Date: as of April 15, 2013 BULK PANGAEA LIMITED, BULK PATRIOT LTD., BULK JULIANA LTD. and BULK TRIDENT LTD. as Joint and Several Borrowers BULK PARTNERS (BERMUDA) LTD., BULK PARTNERS HOLDING COMPANY BERMUDA LTD., and BULK FLEET BERMUDA HOLDING COMPANY...

Exhibit 10.10

Execution Version

Date: as of April 15, 2013

BULK PANGAEA LIMITED, BULK PATRIOT LTD., BULK XXXXXXX LTD. and BULK TRIDENT LTD.

as Joint and Several Borrowers

BULK PARTNERS (BERMUDA) LTD., BULK PARTNERS HOLDING COMPANY BERMUDA LTD., and BULK FLEET BERMUDA HOLDING COMPANY LTD.

as Joint and Several Guarantors

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

– and –

DVB BANK SE

as Agent

and as Security Trustee

LOAN AGREEMENT

relating to

a Senior Secured Post-Delivery Term Loan Facility in

the initial principal amount of up to US$30,301,562.51

Xxxxxx, Xxxxxx & Xxxxxxxx

New York

INDEX

Clause		Page
1	INTERPRETATION	2
2	FACILITY	26
3	POSITION OF THE LENDERS	26
4	DRAWDOWN	28
5	INTEREST	30
6	INTEREST PERIODS	31
7	DEFAULT INTEREST	32
8	REPAYMENT AND PREPAYMENT	33
9	CONDITIONS PRECEDENT	35
10	REPRESENTATIONS AND WARRANTIES	38
11	GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS	47
12	FINANCIAL COVENANTS	55
13	MARINE INSURANCE COVENANTS	56
14	SHIP COVENANTS	62
15	COLLATERAL MAINTENANCE RATIO	67
16	guarantee	68
17	PAYMENTS AND CALCULATIONS	71
18	APPLICATION OF RECEIPTS	73
19	APPLICATION OF EARNINGS	75
20	EVENTS OF DEFAULT	79
21	FEES AND EXPENSES	83
22	INDEMNITIES	84
23	NO SET-OFF OR TAX DEDUCTION; tax indemnity; FATCA	86

INDEX

Clause		Page
24	ILLEGALITY, ETC	91
25	INCREASED COSTS	91
26	SET-OFF	93
27	TRANSFERS AND CHANGES IN LENDING OFFICES	94
28	VARIATIONS AND WAIVERS	98
29	NOTICES	99
30	SUPPLEMENTAL	101
31	THE SERVICING BANKS	102
32	LAW AND JURISDICTION	106
33	WAIVER OF JURY TRIAL	107
34	PATRIOT ACT notice	107

EXECUTION PAGE	108
SCHEDULE 1 LENDERS AND COMMITMENTS	109
SCHEDULE 2 INTENTIONALLY OMITTED	110
SCHEDULE 3 DRAWDOWN NOTICE	111
SCHEDULE 4 CONDITION PRECEDENT DOCUMENTS	113
SCHEDULE 5 TRANSFER CERTIFICATE	119
SCHEDULE 6 INTENTIONALLY OMITTED	123
SCHEDULE 7 list of approved brokers	124
SCHEDULE 8 dvb loan administration form	125
SCHEDULE 9 FORM OF LETTER OF INSTRUCTION TO CLASSIFICATION SOCIETY	127
SCHEDULE 10 FORM OF CLASSIFICATION SOCIETY LETTER OF UNDERTAKING	129
appendix a FORM OF APPROVED MANAGER’S UNDERTAKING	131
appendix b FORM OF BORROWER ACCESSION AGREEMENT	132

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INDEX

Clause		Page
appendix c-1 FORM OF COMPLIANCE CERTIFICATE (borrowers)		133
appendix c-2 FORM OF COMPLIANCE CERTIFICATE (BULK PARTNERS)		134
appendix d FORM OF EARNINGS ACCOUNT PLEDGE		135
appendix e FORM OF EARNINGS ASSIGNMENT		136
appendix f FORM OF FREIGHTS ACCOUNT PLEDGE		137
appendix g FORM OF GUARANTOR ACCESSION AGREEMENT		138
appendix h FORM OF INSURANCE ASSIGNMENT		139
appendix I-1 FORM OF MORTGAGE (PANAMA)		140
appendix I-2 FORM OF MORTGAGE (XXXXXXXX ISLANDS)		141
appendix J FORM OF NOTE		142
appendix K FORM OF SHAREs PLEDGE		143
appendix l TIME CHARTER AND TIME CHARTER GUARANTEE ASSIGNMENT		144
appendix M FORM OF TIME CHARTER EARNINGS ASSIGNMENT		145
appendix N-1 FORM OF UNDERTAKING AND AGREEMENT – BULK PATRIOT		146
appendix N-2 FORM OF UNDERTAKING AND AGREEMENT – BULK TRIDENT		147

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THIS LOAN AGREEMENT (this “Agreement”) is made as of April 15, 2013

AMONG

(1) BULK PANGAEA LIMITED (“Bulk Pangaea”), BULK PATRIOT LTD. (“Bulk Patriot”), BULK XXXXXXX LTD. (“Bulk Xxxxxxx”) and BULK TRIDENT LTD. (“Bulk Trident”), each a company organized and existing under the laws of Bermuda whose registered office is at 0^xx Xxxxx, Xxx xx Xxxxx Xxxxx, 14 Par la Xxxxx Xxxx, Xxxxxxxx XX00, Xxxxxxx, as joint and several borrowers (together with any other person that becomes a borrower party hereto pursuant to a Borrower Accession Agreement (as defined below), the “Borrowers”, and each separately a “Borrower”, which expressions include their respective successors, transferees and assigns);

(2) BULK PARTNERS (BERMUDA) LTD. (“Bulk Partners”), BULK PARTNERS HOLDING COMPANY BERMUDA LTD. (“Bulk Holdings”) and BULK FLEET BERMUDA HOLDING COMPANY LTD. (“Bulk Fleet”), each a company organized and existing under the laws of Bermuda whose registered office is at 0^xx Xxxxx, Xxx xx Xxxxx Xxxxx, 14 Par la Xxxxx Xxxx, Xxxxxxxx XX00, Xxxxxxx, as joint and several guarantors (together with any other person that becomes a guarantor party hereto pursuant to a Guarantor Accession Agreement (as defined below), the “Guarantors”, and each separately a “Guarantor”, which expressions include their respective successors, transferees and assigns);

(3) THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “Lenders”, which expression includes their respective successors, transferees and assigns);

(4) DVB BANK SE, acting in such capacity through its office at Xxxxx xxx Xxxxxxxx 0, 00000 Xxxxxxxxx xx Xxxx, Xxxxxxx, as agent for the Lenders (in such capacity, the “Agent”, which expression includes its successors, transferees and assigns); and

(5) DVB BANK SE, acting in such capacity through its office at Xxxxx xxx Xxxxxxxx 0, 00000 Xxxxxxxxx xx Xxxx, Xxxxxxx, as security trustee for the Lenders (in such capacity, the “Security Trustee”, which expression includes its successors, transferees and assigns).

BACKGROUND

(A) The Lenders have agreed to make available to the Borrowers a senior secured post-delivery term loan facility in the aggregate principal amount of up to $30,301,562.51 in respect of the refinancing of the Initial Ships, provided that the foregoing amount may be increased by an amount to be agreed upon between the Lenders and the Borrowers to provide for an Advance in respect of the acquisition of an Additional Ship.

(B) The Lenders have agreed to share pari passu in the Collateral to be granted to the Security Trustee pursuant to this Agreement.

IT IS AGREED as follows:

1             INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

“Acceptable Accounting Firm” means Ernst & Young LLP, or such other recognized accounting firm as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing, such approval not to be unreasonably withheld;

“Account Bank” means HSBC Bank Bermuda Limited, acting through its office at 00 Xxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx;

“Additional Ship” means any vessel which is:

(a)           to be acquired by a subsidiary of Bulk Partners;

(b)          classed with a Classification Society, free of overdue recommendations and conditions affecting that vessel’s class;

(c)           to be registered on an Approved Flag; and

(d)          approved by the Majority Lenders;

“Advance” means the principal amount of each borrowing by the Borrowers under this Agreement;

“Affiliate” means, as to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with such person or is a director or officer of such person, and for purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such person or to direct or cause direction of the management and policies of such person, whether through the ownership of Voting Stock, by contract or otherwise;

“Agreed Form” means in relation to any document, that document in the form approved by the Agent with the consent of the Majority Lenders (such consent not to be unreasonably withheld), or as otherwise approved in accordance with any other approval procedure specified in any relevant provision of any Finance Document;

“Allseas” means Allseas Logistics Bermuda Ltd., a Bermuda company;

“Applicable Collateral Maintenance Ratio” has the meaning given in Clause 15.2;

“Applicable Margin” means:

(a) with respect to the Advance relating to each of BULK PANGAEA, BULK PATRIOT and BULK TRIDENT, 3.50% per annum; and

(b) with respect to the Advance relating to BULK XXXXXXX, 3.75% per annum;

“Applicable Maturity Date” means:

(a) with respect to the Advance relating to BULK PANGAEA, the earlier of January 19, 2017 and the date on which the Advance relating to BULK PANGAEA is accelerated pursuant to Clause 20.4;

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(b) with respect to the Advance relating to BULK PATRIOT, the earlier of October 19, 2017 and the date on which the Advance relating to BULK PATRIOT is accelerated pursuant to Clause 20.4;

(c) with respect to the Advance relating to BULK XXXXXXX, the earlier of July 19, 2018 and the date on which the Advance BULK XXXXXXX is accelerated pursuant to Clause 20.4; and

(d) with respect to the Advance relating to BULK TRIDENT, the earlier of October 19, 2018 and the date on which the Advance BULK TRIDENT is accelerated pursuant to Clause 20.4;

“Approved Broker” means any of the companies listed on Schedule 7 or such other company proposed by the Borrowers which the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld), approve from time to time for the purpose of valuing a Ship, who shall act as an expert and not as arbitrator and whose valuation shall be conclusive and binding on all parties to this Agreement;

“Approved Flag” means the Panamanian flag, the Xxxxxxxx Islands flag or such other flag as the Agent may, with the consent of the Majority Lenders, approve from time to time in writing as the flag on which a Ship shall be registered;

“Approved Management Agreement” means, in relation to a Ship in respect of its commercial and/or technical management, a management agreement between the Borrower that owns that Ship and the relevant Approved Manager in Agreed Form;

“Approved Manager” means Phoenix Bulk (US), Seamar Management SA or any other company proposed by the Borrowers which the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld), approve from time to time as the technical and/or commercial manager of a Ship;

“Approved Manager’s Undertaking” means, in relation to a Ship, the letter executed and delivered by an Approved Manager, in the form set out in Appendix A;

“Availability Period” means the period commencing on the Effective Date and ending on the earlier of:

(a) May 31, 2013 (or such later date as the Agent may, with the consent of the Majority Lenders, agree with the Borrowers); and

(b) the date on which the Total Commitments are fully borrowed, cancelled or terminated;

“Bank Secrecy Act” means the United States Bank Secrecy Act of 1970, as amended;

“Basel III” means any of the changes designed to strengthen any capital standards or introduce minimum liquidity or other requirements referenced in the publication of the Groups of Governors and Heads of Supervision of the Basel Committee on Banking Supervision (the “Basel Committee”) dated 16 December, 2010, or any subsequent paper or document published by the Basel Committee on any of those requirements;

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“Borrower Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Borrower in the form set out in Appendix B hereto;

“BULK XXXXXXX” means the 2001-built motor vessel of 52,510 deadweight tons currently named “BULK XXXXXXX”, IMO Number 9235854, and registered in the name of Bulk Xxxxxxx on Panamanian flag;

“BULK PANGAEA” means the 1999-built motor vessel of 73,700 deadweight tons currently named “BULK PANGAEA”, IMO Number 9187722, and registered in the name of Bulk Pangaea on Panamanian flag;

“Bulk Partners Shareholders” means, as of the date hereof, Xxxxxx Xxxx, Xxxxxxx Xxxxx, Lagoa Investments Ltd., a Bermuda company, Pangaea One, L.P., a Delaware limited partnership, Pangaea One Parallel Fund (B), L.P., a Delaware limited partnership, Pangaea One (Cayman), L.P., a Cayman Islands limited partnership, Pangaea One Parallel Fund, L.P., a Cayman Islands limited partnership, and up to ten other persons who may be named by Bulk Partners as key personnel after the date of this Agreement, provided that such other persons shall be employed by Bulk Partners or any of its subsidiaries at the time such other persons become Bulk Partners Shareholders, and, if any such other person individually holds more than 10% of the shares of Bulk Partners at any time, Bulk Partners shall so notify the Agent;

“BULK PATRIOT” means the 1996-built motor vessel of 70,165 deadweight tons currently named “BULK PATRIOT”, IMO Number 9115523, and registered in the name of Bulk Patriot on Panamanian flag;

“BULK TRIDENT” means the 2006-built motor vessel of 52,514 deadweight tons currently named “BULK TRIDENT”, IMO Number 9298545, and registered in the name of Bulk Trident on Xxxxxxxx Islands flag;

“Business Day” means a day on which banks are open in London, England, New York, New York and Frankfurt, Germany;

“Capitalized Lease” means, as applied to any person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such person, as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such person; and “Capitalized Lease Obligation” is defined to mean the rental obligations, as aforesaid, under a Capitalized Lease;

“Cash Equivalents” means:

(a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);

(b) time deposits, certificates of deposit or deposits in the interbank market of any commercial bank of recognized standing organized under the laws of the United States of America, any state thereof or any foreign jurisdiction having capital and surplus in excess of $500,000,000; and

(c) such other securities or instruments as the Majority Lenders shall agree in writing;

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and in respect of both (a) and (b) above, with a Rating Category of at least “A+” by S&P and “A” by Xxxxx’x (or the equivalent used by another Rating Agency), and in each case having maturities of not more than ninety (90) days from the date of acquisition;

“Change of Control” means:

(a) in respect of each of the Borrowers, the Guarantors (other than Bulk Partners) and the Time Charterer, the occurrence of any act, event or circumstance that without prior written consent of the Majority Lenders results in Bulk Partners owning directly or indirectly less than 100% of the issued and outstanding Equity Interests in any of the Borrowers, the Guarantors (other than Bulk Partners) and the Time Charterer; and

(b) in respect of Bulk Partners, the occurrence of any act, event or circumstance that without prior written consent of the Majority Lenders results in the Bulk Partners Shareholders owning directly or indirectly, individually or as a group, less than 100% of the issued and outstanding Equity Interests in Bulk Partners;

“Charter” means, in relation to a Ship, any demise, time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months, in each case in Agreed Form, and for the avoidance of doubt, the term “Charter” includes but is not limited to a Time Charter;

“CISADA” means the United States Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010;

“Classification Society” means, in relation to a Ship, Nippon Kaiji Kyokai, American Bureau of Shipping or such other first-class vessel classification society that is a member of IACS that the Agent may, with the consent of the Majority Lenders (such consent not to be unreasonably withheld), approve from time to time;

“COAs” mean, collectively:

(a) the Contract of Affreightment dated January 1, 2011 between Noranda Alumina LLC as shipper and Phoenix Bulk Carriers (US) LLC, a Delaware limited liability company (“Phoenix Bulk (US)”), as owner;

(b) the Contract of Affreightment dated January 1, 0000 xxxxxxx Xxxxxxx Xxxx (XX) as shipper and the Time Charterer as owner; and

(c) the Contract of Affreightment dated March 10, 2012 between Atlantic Minerals Limited as shipper and Phoenix Bulk Carriers (BVI) Limited, a British Virgin Islands company (“Phoenix Bulk (BVI)”), as owner;

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Collateral” means all property (including, without limitation, any proceeds thereof) referred to in the Finance Documents that is or is intended to be subject to any Security Interest in favor of the Security Trustee, for the benefit of the Lenders, securing the Secured Liabilities;

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“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

“Compliance Certificate” means:

(a) a certificate executed by an authorized person of a Borrower in the form set out in Appendix C-1 (Borrowers); and

(b) a certificate executed by an authorized person of Bulk Partners in the form set out in Appendix C-2 (Bulk Partners);

“Consolidated Debt Service” means, on a consolidated basis, the aggregate amount of principal and Consolidated Net Interest Expense paid or scheduled to be paid by Bulk Partners on its consolidated Financial Indebtedness for the immediately preceding twelve month period;

“Consolidated Debt Service Coverage Ratio” means a fraction (expressed as a percentage, rounded up to the nearest tenth of a percent) where (a) the numerator is Consolidated EBITDA and (b) the denominator is Consolidated Debt Service;

“Consolidated EBITDA” means, for any accounting period, the net income of Bulk Partners on a consolidated basis for that accounting period:

(a) plus, to the extent deducted in computing the consolidated net income of Bulk Partners for that accounting period, the sum, without duplication, of:

(i) all federal, state, local and foreign income taxes and tax distributions;

(ii) Consolidated Net Interest Expense;

(iii) depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts) and any extraordinary losses not incurred in the ordinary course of business; and

(iv) any drydocking expenses;

(b) minus, to the extent added in computing the consolidated net income of Bulk Partners for that accounting period, any non-cash income or non-cash gains and any extraordinary gains on asset sales or otherwise not incurred in the ordinary course of business;

“Consolidated Leverage Ratio” means a fraction (expressed as a percentage, rounded up to the nearest tenth of a percent) where (a) the numerator is a number equal to the consolidated Financial Indebtedness of Bulk Partners and (b) the denominator is Consolidated Net Worth;

“Consolidated Minimum Liquidity” means freely available and unencumbered cash and/or Cash Equivalents held by Bulk Partners on a consolidated basis;

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“Consolidated Net Interest Expense” means, on a consolidated basis, the aggregate of all interest, commitment and other fees, commissions, discounts and other costs, charges or expenses accruing that are due from Bulk Partners during the relevant accounting period less interest income received, determined in accordance with GAAP and as shown in the statement of income for Bulk Partners;

“Consolidated Net Worth” means total market adjusted equity of Bulk Partners on a consolidated basis;

“Contractual Currency” has the meaning given in Clause 22.4;

“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

“Creditor Party” means the Agent, the Security Trustee or any Lender, whether as at the date of this Agreement or at any later time;

“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect a person or any of its subsidiaries against fluctuations in currency values to or under which such person or any of its subsidiaries is a party or a beneficiary on the date of this Agreement or becomes a party or a beneficiary thereafter;

“Delivery Date” means the date of the scheduled acquisition by and delivery of an Additional Ship to the Borrower that will own such Additional Ship;

“Disbursement Authorization” has the meaning given in Clause 9.2(b);

“Dollars” and “$” means the lawful currency for the time being of the United States of America;

“Drawdown Date” means, in relation to an Advance, the date requested by the Borrowers for such Advance to be made, or (as the context requires) the date on which such Advance is actually made;

“Drawdown Notice” means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or reasonably requires);

“Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship, the Time Charterer or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a) except to the extent that they fall within paragraph (b):

(i) all freight, hire and passage moneys;

	(ii)	compensation payable to the Borrower owning that Ship, the Time Charterer or the Security Trustee in the event of requisition of that Ship for hire;
	(iii)	remuneration for salvage and towage services;

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(iv) demurrage and detention moneys;

(v) damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and

(vi) all moneys which are at any time payable under Insurances in respect of loss of hire; and

(b) if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;

“Earnings Account” means, in relation to a Ship, an account in the name of the Borrower owning that Ship with the Account Bank designated “[Name of Ship] - Earnings Account”, or any other account (with the Account Bank or the Agent or with another bank or financial institution acceptable to the Majority Lenders) which is designated as the Earnings Account in relation to that Ship for the purpose of receiving (i) all charter hire and other amounts paid under the Time Charter for that Ship and (ii) the Excess Cash Flow for that Ship;

“Earnings Account Minimum Balance” means the minimum amount required to be retained in an Earnings Account pursuant to Clause 19.2(a) or (b), as the case may be;

“Earnings Account Pledge” means a pledge of the Earnings Account for a Ship, in the form set out in Appendix D;

“Earnings Assignment” means, in relation to a Ship, an assignment of the Earnings and any Requisition Compensation of that Ship, in the form set out in Appendix E;

“Effective Date” means the date on which this Agreement is executed and delivered by the parties hereto;

“Email” has the meaning given in Clause 29.1;

“Environmental Claim” means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, indemnification, contribution, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

“Environmental Incident” means:

(a) any release of Environmentally Sensitive Material from a Ship; or

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(b) any incident in which Environmentally Sensitive Material is released and which involves a collision or allision between a Ship and another vessel or object, or some other incident of navigation or operation, in any case, in connection with which such Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or such Ship and/or the Guarantors and/or the Borrower owning such Ship and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which such Ship is actually or potentially liable to be arrested and/or where the Guarantors and/or the Borrower owning such Ship and/or any operator or manager of such Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law;

“Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

“Equity Interests” of any person means:

(a) any and all shares and other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such person; and

(b) all rights to purchase, warrants or options or convertible debt (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such person;

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder;

“ERISA Affiliate” means a trade or business (whether or not incorporated) that, together with Bulk Partners or any subsidiary of Bulk Partners, would be deemed to be a single employer under Section 414 of the Code;

“Estate” has the meaning assigned such term in Clause 31.1(b)(ii);

“Event of Default” means any of the events or circumstances described in Clause 20.1;

“Executive Order” means an executive order issued by the President of the United States of America;

“Excess Cash Flow” means with respect to each Initial Ship, the amount of the Earnings for that Ship remaining in the Freights Account after the payments referred to in Clause 19. 3 are made;

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“Fair Market Value” means, in relation to a Ship, the market value of such Ship at any date that is shown by either:

(a) a single valuation prepared for and addressed to the Agent by an Approved Broker selected and appointed by the Agent (which shall be Maritime Strategies International Ltd., Arrow London, SSY (New York) and Compass Maritime (New Jersey) unless the Agent advises otherwise); or

(b) if requested by the Borrowers, the average of two (2) valuations each prepared for and addressed to the Agent by an Approved Broker, one selected by the Agent (which shall be Maritime Strategies International Ltd., Arrow London, SSY (New York) and Compass Maritime (New Jersey) unless the Agent advises otherwise) and one selected by the Borrower, provided that if there is a difference of or in excess of 10% between the two valuations, the Borrowers may, at their sole expense, obtain a third valuation prepared for and addressed to the Agent by an Approved Broker, in which case the market value of such Ship shall be the average of the three valuations obtained;

provided that if a range of market values is provided in a particular appraisal, then the market value in such appraisal shall be deemed to be the mid-point within such range;

Each valuation prepared by an Approved Broker shall be:

(ii) as at a date not more than 14 days prior to the date such valuation is delivered to the Agent;

(iii) on a “desk-top” basis without physical inspection of that Ship;

(iv) on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (and with no value to be given to any pooling arrangements); and

(v) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale;

“FATCA” means Sections 1471 through 1474 of the Code and any regulations thereunder issued by the United States Treasury;

“FATCA Deduction” means a deduction or withholding from a payment under any Finance Document required by or under FATCA;

“FATCA Exempt Party” means a FATCA Relevant Party who is entitled under FATCA to receive payments free from any FATCA Deduction;

“FATCA Non-Exempt Party” means a FATCA Relevant Party who is not a FATCA Exempt Party;

“FATCA Non-Exempt Lender” means any Lender who is a FATCA Non-Exempt Party;

“FATCA Relevant Party” means each Creditor Party and each Security Party;

“Finance Documents” means:

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(a) this Agreement;

(b) the Earnings Account Pledges;

(c) the Earnings Assignments;

(d) the Freights Account Pledge;

(e) the Insurance Assignments;

(f) the Mortgages;

(g) the Note;

(h) the Shares Pledges;

(i) the Time Charter and Time Charter Guarantee Assignments;

(j) the Time Charter Guarantees;

(k) the Time Charterer Earnings Assignments;

(l) the Undertakings and Agreements; and

(m) any other document (whether creating a Security Interest or not) which is executed at any time by any person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition;

“Financial Indebtedness” means, with respect to any person (the “debtor”) at any date of determination (without duplication):

(a) all obligations of the debtor for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) all obligations of the debtor evidenced by bonds, debentures, notes or other similar instruments;

(c) all obligations of the debtor in respect of any acceptance credit, guarantee or letter of credit facility or equivalent made available to the debtor (including reimbursement obligations with respect thereto);

(d) all obligations of the debtor to pay the deferred purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereto or the completion of such services, except trade payables;

(e) all Capitalized Lease Obligations of the debtor as lessee;

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(f) all Financial Indebtedness of persons other than the debtor secured by a Security Interest on any asset of the debtor, whether or not such Financial Indebtedness is assumed by the debtor, provided that the amount of such Financial Indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such Financial Indebtedness;

(g) all Financial Indebtedness of persons other than the debtor under any guarantee, indemnity or similar obligation entered into by the debtor to the extent such Financial Indebtedness is guaranteed, indemnified, etc. by the debtor; and

(h) to the extent not otherwise included in this definition, obligations of the debtor under Currency Agreements and Interest Rate Agreements or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount.

The amount of Financial Indebtedness of any debtor at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, as determined in conformity with GAAP, provided that (i) the amount outstanding at any time of any Financial Indebtedness issued with an original issue discount is the face amount of such Financial Indebtedness less the remaining unamortized portion of such original issue discount of such Financial Indebtedness at such time as determined in conformity with GAAP, and (ii) Financial Indebtedness shall not include any liability for taxes;

“Fiscal Year” means, in relation to any person, each period of one (1) year commencing on January 1 of each year and ending on December 31 of such year in respect of which its accounts are or ought to be prepared;

“Foreign Pension Plan” means any plan, fund (including without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by Bulk Partners or any one or more of its subsidiaries primarily for the benefit of its or their employees residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code;

“Freights Account” means an account in the name of Allseas with the Account Bank designated as the Freights Account for the Initial Ships and any Additional Ship(s), or any other account (with the Account Bank or the Agent or with another bank or financial institution acceptable to the Majority Lenders) for the purpose of receiving all Earnings of each such Ship under either the COAs for such Ship or any charter by the Time Charterer as disponent owner for such Ship, as applicable;

“Freights Account Pledge” means a pledge of the Freights Account, in the form set out in Appendix F;

“GAAP” means generally accepted accounting principles in the United States of America, including, without limitation, those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession;

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“Guaranteed Obligations” has the meaning given in Clause 16.1;

“Guarantor Accession Agreement” means an agreement providing for the accession of a person to this Agreement as a Guarantor in the form set out in Appendix G hereto;

“IACS” means the International Association of Classification Societies;

“Initial Ships” means, collectively, BULK PANGAEA, BULK PATRIOT, BULK XXXXXXX and BULK TRIDENT, and in the singular means any one of them;

“Insurances” means in relation to a Ship:

(a) all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, the Earnings or otherwise in relation to that Ship whether before, on or after the date of this Agreement; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;

“Insurance Assignment” means, in relation to a Ship, an assignment of the Insurances, in the form set out in Appendix H;

“Interest Period” means a period determined in accordance with Clause 6;

“Interest Rate Agreement” means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement designed to protect a person or any of its subsidiaries against fluctuations in interest rates to or under which such person or any of its subsidiaries is a party or a beneficiary on the date hereof or becomes a party or a beneficiary hereafter;

“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government;

“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

“ISM Code Documentation” includes, in respect of a Ship:

(a) the Document of Compliance and Safety Management Certificate issued pursuant to the ISM Code in relation to that Ship within the periods specified by the ISM Code;

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(b) all other documents and data which are relevant to the safety management system and its implementation and verification which the Agent may reasonably require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain that Ship’s compliance or the compliance of the Borrower that owns that Ship or the relevant Approved Manager with the ISM Code which the Agent may reasonably require;

“ISPS Code” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organization, as the same may be amended or supplemented from time to time;

“ISPS Code Documentation” includes:

(a) the ISSC; and

(b) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

“Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Lending Office” under its name on Schedule 1 or in the relevant Transfer Certificate pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrowers and the Agent in accordance with Clause 27.14;

“LIBOR” means, in relation to any period for which a rate of interest is to be determined under any provisions of a Finance Document, the rate which appears on Reuters BBA page LIBOR 01 screen at or about 11.00 am (London Time) on the relevant Quotation Date for a selected interest period;

“Liquidity” means the sum of (a) cash and (b) Cash Equivalents, in each case held by a Borrower on a freely available and unencumbered basis;

“Loan” means the principal amount from time to time outstanding under this Agreement;

“Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Majority Lenders” means:

(a) before the Loan has been made, Lenders whose Commitments total 66.67% of the Total Commitments; and

(b) after the Loan has been made, Lenders whose Contributions total 66.67% of the Loan;

“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the United States Federal Reserve System and any successor regulations thereto, as in effect from time to time;

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“MOA” means the Memorandum of Agreement entered into between the Seller and a Borrower in respect of the sale and purchase of an Additional Ship;

“Moody’s” means Xxxxx’x Investors Service, Inc., a subsidiary of Xxxxx’x Corporation, and its successors;

“Mortgage” means, in relation to a Ship, the first preferred Panamanian or Xxxxxxxx Islands ship mortgage, as the case may be, on that Ship, in the form set out in Appendix I-1 (Panama) or I-2 (Xxxxxxxx Islands);

“Multiemployer Plan” means, at any time, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which a Borrower, a Guarantor or any subsidiary of them or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;

“Non-indemnified Tax” means:

(a) any tax on the net income of a Creditor Party (but not a tax on gross income or individual items of income), whether collected by deduction or withholding or otherwise, which is levied by a taxing jurisdiction which:

(i) is located in the country under whose laws such entity is formed (or in the case of a natural person is a country of which such person is a citizen); or

(ii) with respect to any Lender, is located in the country of its Lending Office; or

(iii) with respect to any Creditor Party other than a Lender, is located in the country from which such party has originated its participation in this transaction; or

(b) any FATCA Deduction made on account of a payment to a FATCA Non-Exempt Party;

“Note” means a promissory note of the Borrowers, payable to the order of the Agent, evidencing the aggregate indebtedness of the Borrowers under this Agreement, in the form set out in Appendix J;

“Notifying Lender” has the meaning given in Clause 24.1 or Clause 25.1 as the context requires;

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury;

“pari passu”, when used with respect to the ranking of any Financial Indebtedness of any person in relation to other Financial Indebtedness of such person, means that each such Financial Indebtedness:

(a) either (i) is not subordinated in right of payment to any other Financial Indebtedness of such person or (ii) is subordinate in right of payment to the same Financial Indebtedness of such person as is the other and is so subordinate to the same extent; and

(b) is not subordinate in right of payment to the other or to any Financial Indebtedness of such person as to which the other is not so subordinate;

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“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199);

“Payment Currency” has the meaning given in Clause 22.4;

“Permitted Security Interests” means:

(a) Security Interests created by the Finance Documents;

(b) Security Interests for unpaid but not past due master’s and crew’s wages in accordance with usual maritime practice;

(c) Security Interests for salvage;

(d) Security Interests arising by operation of law for not more than two (2) months’ prepaid hire under any charter or other contract of employment in relation to a Ship not otherwise prohibited by this Agreement or any other Finance Document;

(e) Security Interests for master’s disbursements incurred in the ordinary course of trading and any other Security Interests arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such Security Interests do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the Borrower that owns such Ship in good faith by appropriate steps) and subject, in the case of Security Interests for repair or maintenance, to Clause 14.13(h);

(f) any Security Interest created in favor of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where the Borrower that owns the relevant Ship is actively prosecuting or defending such proceedings or arbitration in good faith and such Security Interest does not (and is not likely to) result in any sale, forfeiture or loss of a Ship;

(g) Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

(h) Security Interests created by Bulk Fleet in connection with financings existing prior to the date of this Agreement in respect of the Equity Interests of Bulk Discovery (Bermuda) Ltd., Bulk Cajun Bermuda Ltd. and Bulk Atlantic Ltd.; and

(i) Security Interests created by Allseas, Phoenix Bulk (BVI), Phoenix Bulk (US) or the Time Charterer to secure the obligations in connection with a letter of credit dated on or about the date of this Agreement and issued by Rockland Trust Company, provided that such the amount available under such letter of credit does not exceed $5,000,000;

provided that the Security Interests described in paragraphs (b) through (g) above shall not exceed $500,000 in the aggregate at any time;

“Pertinent Document” means:

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(a) any Finance Document;

(b) any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;

(c) any other document contemplated by or referred to in any Finance Document; and

(d) any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

“Pertinent Jurisdiction”, in relation to a company, means:

(a) the jurisdiction under the laws of which the company is incorporated or formed;

(b) a jurisdiction in which the company has the center of its main interests or in which the company’s central management and control is or has recently been exercised;

(c) a jurisdiction in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(d) a jurisdiction in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; or

(e) a jurisdiction the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company whether as a main or territorial or ancillary proceedings or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (a) or (b) above;

“Pertinent Matter” means:

(a) any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or

(b) any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

“Plan” means any employee benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which a Borrower, a Guarantor or any subsidiary of them or ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA;

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“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed;

“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is two (2) Business Days before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);

“Rating Agencies” means:

(a) S&P and Moody’s; or

(b) if S&P or Moody’s or both of them are not making ratings of securities publicly available, a nationally recognized United States rating agency or agencies, as the case may be, selected by the Agent with the consent of the Majority Lenders, which will be substituted for S&P or Moody’s or both, as the case may be;

“Rating Category” means:

(a) with respect to S&P, any of the following categories (any of which may include a “+” or “-”): AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);

(b) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and

(c) the equivalent of any such categories of S&P or Moody’s used by another Rating Agency, if applicable;

“Repayment Date” means a date on which a repayment is required to be made under Clause 8;

“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies Inc., and its successors;

“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

(a) imposed by law or regulation of the Council of the European Union, the United Nations or its Security Council or the United Kingdom;

(b) under CISADA;

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(c) in respect of (i) a “national” of any “designated foreign country”, within the meaning of the Foreign Assets Control Regulations or the Cuban Asset Control Regulations of the United States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as amended, or (ii) a “specially designated national” listed by OFAC or any regulations or rulings issued thereunder; or

(d) otherwise imposed by any law or regulation or Executive Order by which any Creditor Party, the Borrowers or any Guarantor is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Creditor Party, the Borrowers or any Guarantor, including without limitation laws or regulations or Executive Orders restricting loans to, investments in, or the export of assets to, foreign countries or entities doing business there;

provided that the laws and regulations described in paragraphs (a) and (d) shall be applicable only to the extent such laws and regulations are not inconsistent with the laws and regulations of the United States of America;

“Secured Liabilities” means all liabilities which the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Interest” means:

(a) a mortgage, encumbrance, charge (whether fixed or floating) or pledge, any maritime or other lien or privilege or any other security interest of any kind;

(b) the security rights of a plaintiff under an action in rem; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

“Security Party” means the Borrowers, the Guarantors, the Time Charterer, the Time Charter Guarantors, Allseas, Phoenix Bulk (BVI), Phoenix Bulk (US) and any other person (except a Creditor Party) who, as a surety, guarantor, mortgagor, assignor or pledgor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a Finance Document;

“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the other Security Parties and the other Creditor Parties that:

(a) all amounts which have become due for payment by the Borrowers or any other Security Party under the Finance Documents have been paid;

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(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrowers nor any other Security Party has any future or contingent liability under Clause 21, 22 or 23 or any other provision of this Agreement or another Finance Document; and

(d) the Agent, the Security Trustee and the Majority Lenders do not reasonably consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrowers or another Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

“Seller” means, in respect of an MOA, the seller of the Additional Ship named therein;

“Seller’s Bank” has the meaning given in Clause 9.2(b);

“Servicing Bank” means the Agent or the Security Trustee;

“Shares Pledge” means a pledge of the Equity Interests of each Borrower, in the form set out in Appendix K;

“Ship” means, as the context may require:

(a) any Initial Ship; and

(b)       any Additional Ship;

“Substitute Basis” has the meaning given such term in Clause 5.5;

“Time Charter” means:

(a) in respect of BULK PANGAEA, a “hell or high water” time charter party in Agreed Form between Bulk Pangaea as owner and the Time Charterer as charterer, the terms of which shall include, among other things:

(i) a charter period ending on the earlier of (i) January 10, 2017 or (ii) the full repayment of the Advance relating to BULK PANGAEA;

(ii) a minimum daily hire rate of not less than $11,250 payable in arrears; and

(iii) certain provisions allowing Bulk Pangaea to claim additional payments and/or charter hire to:

(A) repair a breach of the Applicable Collateral Maintenance Ratio; and

(B) cover any excess operational expenses/daily running costs, principal and interest which, in the aggregate, would exceed daily hire rate of $11,250;

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(b) in respect of BULK PATRIOT, a “hell or high water” time charter party in Agreed Form between Bulk Patriot as owner and the Time Charterer as charterer, the terms of which shall include, among other things:

(i) a charter period ending on the earlier of (i) October 10, 2017 or (ii) the full repayment of the Advance relating to BULK PATRIOT;

(ii) a minimum daily hire rate of not less than $12,750 payable in arrears; and

(iii) certain provisions allowing Bulk Patriot to claim additional payments and/or charter hire to:

(A) repair a breach of the Applicable Collateral Maintenance Ratio; and

(B) cover any excess operational expenses/daily running costs, principal and interest which, in the aggregate, would exceed daily hire rate of $12,750;

(c) in respect of BULK XXXXXXX, a “hell or high water” time charter party in Agreed Form between Bulk Xxxxxxx as owner and the Time Charterer as charterer, the terms of which shall include, among other things:

(i) a charter period ending on the earlier of (i) July 10, 2018 or (ii) the full repayment of the Advance relating to BULK XXXXXXX;

(ii) a minimum daily hire rate of not less than $11,000 payable in arrears; and

(iii) certain provisions allowing Bulk Xxxxxxx to claim additional payments and/or charter hire to:

(A) repair a breach of the Applicable Collateral Maintenance Ratio; and

(B) cover any excess operational expenses/daily running costs, principal and interest which, in the aggregate, would exceed daily hire rate of $11,000; and

(d) in respect of BULK TRIDENT, an “internal” time charter party in Agreed Form between Bulk Trident as owner and the Time Charterer as charterer, the terms of which shall include, among other things:

(i) a charter period ending on the earlier of (i) August 30, 2014 or (ii) the full repayment of the Advance relating to BULK TRIDENT;

(ii) a minimum daily hire rate of not less than $10,615 (net) payable in arrears; and

(iii) certain provisions allowing Bulk Trident to claim additional payments and/or charter hire to:

(A) repair a breach of the Applicable Collateral Maintenance Ratio; and

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(B) cover any excess operational expenses/daily running costs, principal and interest which, in the aggregate, would exceed daily hire rate of $10,615 (net);

“Time Charter and Time Charter Guarantee Assignment” means, in relation to a Ship, an assignment of the Time Charter and the Time Charter Guarantee for such Ship, in the form set out in Appendix L;

“Time Charter Guarantee” means, in respect of a Time Charter, a guarantee in Agreed Form in respect of the Time Charterer’s obligations under such Time Charter made by the Time Charter Guarantors, jointly and severally, in favor of the Borrower that owns the Ship subject to such Time Charter;

“Time Charter Guarantors” means Bulk Partners, Bulk Holding and Bulk Fleet acting in such capacity, and in the singular means any one of them;

“Time Charterer” means Americas Bulk Transport (BVI) Limited, a company organized and existing under the laws of British Virgin Islands;

“Time Charterer Earnings Assignment” means, in respect of each Ship, an assignment by the Time Charterer of the Earnings and any Requisition Compensation of such Ship, in the form set out in Appendix M;

“Total Loss” means in relation to a Ship:

(a) actual, constructive, compromised, agreed or arranged total loss of that Ship;

(b) any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension), unless it is within one (1) month redelivered to the full control of the Borrower owning that Ship; or

(c) any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless it is within one (1) month redelivered to the full control of the Borrower owning that Ship;

“Total Loss Date” means in relation to a Ship:

(a) in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

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(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning that Ship with the Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

“Transfer Certificate” has the meaning given in Clause 27.2;

“Transferee Lender” has the meaning given in Clause 27.2;

“Transferor Lender” has the meaning given in Clause 27.2;

“UCC” means the Uniform Commercial Code of the State of New York;

“Undertaking and Agreement” means:

(a) in relation to BULK PATRIOT, the undertaking and agreement made by Bulk Patriot, the Time Charterer, Phoenix Bulk (US) and Allseas, in the form set out in Appendix N-1; and

(b) in relation to BULK TRIDENT, the undertaking and agreement made by Bulk Trident, the Time Charterer, Phoenix Bulk (BVI) and Allseas, in the form set out in Appendix N-2; and

“Voting Stock” of any person as of any date means the Equity Interests of such person that are at the time entitled to vote in the election of the board of directors or similar governing body of such person.

1.2 Construction of certain terms. In this Agreement:

“approved” means, for the purposes of Clause 13, approved in writing by the Agent with the consent of the Majority Lenders;

“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

“company” includes any corporation, limited liability company, partnership, joint venture, unincorporated association, joint stock company and trust;

“consent” includes an authorization, consent, approval, resolution, license, exemption, filing, registration, notarization and legalization;

“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

“document” includes a deed; also a letter, Email or fax;

“excess risks” means, in relation to a Ship, the proportion (if any) of claims for general average, salvage and salvage charges not recoverable under the hull and machinery insurances in respect of that Ship in consequence of the value at which such Ship is assessed for the purpose of such claims exceeding its insured value;

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“excess war risk P&I cover” means, in relation to a Ship, cover for claims only in excess of amounts recoverable under the usual war risk cover including (but not limited to) hull and machinery, crew and protection and indemnity risks;

“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any statute, regulation or resolution of the United States of America, any state thereof, the Council of the European Union, the European Commission, the United Nations or its Security Council or any other Pertinent Jurisdiction;

“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

“months” shall be construed in accordance with Clause 1.3;

“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning that Ship is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

“parent company” has the meaning given in Clause 1.4;

“person” includes natural persons; any company; any state, political sub-division of a state and local or municipal authority; and any international organization;

“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

“protection and indemnity risks” means the usual risks covered by a protection and indemnity association that is a member of the International Group of P&I Clubs, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental body, intergovernmental or supranational, agency, department or regulatory, self-regulatory or other authority or organization;

“subsidiary” has the meaning given in Clause 1.4;

“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganization of it or any other person;

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“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any country, any state, any political sub-division of a state or any local or municipal authority or any other governmental authority authorized to levy such tax (including any such imposed in connection with exchange controls), and any related penalties, interest or fines; and

“war risks” includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).

1.3 Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and “month” and “monthly” shall be construed accordingly.

1.4 Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued Equity Interests in S (or a majority of the issued Equity Interests in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued Equity Interests of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors (or equivalent) of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P;

and any company of which S is a subsidiary is a parent company of S.

1.5 General interpretation. In this Agreement:

(a) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(b) references in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent approves or reasonably requires with the consent of the Majority Lenders and which are acceptable to the Borrowers;

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(c) references to, or to a provision of, any law or regulation include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

(d) words denoting the singular number shall include the plural and vice versa; and

(e) Clauses 1.1 to 1.5 apply unless the contrary intention appears.

1.6 Headings. In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

1.7 Accounting terms. Unless otherwise specified herein, all accounting terms used in this Agreement and in the other Finance Documents shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to any Creditor Party under this Agreement shall be prepared, in accordance with GAAP as from time to time in effect.

1.8 Inferences regarding materiality. To the extent that any representation, warranty, covenant or other undertaking of a Security Party in this Agreement or any other Finance Document is qualified by reference to those matters which are not reasonably expected to result in a “material adverse effect” or language of similar import, no inference shall be drawn therefrom that any Creditor Party has knowledge or approves of any noncompliance by such Security Party with any law or regulation.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lenders severally agree to make available to the Borrowers a loan facility in the aggregate principal amount of up to $30,301,562.51 in respect of the refinancing of the Initial Ships, provided that the foregoing amount may be increased by an amount to be agreed upon between the Lenders and the Borrowers to provide for an Advance in respect of the acquisition of an Additional Ship.

2.2 Lenders’ participations in Advances. Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.

2.3 Purpose of Advances. The Borrowers undertake with each Creditor Party to use each Advance only to partially finance or refinance the acquisition of a Ship to which such Advance relates.

2.4 Cancellation of Total Commitments. Any portion of the Total Commitments not disbursed to the Borrowers shall be cancelled and terminated automatically on the expiration of the Availability Period.

3 POSITION OF THE LENDERS

3.1 Interests several. The rights of the Lenders under this Agreement are several.

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3.2 Individual right of action. Each Lender shall be entitled to xxx for any amount which has become due and payable by a Security Party to it under this Agreement without joining the Agent, the Security Trustee or any other Lender as additional parties in the proceedings.

3.3 Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender may commence proceedings against any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.

3.4 Obligations several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:

(a) the obligations of the other Lenders being increased; nor

(b) any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Document,

and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

3.5 Replacement of a Lender.

(a) If at any time:

(i) any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or

(ii) the Borrowers or any other Security Party becomes obliged in the absence of an Event of Default to repay any amount in accordance with Clause 24 or to pay additional amounts pursuant to Clause 23 or Clause 25 to any Lender in excess of amounts payable to other Lenders generally,

then the Borrowers may, on 30 Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Borrowers, which is acceptable to the Agent with the consent of the Majority Lenders (other than the Lender the Borrowers desires to replace), which confirms its willingness to assume and by its execution of a Transfer Certificate does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Advances and all accrued interest and/or breakages costs and other amounts payable in relation thereto under the Finance Documents.

(b) The replacement of a Lender pursuant to this Clause 3.5 shall be subject to the following conditions:

(i) the Borrowers shall have no right to replace the Agent or the Security Trustee;

(ii) neither the Agent nor any Lender shall have any obligation to the Borrowers to find a Replacement Lender;

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(iii) in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 30 days after the date the Borrowers notify the Non-Consenting Lender and the Agent of its intent to replace the Non-Consenting Lender pursuant to Clause 3.5(a); and

(iv) in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(c) For purposes of this Clause 3.5, in the event that:

(i) the Borrowers or the Agent has requested the Lenders to give a consent in relation to or to agree to a waiver or amendment of any provisions of the Finance Documents;

(ii) the consent, waiver or amendment in question requires the approval of all Lenders; and

(iii) Lenders whose Commitments aggregate more than 66.67% percent of the Total Commitments have consented to or agreed to such waiver or amendment,

then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.

4 DRAWDOWN

4.1 Request for Advance. Subject to the following conditions, the Borrowers may request an Advance to be made by delivering to the Agent a completed Drawdown Notice not later than 10:00 a.m. (New York City time) three (3) Business Days prior to the intended Drawdown Date.

4.2 Availability. The conditions referred to in Clause 4.1 are that:

(a) the Drawdown Date must be a Business Day during the Availability Period;

(b) the loan facility is divided into an Advance for each Ship as follows:

(i) in the principle amount of up to $5,562,500 in respect of the refinancing of BULK PANGAEA;

(ii) in the principle amount of up to $9,050,000 in respect of the refinancing of BULK PATRIOT;

(iii) in the principle amount of up to $7,436,458.34 in respect of the refinancing of BULK XXXXXXX;

(iv) in the principle amount of up to $9,562,500 in respect of the refinancing of BULK TRIDENT; and

(v) in a principle amount to be agreed upon between the Lenders and the Borrowers in respect of the financing of the acquisition of any Additional Ship;

(c) the applicable conditions precedent stated in Clause 9 hereof shall have been satisfied or waived as provided therein.

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4.3 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a) the amount of the Advance, the Ship(s) to which such Advance relates and the Drawdown Date;

(b) the amount of that Lender’s participation in the Advance; and

(c) the duration of the first Interest Period.

4.4 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director, an officer or a duly authorized attorney-in-fact of the Borrowers and once served, a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

4.5 Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, before 10:00 a.m. (New York City time) on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender under Clause 2.2.

4.6 Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5 and that payment to the Borrowers shall be made:

(a) to the account which the Borrowers specify in the Drawdown Notice; and

(b) in the like funds as the Agent received the payments from the Lenders.

4.7 Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 to the account of a third party designated by the Borrowers in a Drawdown Notice shall constitute the making of an Advance and the Borrowers shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender’s Contribution.

4.8 Promissory note.

(a) The obligation of the Borrowers to pay the principal of, and interest on, the Loan shall be evidenced by the Note, which shall be dated the date of the first Drawdown Date.

(b) Each Advance made by the Lenders to the Borrowers may be evidenced by a notation of the same made by the Agent on the grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of such Advance.

(c) Each Lender shall record on its internal records the amount of its participation in each Advance and each payment in respect thereof, and the unpaid balance of such participation in such Advance shall, absent manifest error and to the extent not inconsistent with the notations made by the Agent on the grid attached to the Note, be as so recorded.

(d) The failure of the Agent or any Lender to make any such notation shall not affect the obligation of the Borrowers in respect of such Advance or the Loan nor affect the validity of any transfer by the Agent of the Note.

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(e) On receipt of satisfactory evidence that the Note has been lost, mutilated or destroyed and on surrender of the remnants thereof, if any, the Borrowers will promptly replace the Note, without charge to the Creditor Parties, with a similar Note. If such replacement Note replaces a lost Note it shall bear an endorsement to that effect. Any lost Note subsequently found shall be surrendered to the Borrowers and cancelled. The Agent shall indemnify the Borrowers for any losses, claims or damages resulting from the loss of such Note.

5 INTEREST

5.1 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of the Applicable Margin and LIBOR applicable to such Advance for that Interest Period.

5.2 Payment of normal interest. Subject to the provisions of this Agreement, interest on an Advance in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

5.3 Payment of accrued interest. In the case of an Interest Period longer than three (3) months, accrued interest shall be paid every three (3) months during that Interest Period and on the last day of that Interest Period.

5.4 Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrowers and each Lender of:

(a) each rate of interest; and

(b) the duration of each Interest Period (as determined under Clause 6.2),

as soon as reasonably practicable after each is determined.

5.5 Non-availability of funds.

(a) If the Agent, in its sole discretion, shall determine, by reason of circumstances affecting the London interbank market generally, that adequate and reasonable means do not or will not exist for ascertaining the LIBOR applicable to any Advance for any interest period, the Agent shall forthwith give notice of such determination to the Borrowers.

(b) Not later than 15 days from the date of the notice required by Clause 5.5(a), the Agent and the Borrowers shall enter into negotiations in good faith with a view to agreeing to an alternative mutually acceptable basis (the “Substitute Basis”) for funding of such Advance (or the continued funding of such Advance), or such portion thereof, and for determining the interest rate from time to time applicable thereto.

(c) If at the expiry of 30 days from the date of the notice required by Clause 5.5(a) the Agent and the Borrowers have agreed upon such Substitute Basis, it shall be retroactive to and take effect from the beginning of the then current Interest Period and the Agent shall promptly notify the Lenders accordingly.

(d) If at the expiry of 30 days from the date of the notice required by Clause 5.5(a) no such Substitute Basis has been agreed, then the Borrowers shall have the right either:

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(i) to maintain the Advance, or such portion thereof, with such interest rate as the Agent may, from time to time, determine and which rate shall reflect the cost to the Lenders of funding such Advance, or such portion thereof, from alternative sources and the margin over such cost from time to time provided for hereunder; or

(ii) to prepay the Advance, or such portion thereof, and accrued interest thereon at the rate or rates applicable to such Advance during the immediately preceding Interest Period up to the date of payment, together with all costs incurred by the Lenders to fund such Advance, or such portion thereof, during such 30 day period.

The Borrowers shall on or prior to the end of such 30 day period notify the Agent in writing of the alternative which they have selected and, if they select alternative (d)(ii) or if they fail to make any selection, in which case they shall be deemed to have selected alternative (d)(ii), the Borrowers shall prepay such Advance (without premium or penalty but subject to any applicable prepayment fee under Clause 8.9(c)), together with accrued interest thereon at the applicable rate plus the Applicable Margin on or prior to the end of such 30 day period and thereupon the obligation of the Lenders to maintain the relevant Advance, or such portion thereof, shall cease and the Total Commitments in respect of such Advance shall be cancelled. A selection (or a deemed selection) by the Borrowers of alternative (d)(ii) shall be irrevocable and the Agent shall promptly notify the Lenders of the Borrowers’ intended prepayment.

5.6 Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment made pursuant to Clause 5.5.

6 INTEREST PERIODS

6.1 Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

6.2 Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be 3 months or such other period as the Agent may, with the authorization of all the Lenders, agree with the Borrowers pursuant to Clause 6.5.

6.3 Duration of Interest Periods for repayment installments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

6.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected and the Lenders have agreed an Interest Period longer than three (3) months pursuant to Clause 6.5, any Lender notifies the Agent by 11:00 a.m. (New York time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of three (3) months.

6.5 Interest periods longer than 12 months. Upon not less than five (5) Business Days prior written notice from the Borrowers to the Agent, and subject to the agreement of all of the Lenders, the interest rate of all or more than 50% of the Advance may be fixed for an Interest Period in excess of 12 months. The interest rate will be the actual refinancing rate available to the Lenders (on a weighted average basis) for that Interest Period plus the Applicable Margin.

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7 DEFAULT INTEREST

7.1 Payment of default interest on overdue amounts. A Security Party shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by such Security Party under any Finance Document which the Agent, the Security Trustee or any other designated payee does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 20.4, the date on which it became immediately due and payable.

7.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.00 percent above:

(a) in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and (b); or

(b) in the case of any other overdue amount, the rate set out at Clause 7.3(b).

7.3 Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a) the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period); and

(b) the Applicable Margin plus, in respect of successive periods of any duration (including at call) up to three (3) months which the Agent may, with the consent of the Majority Lenders, select from time to time:

(i) LIBOR; or

(ii) if the Agent determines that Dollar deposits for any such period are not being made available to the Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Lenders from such other sources as the Agent may from time to time determine.

7.4 Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and each relevant Security Party of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that such Security Party is liable to pay such interest only with effect from the date of the Agent’s notification.

7.5 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

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7.6 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

8 REPAYMENT AND PREPAYMENT

8.1 Amount of repayment installments. The Borrowers shall repay the Loan as follows:

(a) with respect to the Advance relating to BULK PANGAEA, by 15 equal consecutive quarterly installments of $346,875 each;

(b) with respect to the Advance relating to BULK PATRIOT, by 18 consecutive quarterly installments of $500,000 each for installment numbers 1 through 16, $387,500 for installment number 17 and $50,000 for the last quarterly installment;

(c) with respect to the Advance relating to BULK XXXXXXX, by 22 consecutive quarterly installments of $338,020.83 each for installment numbers 1 through 21 and $338,020.91 for the last quarterly installment; and

(d) with respect to the Advance relating to BULK TRIDENT, by 22 equal consecutive quarterly installments of $318,750 each, and a balloon payment in the amount of $2,550,000 together with the last quarterly repayment installment.

8.2 Repayment Dates. The first installment of each Advance in respect of an Initial Ship (other than BULK XXXXXXX) shall be repaid on July 19, 2013. The first installment of the Advance in respect of BULK XXXXXXX shall be repaid on April 19, 2013. The last installment of each Advance in respect of an Initial Ship shall be repaid on the Applicable Maturity Date for such Advance. The first installment of each Advance in respect of an Additional Ship shall be repaid on the date falling three (3) months after the Drawdown Date of such Advance and the last installment on the Applicable Maturity Date for such Advance.

8.3 Applicable Maturity Date. On the relevant Applicable Maturity Date, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document to which they are a party in relation to such Advance.

8.4 Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of an Advance on the last day of an Interest Period.

8.5 Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a) a partial prepayment shall be $100,000 or a multiple of $100,000;

(b) the Agent has received from the Borrowers at least five (5) Business Days’ prior written notice specifying the Advance to be prepaid, the amount to be prepaid and the date on which the prepayment is to be made; and

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(c) the Borrowers have provided evidence satisfactory to the Agent that any consent required by the Borrowers or any other Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrowers or any other Security Party has been complied with (which may be satisfied by the Borrowers certifying that no consents are required and that no regulations need to be complied with).

8.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authorization of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

8.7 Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c).

8.8 Mandatory prepayment. If a Ship is sold or becomes a Total Loss, the Borrowers shall prepay in full the Advance related to that Ship:

(a) in the case of a sale, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

(b) in the case of a Total Loss, on the earlier of the date falling 150 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

8.9 Amounts payable on prepayment. A voluntary prepayment under Clause 8.4 and a mandatory prepayment under Clause 8.8 shall be made together with:

(a) accrued interest (and any other amount payable under Clause 22 or otherwise) in respect of the amount prepaid;

(b) if the prepayment is not made on the last day of an Interest Period, any sums payable under Clause 22.1(b); and

(c) the following prepayment fees as applicable:

(i) in respect of the Advance relating to BULK PANGAEA:

(A) 3.00% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it prior to the first anniversary of the Drawdown Date of such Advance;

(B) 2.00% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it on or after the first anniversary of the Drawdown Date but prior to the second anniversary of the Drawdown Date of such Advance;

(C) 1.00% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it on or after the second anniversary of the Drawdown Date but prior to the third anniversary of the Drawdown Date of such Advance; or

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(D) 0.25% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it on or after the third anniversary of the Drawdown Date of such Advance;

(ii) in respect of each Advance relating to BULK PATRIOT, BULK XXXXXXX and BULK TRIDENT:

(A) 2.00% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it prior to the first anniversary of the Drawdown Date of such Advance;

(B) 1.00% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it on or after the first anniversary of the Drawdown Date but prior to the second anniversary of the Drawdown Date of such Advance; or

(C) 0.25% of the prepaid amount in respect of any prepayment made in respect of the Advance related to it on or after the second anniversary of the Drawdown Date but prior to the third anniversary of the Drawdown Date of such Advance;

provided that no prepayment fee shall be payable:

(A) in respect of prepayments made from Excess Cash Flow pursuant to Clause 19.3(c), 19.4(c), 19.5(b)(ii) or 19.6(b)(ii);

(B) in respect of a mandatory prepayment under Clause 8.8(a) if the Ship is sold to a person who is not an Affiliate of the Borrowers;

(C) in respect of a mandatory prepayment under Clause 8.8(b), 15.3 or 24.1(c);

(D) in respect of a refinancing of a Ship by the Agent or any of its Affiliates; or

(E) in respect of amounts paid pursuant to Clauses 8.9(a) and (b).

8.10 Application of partial prepayment. Each partial prepayment shall be applied against the repayment installments specified in Clause 8.1 in inverse order of maturity.

8.11 No reborrowing. No amount prepaid may be reborrowed.

9 CONDITIONS PRECEDENT

9.1 Documents, fees and no default. Each Lender’s obligation to contribute to an Advance is subject to the following conditions precedent:

(a) that, on or before the service of any Drawdown Notice, the Agent receives (to the extent not previously delivered to the Agent in connection with a previous Drawdown Notice):

(i) the documents described in Part A of Schedule 4 in form and substance satisfactory to the Agent and its lawyers; and

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(ii) such documentation and other evidence as is reasonably requested by the Agent or a Lender in order for each to carry out and be satisfied with the results of all necessary “know your customer” or other checks which it is required to carry out in relation to the transactions contemplated by this Agreement and the other Finance Documents, including without limitation obtaining, verifying and recording certain information and documentation that will allow the Agent and each of the Lenders to identify each Security Party in accordance with the requirements of the PATRIOT Act;

(b) that, on each Drawdown Date but prior to the making of an Advance in respect of an Initial Ship, the Agent receives or is satisfied that it will receive on the making of such Advance the documents described in Part B of Schedule 4 in form and substance satisfactory to it and its lawyers;

(c) that in respect of an Advance for an Additional Ship:

(i) the Borrower has advised the Agent at least 60 days prior to service of the Drawdown Notice for such Advance of the identity of the proposed Additional Ship (and has provided the Agent with a copy of the MOA relative thereto and all other documents and information as may be required by the Agent (acting with the authority of the Majority Lenders) to decide whether to accept the such Additional Ship (with the Borrower acknowledging that the Agent acting with the authority of the Majority Lenders shall be entitled to refuse, in its sole and absolute discretion, such a request));

(ii) the Agent (acting with the authority of the Majority Lenders) has agreed to accept such proposed Additional Ship; and

(iii) on the Drawdown Date but prior to the making of an Advance in respect of such Additional Ship, the Agent receives or is satisfied that it will receive on the making of such Advance the documents described in Part C of Schedule 4 in form and substance satisfactory to it;

(d) that, on or before the service of the first Drawdown Notice, the Agent receives payment of the fees referred to in Clause 21.1 and payment of the expenses referred to in Clause 21.2;

(e) that both at the date of each Drawdown Notice and at each Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance;

(ii) the representations and warranties in Clause 10 and those of the Borrowers or any other Security Party which are set out in the other Finance Documents (other than those relating to a specific date) would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) there has been no material change in the consolidated financial condition, operations or business prospects of the Borrowers or the Guarantors since the date on which the Borrowers and/or the Guarantors provided information concerning those topics to the Agent and/or any Lender;

(iv) there have been no material adverse global economic or political developments;

(v) there have been no material adverse developments in the international money and capital markets; and

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(vi) none of the Guarantors or any of their subsidiaries or Affiliates has launched any other facilities or debt transactions into the international capital markets either publicly or privately,

and, in the case of paragraphs (iii), (iv), (v) or (vi) in the sole opinion of the Lenders, which might prejudice either the successful and timely syndication or performance of the loan facility contemplated by this Agreement;

(f) that, if the Applicable Collateral Maintenance Ratio were applied immediately following the making of such Advance, the Borrowers would not be required to provide additional Collateral or prepay part of the Loan under Clause 15; and

(g) that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorization of the Majority Lenders, request by notice to the Borrowers prior to the Drawdown Date.

9.2 Waiver of conditions precedent. Notwithstanding anything in Clause 9.1 to the contrary:

(a) except with respect to the circumstances described in Clause 9.2(b), if the Agent, with the consent of the Majority Lenders, permits an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that such conditions are satisfied within ten (10) Business Days after such Drawdown Date (or such longer period as the Agent may specify); and

(b) only if required under the terms of an MOA or another contract for the acquisition of an Additional Ship, an Advance may be borrowed before the applicable conditions set forth in Clause 9.1 are satisfied and:

(i) each Lender agrees to fund its Contribution on a day not more than five (5) Business Days prior to the Delivery Date of that Ship; and

(ii) the Agent shall on the date on which the Advance is funded (or as soon thereafter as practicable) (A) preposition an amount equal to the aggregate principal amount of the Advance at a bank or other financial institution (the “Seller’s Bank”) satisfactory to the Agent, which funds shall be held at the Seller’s Bank in the name and under the sole control of the Agent or one of its Affiliates and (B) issue a SWIFT MT 199 or other similar communication (each such communication, a “Disbursement Authorization”) authorizing the release of such funds by the Seller’s Bank on the relevant Delivery Date upon receipt of a Protocol of Delivery and Acceptance in respect of such Ship duly executed by the Seller and the Borrower owning such Ship and countersigned by a representative of the Agent;

provided that if delivery of the Ship does not occur within five (5) Business Days after the scheduled Delivery Date, the funds held at the Seller’s Bank shall be returned to the Agent for further distribution to the Lenders.

For the avoidance of doubt, the parties hereto acknowledge and agree that:

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(1) the date on which the Lenders fund the Advance constitutes the Drawdown Date in respect of such Advance and all interest and fees thereon shall accrue from such date;

(2) the Agent and the Lenders suspend fulfillment of the conditions precedent set forth in Schedule 4, Part C, Paragraphs 5, 8 and 9 solely for the time period on and between such Drawdown Date and the relevant Delivery Date, and the Borrowers acknowledge and agree that fulfillment of such conditions precedent to the satisfaction of the Agent shall be required as a condition precedent to the countersignature by a representative of the Agent of the Protocol of Delivery and Acceptance referred to in Clause 9.2(b)(ii);

(3) from the date the proceeds of the Advance are deposited at the Seller’s Bank to the Delivery Date (or, if delivery of the Ship does not occur within the time prescribed in the Disbursement Authorization, the date on which the funds are returned to the Agent for further distribution to the Lenders), the Borrowers shall be entitled to interest on the Advance at the applicable rate, if any, paid by the Seller’s Bank for such deposited funds;

(4) if the Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of the Advance are returned to the Agent and distributed to the Lenders, (i) the Borrowers shall pay all accrued interest and fees in respect of such returned proceeds on the date such proceeds are returned to the Agent and (ii) the relevant available Commitment will be increased by an amount equal to the aggregate principal amount of the Loan proceeds so returned; and

(5) if the Borrowers have instructed the Agent to convert the aggregate principal amount of the Advance borrowed into a currency other than Dollars for deposit with the Seller’s Bank and the relevant Ship is not delivered within the time prescribed in the Disbursement Authorization and the proceeds of the Advance are returned to the Agent for further distribution to the Lenders, the Agent shall convert the aggregate principal amount of funds so returned back into Dollars and if such funds are less than the Dollar amount of the aggregate principal amount of the Advance incurred on the relevant Drawdown Date, the Borrowers shall immediately repay the difference and, in any event, the Borrowers shall pay any and all fees, charges and expenses arising from such conversion.

10 REPRESENTATIONS AND WARRANTIES

10.1 General. Each of the Borrowers and the Guarantors represents and warrants to each Creditor Party as of the Effective Date and each Drawdown Date as follows.

10.2 Status. Each Security Party is:

(a) duly incorporated or formed and validly existing and in good standing under the law of its jurisdiction of incorporation or formation; and

(b) duly qualified and in good standing as a foreign company in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where, in each case, the failure to so qualify or be licensed and be in good standing could not reasonably be expected to have a material adverse effect on its business, assets or financial condition or which may affect the legality, validity, binding effect or enforceability of the Finance Documents, and there are no proceedings or actions pending or contemplated by any Security Party, or to the knowledge of the Borrowers or any Guarantor contemplated by any third party, seeking to adjudicate such Security Party a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property.

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10.3 Company power; consents. Each Security Party has the capacity and has taken all action, and no consent of any person is required, for:

(a) it to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted;

(b) it to execute each Finance Document to which it is or is to become a party and comply with its obligations under each Finance Document to which it is or is to become a party;

(c) it (in the case of a Borrower only) to execute the MOA to which it is or will be a party, to purchase and pay for the relevant Ship under such MOA and register the relevant Ship in its name under an Approved Flag;

(d) it (in the case of each Borrower, the Time Charterer and each Time Charter Guarantor only) to execute each Time Charter and COA to which it is or will be a party, and comply with its obligations under each such each Time Charter and COA to which it is or is to become a party;

(e) it to grant the Security Interests granted by it pursuant to the Finance Documents to which it is or is to become a party;

(f) the perfection or maintenance of the Security Interests created by the Finance Documents (including the first priority nature thereof); and

(g) the exercise by any Creditor Party of their rights under any of the Finance Documents or the remedies in respect of the Collateral pursuant to the Finance Documents,

except, in each case, for consents which have been duly obtained, taken, given or made and are in full force and effect.

10.4 Consents in force. All the consents referred to in Clause 10.3 remain in force and nothing has occurred which makes any of them liable to revocation.

10.5 Title.

(a) Each Security Party owns (i) in the case of owned real property, good and marketable fee title to and (ii) in the case of owned personal property, good and valid title to, or, in the case of leased real or personal property, valid and enforceable leasehold interests (as the case may be) in, all of its properties and assets, tangible and intangible, of any nature whatsoever, free and clear in each case of all Security Interests or claims, except for Permitted Security Interests.

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(b) Except for Permitted Security Interests, no Security Party has created or is contractually bound to create any Security Interest on or with respect to any of its assets, properties, rights or revenues, and except as provided in this Agreement no Security Party is restricted by contract, applicable law or regulation or otherwise from creating Security Interests on any of its assets, properties, rights or revenues.

(c) Each Borrower has received (or will receive on the relevant Delivery Date) all deeds, assignments, waivers, consents, non-disturbance and attornment or similar agreements, bills of sale and other documents, and has duly effected (or will duly effect on the Delivery Date) all recordings, filings and other actions necessary to establish, protect and perfect such Borrower’s right, title and interest in and to the Ship owned or to be owned by it and other properties and assets (or arrangements for such recordings, filings and other actions acceptable to the Agent shall have been made).

10.6 Legal validity; effective first priority Security Interests. Subject to any relevant insolvency laws affecting creditors’ rights generally:

(a) the Finance Documents to which each Security Party is a party, constitute or, as the case may be, will constitute upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), such Security Party’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and

(b) the Finance Documents to which each Security Party is a party, create or, as the case may be, will create upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents), legal, valid and binding first priority Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate.

10.7 No third party Security Interests. Without limiting the generality of Clauses 10.5 and 10.6, at the time of the execution and delivery of each Finance Document:

(a) the relevant Security Party will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8 No conflicts. The execution of each Finance Document, Time Charter and COA, the borrowing of each Advance, and compliance with each Finance Document, Time Charter and COA, will not involve or lead to a contravention of:

(a) to the knowledge of any of the Borrowers or the Guarantors, any law or regulation; or

(b) the constitutional documents of any Security Party; or

(c) any contractual or other obligation or restriction which is binding on any Security Party or any of its assets.

10.9 Status of Secured Liabilities. The Secured Liabilities constitute direct, unconditional and general obligations of each Security Party and rank (a) senior to all subordinated Financial Indebtedness, including but not limited to shareholder loans, trade credit, and revolving credit facilities and (b) not less than pari passu (as to priority of payment and as to security) with all other Financial Indebtedness of each Security Party.

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10.10 Taxes.

(a) All payments which a Security Party is liable to make under the Finance Documents to which it is a party can properly be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

(b) Each Security Party has timely filed or has caused to be filed all tax returns and other reports that it is required by law or regulation to file in any Pertinent Jurisdiction, and has paid or caused to be paid all taxes, assessments and other similar charges that are due and payable in any Pertinent Jurisdiction, other than taxes and charges:

	(i)	which (A) are not yet due and payable or (B) are being contested in good faith by appropriate proceedings and for which adequate reserves have been established and as to which such failure to have paid such tax does not create any risk of sale, forfeiture, loss, confiscation or seizure of a Ship or of criminal liability; or
	(ii)	the non-payment of which could not reasonably be expected to have a material adverse effect on the financial condition of such Security Party.

The charges, accruals, and reserves on the books of each Security Party respecting taxes are adequate in accordance with GAAP.

(c) No material claim for any tax has been asserted against a Security Party by any Pertinent Jurisdiction or other taxing authority other than claims that are included in the liabilities for taxes in the most recent balance sheet of such person or disclosed in the notes thereto, if any.

(d) The execution, delivery, filing and registration or recording (if applicable) of the Finance Documents and the consummation of the transactions contemplated thereby will not cause any of the Creditor Parties to be required to make any registration with, give any notice to, obtain any license, permit or other authorization from, or file any declaration, return, report or other document with any governmental authority in any Pertinent Jurisdiction.

(e) No taxes are required by any governmental authority in any Pertinent Jurisdiction to be paid with respect to or in connection with the execution, delivery, filing, recording, performance or enforcement of any Finance Document.

(f) The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be subject to taxation under any law or regulation of any governmental authority in any Pertinent Jurisdiction of any Security Party.

(g) It is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any stamp, registration or similar taxes be paid on or in relation to this Agreement or any of the other Finance Documents.

10.11 No default. No Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance.

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10.12 Information. All financial statements, information and other data furnished by or on behalf of a Security Party to any of the Creditor Parties:

(a) was true and accurate at the time it was given;

(b) such financial statements, if any, have been prepared in accordance with GAAP and accurately and fairly represent the financial condition of such Security Party as of the date or respective dates thereof and the results of operations of such Security Party for the period or respective periods covered by such financial statements;

(c) there are no other facts or matters the omission of which would have made or make any such information false or misleading;

(d) there has been no material adverse change in the financial condition, operations or business prospects of any Security Party since the date on which such information was provided other than as previously disclosed to the Agent in writing; and

(e) none of the Security Parties has any contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate except as disclosed in such statements, information and data.

10.13 No litigation. No legal or administrative action involving a Security Party (including any action relating to any alleged or actual breach of the ISM Code, the ISPS Code or any Environmental Law) has been commenced or taken by any person, or, to the Borrowers’ or any Guarantor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the business, assets or financial condition of a Security Party or which may affect the legality, validity, binding effect or enforceability of the Finance Documents.

10.14 Intellectual property. Except for those with respect to which the failure to own or license could not reasonably be expected to have a material adverse effect, each Security Party owns or has the right to use all patents, trademarks, permits, service marks, trade names, copyrights, franchises, formulas, licenses and other rights with respect thereto, and have obtained assignment of all licenses and other rights of whatsoever nature, that are material to its business as currently contemplated without any conflict with the rights of others.

10.15 ISM Code and ISPS Code compliance. Each Borrower has obtained or will obtain or will cause to be obtained all necessary ISM Code Documentation and ISPS Code Documentation in connection with the Ship owned or to be owned by it and its operation and will be or will cause such Ship and the Approved Manager to be in full compliance with the ISM Code and the ISPS Code.

10.16 Validity and completeness of MOAs, Time Charters, Time Charter Guarantees and COAs.

(a) To the extent entered into for the purchase of an Additional Ship, the relevant MOA for such Additional Ship constitutes valid, binding and enforceable obligations of the Seller and the Borrower party thereto in accordance with its terms and:

(i) the copy of such MOA delivered to the Agent is a true and complete copy; and

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(ii) no amendments or additions to such MOA have been agreed nor has the relevant Borrower or Seller party thereto waived any of their respective rights under such MOA.

(b) Each Time Charter constitutes valid, binding and enforceable obligations of the Time Charterer and the Borrower party thereto in accordance with its terms and:

(i) the copy of such Time Charter delivered to the Agent before the date of this Agreement is a true and complete copy; and

(ii) no amendments or additions to such Time Charter have been agreed nor has the relevant Borrower party thereto or the Time Charterer waived any of their respective rights under such Time Charter.

(c) Each Time Charter Guarantee constitutes valid, binding and enforceable obligations of each of the Time Charterer Guarantors in accordance with its terms and:

(i) the copy of such Time Charter Guarantee delivered to the Agent before the date of this Agreement is a true and complete copy; and

(ii) no amendments or additions to such Time Charter Guarantee have been agreed nor has the relevant Borrower waived any of its rights under such Time Charter Guarantee.

(d) Each COA constitutes valid, binding and enforceable obligations of each of Phoenix Bulk (BVI), Phoenix Bulk (US) and/or the Time Charterer party thereto in accordance with its terms and:

(i) the copy of such COA delivered to the Agent before the date of this Agreement is a true and complete copy; and

(ii) no amendments or additions to such COA have been agreed nor have any of Phoenix Bulk (BVI), Phoenix Bulk (US) and/or the Time Charterer party thereto waived any of its rights under such COA.

10.17 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrowers or any of their parents, subsidiaries or Affiliates, the Seller or any third party in connection with the relevant MOA, other than as provided in such MOA and disclosed to the Agent in writing.

10.18 Compliance with law; Environmentally Sensitive Material. Except to the extent the following could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of any Security Party, or affect the legality, validity, binding effect or enforceability of the Finance Documents:

(a) the operations and properties of each of the Security Parties comply with all applicable laws and regulations, including without limitation Environmental Laws, all necessary Environmental Permits have been obtained and are in effect for the operations and properties of each of the Security Parties and each of the Security Parties is in compliance in all material respects with all such Environmental Permits; and

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(b) none of the Security Parties has been notified in writing by any person that it or any of its subsidiaries or Affiliates is potentially liable for the remedial or other costs with respect to treatment, storage, disposal, release, arrangement for disposal or transportation of any Environmentally Sensitive Material, except for costs incurred in the ordinary course of business with respect to treatment, storage, disposal or transportation of such Environmentally Sensitive Material.

10.19 Ownership structure.

(a) No Borrower has any subsidiaries.

(b) All of the Equity Interests of each Borrower have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests and are owned beneficially and of record by Bulk Fleet.

(c) All of the Equity Interests of each of the Time Charterer, Phoenix Bulk (US), Phoenix Bulk (BVI), Allseas and Bulk Fleet have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests and are owned beneficially and of record by Bulk Holding.

(d) All of the Equity Interests of Bulk Holding have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests and are owned beneficially and of record by Bulk Partners.

(e) All of the Equity Interests of Bulk Partners have been validly issued, are fully paid, non-assessable and free and clear of all Security Interests and are owned beneficially and of record by the Bulk Partners Shareholders.

(f) None of the Equity Interests of any of the Security Parties are subject to any existing option, warrant, call, right, commitment or other agreement of any character to which any of the Security Parties is a party requiring, and there are no Equity Interests of any of the Security Parties outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional Equity Interests of any of the Security Parties or other Equity Interests convertible into, exchangeable for or evidencing the right to subscribe for or purchase Equity Interests of any of the Security Parties except for the rights of the Bulk Partners Shareholders to convert certain preferred shares of Bulk Partners into common stock of Bulk Fleet.

10.20 ERISA. None of the Borrowers or the Guarantors maintains any Plan, Multiemployer Plan or Foreign Pension Plan.

10.21 Margin Stock. The Borrowers are not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and no proceeds of any Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock.

10.22 Investment company, public utility, etc. None of the Borrowers is:

(a) an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended; or

(b) a “public utility” within the meaning of the United States Federal Power Act of 1920, as amended.

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10.23 Asset control.

(a) No Borrower is a Prohibited Person, no Borrower is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and no Borrower owns or controls a Prohibited Person; and

(b) No proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

10.24 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrowers of an Advance, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements affected or contemplated by the Finance Documents to which any Borrower is a party, each of the Borrowers confirms that:

(a) it is acting for its own account;

(b) it will use the proceeds of such Advance for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement; and

(c) the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act.

10.25 Ships. As of the relevant Drawdown Date, each Ship will be:

(a) in the sole and absolute ownership of the a Borrower and duly registered in such Borrower’s name under the law of an Approved Flag, unencumbered save and except for the Mortgage thereon in favor of the Security Trustee recorded against it and Permitted Security Interests;

(b) seaworthy for hull and machinery insurance warranty purposes and in every way fit for its intended service;

(c) insured in accordance with the provisions of this Agreement and the requirements hereof in respect of such insurances will have been complied with;

(d) in class in accordance with the provisions of this Agreement and the requirements hereof in respect of such classification will have been complied with; and

(e) managed by an Approved Manager pursuant to an Approved Management Agreement.

10.26 Place of business. For purposes of the UCC, each Security Party (other than Phoenix Bulk (US)) has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:

00

Xxx xx Xxxxx Xxxxx

00 Par la Xxxxx Xxxx

Xxxxxxxx XX00

Xxxxxxx

Xxxx of the Security Parties, other than Phoenix Bulk (US) has a place of business in the United States of America, the District of Columbia, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America.

Phoenix Bulk (US) has only one place of business located at, or, if it has more than one place of business, the chief executive office from which it manages the main part of its business operations and conducts its affairs is located at:

Phoenix Bulk Carriers (US) LLC as agents

000 Xxxx Xxxxx, Xxxxxx Xxxxx

Xxxxxxx, Xxxxx Xxxxxx 00000

10.27 Solvency. In the case of each of the Borrowers and each of the Guarantors:

(a) the sum of its assets, at a fair valuation, does and will exceed its liabilities, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities;

(b) the present fair market saleable value of its assets is not and shall not be less than the amount that will be required to pay its probable liability on its then existing debts, including, to the extent they are reportable as such in accordance with GAAP, contingent liabilities, as they mature;

(c) it does not and will not have unreasonably small working capital with which to continue its business; and

(d) it has not incurred, does not intend to incur and does not believe it will incur, debts beyond its ability to pay such debts as they mature.

10.28 Borrowers’ business; Guarantors’ business. From the date of its incorporation until the date hereof, neither the Borrowers nor any of the Guarantors has conducted any business other than in connection with, or for the purpose of, owning and operating the Ships.

10.29 Immunity; enforcement; submission to jurisdiction; choice of law.

(a) Each Security Party is subject to civil and commercial law with respect to its obligations under the Finance Documents, and the execution, delivery and performance by each Security Party of the Finance Documents to which it is a party constitute private and commercial acts rather than public or governmental acts.

(b) No Security Party or any of its properties has any immunity from suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment, set-off, execution of a judgment or from any other legal process in relation to any Finance Document.

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(c) It is not necessary under the laws of any Security Party’s jurisdiction of incorporation or formation, in order to enable any Creditor Party to enforce its rights under any Finance Document or by reason of the execution of any Finance Document or the performance by any Security Party of its obligations under any Finance Document, that such Creditor Party should be licensed, qualified or otherwise entitled to carry on business in such Security Party’s jurisdiction of incorporation or formation.

(d) Other than the recording of the Mortgage in accordance with the laws of the Republic of Panama or the laws of the Republic of the Xxxxxxxx Islands, as the case may be, and such filings as may be required in a Pertinent Jurisdiction in respect of certain of the Finance Documents, and the payment of fees consequent thereto, it is not necessary for the legality, validity, enforceability or admissibility into evidence of this Agreement or any other Finance Document that any of them or any document relating thereto be registered, filed recorded or enrolled with any court or authority in any Pertinent Jurisdiction.

(e) The execution, delivery, filing, registration, recording, performance and enforcement of the Finance Documents by any of the Creditor Parties will not cause such Creditor Party to be deemed to be resident, domiciled or carrying on business in any Pertinent Jurisdiction of any Security Party or subject to taxation under any law or regulation of any governmental authority in any Pertinent Jurisdiction of any Security Party.

(f) Under the law of each Security Party’s jurisdiction of incorporation or formation, the choice of the law of New York to govern this Agreement and the other Finance Documents to which New York law is applicable is valid and binding.

(g) The submission by the Borrowers and the Guarantors to the jurisdiction of the New York State courts and the U.S. Federal court sitting in New York County pursuant to Clause 32.2(a) is valid and binding and not subject to revocation, and service of process effected in the manner set forth in Clause 32.2(d) will be effective to confer personal jurisdiction over the Borrowers and the Guarantors in such courts.

11 GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS

11.1 Affirmative covenants. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full each of the Borrowers and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.1 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld:

(a) Performance of obligations. Each Security Party shall duly observe and perform its obligations under each Time Charter, COA and Finance Document to which it is or is to become a party.

(b) Notification of defaults (etc). The Borrowers shall promptly notify the Agent, upon becoming aware of the same, of:

(i) the occurrence of an Event of Default or of any Potential Event of Default or any other event (including any litigation) which might adversely affect any Security Party’s ability to perform its obligations under a Time Charter, a COA or a Finance Document to which it is or is to become a party;

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(ii) any default, or any interruption in the performance whether or not the same constitutes a default lasting more than 5 consecutive days, by any party to a Time Charter or a COA; and

(iii) any damage or injury caused by or to a Ship in excess of $500,000.

(c) Confirmation of no default. The Borrowers will, within two (2) Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by a director, an officer or a duly authorized person of the Borrowers and which states that:

(i) no Event of Default or Potential Event of Default has occurred; or

(ii) no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

The Agent may serve requests under this Clause 11.1(c) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10% of the Loan or (if no Advances have been made) Commitments exceeding 10% of the Total Commitments, and this Clause 11.1(c) does not affect the Borrowers’ obligations under Clause 11.1(b).

(d) Notification of litigation. The Borrowers will provide the Agent with details of any legal or administrative action involving the Borrowers, any other Security Party, the Approved Manager or any Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the Borrowers that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

(e) Provision of further information. The Borrowers and each of the Guarantors will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to:

(i) the Borrowers, the Guarantors, the Time Charterer, the Time Charter Guarantors, Allseas, Phoenix Bulk (US) or Phoenix Bulk (BVI); or

(ii) any other matter relevant to, or to any provision of, a Finance Document,

which may be reasonably requested by the Agent, the Security Trustee or any Lender at any time.

(f) Books of record and account; separate accounts.

(i) Each of the Borrowers and the Guarantors shall keep separate and proper books of record and account in which full and materially correct entries shall be made of all financial transactions and the assets and business of each of the Borrowers and the Guarantors in accordance with GAAP, and the Agent shall have the right to examine the books and records of each of the Borrowers and the Guarantors wherever the same may be kept from time to time as it sees fit, in its sole reasonable discretion, or to cause an examination to be made by a firm of accountants selected by it, provided that any examination shall be done without undue interference with the day to day business operations of the Borrowers or the Guarantors, as the case may be.

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(ii) Each of the Borrowers and the Guarantors shall keep separate accounts and shall not co-mingle assets with each other except for funds held in the Earnings Account or any other person.

(g) Financial reports. Each of the Borrowers and Bulk Partners, as the case may be, shall prepare and deliver to the Agent:

(i) as soon as practicable, but not later than:

(A) 120 days after the end of each Fiscal Year, an unaudited balance sheet as of the end of such period and the related statements of profit and loss and changes in financial position for each Borrower, each in respect of such Fiscal Year, all in reasonable detail, prepared in accordance with GAAP and certified as having been reviewed by its chief financial officer (or equivalent);

(B) 180 days after the end of each Fiscal Year, an audited consolidated balance sheet as of the end of such period and the related consolidated statements of profit and loss, cash flow statements and changes in financial position for Bulk Partners, each in respect of such Fiscal Year, all in reasonable detail, prepared in accordance with GAAP and certified as having been audited by an Acceptable Accounting Firm;

(ii) within 75 days after the end of each of the first three quarters of each Fiscal Year, consolidated financial statements in respect of Bulk Partners for such fiscal quarter (which statements shall include a recap of the Borrowers), all in reasonable detail and prepared in accordance with GAAP, certified as having been reviewed by Bulk Partner’s chief financial officer or designated representative;

(iii) together with the financial statements that each of the Borrowers and Bulk Partners delivers in (i) and (ii) above, a Compliance Certificate; and

(iv) such other financial statements (including without limitation details of all off-balance sheet and time charter hire commitments), annual budgets and projections as may be reasonably requested by the Agent, each to be in such form as the Agent may reasonably request.

(h) Appraisals of Fair Market Value. The Borrowers shall cause the Fair Market Value of each Ship to be reported to the Agent as follows:

(i) at the Borrowers’ expense, on a semi-annual basis, for the first time approximately six (6) months after the first Drawdown Date and every six (6) months thereafter;

(ii) at the Lenders’ expense, at any time upon the request of the Agent (acting upon the instructions of the Majority Lenders); and

(iii) at the Borrowers’ expense, at any time upon the request of the Agent (acting upon the instructions of the Majority Lenders) if a Potential Event of Default or an Event of Default has occurred and is continuing.

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(i) Taxes. Each Security Party shall prepare and timely file all tax returns required to be filed by it and pay and discharge all taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a Security Interest upon the Collateral or any part thereof, except in each case, for any such taxes (i) as are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, (ii) as to which such failure to have paid does not create any risk of sale, forfeiture, loss, confiscation or seizure of a Ship or criminal liability, or (ii) the failure of which to pay or discharge would not be likely to have a material adverse effect on the business, assets or financial condition of the Borrowers or any other Security Party or to affect the legality, validity, binding effect or enforceability of the Finance Documents.

(j) Consents. Each Security Party shall obtain or cause to be obtained, maintain in full force and effect and comply with the conditions and restrictions (if any) imposed in connection with, every consent and do all other acts and things which may from time to time be necessary or required for the continued due performance of all of its obligations under any Time Charter, COA and Finance Document to which it is or is to become a party, and shall deliver a copy of all such consents to the Agent promptly upon its request.

(k) Compliance with applicable law. Each Security Party shall comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation, all Environmental Laws and regulations relating thereto, the failure to comply with which would be likely to have a material adverse effect on the financial condition of such Security Party or affect the legality, validity, binding effect or enforceability of any Time Charter, COA and Finance Document to which it is or is to become a party.

(l) Existence. Each Security Party shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence in good standing under the laws of its jurisdiction of incorporation or formation.

(m) Conduct of business.

(i) Each Borrower shall conduct business only in connection with, or for the purpose of, owning and chartering the Ship owned by it.

(ii) Each Security Party shall conduct business in its own name and observe all corporate and other formalities required by its constitutional documents.

(n) Properties.

	(i)	Except to the extent the failure to do so could not reasonably be expected to have a material adverse effect on the business, assets or financial condition of a Security Party or affect the legality, validity, binding effect or enforceability of the Finance Documents, each Security Party shall maintain and preserve all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
	(ii)	Each Security Party shall obtain and maintain good and marketable title or the right to use or occupy all real and personal properties and assets (including intellectual property) reasonably required for the conduct of its business.

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(iii) Each Security Party shall maintain and protect its intellectual property and conduct its business and affairs without infringement of or interference with any intellectual property of any other person in any material respect and shall comply in all material respects with the terms of its licenses.

(o) Loan proceeds. The Borrowers shall use the proceeds of each Advance solely to partially finance or refinance the acquisition of a Ship.

(p) Change of place of business. The Borrowers shall notify the Agent promptly of any change in the location of the place of business where any Security Party conducts its affairs and keeps its records.

(q) Pollution liability. Each Security Party shall take, or cause to be taken, such actions as may be reasonably required to mitigate potential liability to it arising out of pollution incidents or as may be reasonably required to protect the interests of the Creditor Parties with respect thereto.

(r) Subordination of loans. Each Borrower shall cause all loans made to it by any Affiliate, parent or subsidiary or an Approved Manager and all sums and other obligations (financial or otherwise) owed by it to any Affiliate, parent or subsidiary or an Approved Manager to be fully subordinated to all Secured Liabilities.

(s) Asset control. Each Borrower shall to the best of its knowledge and ability ensure that:

(i) it is not owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and does not own or control a Prohibited Person; and

(ii) no proceeds of any Advance shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

(t) Money laundering. The Borrowers shall to the best of their knowledge and ability comply, and cause each of its subsidiaries to comply, with any applicable law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council) and comparable United States federal and state laws, including without limitation the PATRIOT Act and the Bank Secrecy Act.

(u) Pension Plans. Promptly upon the institution of a Plan, a Multiemployer Plan or a Foreign Pension Plan by any Borrower or any Guarantor, the Borrowers shall furnish or cause to be furnished to the Agent written notice thereof and, if requested by the Agent or any Lender, a copy of such Plan, Multiemployer Plan or Foreign Pension Plan.

(v) Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of any Security Party under or in connection with any Finance Document shall be true and not misleading and shall not omit any material fact or consideration.

(w) Shareholder and creditor notices. Each of the Borrowers and the Guarantors shall send the Agent, at the same time as they are dispatched, copies of all communications which are dispatched to its (i) shareholders (or equivalent) or any class of them or (ii) creditors generally.

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(x) Maintenance of Security Interests. Each of the Borrowers and the Guarantors shall:

(i) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(ii) without limiting the generality of paragraph (i), at its own cost, promptly register, file, record or enroll any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

(y) “Know your customer” checks. If:

(i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

(ii) any change in the status of any Borrower or any other Security Party after the date of this Agreement; or

(iii) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (iii), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (iii), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(z) Further assurances. From time to time, at their expense, the Borrowers and each of the Guarantors shall duly execute and deliver to the Agent, or cause the execution and delivery to the Agent of, such further documents and assurances as the Majority Lenders or the Agent may request to effectuate the purposes of this Agreement, the other Finance Documents or obtain the full benefit of any of the Collateral.

11.2 Negative covenants. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full each of the Borrowers and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 11.2 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld:

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(a) Security Interests. None of the Borrowers or the Guarantors shall create, assume or permit to exist any Security Interest whatsoever upon any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Security Interests.

(b) Sale of assets; merger. No Security Party shall sell, transfer or lease (other than in connection with a Charter) all or substantially all of its properties and assets, or enter into any transaction of merger or consolidation or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution) provided that (i) a Borrower may sell the Ship owned by it pursuant to the terms of this Agreement and (ii) it shall not be a breach of this covenant for a Borrower to dispose of up to 10% of its properties and assets.

(c) No contracts other than in ordinary course. None of the Borrowers shall enter into any transactions or series of related transactions with third parties other than in the ordinary course of its business.

(d) Affiliate transactions. None of the Borrowers or the Guarantors shall enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate other than on terms and conditions substantially as favorable to such Borrowers or Guarantor as would be obtainable by it at the time in a comparable arm’s-length transaction with a person other than an Affiliate.

(e) Change of business. None of the Borrowers shall change the nature of its business or commence any business other than in connection with, or for the purpose of, owning and chartering the Ship owned by it.

(f) Change of Control; Negative pledge. None of the Borrowers or the Guarantors shall permit any act, event or circumstance that would result in a Change of Control, and the Guarantors shall not permit any pledge or assignment of its or a Borrower’s Equity Interests except in favor of the Security Trustee to secure the Secured Liabilities.

(g) Increases in capital. None of the Guarantors shall permit an increase of its or a Borrower’s capital by way of the issuance of any class or series of Equity Interests or create any new class of Equity Interests that is not subject to a Security Interest to secure the Secured Liabilities.

(h) Financial Indebtedness; Trade payables.

(i) None of the Borrowers shall incur any Financial Indebtedness other than in respect of the Loan and subordinated loans from a Guarantor or an Approved Manager or another Affiliate of the Borrowers permitted under Clause 11.1(r);

(ii) None of the Borrowers shall incur unsecured trade credit exceeding $500,000 (exclusive of drydocking expenses), with repayment terms not to exceed 60 days, on the Ship owned by it at any time; and

(iii) None of the Guarantors shall incur any guarantee obligations other than (A) in respect of this Agreement, (B) performance guarantees not exceeding $2,000,000 (individually or in the aggregate) with a duration of not more than one year, and (C) ship finance guarantees for the next 3 vessel acquisitions, provided that the loan advance does not exceed 60% of the fair market value of any said acquisition except the purchase of m/v GOOD PROVIDENCE.

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For purposes of this Clause 11.2(h), “performance guarantee” means any guarantee provided by a Guarantor for any purpose save for securing a loan for the part financing of a vessel acquisition; and “ship finance guarantee” means any guarantee provided by the guarantor as part of the security package to secure a loan for the part financing of a vessel acquisition.

(i) Dividends.

(i) None of the Borrowers shall declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its Equity Interests (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans to equity holders or set aside any funds for any of the foregoing purposes.

(ii) None of the Guarantors shall declare or pay any dividends or return any capital to its equity holders or authorize or make any other distribution, payment or delivery of property or cash to its equity holders, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its Equity Interests (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding, or repay any subordinated loans to equity holders or set aside any funds for any of the foregoing purposes, provided that:

(A) Bulk Partners is permitted to pay cash dividends of not more than $2,000,000 per calendar year so long as no Event of Default has occurred and is continuing and Bulk Partners is in compliance with the financial covenants of Clause 12 applicable to it both before and after such dividend is paid; and

(B) Bulk Partners is permitted to repay shareholder loans of not more than $5,000,000 per annum (including accrued interest) so long as no Event of Default has occurred and is continuing and Bulk Partners is in compliance with the financial covenants of Clause 12 applicable to it both before and after such repayment is made;

(j) No amendment to MOA, Time Charters or Time Charter Guarantees. None of the Borrowers shall agree to any amendment or supplement to, or waive or fail to enforce, an MOA or any of its provisions or a Time Charter or any of its provisions or a Time Charter Guarantee or any of its provisions.

(k) Intentionally omitted.

(l) Loans and investments. None of the Borrowers shall make any loan or advance to, make any investment in, or enter into any working capital maintenance or similar agreement with respect to any person, whether by acquisition of Equity Interests or indebtedness, by loan, guarantee or otherwise.

(m) Acquisition of capital assets. None of the Borrowers shall acquire any capital assets (including any vessel other than a Ship) by purchase, charter or otherwise, provided that for the avoidance of doubt nothing in this Clause 11.2(m) shall prevent or be deemed to prevent capital improvements being made to a Ship.

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(n) Sale and leaseback. None of the Borrowers shall enter into any arrangements, directly or indirectly, with any person whereby it shall sell or transfer any of its property, whether real or personal, whether now owned or hereafter acquired, if it, at the time of such sale or disposition, intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.

(o) Changes to Fiscal Year and accounting policies. None of the Borrowers or the Guarantors shall change its Fiscal Year or make or permit any change in accounting policies affecting (i) the presentation of financial statements or (ii) reporting practices, except in either case in accordance with GAAP or pursuant to the requirements of applicable laws or regulations.

(p) Jurisdiction of incorporation or formation; Amendment of constitutional documents. None of the Borrowers or the Guarantors shall change the jurisdiction of its incorporation or formation or materially amend its constitutional documents.

(q) Sale of Ship. No Borrower shall consummate the sale of its Ship without paying or causing to be paid all amounts due and owing under this Agreement and the other Finance Documents relating to the Advance for such Ship prior to or simultaneously with the consummation of such sale; provided that the Applicable Collateral Maintenance Ratio pursuant to Clause 15.2 shall be maintained at all times.

(r) Change of location. None of the Borrowers shall change the location of its chief executive office or the office where its corporate records are kept or open any new office for the conduct of its business on less than thirty (30) days prior written notice to the Agent.

(s) No employees; VAT group.

(i) None of the Borrowers shall have any employees other than the master, the officers and the crew of the Ship owned by it.

(ii) None of the Borrowers shall be or become a member of any VAT (value added tax) group.

12 FINANCIAL COVENANTS

12.1 General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full the Borrowers and Bulk Partners undertake with each Creditor Party to comply or cause compliance with the following provisions of this Clause 12 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.

12.2 Borrowers’ Minimum liquidity requirements.

(a) Each Borrower shall at all times maintain Liquidity, including all amounts on deposit with any bank, of not less than $350,000; and

(b) The Borrowers shall at all times maintain an aggregate on deposit in the Earnings Accounts of not less than $2,000,000.

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12.3 Bulk Partners’ Consolidated Leverage Ratio. Bulk Partners shall maintain a Consolidated Leverage Ratio of not more than 200%.

12.4 Bulk Partners’ Consolidated Debt Service Coverage Ratio. From and after January 1, 2013, Bulk Partners shall maintain a Consolidated Debt Service Coverage Ratio of not less than 120% (on a rolling four quarter basis, tested as of the last day of each fiscal quarter).

12.5 Bulk Partners’ Consolidated Net Worth. Bulk Partners shall maintain a Consolidated Net Worth of not less than $30,000,000 plus, with respect to any vessel purchased or leased by Bulk Partners or its subsidiaries after the Effective Date, for so long as such vessels are legally or economically owned, 25% of the purchase price or (finance) lease amount of such vessels.

12.6 Bulk Partners’ Consolidated Minimum Liquidity. Bulk Partners shall maintain Consolidated Minimum Liquidity of not less than $10,000,000 plus $1,000,000 for every vessel purchased or (finance) leased by Bulk Partners or its subsidiaries after the Effective Date.

13 MARINE INSURANCE COVENANTS

13.1 General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 13 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.

13.2 Maintenance of obligatory insurances. Each Borrower shall keep the Ship owned by it insured at its expense for and against:

(a) hull and machinery risks, plus freight interest and hull interest and any other usual marine risks such as excess risks;

(b) war risks (including the London Blocking and Trapping addendum or similar arrangement);

(c) full protection and indemnity risks (including liability for oil pollution and excess war risk P&I cover) on standard Club Rules, covered by a Protection and Indemnity association which is a member of the International Group of Protection and Indemnity Associations (or, if the International Group ceases to exist, any other leading protection and indemnity association or other leading provider of protection and indemnity insurance) (including, without limitation, the proportion (if any) of any collision liability not covered under the terms of the hull cover), or other with written consent from the Agent;

(d) freight, demurrage & defense risks;

(e) risks covered by mortgagee’s interest insurance (M.I.I.) (as provided in Clause 13.16 below);

(f) risks covered by mortgagee’s interest additional perils (pollution) (M.A.P.) (as provided in Clause 13.16 below); and

(g) [intentionally omitted];

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(h) any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to that Borrower (such as political risks and mortgage rights insurance).

13.3 Terms of obligatory insurances. Each Borrower shall affect such insurances in respect of the Ship owned by it:

(a) in Dollars;

(b) in the case of the insurances described in (a), (b), (e) and (f) of Clause 13.2 shall each be for at least the greater of:

(i) when aggregated with the insured values of the other Ships then financed under this Agreement, 120% of the aggregate of the Loan; and

(ii) the Fair Market Value of the Ship owned by it;

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the greater of $1,000,000,000 and the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;

(d) in relation to protection and indemnity risks in respect of the full tonnage of the Ship owned by it;

(e) in relation to loss of hire insurance, for a daily amount equal to at least the daily running costs and/or the daily hire rate under the Time Charter in respect of the Ship owned by it plus the daily debt service amount;

(f) on approved terms; and

(g) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations that are members of the International Group of P&I Clubs.

13.4 Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, each Borrower shall procure that the obligatory insurances affected by it shall:

(a) subject always to paragraph (b), name that Borrower as the sole named assured unless the interest of every other named assured is limited:

(i) in respect of any obligatory insurances for hull and machinery and war risks;

(A) to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and

(B) to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

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(ii) in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

and every other named assured has undertaken in writing to the Security Trustee (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named assured in proportion to the aggregate claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;

(b) in the case of any obligatory insurances against any risks other than protection and indemnity risks, and whenever the Security Trustee requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(c) name the Security Trustee as first priority mortgagee and loss payee with such directions for payment as the Security Trustee may specify;

(d) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

(e) provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee or any other Creditor Party;

(f) provide that the Security Trustee may make proof of loss if that Borrower fails to do so; and

(g) provide that the deductible of the hull and machinery insurance is not higher that the amount agreed upon and stated in the loss payable clause.

13.5 Renewal of obligatory insurances. Each Borrower shall:

(a) at least 21 days before the expiry of any obligatory insurance:

(i) notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

(ii) obtain the Security Trustee’s approval to the matters referred to in paragraph (i);

(b) at least five (5) days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

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13.6 Copies of policies; letters of undertaking. Each Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all policies and cover notes relating to the obligatory insurances which they are to affect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment in accordance with the requirements of the Insurance Assignment for that Borrower’s Ship;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

(c) they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances or if they cease to act as brokers;

(d) they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.

13.7 Copies of certificates of entry. Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:

(a) a certified copy of the certificate of entry for that Ship;

(b) a letter or letters of undertaking in such form as may be required by the Security Trustee; and

(c) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

13.8 Deposit of original policies. Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

13.9 Payment of premiums. Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

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13.10 Guarantees. Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11 Compliance with terms of insurances. No Borrower shall do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular:

(a) each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b) no Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it unless approved by the underwriters of the obligatory insurances;

(c) each Borrower shall make (and promptly supply copies to the Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) no Borrower shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.12 Alteration to terms of insurances. No Borrower shall either make or agree to any alteration to the terms of any obligatory insurance nor waive any right relating to any obligatory insurance.

13.13 Settlement of claims. No Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

13.14 Provision of copies of communications. Upon specific request of the Security Trustee each Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications between that Borrower and:

(a) the approved brokers;

(b) the approved protection and indemnity and/or war risks associations;

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

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(ii) any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances; and

(d) any parties involved in case of a claim under any of insurances relating to that Borrower’s Ship.

13.15 Provision of information. In addition, each Borrower shall promptly provide (and in no event less than five (5) days prior to a Drawdown Date) the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 or dealing with or considering any matters relating to any such insurances;

and that Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

13.16 Mortgagee’s interest, additional perils and political risk insurances. The Security Trustee shall be entitled from time to time to effect, maintain and renew (i) mortgagee’s interest marine insurance, (ii) mortgagee’s interest additional perils insurance and/or (iii) mortgagee’s political risks / rights insurance in such amounts (up to 120% of the Loan), on such terms, through such insurers and generally in such manner as the Security Trustee may from time to time consider appropriate and the Borrowers, jointly and severally, shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.17 Review of insurance requirements. The Security Trustee may and, on instruction of the Majority Lenders, shall review, at the expense of the Borrowers, the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent or the Majority Lenders significant and capable of affecting the relevant Borrower or a Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the relevant Borrower may be subject.)

13.18 Modification of insurance requirements. The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.17 to the requirements of this Clause 13 which the Security Trustee may or, on instruction of the Majority Lenders, shall reasonably consider appropriate in the circumstances and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers accordingly.

13.19 Compliance with instructions. The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the relevant Security Party implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18.

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14 SHIP COVENANTS

14.1 General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers and each of the Guarantors, as the case may be, undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 14 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.

14.2 Ship’s name and registration. Each Borrower shall:

(a) keep the Ship owned by it registered in its name under the law of an Approved Flag;

(b) not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperiled; and

(c) not change the name or port of registry on which such Ship was registered when it became subject to a Mortgage.

14.3 Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the highest class for that Ship with the Classification Society, free of overdue recommendations and conditions; and

(c) so as to comply with all laws and regulations applicable to vessels registered under the law of the Approved Flag on which that Ship is registered or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code,

and the Borrowers shall notify the Creditor Parties of the class and the Classification Society of a Ship not less than 15 days prior to the Drawdown Date in respect of the Advance relating to such Ship.

14.4 Classification Society instructions and undertaking. Each Borrower shall instruct the Classification Society referred to in Clause 14.3(b) (and procure that the Classification Society undertakes with the Security Trustee):

(a) to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records held by the Classification Society in relation to that Borrower’s Ship;

(b) to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and the Ship owned by it either (i) electronically (through the Classification Society directly or by way of indirect access via such Borrower’s account manager and designating the Security Trustee as a user or administrator of the system under its account) or (ii) in person at the offices of the Classification Society, and to take copies of them electronically or otherwise;

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(c) to notify the Security Trustee immediately in writing and by Email at xxxx.xxxxxxxxxx@xxxxxxx.xxx and at xxxxxxx@xxxxxxx.xxx if the Classification Society:

(i) receives notification from that Borrower or any other person that that Ship’s Classification Society is to be changed; or

(ii) becomes aware of any facts or matters which may result in or have resulted in a condition of class or a recommendation, or a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Borrower’s or that Ship’s membership of the Classification Society;

(d) following receipt of a written request from the Security Trustee:

(i) to confirm that that Borrower is not in default of any of its contractual obligations or liabilities to the Classification Society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the Classification Society; or

(ii) if that Borrower is in default of any of its contractual obligations or liabilities to the Classification Society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society.

14.5 Modification. No Borrower shall make any modification or repairs to, or replacement of, the Ship owned by it or equipment installed on that Ship which would or is reasonably likely to materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.

14.6 Removal of parts. No Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on, that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favor of any person other than the Security Trustee and becomes on installation on that Ship, the property of that Borrower and subject to the security constituted by the Mortgage, provided that a Borrower may install and remove equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.

14.7 Surveys. Each Borrower, at its sole expense, shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee, provide the Security Trustee, at that Borrower’s sole expense, with copies of all survey reports.

14.8 Inspection. Each Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose at the cost of the Borrowers) to board the Ship owned by it at all reasonable times but not more than once per year unless an Event of Default has occurred and is continuing, to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. The Security Trustee shall use reasonable efforts to ensure that the operation of that Ship is not adversely affected as a result of such inspections.

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14.9 Prevention of and release from arrest. Each Borrower shall promptly discharge or contest in good faith with appropriate proceedings:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship owned by it, the Earnings or the Insurances; and

(c) all other accounts payable whatsoever in respect of the Ship owned by it, the Earnings or the Insurances,

and, forthwith (and in no event more than 14 days) upon receiving notice of the arrest of the Ship owned by it, or of its detention in exercise or purported exercise of any lien or claim, that Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

14.10 Compliance with laws etc. Each Borrower shall:

(a) comply, or procure compliance with, all laws or regulations:

	(i)	relating to its business generally; or
	(ii)	relating to the ownership, employment, operation and management of the Ship owned by it,

including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and all Sanctions;

(b) without prejudice to the generality of paragraph (a) above, not employ the Ship owned by it nor allow its employment in any manner contrary to any laws or regulations, including but not limited to the ISM Code, the ISPS Code; all Environmental Laws and all Sanctions; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

14.11 Provision of information. Each Borrower shall promptly provide the Security Trustee with any information which it requests regarding:

(a) the Ship owned by it, its employment, position and engagements;

(b) the Earnings and payments and amounts due to that Ship’s master and crew;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;

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(d) any towages and salvages; and

(e) that Borrower’s, the Approved Manager’s and that Ship’s compliance with the ISM Code and the ISPS Code,

and, upon the Security Trustee’s request, provide copies of any current Time Charter and Time Charter Guarantee relating to that Ship and copies of that Borrower’s or the Approved Manager’s Document of Compliance.

14.12 Notification of certain events. Each Borrower shall immediately notify the Security Trustee by fax or Email, confirmed forthwith by letter, of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or condition made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship owned by it, any exercise or purported exercise of any Security Interest on that Ship or the Earnings or any requisition of that Ship for hire;

(e) any intended dry docking of the Ship owned by it;

(f) any Environmental Claim made against that Borrower or in connection with the Ship owned by it, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, the Approved Manager or otherwise in connection with the Ship owned by it; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with;

and that Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

14.13 Restrictions on chartering, appointment of managers etc. No Borrower shall:

(a) let the Ship owned by it on demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months (except pursuant to a Time Charter);

(c) enter into any charter in relation to that Ship under which more than two (2) months’ hire (or the equivalent) is payable in advance;

(d) charter that Ship otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;

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(e) appoint a manager of that Ship other than the Approved Manager or agree to any alteration to the terms of the Approved Management Agreement;

(f) de-activate or lay up that Ship;

(g) change the Classification Society;

(h) put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any Security Interest on that Ship or the Earnings for the cost of such work or for any other reason; or

(i) permit the Ship owned by it to carry nuclear waste or material.

14.14 Copies of Charters; Charter Assignment; Earnings Assignment. Provided that all approvals necessary under Clause 14.13 have been previously obtained, each Borrower shall:

(a) furnish promptly to the Agent a true and complete copy of any Charter entered into by a Borrower for the Ship owned by it, all other documents related thereto and a true and complete copy of each material amendment or other modification thereof;

(b) in respect of any such Charter entered into by a Borrower, execute and deliver to the Agent a charter assignment in Agreed Form and use reasonable commercial efforts to cause the charterer to execute and deliver to the Security Trustee a consent and acknowledgement to such charter assignment in the form required thereby; and

(c) in respect of any contract for the employment of that Ship for a term which is or which by virtue of any optional extensions therein contained would be reasonably likely to be of less than 12 months duration, execute and deliver to the Agent an Earnings Assignment and use reasonable commercial efforts to cause the charterer to execute and deliver to the Security Trustee a consent and acknowledgement to such Earnings Assignment in the form required thereby (if any).

14.15 Notice of Mortgage. Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first preferred mortgage, carry on board that Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that such Ship is mortgaged by that Borrower to the Security Trustee.

14.16 Sharing of Earnings. No Borrower shall enter into any agreement or arrangement for the sharing of any Earnings.

14.17 ISPS Code. Each Borrower shall comply with the ISPS Code and in particular, without limitation, shall:

(a) procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and

(b) maintain for that Ship an ISSC; and

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(c) notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

15 COLLATERAL MAINTENANCE RATIO

15.1 General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, the Borrowers undertake with each Creditor Party to comply with the following provisions of this Clause 15 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.

15.2 Applicable Collateral Maintenance Ratio. If, at any time, the Agent notifies the Borrowers that:

(a) the aggregate Fair Market Value of the Ships; plus

(b) the net realizable value of any additional Collateral previously provided under this Clause 15,

is below either (i) 142.85 percent of the Loan at all times before any of BULK PANGAEA, BULK PATRIOT, BULK XXXXXXX or BULK TRIDENT is sold or becomes a Total Loss or (ii) 200 percent of the Loan at all times after any of BULK PANGAEA, BULK PATRIOT, BULK XXXXXXX or BULK TRIDENT is sold or becomes a Total Loss (such ratio being in either case the “Applicable Collateral Maintenance Ratio”), the Agent (acting upon the instruction of the Majority Lenders) shall have the right to require the Borrowers to comply with the requirements of Clause 15.3.

15.3 Provision of additional Collateral; prepayment.

(a) If the Agent serves a notice on the Borrowers under Clause 15.2, the Borrowers shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling one (1) month after the date on which the Agent’s notice is served under Clause 15.2 (the “Collateral Maintenance Prepayment Date”) unless at least one (1) Business Day before the Collateral Maintenance Prepayment Date it has provided, or ensured that a third party has provided, additional Collateral which, in the opinion of the Majority Lenders, has a net realizable value at least equal to the shortfall and which has been documented in such terms as the Agent may, with the authorization of the Majority Lenders, approve or require.

(b) Any prepayment made pursuant to Clause 15.3(a) shall be applied pro rata to each outstanding Advance of the Loan at the time such prepayment is made.

15.4 Value of additional vessel security. The net realizable value of any additional Collateral which is provided under Clause 15.3 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the definition of Fair Market Value.

15.5 Valuations binding. Any valuation under Clause 15.3 or 15.4 shall be binding and conclusive as regards the Borrowers and the Guarantors, as shall be any valuation which the Majority Lenders make of any additional Collateral which does not consist of or include a Security Interest.

15.6 Provision of information. The Borrowers shall promptly provide the Agent and any Approved Broker or other expert acting under Clause 15.4 with any information which the Agent or the Approved Broker or other expert may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

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15.7 Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 21.2, 21.3 and 22.3, the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or other expert instructed by the Agent under this Clause 15 and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause 15.

16 guarantee

16.1 Guarantee and indemnity. In order to induce the Lenders to make the Loan to the Borrowers, each Guarantor irrevocably and unconditionally jointly and severally:

(a) guarantees, as a primary obligor and not merely as a surety, to each Creditor Party, the punctual payment and performance by the Borrowers when due, whether at stated maturity, by acceleration or otherwise, of all Secured Liabilities of the Borrowers, whether for principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Obligations”);

(b) undertakes with each Creditor Party that whenever the Borrowers do not pay any Guaranteed Obligation when due, such Guarantor shall immediately on demand pay that Guaranteed Obligation as if it were the primary obligor; and

(c) indemnifies each Creditor Party immediately on demand against any cost, loss or liability suffered or incurred by that Creditor Party (i) if any Guaranteed Obligation is or becomes unenforceable, invalid or illegal or (ii) by operation of law as a consequence of the transactions contemplated by the Finance Documents. The amount of the cost, loss or liability shall be equal to the amount which that Creditor Party would otherwise have been entitled to recover.

16.2 Continuing guarantee. This guarantee:

(a) is a continuing guarantee;

(b) constitutes a guarantee of punctual performance and payment and not merely of collection;

(c) is joint and several with any other guarantee given in respect of the Guaranteed Obligations and shall not in any way be prejudiced by any other guarantee or security now or subsequently held by any Creditor Party in respect of the Guaranteed Obligations;

(d) shall remain in full force and effect until the later of the termination of the Total Commitments and the payment and performance in full of the Guaranteed Obligations and all other amounts payable hereunder regardless of any intermediate payment or discharge in whole or in part; and

(e) shall be binding upon each Guarantor, its successors and permitted assigns.

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16.3 Performance of Guaranteed Obligations; obligations pari passu.

(a) Each Guarantor agrees that the Guaranteed Obligations will be performed and paid strictly in accordance with the terms of the relevant Finance Document regardless of any law or regulation or order of any court:

(i) affecting (A) any term of such Finance Document or the rights of any of the Creditor Parties with respect thereto or (B) the Borrowers’ ability or obligation to make or render, or right of any Creditor Party to receive, any payments or performance due thereunder; or

(ii) which might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrowers.

(b) The obligations of each Guarantor under this guarantee shall rank pari passu with all other unsecured obligations of such Guarantor.

16.4 Reinstatement. If any payment of any of the Guaranteed Obligations is rescinded, discharged, avoided or reduced or must otherwise be returned by a Creditor Party or any other person upon the insolvency, bankruptcy or reorganization of a Borrower or any other Security Party or otherwise:

(a) this guarantee shall continue to be effective or be reinstated, and the liability of each Guarantor hereunder shall continue or be reinstated, as the case may be, as if the payment, discharge, avoidance or reduction had not occurred; and

(b) each Creditor Party shall be entitled to recover the value or amount of that payment from each Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

16.5 Liability absolute and unconditional. The obligations of each Guarantor under this Clause 16 shall be irrevocable, absolute and unconditional and shall not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 16, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a) any time, waiver or consent granted to, or composition with, any Security Party or other person;

(b) the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;

(c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realize the full value of any security;

(d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the corporate or company structure or status of a Security Party or any other person (including without limitation any change in the holding of such Security Party’s or other person’s Equity Interests);

(e) any amendment to or replacement of a Finance Document or any other document or security;

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(f) any unenforceability, illegality or invalidity of any obligation of any Security Party or any other person under any Finance Document or any other document or security;

(g) any bankruptcy, insolvency or similar proceedings; or

(h) any other circumstance whatsoever that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Security Party.

16.6 Waiver of promptness, etc. Each of the Guarantors hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this guarantee and any requirement that a Creditor Party protect, secure, perfect or insure any Security Interest or any property subject thereto or exhaust any right or take any action against any Security Party or any other person or entity or any Collateral.

16.7 Waiver of revocation, etc. Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this guarantee.

16.8 Waiver of certain defenses. Each Guarantor hereby unconditionally and irrevocably waives:

(a) any defense arising by reason of any claim or defense based upon an election of remedies by a Creditor Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against the Borrowers, any of the other Security Parties, any other guarantor or any other person or entity or any Collateral; and

(b) any defense based on any right of set-off or counterclaim against or in respect of the obligations of such Guarantor hereunder.

16.9 Waiver of disclosure, etc. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Creditor Party to disclose to the Guarantors any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrowers, any other Security Party or any of their respective subsidiaries now or hereafter known by any Creditor Party.

16.10 Immediate recourse. Each Guarantor waives any right it may have of first requiring any Creditor Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 16. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

16.11 Acknowledgment of benefits. Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Finance Documents and that the waivers set forth in this Clause 16 are knowingly made in contemplation of such benefits.

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16.12 Independent obligations. The obligations of each Guarantor under or in respect of this guarantee are independent of the Guaranteed Obligations or any other obligations of the Borrowers or any other Security Party under or in respect of the Finance Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this guarantee irrespective of whether any action is brought against the Borrowers or any other Security Party or whether the Borrowers or any other Security Party is joined in any such action or actions.

16.13 Deferral of Guarantors’ rights. Until the Guaranteed Obligations have been irrevocably paid and performed in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

(a) to be indemnified by another Security Party;

(b) to claim any contribution from any other guarantor of any Security Party’s obligations under the Finance Documents; and/or

(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Creditor Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Creditor Party.

16.14 Limitation of liability. Each of the Guarantors and the Creditor Parties hereby confirms that it is its intention that the Guaranteed Obligations not constitute a fraudulent transfer or conveyance for purposes of the United States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar law. To effectuate the foregoing intention, each of the Guarantors and the Creditor Parties hereby irrevocably agrees that the Guaranteed Obligations guaranteed by each Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.

16.15 Reliance of Creditor Parties. Each of the Creditor Parties has entered into this Agreement in reliance upon, among other things, this guarantee.

17 PAYMENTS AND CALCULATIONS

17.1 Currency and method of payments. All payments to be made by the Lenders or by the Security Parties under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(a) by not later than 11:00 a.m. (New York City time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

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(c) in the case of an amount payable by a Lender to the Agent or by another Security Party to the Agent or any Lender, to the account of the Agent at HSBC Bank USA, New York, New York, ABA No. 000000000, SWIFT ID No. XXXXXX00, for credit to DVB Bank SE (Account No. 000.137.278), Reference: Bulk Partners Fleet Financing, or to such other account with such other bank as the Agent may from time to time notify to the Borrowers, the other Security Parties and the other Creditor Parties; and

(d) in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties.

17.2 Payment on non-Business Day. If any payment by a Security Party under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day;

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

17.3 Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

17.4 Distribution of payments to Creditor Parties. Subject to Clauses 17.5, 17.6 and 17.7:

(a) any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than five (5) Business Days previously; and

(b) amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

17.5 Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

17.6 Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender until the Agent has satisfied itself that it has received that sum.

17.7 Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrowers or a Lender, without first having received that sum, the Borrowers or (as the case may be) the Lender concerned shall, on demand:

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(a) refund the sum in full to the Agent; and

(b) pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

17.8 Agent may assume receipt. Clause 17.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

17.9 Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any other Security Party.

17.10 Agent’s memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each other Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any other Security Party.

17.11 Accounts prima facie evidence. If any accounts maintained under Clauses 17.9 and 17.10 show an amount to be owing by the Borrowers or any other Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.

18 APPLICATION OF RECEIPTS

18.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a) FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

(i) first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 21, 22 and 23 of this Agreement or by the Borrowers or any other Security Party under any corresponding or similar provision in any other Finance Document);

(ii) second, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; and

(iii) third, in or towards satisfaction pro rata of the Loan;

(b) SECOND: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers, the other Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 18.1(a); and

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(c) THIRD: provided that no Event of Default has occurred and is continuing, any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

18.2 Variation of order of application. The Agent may, with the authorization of the Majority Lenders, by notice to the Borrowers, the other Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 18.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

18.3 Notice of variation of order of application. The Agent may give notices under Clause 18.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

18.4 Appropriation rights overridden. This Clause 18 and any notice which the Agent gives under Clause 18.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any other Security Party.

18.5 Payments in excess of Contribution.

(a) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, counterclaim or otherwise) in excess of its Contribution, such Lender shall forthwith purchase from the other Lenders such participation in their respective Contributions as shall be necessary to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.

(b) The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Clause 18.5 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.

(c) Notwithstanding paragraphs (a) and (b) of this Clause 18.5, any Lender which shall have commenced or joined (as a plaintiff) in an action or proceeding in any court to recover sums due to it under any Finance Document and pursuant to a judgment obtained therein or a settlement or compromise of that action or proceeding shall have received any amount, such Lender shall not be required to share any proportion of that amount with a Lender which has the legal right to, but does not, join such action or proceeding or commence and diligently prosecute a separate action or proceeding to enforce its rights in the same or another court.

(d) Each Lender exercising or contemplating exercising any rights giving rise to a receipt or receiving any payment of the type referred to in this Clause 18.5 or instituting legal proceedings to recover sums owing to it under this Agreement shall, as soon as reasonably practicable thereafter, give notice thereof to the Agent who shall give notice to the other Lenders.

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19 APPLICATION OF EARNINGS

19.1 General. From the first Drawdown Date until the Total Commitments have terminated and all amounts payable hereunder have been paid in full, each of the Borrowers undertakes with each Creditor Party to comply or cause compliance with the following provisions of this Clause 19 except as the Agent, with the consent of the Majority Lenders, may approve from time to time in writing, such approval not to be unreasonably withheld.

19.2 Funding of Earnings Accounts.

(a) With respect to BULK XXXXXXX, BULK PANGEA and BULK PATRIOT, on the Drawdown Date of the Advance for each such Initial Ship, the Borrower that owns such Ship shall deposit not less than $500,000 into and shall at all times thereafter during the Security Period retain not less than $500,000 in the Earnings Account for the Ship owned by such Borrower, and

(b) With respect to BULK TRIDENT, on the Drawdown Date of the Advance in respect of such Initial Ship, Bulk Trident shall deposit not less than $200,000 into the Earnings Account for such Initial Ship and shall, not later than December 31, 2013, increase such balance to not less than $500,000; provided that if the balance in such Earnings Account is less than $500,000 on December 31, 2013, any Security Party may loan to Bulk Trident an amount sufficient to bring the balance in such Earnings Account to $500,000,

provided that the aggregate balance maintained in all of the Earnings Accounts on a consolidated basis shall be not less than $2,000,000 at all times during the Security Period.

19.3 Application of Earnings.

(a) For each Initial Ship, each Borrower undertakes with each Creditor Party to ensure that, subject only to the provisions of the relevant Time Charter, COA, Earnings Assignment, Earnings Account Pledge, Freights Account Pledge and Time Charterer Earnings Assignment, as applicable:

(i) all Earnings of that Ship under either the COAs for such Ship or any charter by the Time Charterer as disponent owner for such Ship are paid to the Freights Account; and

(ii) Allseas pays from such Earnings of that Ship, as and when due, all voyage expenses (if applicable) related to the commercial operation of that Ship; and

(iii) Allseas pays from such Earnings of that Ship, as and when due, the amount necessary to pay the charter hire for that Ship (or, if such Time Charter is no longer in existence, the amount necessary for the Borrower to satisfy the debt service obligations in respect of the Advance under this Agreement relating to that Ship (principal, interest and fees) as and when due under this Agreement and the amount necessary to pay all daily operating expenses of that Ship). Such transfer shall be made to the Earnings Account for that Ship.

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19.4 Application of Excess Cash Flow.

(a) Bulk Trident undertakes with each Creditor Party to ensure that all Excess Cash Flow of the BULK TRIDENT (i.e., any Earnings of the BULK TRIDENT remaining in the Freights Account after paying the voyage expenses and charter hire) shall be transferred to the Bulk Trident Earnings Account and retained, subject to the following:

(i) Provided the applicable Earnings Account Minimum Balance is being maintained in the Bulk Trident Earnings Account:

(A) if the Excess Cash Flow is in the aggregate more than $106,250 on the date falling three (3) months after the Drawdown Date of the Advance in respect of the BULK TRIDENT, and at the end of each three (3) month period thereafter, Bulk Trident shall make a prepayment in integrals of $106,250, to be applied in the aggregate to prepay, without any prepayment fee otherwise required by Clause 8.9(c)), the repayment installments specified in Clause 8.1(b) in inverse order of maturity, provided that

(B) if the Excess Cash Flow is in the aggregate less than $106,250 on the last day of the applicable 3 month period, all such Excess Cash Flow shall be retained in the Bulk Trident Earnings Account and Bulk Trident shall not be required to make the prepayment specified above; and

(C) if the Excess Cash Flow is in the aggregate more than $106,250 on the last day of the applicable three (3) month Period (not including any amounts retained pursuant to Clause 19.4(a)(i)(B) above), all such Excess Cash Flow remaining after the required prepayment of $106,250 is made shall be released to the Security Parties for general corporate purposes.

(ii) It is understood that the following shall be paid from the Bulk Trident Earnings Account:

(A) daily operating expenses (“OPEX”) of the BULK TRIDENT (crew costs, insurance, maintenance, stores, lube oils, etc.);

(B) amounts necessary to comply with the Collateral Maintenance Ratio;

(C) excess expenses that exceed the daily charter hire rate.

(b) Bulk Patriot undertakes with each Creditor Party to ensure that all Excess Cash Flow of the BULK PATRIOT (i.e., any Earnings of the BULK PATRIOT remaining in the Freights Account after paying the voyage expenses and charter hire) shall be transferred to the Bulk Patriot Earnings Account and retained, subject to the following:

(iii) Provided the applicable Earnings Account Minimum Balance is being maintained in the Bulk Patriot Earnings Account:

(A) if the Excess Cash Flow is in the aggregate more than $112,500 on the date falling three (3) months after the Drawdown Date of the Advance in respect of the BULK PATRIOT, and at the end of each three (3) month period thereafter, Bulk Patriot shall make a prepayment in integrals of $112,500, to be applied in the aggregate to prepay, without any prepayment fee otherwise required by Clause 8.9(c)), the repayment installments specified in Clause 8.1(b) in inverse order of maturity, provided that

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(B) if the Excess Cash Flow is in the aggregate less than $112,500 on the last day of the applicable 3 month period, all such Excess Cash Flow shall be retained in the Bulk Patriot Earnings Account and Bulk Patriot shall not be required to make the prepayment specified above; and

(C) if the Excess Cash Flow is in the aggregate more than $112,500 on the last day of the applicable three (3) month Period (not including any amounts retained pursuant to Clause 19.4(b)(i)(B) above), all such Excess Cash Flow remaining after the required prepayment of $112,500 is made shall be released to the Security Parties for general corporate purposes, provided further that:

(1) all charter hire has been paid; and

(2) all expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the BULK PATRIOT have been paid in full or for which adequate reserves have been made.

(iv) It is understood that the following shall be paid from the Bulk Patriot Earnings Account:

(A) daily operating expenses (“OPEX”) of the BULK PATRIOT (crew costs, insurance, maintenance, stores, lube oils, etc.);

(B) amounts necessary to comply with the Collateral Maintenance Ratio;

(C) excess expenses that exceed the daily charter hire rate.

(c) Bulk Xxxxxxx undertakes with each Creditor Party to ensure that all Excess Cash Flow of the BULK XXXXXXX (i.e., any Earnings of the BULK XXXXXXX remaining in the Freights Account after paying the voyage expenses and charter hire) shall be transferred to the Bulk Xxxxxxx Earnings Account and retained, subject to the following:

(i) Provided the applicable Earnings Account Minimum Balance is being maintained in the Bulk Xxxxxxx Earnings Account:

(A) if the Excess Cash Flow is in the aggregate more than $100,000 on the date falling three (3) months after the Drawdown Date of the Advance in respect of the BULK XXXXXXX, and at the end of each three (3) month period thereafter, Bulk Xxxxxxx shall make a prepayment in integrals of $100,000, to be applied in the aggregate to prepay, without any prepayment fee otherwise required by Clause 8.9(c)), the repayment installments specified in Clause 8.1(b) in inverse order of maturity, provided that

(B) if the Excess Cash Flow is in the aggregate less than $100,000 on the last day of the applicable 3 month period, all such Excess Cash Flow shall be retained in the Bulk Xxxxxxx Earnings Account and Bulk Xxxxxxx shall not be required to make the prepayment specified above.

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(ii) It is understood that the following shall be paid from the Bulk Xxxxxxx Earnings Account:

(A) daily operating expenses (“OPEX”) of the BULK XXXXXXX (crew costs, insurance, maintenance, stores, lube oils, etc.);

(B) amounts necessary to comply with the Collateral Maintenance Ratio;

(C) excess expenses that exceed the daily charter hire rate.

(d) Bulk Pangaea undertakes with each Creditor Party to ensure that all Excess Cash Flow of the BULK PANGAEA (i.e., any Earnings of the BULK PANGAEA remaining in the Freights Account after paying the voyage expenses and charter hire) shall be transferred to the Bulk Pangaea Earnings Account and retained, subject to the following:

(i) Provided the applicable Earnings Account Minimum Balance is being maintained in the Bulk Pangaea Earnings Account:

(A) if the Excess Cash Flow is in the aggregate more than $100,000 on the date falling three (3) months after the Drawdown Date of the Advance in respect of the BULK PANGAEA, and at the end of each three (3) month period thereafter, Bulk Pangaea may, at its option, make a prepayment in integrals of $100,000, to be applied in the aggregate to prepay, without any prepayment fee otherwise required by Clause 8.9(c)), the repayment installments specified in Clause 8.1(b) in inverse order of maturity, provided that

(B) if the Excess Cash Flow is in the aggregate less than $100,000 on the last day of the applicable 3 month period, all such Excess Cash Flow shall be retained in the Bulk Pangaea Earnings Account and Bulk Pangaea shall not be required to make the prepayment specified above; and

(ii) It is understood that the following shall be paid from the Bulk Pangaea Earnings Account:

(A) daily operating expenses (“OPEX”) of the BULK PANGAEA (crew costs, insurance, maintenance, stores, lube oils, etc.);

(B) amounts necessary to comply with the Collateral Maintenance Ratio;

(C) excess expenses that exceed the daily charter hire rate.

19.5 Location of Earnings Accounts and Freights Account. Each of the Borrowers shall promptly:

(a) comply, or cause the compliance, with any requirement of the Agent as to the location or re-location of its Earnings Account or the Freights Account, and without limiting the foregoing, each of the Borrowers agrees to segregate, or cause the segregation of, its Earnings Account from the banking platform on which their other accounts are located or designated and the Freights Account from the banking platform on which the other bank accounts of Allseas are located or designated; and

(b) execute, or cause the execution of, any documents which the Agent specifies to create or maintain in favor of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) its Earnings Account and the Freights Account.

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19.6 Debits for expenses etc. Upon the occurrence and during the continuance of an Event of Default, the Agent shall be entitled (but not obliged) from time to time to debit the Earnings Accounts and/or the Freights Account without prior notice in order to discharge any amount due and payable under Clause 21 or 22 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 21 or 22.

19.7 Borrowers’ obligations unaffected. The provisions of this Clause 19 do not affect:

	(a)	the liability of the Borrowers to make payments of principal and interest on the due dates required by this Agreement or any other Finance Document; or
	(b)	any other liability or obligation of the Borrowers or any other Security Party under any Finance Document.

20 EVENTS OF DEFAULT

20.1 Events of Default. An Event of Default occurs if:

(a) any Borrower or any other Security Party fails to pay when due any sum payable under a Finance Document or under any document relating to a Finance Document or, only in the case of sums payable on demand, within five (5) Business Days after the date when first demanded; or

(b) any breach occurs of any of Clauses 8.8, 9.2(a), 11.2(b), 11.2(e), 11.2(o), 11.2(p), 13 or 15.3; or

(c) any breach by any Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b), (d), (e) or (n) of this Clause 20.1) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 10 days after written notice from the Agent requesting action to remedy the same; or

(d) subject to any applicable grace period specified in a Finance Document, any breach by any Borrower or any other Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b), (c) or (e) of this Clause 20.1); or

(e) any representation, warranty or statement made or repeated by, or by an officer or director or other authorized person of, a Borrower or any other Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or

(f) an event of default, or an event or circumstance which, with the giving of any notice, the lapse of time or both would constitute an event of default, has occurred on the part of a Security Party under any contract or agreement (other than the Finance Documents) to which such Security Party is a party (including without limitation a Time Charter or a COA), and, in respect of any payment default, the value of which is or exceeds $250,000 (in the case of a Borrower) or $500,000 (in the case of a Guarantor), and such event of default has not been cured within any applicable grace period, provided that any event of default other than a payment default shall not be subject to the financial thresholds set forth in this paragraph (f); or

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(g) any Financial Indebtedness of a Security Party is not paid when due (or if there is a grace period, within such grace period) or, only in the case of sums payable on demand, when first demanded, except for any such Financial Indebtedness which is being contested by such Security Party in good faith and through appropriate proceedings and in a manner that does not involve any risk of sale, forfeiture, loss, confiscation or seizure of the Ship; or

(h) any Security Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or

(i) any proceeding shall be instituted by or against any Security Party seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, and solely in the case of an involuntary proceeding:

(i) such proceeding shall remain undismissed or unstayed for a period of 60 days; or

(ii) any of the actions sought in such involuntary proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or

(j) all or a material part of the undertakings, assets, rights or revenues of, or shares or other ownership interest in, any Security Party are seized, nationalized, expropriated or compulsorily acquired by or under authority of any government; or

(k) a creditor attaches or takes possession of, or a distress, execution, sequestration or process (each an “action”) is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues (the “assets”) of any Security Party in relation to a claim by such creditor which, in the reasonable opinion of the Majority Lenders, is likely to materially and adversely affect the ability of such Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any Finance Document, Time Charter or COA to which it is a party and such Security Party does not procure that such action is lifted, released or expunged within 20 Business Days of such action being (i) instituted and (ii) notified to such Security Party; or

(l) any judgment or order for the payment of money individually or in the aggregate in excess of $1,000,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) and as to which the insurer has acknowledged its responsibility to cover such judgment or order) shall be rendered against a Security Party and such judgment shall not have been vacated or discharged or stayed or bonded pending appeal within 30 days after the entry thereof or enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or

(m) any Security Party ceases or suspends or threatens to cease or suspend the carrying on of its business, or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement, except in the case of a sale or a proposed sale of the Ship by a Borrower; or

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(n) a Ship becomes a Total Loss or suffers a Major Casualty and (i) in the case of a Total Loss, insurance proceeds are not collected or received by the Security Trustee from the underwriters within 150 days of the Total Loss Date; or (ii) in the case of a Major Casualty, that Ship has not been otherwise repaired in a timely and proper manner; or

(o) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document;

(ii) for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(p) any consent necessary to enable a Borrower to own, operate or charter the Ship owned by it or to enable a Borrower or any other Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or a Time Charter or a COA is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(q) any provision of a Finance Document which the Majority Lenders consider material proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(r) the security constituted by a Finance Document is in any way imperiled or in jeopardy; or

(s) there occurs the cancellation or termination of any contract of employment for the Ship of more than 12 months duration to which a Security Party is a party, including a Time Charter and a COA, unless such contract of employment is replaced with a substitute contract of employment with the consent of the Lenders (such consent not to be unreasonably withheld); or

(t) any event occurs or any circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of any Security Party; or

(ii) any accident or other event involving a Ship;

and the Majority Lenders reasonably consider that there is a significant risk that a Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due; or

(u) there occurs or develops a change in the financial position, state of affairs or prospects of a Security Party which, in the reasonable opinion of the Majority Lenders, has a material adverse effect on such Security Party’s ability to discharge its liabilities under the Finance Documents, the Time Charters or the COAs as they fall due; or

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(v) the results of any survey or inspection of a Ship pursuant to Clause 14.7 or 14.8 are deemed unsatisfactory by the Majority Lenders in their sole, reasonable discretion after giving due consideration to the type and age of that Ship and whether such results adversely affect that Ship’s Fair Market Value or safe operation, unless such survey or inspection is revised to the satisfaction of the Majority Lenders within 60 days of the date that a copy of the original inspection is delivered by the Borrowers to the Agent; or

(w) a Ship is off charter for a continuous period of 45 days at any time, or for an aggregate of 56 days in any 12 month period.

20.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a) the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i) serve on the Borrowers a notice stating that the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are cancelled; and/or

(ii) serve on the Borrowers a notice stating that the Loan, together with accrued interest and all other amounts accrued or owing under this Agreement, are immediately due and payable or are due and payable on demand, provided that in the case of an Event of Default under either of Clauses 20.1(h) or (i), the Loan and all accrued interest and other amounts accrued or owing hereunder shall be deemed immediately due and payable without notice or demand therefor; and/or

(iii) take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b) the Security Trustee may, and if so instructed by the Agent, acting with the authorization of the Majority Lenders, the Security Trustee shall, take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii), the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law to enforce the Security Interests created by this Agreement and any other Finance Document in any manner available to it and in such sequence as the Security Trustee may, in its absolute discretion, determine.

20.3 Termination of Commitments. On the service of a notice under Clause 20.2(a)(i), the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall be cancelled.

20.4 Acceleration of Loan. On the service of a notice under Clause 20.2(a)(ii), all or, as the case may be, the part of the Loan specified in the notice, together with accrued interest and all other amounts accrued or owing from the Borrowers or any other Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

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20.5 Multiple notices; action without notice. The Agent may serve notices under Clauses 20.2(a)(i) and (ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 20.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

20.6 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee and each Security Party a copy of the text of any notice which the Agent serves on the Borrowers under Clause 20.2. Such notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defense.

20.7 Creditor Party rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

20.8 Exclusion of Creditor Party liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to any Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realized from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

provided that nothing in this Clause 20.8 shall exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by the gross negligence or the willful misconduct of such Creditor Party’s own officers and employees or ( as the case may be) such receiver’s or manager’s own partners or employees.

21 FEES AND EXPENSES

21.1 Upfront and facility fees. The Borrowers shall pay to the Agent:

(a) On or before the first Drawdown Date, an upfront fee of:

(i) $100,000 in respect of the Advance relating to BULK PANGAEA; and

(ii) $33,000 in respect of the Advance relating to each of BULK PATRIOT, BULK XXXXXXX and BULK TRIDENT,

each such upfront fee to be payable to the Agent for its own account; and

(b) on the Drawdown Date of each Advance and on each anniversary of the Drawdown Date of each Advance, a facility fee of $10,000 for each Advance payable to the Agent for its own account.

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