-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U4CrNVqT++88iSiMLSLEOjKU3JlHQ+K2JlfjXFArM2bZrKJ+sN8rC0fVFZ/pCgLu sFMlzjLdpds1cxNYNOdD2g== 0000919574-07-002087.txt : 20070420 0000919574-07-002087.hdr.sgml : 20070420 20070420145346 ACCESSION NUMBER: 0000919574-07-002087 CONFORMED SUBMISSION TYPE: 20-F PUBLIC DOCUMENT COUNT: 74 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070420 DATE AS OF CHANGE: 20070420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOP TANKERS INC. CENTRAL INDEX KEY: 0001296484 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 20-F SEC ACT: 1934 Act SEC FILE NUMBER: 000-50859 FILM NUMBER: 07778620 BUSINESS ADDRESS: STREET 1: 1, VASSILISSIS SOFIAS STR. & MEG. STREET 2: ALEXANDROU STR. CITY: 151 24, MAROUSSI STATE: J3 ZIP: 00000 BUSINESS PHONE: 011-30-210-81-28-107 MAIL ADDRESS: STREET 1: 1, VASSILISSIS SOFIAS STR. & MEG. STREET 2: ALEXANDROU STR. CITY: 151 24, MAROUSSI STATE: J3 ZIP: 00000 20-F 1 d759408_20-f.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) [_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2006 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [_] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report: N/A Commission file number 000-50859 TOP TANKERS INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Republic of The Marshall Islands - -------------------------------------------------------------------------------- (Jurisdiction of incorporation or organization) 1 Vas. Sofias and Meg. Alexandrou Str, 15124 Maroussi, Greece - -------------------------------------------------------------------------------- (Address of principal executive offices) Securities registered or to be registered pursuant to section 12(b) of the Act. Common Stock par value $0.01 per share Preferred Stock Purchase Rights - -------------------------------------------------------------------------------- Securities registered or to be registered pursuant to section 12(g) of the Act. NONE - -------------------------------------------------------------------------------- Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. NONE - -------------------------------------------------------------------------------- Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 32,429,105 shares of Common Stock, par value $0.01 per share. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes |_| No |X| If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes |_| No |X| Note- Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 for their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer |_| Accelerated filer |X| Non-accelerated filer |_| Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 |_| Item 18 |X| If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| TABLE OF CONTENTS Page ITEM 1. Identity Of Directors, Senior Management And Advisers...............1 ITEM 2. Offer Statistics And Expected Timetable.............................1 ITEM 3. Key Information.....................................................1 ITEM 4. Information On The Company.........................................17 ITEM 4A. Unresolved Staff Comments .........................................35 ITEM 5. Operating And Financial Review And Prospects.......................36 ITEM 6. Directors, Senior Management And Employees........................ 53 ITEM 7. Major Shareholders And Related Party Transactions. ................59 ITEM 8. Financial Information. ............................................60 ITEM 9. The Offer And Listing..............................................60 ITEM 10. Additional Information.............................................61 ITEM 11. Quantitative And Qualitative Disclosures About Market Risk.........74 ITEM 12. Description Of Securities Other Than Equity Securities ............74 ITEM 13. Defaults, Dividend Arrearages And Delinquencies....................75 ITEM 14. Material Modifications To The Rights Of Security Holders And Use Of Proceeds....................................................75 ITEM 15. Controls And Procedures............................................75 ITEM 16A. Audit Committee Financial Expert...................................76 ITEM 16B. Code Of Ethics ....................................................76 ITEM 16C. Principal Accountant Fees And Services ............................76 ITEM 16D. Exemptions From The Listing Standards For Audit Committees.........77 ITEM 16E. Purchases Of Equity Securities By The Issuer And Affiliated Purchases...........................................77 ITEM 17. Financial Statements...............................................78 ITEM 18. Financial Statements...............................................78 ITEM 19. Exhibits........................................................... CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as: o future operating or financial results; o statements about planned, pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including drydocking and insurance costs; o statements about crude oil and refined petroleum products tanker shipping market trends, including charter rates and factors affecting supply and demand; o our ability to obtain additional financing; o expectations regarding the availability of vessel acquisitions; and o anticipated developments with respect to pending litigation. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although TOP Tankers Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TOP Tankers Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements contained in this report. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for crude oil, refined petroleum products, the effect of changes in OPEC's petroleum production levels, worldwide crude oil consumption and storage, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in TOP Tankers Inc.'s voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations including requirements for double-hull tankers or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists. When used in this document, the words "anticipate," "estimate," "project," "forecast," "plan," "potential," "will," "may," "should," and "expect" reflect forward-looking statements. PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable. ITEM 3. KEY INFORMATION Unless the context otherwise requires, as used in this report, the terms "Company," "we," "us," and "our" refer to TOP Tankers Inc. and all of its subsidiaries, and "TOP Tankers Inc." refers only to TOP Tankers Inc. and not to its subsidiaries. We use the term deadweight, or dwt, in describing the size of vessels. Dwt, expressed in metric tons each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. A. Selected Financial Data The following table sets forth the selected historical consolidated financial data and other operating data of TOP Tankers Inc. as of December 31, 2002, 2003, 2004, 2005 and 2006 and for the years ended December 31, 2002, 2003, 2004, 2005 and 2006. The following information should be read in conjunction with Item 5 "Operating and Financial Review and Prospects" and the consolidated financial statements and related notes included herein. The following selected historical consolidated financial data of TOP Tankers Inc. in the table are derived from our consolidated financial statements and notes thereto which have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and have been audited for the years ended December 31, 2002, 2003, 2004 and 2005 by Ernst & Young (Hellas) Certified Auditors Accountants S.A ("Ernst & Young") and for the year ended December 31, 2006 by Deloitte, Hadjipavlou, Sofianos & Cambanis S.A., both independent registered public accounting firms.
Year Ended December 31, Dollars in thousands, except per share data and ----------------------- average daily results 2002 2003 2004 2005 2006 INCOME STATEMENT DATA ---- ---- ---- ---- ---- Voyage revenues.......................................... $11,426 $23,085 $93,829 $244,215 $310,043 Voyage expenses.......................................... 3,311 5,937 16,898 36,889 55,351 Charter hire expense..................................... - - - 7,206 96,302 Amortization of deferred gain on sale and leaseback of vessels.................................. - - - 837 8,110 Other vessel operating expenses.......................... 4,553 8,420 16,859 47,315 66,082 General and administrative expenses(1)................... 816 1,815 8,579 23,818 23.016 Foreign currency (gains) losses, net..................... 62 105 75 (68) 255 Gain on sale of vessels.................................. - - 638 10,115 12,667 Depreciation and amortization............................ 2,390 4,203 14,622 53,054 48,453 Total operating expenses................................. 11,132 20,480 56,395 157,262 268,682 Operating income......................................... 294 2,605 37,434 86,953 41,361 Interest and finance costs............................... 993 1,336 5,201 20,177 29,175 Interest income.......................................... 6 1 481 1,774 3,022 Other income (expense), net.............................. 894 364 80 134 (67) Net income............................................... $201 $1,634 $32,794 $68,684 $15,141 Earnings per share, basic and diluted(2)................. $0.03 $0.27 $2.54 $2.46 $0.47 Weighted average common shares outstanding, basic(2)..... 6,000,000 6,000,000 12,922,449 27,926,771 30,550,274 Weighted average common shares outstanding, diluted(2)... 6,000,000 6,000,000 12,922,449 27,932,012 30,603,868 Dividends declared per share(2).......................... $0.14 $0.10 $0.60 $0.88 $7.71
Dollars in thousands, except per share data and 2002 2003 2004 2005 2006 average daily results ---- ---- ---- ---- ---- BALANCE SHEET DATA, at end of period Current assets .......................................... $845 $4,862 $141,051 $67,574 $72,799 Total assets............................................. 33,474 55,703 539,886 980,897 522,735 Current liabilities, including current portion of long 4,390 9,008 42,811 76,143 40,609 long-term debt Total long-term debt, including current portion.......... 22,875 34,403 194,806 564,103 218,052 Stockholders' equity..................................... 8,772 16,319 321,809 369,658 197,855 OTHER FINANCIAL DATA Adjusted EBITDA(3)....................................... $3,578 $7,172 $52,136 $140,141 $90,075 FLEET DATA Total number of vessels at end of period................. 3.0 5.0 15.0 27.0 24.0 Average number of vessels(4)............................. 2.9 4.4 9.6 21.7 26.7 Total voyage days for fleet(5)........................... 961 1,517 3,215 7,436 8,634 Total time charter days for fleet........................ 160 543 1,780 5,567 6,223 Total spot market days for fleet......................... 801 974 1,435 1,869 2,411 Total calendar days for fleet(6)......................... 1,042 1,609 3,517 7,905 9,747 Fleet utilization(7)..................................... 92.2% 94.3% 91.4% 94.1% 88.6% AVERAGE DAILY RESULTS Time charter equivalent(8)............................... $8,444 $11,304 $23,929 $27,881 $29,499 Other vessel operating expenses(9)....................... 4,369 5,233 4,794 5,985 6,780 General and administrative expenses(10).................. 783 1,128 2,439 3,013 2,361
(1) General and administrative expenses include management fees charged by a related party, sub-manager fees and other general and administrative expenses. We did not pay any compensation to members of our senior management or our directors in the years ended December 31, 2002 and 2003. During 2004, 2005 and 2006, we paid to the members of our senior management and to our directors aggregate compensation of approximately $4.4 million, $8.1 million and $4.2 million respectively. (2) All share and per share amounts have been restated to reflect the retroactive effect of the stock dividend in May 2004. (3) Adjusted EBITDA represents earnings before interest and finance costs, interest income, taxes, depreciation and amortization. Interest and finance costs, net includes interest expense, interest income, amortization of deferred financing fees, other financial costs, gain or loss from termination of swaps and swap fair value changes. Adjusted EBITDA is included in this report because we believe it provides investors with an understanding of operating performance over comparative periods. Adjusted EBITDA should not be considered as a substitute for operating income or net income (all as determined in accordance with generally accepted accounting principles) for the purpose of analyzing our operating performance, as Adjusted EBITDA is not defined by generally accepted accounting principles. We presented Adjusted EBITDA, however, because it is commonly used by certain investors and analysts to analyze and compare companies on the basis of operating performance and to determine a company's ability to service and/or incur debt. The following table reconciles net income, as reflected in the consolidated income statements to Adjusted EBITDA:
2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- Dollars in thousands Net Income.............................................. $201 $1,634 $32,794 $68,684 $15,141 Depreciation and amortization........................... 2,390 4,203 14,622 53,054 48,781* Interest and finance costs, net......................... 987 1,335 4,720 18,403 26,153 Adjusted EBITDA......................................... $3,578 $7,172 $52,136 $140,141 $90,075 - ---------- * Includes $328 of depreciation of other fixed assets, classified in 2006 in general and administrative expenses.
(4) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period. (5) Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days associated with major repairs, drydockings or special or intermediate surveys. (6) Calendar days are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys. (7) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period. (8) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing net voyage revenue by voyage days for the relevant time period. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. The following table reflects calculation of the TCE (all amounts are expressed in thousands of U.S. dollars, except for Average Daily Time Charter Equivalent amounts and Total Voyage Days):
2002 2003 2004 2005 2006 ---- ---- ---- ---- ---- Dollars in thousands, except average daily results Voyage revenues................................................. $11,426 $23,085 $93,829 $244,215 $310,043 Less: Voyage expenses.......................................... (3,311) (5,937) (16,898) (36,889) (55,351) ------- ------- -------- -------- -------- Time charter equivalent revenue.......................... $8,115 $17,148 $76,931 $207,326 $254,692 ====== ======= ======= ======== ======== Total voyage days........................................ 961 1,517 3,215 7,436 8,634 Average Daily Time Charter Equivalent.................... $8,444 $11,304 $23,929 $27,881 $29,499
(9) Daily other vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing other vessel operating expenses by fleet calendar days for the relevant time period. (10) Daily general and administrative expenses are calculated by dividing general and administrative expenses by fleet calendar days for the relevant time period. B. Capitalization and Indebtedness Not Applicable. C. Reasons for the Offer and Use of Proceeds Not Applicable. D. Risk Factors The following risks relate principally to the industry in which we operate and our business in general. Any of the risk factors could materially and adversely affect our business, financial condition or operating results and the trading price of our common stock. Risks Related to Our Industry The international tanker industry is both cyclical and volatile and this may lead to reductions and volatility in our charter rates when we re-charter our vessels, vessel values and our results of operation The international tanker industry is cyclical with attendant volatility in charter hire rates and industry profitability. The degree of charter hire volatility within the tanker industry has varied widely. If we enter into a charter when charter rates are low, our revenues and earnings will be adversely affected. In addition, a decline in charter hire rates likely will cause the value of our vessels to decline. The degree of charter rate volatility among different types of tankers has varied widely. Although our fleet deployment strategy may limit our exposure, we are nonetheless exposed to changes in spot rates for tankers and such changes may affect our earnings and the value of our vessels at any given time. The factors affecting the supply and demand for our tankers are outside our control and are unpredictable. The nature, timing, direction and degree of changes in industry conditions are also unpredictable. Factors that influence demand for tanker capacity include: o demand for refined petroleum products and crude oil; o changes in crude oil production and refining capacity; o the location of regional and global crude oil refining facilities that affect the distance that refined petroleum products and crude oil are to be moved by sea; o global and regional economic and political conditions; o developments in international trade; o changes in seaborne and other transportation patterns, including changes in the distances over which cargoes are transported; o environmental and other regulatory developments; o currency exchange rates; and o weather. The factors that influence the supply of oceangoing vessel capacity include: o the number of newbuilding deliveries; o the scrapping rate of older vessels; o the price of steel; o changes in environmental and other regulations that may limit the useful lives of vessels; o port or canal congestion; o the number of vessels that are out of service; and o changes in global crude oil production. The international tanker industry has experienced historically high charter rates and vessel values in the recent past and there can be no assurance that these historically high charter rates and vessel values will be sustained Charter rates in the tanker industry recently have been near historically high levels. We anticipate that future demand for our vessels, and in turn our future charter rates, will be dependent upon continued economic growth in the world's economy as well as seasonal and regional changes in demand and changes in the capacity of the world's fleet. We believe that these charter rates are the result of continued economic growth in the world economy that exceeds growth in global vessel capacity. There can be no assurance that economic growth will not stagnate or decline leading to a decrease in vessel values and charter rates. A decline in charter rates could have a material adverse effect on our business, financial condition, results of operation and ability to pay dividends. Compliance with environmental laws or regulations may adversely affect our operations The shipping industry in general, our business and the operation of our tankers in particular, are affected by a variety of governmental regulations in the form of numerous international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which such tankers operate, as well as in the country or countries in which such tankers are registered. These regulations include: o the United States Oil Pollution Act of 1990, or OPA, which imposes strict liability for the discharge of oil into the 200-mile United States exclusive economic zone, the obligation to obtain certificates of financial responsibility for vessels trading in United States waters and the requirement that newly constructed tankers that trade in United States waters be constructed with double-hulls; o the International Convention on Civil Liability for Oil Pollution Damage of 1969 entered into by many countries (other than the United States) relating to strict liability for pollution damage caused by the discharge of oil; o the International Maritime Organization, or IMO, International Convention for the Prevention of Pollution from Ships with respect to strict technical and operational requirements for tankers; o the IMO International Convention for the Safety of Life at Sea of 1974, or SOLAS, with respect to crew and passenger safety; o the International Convention on Load Lines of 1966 with respect to the safeguarding of life and property through limitations on load capability for vessels on international voyages; and o the United States Marine Transportation Security Act of 2002. More stringent maritime safety rules are being imposed worldwide as a result of the oil spill in November 2002 relating to the loss of the m.t. Prestige, a 26-year old single-hull tanker owned by a company not affiliated with us. Additional laws and regulations may also be adopted that could limit our ability to do business or increase the cost of our doing business and that could have a material adverse effect on our operations. In addition, we are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. In the event of war or national emergency, our tankers may be subject to requisition by the government of the flag flown by the tanker without any guarantee of compensation for lost profits. We believe our tankers are maintained in good condition in compliance with present regulatory requirements, are operated in compliance with applicable safety/environmental laws and regulations and are insured against usual risks for such amounts as our management deems appropriate. The tankers' operating certificates and licenses are renewed periodically during each tanker's required annual survey. However, government regulation of tankers, particularly in the areas of safety and environmental impact may change in the future and require us to incur significant capital expenditures on our ships to keep them in compliance. Because the market value of our vessels may fluctuate significantly, we may incur losses when we sell vessels or we may be required to write down their carrying value, which will adversely affect our earnings The fair market value of our vessels may increase and decrease depending on the following factors: o general economic and market conditions affecting the international tanker industry; o competition from other shipping companies; o types and sizes of vessels; o other modes of transportation; o cost of newbuildings; o governmental or other regulations; o prevailing level of charter rates; and o technological advances. If we sell vessels at a time when vessel prices have fallen and before an impairment is identified the sale may be at less than the vessel's carrying amount in our financial statements or if vessel prices have fallen below the carrying amount in our financial statements we may be required to write down the carrying amount, with the result that we shall incur a loss and a reduction in earnings. An increase in the supply of vessel capacity without an increase in demand for vessel capacity would likely cause charter rates and vessel values to decline, which could have a material adverse effect on our revenues and profitability The supply of vessels generally increases with deliveries of new vessels and decreases with the scrapping of older vessels, conversion of vessels to other uses, such as floating production and storage facilities, and loss of tonnage as a result of casualties. Currently there is significant new building activity with respect to virtually all sizes and classes of vessels. If the amount of tonnage delivered exceeds the number of vessels being scrapped, vessel capacity will increase. If the supply of vessel capacity increases and the demand for vessel capacity does not, the charter rates paid for our vessels as well as the value of our vessels could materially decline. Such a decline in charter rates and vessel values would likely have a material adverse effect on our revenues and profitability. Our operating results from our tankers are subject to seasonal fluctuations, which may adversely affect our operating results and ability to pay dividends We operate our tankers in markets that have historically exhibited seasonal variations in demand and, therefore, charter rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The tanker sector is typically stronger in the fall and winter months in anticipation of increased oil consumption of oil and petroleum in the northern hemisphere during the winter months. Our Handymax tankers carry, in part, refined petroleum products such as gasoline, jet fuel, kerosene, naphtha and heating oil. As a result, our revenues from our tankers may be weaker during the fiscal quarters ended June 30 and September 30, and, conversely, revenues may be stronger in fiscal quarters ended December 31 and March 31. This seasonality could materially affect our operating results and cash available for dividends in the future. Compliance with safety and other vessel requirements imposed by classification societies may be very costly and may adversely affect our business The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. Our vessels are currently enrolled with the American Bureau of Shipping, Lloyd's Register of Shipping or Det Norske Veritas, each of which is a member of the International Association of Classification Societies. A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be dry docked every two to three years for inspection of the underwater parts of such vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable, which would negatively impact our revenues. World events could adversely affect our results of operations and financial condition Terrorist attacks such as the attacks on the United States on September 11, 2001, the bombings in Spain on March 11, 2004 and in London on July 7, 2005 and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks in the United States or elsewhere, continue to cause uncertainty in the world financial markets and may affect our business, operating results and financial condition. The continuing conflict in Iraq may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain any additional financing or, if we are able to obtain additional financing, to do so on terms favorable to us. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Any of these occurrences could have a material adverse impact on our business, financial condition, results of operations and ability to pay dividends. Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination. Inspection procedures can result in the seizure of contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends. Risks Related to Our Business If we fail to manage our planned growth properly, we may not be able to successfully expand our market share We intend to continue to grow our fleet. Our growth will depend on: o locating and acquiring suitable vessels; o identifying and consummating acquisitions or joint ventures; o integrating any acquired business successfully with our existing operations; o enhancing our customer base; o managing expansion; and o obtaining required financing. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. We cannot give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection therewith. A decline in the market value of our vessels could lead to a default under our loan agreements and the loss of our vessels The loan agreements under our credit facilities contain a covenant that requires the aggregate market value of the mortgaged vessels to at all times exceed 140% of the aggregate outstanding principal amount of the loan. If the market value of our fleet declines, we may be in default of this loan covenant and we may not be able to refinance our debt or obtain additional financing. Also, declining vessel values could cause us to breach some of the covenants under the financing agreements relating to our indebtedness. If we are unable to pledge additional collateral, our lenders could accelerate our debt and foreclose on our fleet. Servicing future debt would limit funds available for other purposes such as the payment of dividends To finance our fleet expansion program, we incurred secured indebtedness. We must dedicate a portion of our cash flow from operations to pay the principal and interest on our indebtedness. These payments limit funds otherwise available for working capital, capital expenditures and other purposes. We will need to take on additional indebtedness as we expand our fleet, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes, including the payment of dividends, and our inability to service debt could lead to acceleration of our debt and foreclosure on our fleet. Our loan agreements contain restrictive covenants that may limit our liquidity and corporate activities Our loan agreements impose operating and financial restrictions on us. These restrictions may limit our ability to: o incur additional indebtedness; o create liens on our assets; o sell capital stock of our subsidiaries; o make investments; o engage in mergers or acquisitions; o pay dividends; o make capital expenditures; o change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and o sell our vessels. Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours, and we cannot guarantee that we will be able to obtain our lenders' permission when needed. This may prevent us from taking actions that are in our best interest. We depend on third party managers to manage our fleet As of December 31, 2006, we have subcontracted the day to day technical management, crewing and certain purchasing functions of all vessels in our fleet to third party managers, with the exception of three vessels for which only the crewing has been assigned to third party managers. Further, we may subcontract the technical management of vessels acquired in the future to other third party technical management companies. While our wholly-owned subsidiary, TOP Tanker Management, has direct oversight responsibility for these third party managers, the loss of their services or their failure to perform their obligations could materially and adversely affect the results of our operations. Although we may have rights against these managers if they default on their obligations, we will have no recourse against these parties. Further, we expect that we will need to seek approval from our lenders to change these third party managers. Our ability to obtain additional debt financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of operation and our ability to implement our business strategy. As we expand our business, we will need to improve our operations and financial systems and staff; if we cannot improve these systems or recruit suitable employees, our performance may be adversely affected Our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and our attempts to improve those systems may be ineffective. If we are unable to operate our financial and operations systems effectively or to recruit suitable employees as we expand our fleet, our performance may be adversely affected. Our earnings may be adversely affected if we do not successfully employ our vessels We seek to deploy our vessels both on time charters and in the spot market in a manner that will optimize our earnings. As of December 31, 2006, 15 of our vessels were contractually committed to time charters. Although these time charters provide relatively steady streams of revenue as well as a portion of the revenues generated by the charterer's deployment of the vessels in the spot market or otherwise, our tankers committed to time charters may not be available for spot voyages during an upturn in the tanker industry cycle, when spot voyages might be more profitable. The spot market is highly competitive, and spot market charter rates may fluctuate dramatically based on the supply and demand for the major commodities internationally carried by water and other factors. We cannot assure you that future spot market voyage charters will be available at rates that will allow us to operate our vessels profitably. As of December 31, 2006, 8 vessels were trading in the spot market and 1 vessel was undergoing her special survey. If we cannot continue to employ these vessels on time charters or trade them in the spot market profitably, our results of operations and operating cash flow may suffer. In the highly competitive international tanker market, we may not be able to compete for charters with new entrants or established companies with greater resources The operation of tanker vessels and transportation of crude and petroleum products, as well as the shipping industry in general, is extremely competitive. Competition arises primarily from other vessel owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater resources than we do. Competition for the transportation of oil and refined petroleum products can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets. We depend upon a few significant customers for a large part of our revenues. The loss of one or more of these customers could adversely affect our financial performance We have historically derived a significant part of our revenue from a small number of charterers. In 2006, approximately 40% of our revenue was derived from 2 charterers; in 2005, approximately 52% of our revenue was derived from 2 charterers; in 2004, approximately 44% of our revenue was derived from 2 charterers; in 2003, approximately 47% of our revenue was derived from 2 charterers and, in 2002, approximately 65% of our revenue was derived from 3 charterers. During 2006, under time charter contracts, Glencore and Vitol provided 29% and 11% of our revenues, respectively. The occurrence of any problems with these charterers may adversely affect our revenues. We may be unable to attract and retain key management personnel and other employees in the international tanker industry, which may negatively affect the effectiveness of our management and our results of operations Our success depends to a significant extent upon the abilities and efforts of our management team. We have entered into employment contracts with our President, Chief Executive Officer and Director, Evangelos Pistiolis, our Chief Financial Officer and Director, Stamatios Tsantanis and our Executive Vice President and Director, Vangelis Ikonomou. Our success will depend upon our ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not intend to maintain "key man" life insurance on any of our officers. Risks involved with operating ocean going vessels could affect our business and reputation, which would adversely affect our revenues and stock price The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of: o marine disaster o piracy; o environmental accidents; o cargo and property losses or damage; and o mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions. Any of these circumstances or events could result in death or injury to persons, loss of revenues or property, environmental damage, higher insurance rates, damage to our customer relationships, delay or rerouting, and could increase our costs or lower our revenues. The involvement of our vessels in an oil spill or other environmental disaster may harm our reputation as a safe and reliable vessel operator. If one of our vessels were involved in an accident with the potential risk of environmental contamination, the resulting media coverage could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends. Rising fuel prices may adversely affect our profits Fuel is a significant, if not the largest, operating expense for many of our shipping operations when our vessels are not under period charter. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. As a result, an increase in the price of fuel may adversely affect our profitability. Further, fuel may become much more expensive in future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail. Our vessels may suffer damage and we may face unexpected drydocking costs, which could affect our cash flow and financial condition If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. We may have to pay drydocking costs that our insurance does not cover. The inactivity of these vessels while they are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or we may be forced to move to a drydocking facility that is not conveniently located to our vessels' positions. The loss of earnings while our vessels are forced to wait for space or to relocate to drydocking facilities that are farther away from the routes on which our vessels trade would decrease our earnings. Purchasing and operating previously owned, or secondhand, vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings While we inspect previously owned, or secondhand, vessels prior to purchase, this does not normally provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Also, we do not receive the benefit of warranties from the builders if the vessels we buy are older than one year. In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we are not certain that the price for which we sell them will equal at least their carrying amount at that time. We may not have adequate insurance to compensate us if we lose our vessels We procure insurance for our fleet against those types of risks commonly insured against by vessel owners and operators. These insurances include hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance coverage, war risk insurance and insurance against loss of hire, which covers business interruptions that result in the loss of use of a vessel. While we currently have loss of hire insurance that covers, subject to annual coverage limits, all of the vessels in our fleet, we may not purchase loss of hire insurance to cover newly acquired vessels. We can give no assurance that we are adequately insured against all risks. We may not be able to obtain adequate insurance coverage at reasonable rates for our fleet in the future. The insurers may not pay particular claims. Our insurance policies contain deductibles for which we will be responsible, limitations and exclusions which may nevertheless increase our costs or lower our revenue. Maritime claimants could arrest our vessels, which could interrupt our cash flow Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest lifted. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel in our fleet for claims relating to another of our ships. Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings A government could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a vessel and becomes her owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels would negatively impact our revenues. Certain existing stockholders, who hold approximately 12.6% of our common stock, may have the power to exert control over us, which may limit your ability to influence our actions Sovereign Holdings Inc., or Sovereign Holdings, a company that is wholly owned by our President, Chief Executive Officer and Director, Evangelos J. Pistiolis, and Kingdom Holdings Inc., or Kingdom Holdings, a company owned primarily by adult relatives of our President, Chief Executive Officer and Director, Evangelos J. Pistiolis, own, directly or indirectly, approximately 12.6% of the outstanding shares of our common stock. While these shareholders have no agreement, arrangement or understanding relating to the voting of their shares of common stock, due to the number of shares of our common stock they own, they have the power to exert considerable influence over our actions. Investor confidence and the market price of our common stock may be adversely impacted if we are unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002. We are subject to Section 404 of the Sarbanes-Oxley Act of 2002, which requires us to include in our annual report on Form 20-F our management's report on, and assessment of the effectiveness of, our internal controls over financial reporting. These requirements have been applied to our annual report for the fiscal year ending December 31, 2006. In addition, beginning with the annual report for the fiscal year ending December 31, 2007, our independent registered public accounting firm will be required to attest to and report on management's assessment of the effectiveness of our internal controls over financial reporting. If we fail to achieve and maintain the adequacy of our internal controls over financial reporting, we will not be in compliance with all of the requirements imposed by Section 404. Any failure to comply with Section 404 could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could harm our business and could negatively impact the market price of our common stock. We may have to pay tax on United States source income, which would reduce our earnings Under the United States Internal Revenue Code of 1986, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not begin and end, in the United States is characterized as United States source shipping income and such income is subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code. We expect that we and each of our subsidiaries will qualify for this statutory tax exemption and we have taken this position for United States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and thereby become subject to United States federal income tax on our United States source income. Therefore, we can give no assurances on our tax-exempt status or that of any of our subsidiaries. If we or our subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries would be subject for those years to a 4% United States federal income tax on our U.S. source shipping income. The imposition of this taxation could have a negative effect on our business. U.S. tax authorities could treat us as a "passive foreign investment company," which could have adverse U.S. federal income tax consequences to U.S. holders A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. Based on our proposed method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities does not constitute "passive income," and the assets that we own and operate in connection with the production of that income do not constitute passive assets. There is, however, no direct legal authority under the PFIC rules addressing our proposed method of operation. Accordingly, no assurance can be given that the U.S. Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations. If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders will face adverse U.S. tax consequences. Under the PFIC rules, unless those shareholders make an election available under the Code (which election could itself have adverse consequences for such shareholders, as discussed below under "Tax Considerations--U.S. Federal Income Taxation of U.S. Holders"), such shareholders would be liable to pay U.S. federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our common stock. See "Tax Considerations--U.S. Federal Income Taxation of U.S. Holders" for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. shareholders if we are treated as a PFIC. Because we generate all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations We generate all of our revenues in U.S. dollars but incur approximately 6% of our expenses in currencies other than U.S. dollars, mainly Euros. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to the other currencies, in particular the Euro. Should the Euro appreciate relatively to the U.S. Dollar, then our expenses will increase in U.S Dollar terms, thereby decreasing our net income. Specifically, in the 12 months ended December 31, 2006, the value of the U.S. dollar decreased by 12.53% as compared to the Euro. We have not hedged these risks. Our operating results could suffer as a result. We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Security holder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our security holders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would security holders of a corporation incorporated in a United States jurisdiction. ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Our predecessor, Ocean Holdings Inc. was formed in January 2000, under the laws of Marshall Islands and renamed to TOP Tankers Inc. in May 2004. On July 23, 2004, our common stock was listed on the Nasdaq National Market, under the symbol "TOPT", in connection with our initial public offering. The net proceeds of our initial public offering, approximately $124.6 million, were primarily used to finance the acquisition of 10 vessels, comprised of 8 ice-class double-hull Handymax tankers and 2 double-hull Suezmax tankers. The total cost of the acquisition was approximately $251.3 million. The current address of our principal executive office is 1 Vas. Sofias and Meg. Alexandrou Str, 15124 Maroussi, Greece. The telephone number of our registered office is + 30 210 8128000. On November 5, 2004, we completed a follow-on offering of our common stock. The net proceeds of our follow-on offering, approximately $139.5 million, were used primarily to finance the acquisition of 5 double-hull Suezmax tankers. The total cost of the acquisition was approximately $249.3 million. During 2005, we acquired 5 double-hull Handymax and 4 double-hull Suezmax tankers at a total cost of $453.4 million and sold 1 double-hull Handymax and our last single-hull Handysize tanker. We finally sold and leased-back 5 double-hull Handymax tankers for a period of 7 years. From April till July 2006, we issued through a "controlled equity offering" 3,907,365 shares of common stock at par value of $0.01. The net proceeds totaled $26.9 million. During 2006, we sold and leased-back 4 double-hull Handymax, 4 double-hull Suezmax and 5 double-hull Suezmax tankers for a period of 5 years, 5 years and 7 years, respectively. Additionally, we sold 3 double-hull Handymax tankers and we entered into an agreement with SPP Shipbuilding Co, Ltd of the Republic of Korea for the construction of 6 Product / Chemical tankers. As of December 31, 2006, our fleet size consisted of 24 vessels - 13 Suezmax Tankers and 11 Handymax Tankers, or 2.5 million dwt (including 18 vessels sold and leased back) as compared to 27 vessels, or 2.6 million dwt (including 5 vessels sold and leased back) as of December 31, 2005. Based on the Memorandum of Agreement dated March 30, 2007, we agreed to sell the vessel M/T Errorless to an unrelated party for a consideration of $52.5 million. The vessel is expected to be delivered to her new owners in the second quarter of 2007. B. Business Overview Business Strategy Our business strategy is focused on building and maintaining enduring relationships with participants in the international tanker industry, including leading charterers, oil companies, oil traders, brokers, suppliers, classification societies, insurers and others. We seek to continue to create long-term value principally by acquiring and operating high quality double-hull, refined petroleum products and crude oil tankers. We will consider acquisitions in other industry segments as appropriate. We believe we have established a reputation in the international ocean transport industry for operating and maintaining our fleet with high standards of performance, reliability and safety. We have assembled a management team comprised of executives who have extensive experience operating large and diversified fleets of tankers and who have strong ties to a number of national, regional and international oil companies, charterers and traders. Our Fleet We are a provider of international seaborne transportation services, carrying refined petroleum products and crude oil. As of December 31, 2006, our fleet consisted of 24 vessels (including 18 vessels sold and leased-back), comprised of 11 double-hull Handymax product tankers and 13 double-hull Suezmax tankers, with a total cargo carrying capacity of approximately 2.5 million dwt. We actively manage the deployment of our fleet between spot market voyage charters, which generally last from several days to several weeks, and time charters, which can last up to several years. 88.2% of our fleet by dwt were sister ships, which enhances the revenue generating potential of our fleet by providing us with operational and scheduling flexibility. Sister ships also increase our operating efficiencies because technical knowledge can be applied to all vessels in a series and create cost efficiencies and economies of scale when ordering spare parts, supplying and crewing these vessels. During 2006, we sold and leased-back 4 double-hull Handymax, 4 double-hull Suezmax and 5 double-hull Suezmax tankers for a period of 5 years, 5 years and 7 years, respectively. Additionally, we sold 3 double-hull Handymax tankers and we entered into an agreement with SPP Shipbuilding Co, Ltd of the Republic of Korea for the construction of 6 Product / Chemical tankers for a consideration of approximately $285.4 million, which will be funded with secured credit lines and working capital. The vessels will be delivered during the first and second quarters of 2009.
Dwt Year Daily Base Profit Sharing --- Built Charter Type Expiry Rate Above Base Rate (2007) ----- 13 Suezmax Tankers TimelessC................. 154,970 1991 Spot FlawlessC................. 154,970 1991 Spot StoplessC................. 154,970 1991 Spot PricelessC................ 154,970 1991 Time Charter Q3/2008 $35,000 50% thereafter FaultlessD................ 154,970 1992 Spot NoiselessD................ 149,554 1992 Time Charter Q2/2010 $37,000(1) None StainlessD................ 149,599 1992 Spot EndlessD.................. 135,915 1992 Time Charter Q4/2008A $36,500 None LimitlessD................ 136,055 1993 Spot Stormless................. 150,038 1993 Time Charter Q4/2009 $36,900 None Ellen P................... 146,286 1996 Spot Errorless................. 147,048 1993 Spot Edgeless.................. 147,048 1994 Spot 11 Handymax Tankers VictoriousB............... 47,084 1991 Time Charter Q3/2009 $14,000 50% thereafter SovereignB................ 47,084 1992 Time Charter Q3/2009 $14,000 50% thereafter InvincibleB............... 47,084 1992 Time Charter Q3/2009 $14,000 50% thereafter RelentlessB............... 47,084 1992 Time Charter Q3/2009 $14,000 50% thereafter VanguardC................. 47,084 1992 Time Charter Q1/2010 $15,250 50% thereafter RestlessB................. 47,084 1991 Time Charter Q4/2009 $15,250 50% thereafter SpotlessC................. 47,094 1991 Time Charter Q1/2010 $15,250 50% thereafter DoubtlessC................ 47,076 1991 Time Charter Q1/2010 $15,250 50% thereafter FaithfulC................. 45,720 1992 Time Charter Q2/2010 $14,500 100% first $500 + 50% thereafter Dauntless................ 46,168 1999 Time Charter Q1/2010 $16,250 100% first $1,000 + 50% thereafter Ioannis P................ 46,346 2003 Time Charter Q4/2010 $18,000 100% first $1,000 + 50% thereafter Total Tanker DWT 2,451,301
A. Charterers have option to extend contract for an additional four-year period B. Vessels sold and leased back in August and September 2005 for a period of 7 years C. Vessels sold and leased back in March 2006 for a period of 5 years D. Vessels sold and leased back in April 2006 for a period of 7 years 1. Base rate will change to $36,000 in Q2 2007 and $35,000 in Q2 2008 until expiration. Chartering of the Fleet As of December 31, 2006, 15 of the 24 tankers (11 Handymax tankers and 4 Suezmax tankers) operated under time charter contracts with an average term of over three years with all but three of the time charters including profit sharing arrangements. All 11 of our Handymax tankers operated under time charter contracts expiring in 2009 and 2010. Four of our Handymax tankers were deployed under time charter contracts expiring in Q3 of 2009 and have a base rate of $14,000 per day. Should the vessels generate revenues, on a quarterly basis, in excess of the base rate, we will receive 50% of the excess of the base rate. One of our Handymax tankers was deployed under time charter contract expiring in Q4 of 2009 and has a base rate of $15,250 per day. Should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 50% of the excess of the base rate. Three of our Handymax tankers were deployed under time charter contracts expiring in Q1 of 2010 and had a base rate of $13,250 per day. Based on this agreement, should the vessels had generated revenues, on a quarterly basis, in excess of the base rate, we would have received 100% of the first $1,250 per day above the base rate and 50% of the excess thereafter. However, in Q1 2007, these vessels were redelivered and are currently deployed under time charter contracts expiring in Q1 of 2010. These contracts have a base rate of $15,250 per day and should the vessels generate revenues, on a quarterly basis, in excess of the base rate, we will receive 50% of the excess of the base rate. One of our Handymax tankers was deployed under time charter contract expiring in Q2 of 2007 and had a base rate of $13,250 per day. Based on this agreement, should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 100% of the first $1,250 per day above the base rate and 50% of the excess thereafter. This contract is due to expire in Q2 2007 and upon expiration the vessel will enter into a new a time charter contract expiring in Q2 of 2010 and will have a base rate of $14,500 per day. Should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 100% of the first $500 per day above the base rate and 50% of the excess thereafter. One of our Handymax tankers was deployed under a time charter contract expiring in Q1 of 2010 and has a base rate of $16,250 per day. Should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 100% of the first $1,000 per day above the base rate and 50% of the excess thereafter. One of our Handymax tankers was deployed under a time charter contract expiring in Q4 of 2010 and has a base rate of $18,000 per day. Should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 100% of the first $1,000 per day above the base rate and 50% of the excess thereafter. 4 of our 13 Suezmax tankers operated under time charter contracts expiring from 2008 to 2010. One of our Suezmax tankers was deployed under a time charter contract expiring in Q3 of 2008 and has a base rate of $35,000 per day. Should the vessel generate revenues, on a quarterly basis, in excess of the base rate, we will receive 50% of the excess of the base rate. The remaining 3 Suezmax tankers were deployed under time charter contracts expiring in Q4 of 2008, Q4 of 2009 and Q2 of 2010, earning a daily rate of $36,500, $36,900 and $37,000 respectively. Management of the Fleet Since July 1, 2004, TOP Tanker Management, our wholly-owned subsidiary, has been responsible for all of the chartering, operational and technical management of our fleet, including crewing, maintenance, repair, capital expenditures, drydocking, vessel taxes, maintaining insurance and other vessel operating expenses under management agreements with our vessel owning subsidiaries. Prior to July 1, 2004, the operations of our fleet were managed by Primal Tankers Inc., which was wholly-owned by the father of our Chief Executive Officer. As of December 31, 2006 TOP Tanker Management has subcontracted the day to day technical management and crewing of 5 Handymax tankers and 8 Suezmax tankers to V.Ships Management Limited, a ship management company, and has subcontracted the day to day technical management and crewing of 5 Handymax tankers and 3 Suezmax tankers to Hanseatic Shipping Company Ltd, a ship management company operating in Cyprus. Additionally, TOP Tanker Management has subcontracted the crewing of 1 Handymax tanker and 2 Suezmax tankers to V. Ships Management Limited. TOP Tanker Management pays a monthly fee of $10,000 per vessel for technical management and crewing of the 13 vessels and $3,100 per vessel for the crewing of 3 vessels under its agreements with V. Ships Management and a monthly fee of $7,083 per vessel for the 8 vessels under its agreements with Hanseatic Shipping Company. Crewing and Employees As of December 31, 2005 and 2006, TOP TANKERS had 3 employees, while our wholly-owned subsidiary, TOP Tanker Management, employed approximately 58 employees in 2005 and 68 employees in 2006, all of whom are shore-based. TOP Tanker Management ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that our vessels employ experienced and competent personnel. V. Ships Management and Hanseatic Shipping Company are responsible for the crewing of the fleet. Such responsibilities include training, transportation, compensation and insurance of the crew. All of the employees of TOP Tanker Management are subject to a general collective bargaining agreement covering employees of shipping agents in Greece. These agreements set industry-wide minimum standards. We have not had any labor problems with our employees under this collective bargaining agreement and consider our workplace and labor union relations to be good. Environmental Regulation Government regulation significantly affects the ownership and operation of our vessels. They are subject to international conventions, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered. We cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. Various governmental and quasi-governmental agencies require us to obtain permits, licenses and certificates for the operation of our vessels. We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with U.S. and international regulations. We believe that the operation of our vessels are in substantial compliance with applicable environmental laws and regulations; however, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. Our vessels are subject to both scheduled and unscheduled inspections by a variety of governmental and private entities, each of which may have unique requirements. These entities include the local port authorities (U.S. Coast Guard, harbor master or equivalent), classification societies, flag state administration (country of registry) and charterers, particularly terminal operators and oil companies. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels. International Maritime Organization (IMO) The International Maritime Organization, or IMO (the United Nations agency for maritime safety), has adopted the International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, which has been updated through various amendments, or the "MARPOL Convention". The MARPOL Convention relates to environmental standards including oil leakage or spilling, garbage management, as well as the handling and disposal of noxious liquids, harmful substances in packaged forms, sewage and air emissions. These regulations, which have been implemented in many jurisdictions in which our vessels operate, provide in part, that: o 25 year old tankers must be of double-hull construction or of a mid-deck design with double-sided construction, unless: (1) they have wing tanks or double-bottom spaces not used for the carriage of oil, which cover at least 30% of the length of the cargo tank section of the hull or bottom; or (2) they are capable of hydrostatically balanced loading (loading less cargo into a tanker so that in the event of a breach of the hull, water flows into the tanker, displacing oil upwards instead of into the sea); o 30 year old tankers must be of double-hull construction or mid-deck design with double sided construction; and o all tankers will be subject to enhanced inspections. Also, under IMO regulations, a tanker must be of double-hull construction or a mid-deck design with double-sided construction or be of another approved design ensuring the same level of protection against oil pollution if the tanker: o is the subject of a contract for a major conversion or original construction on or after July 6, 1993; o commences a major conversion or has its keel laid on or after January 6, 1994; or o completes a major conversion or is a newbuilding delivered on or after July 6, 1996. Our vessels are also subject to regulatory requirements including the phase-out of single-hull tankers, imposed by the IMO. Effective September 2002, the IMO accelerated its existing timetable for the phase-out of single-hull oil tankers. At that time, these regulations required the phase-out of most single- hull oil tankers by 2015 or earlier, depending on the age of the tanker and whether it has segregated ballast tanks. Under the regulations, the flag state may allow for some newer single hull ships registered in its country that conform to certain technical specifications to continue operating until the 25th anniversary of their delivery. Any port state, however, may deny entry of those single hull tankers that are allowed to operate until their 25th anniversary to ports or offshore terminals. These regulations have been adopted by over 150 nations, including many of the jurisdictions in which our tankers operate. As result of the oil spill in November 2002 relating to the loss of the M/T Prestige, which was owned by a company not affiliated with us, in December 2003, the Marine Environmental Protection Committee of the IMO, or MEPC, adopted an amendment to the MARPOL Convention, which became effective in April 2005. The amendment revised an existing regulation 13G accelerating the phase-out of single hull oil tankers and adopted a new regulation 13H on the prevention of oil pollution from oil tankers when carrying heavy grade oil. Under the revised regulation, single hull oil tankers must be phased out no later than April 5, 2005 or the anniversary of the date of delivery of the ship on the date or in the year specified in the following table: - -------------------------------------------------------------------------------- Category of Oil Tankers Date of Year Category 1 oil tankers of 20,000 dwt and above carrying crude oil, fuel April 5, 2005 for ships delivered on oil, heavy diesel oil or lubricating April 5, 1982 or earlier; or 2005 for oil as cargo, and of 30,000 dwt and ships delivered after April 5, 1982 above carrying other oils, which do not comply with the requirements for protectively located segregated ballast tanks Category 2 - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy diesel oil or lubricating April 5, 2005 for ships delivered on oil as cargo, and of 30,000 dwt and April 5, 1977 or earlier 2005 for above carrying other oils, which do ships delivered after April 5, 1977 comply with the protectively located but before January 1, 1978 2006 for segregated ballast tank requirements ships delivered in 1978 and 1979 2007 for ships delivered in 1980 and 1981 and 2008 for ships delivered in 1982 2009 for ships delivered in 1983 2010 for Category 3 - oil tankers of 5,000 dwt ships delivered in 1984 or later and above but less than the tonnage specified for Category 1 and 2 tankers. - -------------------------------------------------------------------------------- Under the revised regulations, the flag state may allow for some newer single hull oil tankers registered in its country that conform to certain technical specifications to continue operating until the earlier of the anniversary of the date of delivery of the vessel in 2015 or the 25th anniversary of their delivery. Any port state, however, may deny entry of those single hull oil tankers that are allowed to operate until the earlier of their anniversary date of delivery in 2015 or the year in which the ship reaches to 25 years of age after the date of its delivery, whichever is earlier. The MEPC, in October 2004, adopted a unified interpretation to regulation 13G that clarified the date of delivery for tankers that have been converted. Under the interpretation, where an oil tanker has undergone a major conversion that has resulted in the replacement of the fore-body, including the entire cargo carrying section, the major conversion completion date of the oil tanker shall be deemed to be the date of delivery of the ship, provided that: o the oil tanker conversion was completed before July 6, 1996; o the conversion included the replacement of the entire cargo section and fore-body and the tanker complies with all the relevant provisions of MARPOL Convention applicable at the date of completion of the major conversion; and o the original delivery date of the oil tanker will apply when considering the 15 years of age threshold relating to the first technical specifications survey to be completed in accordance with MARPOL Convention. In December 2003, the MEPC adopted a new regulation 13H on the prevention of oil pollution from oil tankers when carrying heavy grade oil, or HGO, which includes most of the grades of marine fuel. The new regulation bans the carriage of HGO in single hull oil tankers of 5,000 dwt and above after April 5, 2005, and in single hull oil tankers of 600 dwt and above but less than 5,000 dwt, no later than the anniversary of their delivery in 2008. Under regulation 13H, HGO means any of the following: o crude oils having a density at 15(0)C higher than 900 kg/m3; o fuel oils having either a density at 15(0)C higher than 900 kg/ m3 or a kinematic viscosity at 50(0)C higher than 180 mm2/s; o bitumen, tar and their emulsions. Under the regulation 13H, the flag state may allow continued operation of oil tankers of 5,000 dwt and above, carrying crude oil with a density at 15(0)C higher than 900 kg/m3 but lower than 945 kg/m3, that conform to certain technical specifications and, in the opinion of the such flag state, the ship is fit to continue such operation, having regard to the size, age, operational area and structural conditions of the ship and provided that the continued operation shall not go beyond the date on which the ship reaches 25 years after the date of its delivery. The flag state may also allow continued operation of a single hull oil tanker of 600 dwt and above but less than 5,000 dwt, carrying HGO as cargo, if, in the opinion of the such flag state, the ship is fit to continue such operation, having regard to the size, age, operational area and structural conditions of the ship, provided that the operation shall not go beyond the date on which the ship reaches 25 years after the date of its delivery. The flag state may also exempt an oil tanker of 600 dwt and above carrying HGO as cargo if the ship is either engaged in voyages exclusively within an area under its jurisdiction, or is engaged in voyages exclusively within an area under the jurisdiction of another party, provided the party within whose jurisdiction the ship will be operating agrees. The same applies to vessels operating as floating storage units of HGO. Any port state, however, can deny entry of single hull tankers carrying HGO which have been allowed to continue operation under the exemptions mentioned above, into the ports or offshore terminals under its jurisdiction, or deny ship-to-ship transfer of HGO in areas under its jurisdiction except when this is necessary for the purpose of securing the safety of a ship or saving life at sea. Revised Annex I to the MARPOL Convention entered into force in January 2007. Revised Annex I incorporates various amendments adopted since the MARPOL Convention entered into force in 1983, including the amendments to regulation 13G (regulation 20 in the revised Annex) and Regulation 13H (regulation 21 in the revised Annex). Revised Annex I also imposes construction requirements for oil tankers delivered on or after January 1, 2010. A further amendment to revised Annex I includes an amendment to the definition of "heavy grade oil" that will broaden the scope of regulation 21. In September 1997, the IMO adopted Annex VI to the International Convention for the Prevention of Pollution from Ships to address air pollution from ships. Annex VI was ratified in May 2004 and became effective May 19, 2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. We believe that all our vessels are currently compliant in all material respects with these regulations. Additional or new conventions, laws and regulations may be adopted that could adversely affect our business, cash flows, results of operations and financial condition. The IMO has also adopted the International Convention for the Safety of Life at Sea, or SOLAS Convention, which imposes a variety of standards to regulate design and operational features of ships. SOLAS Convention standards are revised periodically. We believe that all our vessels are in substantial compliance with SOLAS Convention standards. The requirements contained in the International Safety Management Code, or ISM Code, promulgated by the IMO, also affect our operations. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We intend to rely upon the safety management system that we and our third-party technical managers have developed. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel's management with code requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. We are required to renew these documents of compliance and safety management certificates annually. Noncompliance with the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The U.S. Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code by the applicable deadlines will be prohibited from trading in U.S. and European Union ports, as the case may be. The IMO has negotiated international conventions that impose liability for oil pollution in international waters and a signatory's territorial waters. Additional or new conventions, laws and regulations may be adopted which could limit our ability to do business and which could have a material adverse effect on our business and results of operations. Although the United States is not a party to these conventions, many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969. Under this convention, and depending on whether the country in which the damage results is a party to the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage, a vessel's registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses. Under an amendment to the 1992 protocol that became effective on November 1, 2003 for vessels of 5,000 to 140,000 gross tons (a unit of measurement for the total enclosed spaces within a vessel), liability will be limited to approximately $6.75 million plus $944.7 for each additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability will be limited to approximately $134.4 million. As the convention calculates liability in terms of a basket of currencies, these figures are based on currency exchange rates on January 23, 2007. The right to limit liability is forfeited under the International Convention on Civil Liability for Oil Pollution Damage where the spill is caused by the owner's actual fault; and under the 1992 Protocol, where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the International Convention on Civil Liability for Oil Pollution Damage has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that convention. We believe that our P&I insurance will cover the liability under the plan adopted by the IMO. U.S Oil Pollution Act of 1990, Comprehensive Environmental Response, Compensation and Liability Act of the Clean Water Act OPA established an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. OPA affects all owners and operators whose vessels trade with the United States, or its territories or possessions, or whose vessels operate in the waters of United States, which include the U.S territorial sea and the 200 nautical mile exclusive economic zone around the United States. The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, applies to the discharge of hazardous substances (other than oil) whether on land or at sea. Both OPA and CERCLA impact our operations. Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" who are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from oil spills from their vessels. These other damages are defined broadly to include: o natural resource damages and related assessment costs; o real and personal property damages; o net loss of taxes, royalties, rents, profits or earnings capacity; o net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources. OPA previously limited the liability of responsible parties to the greater of $1,200 per gross ton or $10 million per tanker that is over 3,000 gross tons (subject to possible adjustment for inflation). Amendments to OPA signed into law in July 2006 increased these limits on the liability of responsible parties to the greater of $1,900 per gross ton or $16 million per double hull tanker that is over 3,000 gross tons. The act specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters. In some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. CERCLA, which applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages. Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million. These limits of liability do not apply, however, where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct. These limits do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA, CERCLA and all applicable state regulations in the ports where our vessels call. OPA requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under the act. The U.S. Coast Guard has enacted regulations requiring evidence of financial responsibility in the amount of $1,500 per gross ton for tankers, coupling the OPA limitation on liability of $1,200 per gross ton with the CERCLA liability limit of $300 per gross ton. The U.S. Coast Guard has indicated that it expects to adopt regulations requiring evidence of financial responsibility in amounts that reflect the higher limits of liability imposed by the July amendments to OPA, as described above. Under the regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA regulations, an owner or operator of more than one tanker is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the tanker having the greatest maximum strict liability under OPA and CERCLA. We have provided such evidence and received certificates of financial responsibility from the U.S. Coast Guard for each of our vessels required to have one. We insure each of our vessels with pollution liability insurance in the maximum commercially available amount of $1.0 billion. A catastrophic spill could exceed the insurance coverage available, in which event there could be a material adverse effect on our business. Under OPA, with certain limited exceptions, all newly-built or converted vessels operating in U.S. waters must be built with double-hulls, and existing vessels that do not comply with the double-hull requirement will be prohibited from trading in U.S. waters over a 20-year period (1995-2015) based on size, age and place of discharge, unless retrofitted with double-hulls. Notwithstanding the prohibition to trade schedule, the act currently permits existing single-hull and double-sided tankers to operate until the year 2015 if their operations within U.S. waters are limited to discharging at the Louisiana Offshore Oil Port or off-loading by lightering within authorized lightering zones more than 60 miles off-shore. Lightering is the process by which vessels at sea off-load their cargo to smaller vessels for ultimate delivery to the discharge port. Under OPA, with certain limited exceptions, all newly built or converted tankers operating in U.S. waters must be built with double-hulls. Existing vessels that do not comply with the double-hull requirement must be phased out over a 20-year period, from 1995 to 2015, based on size, age and place of discharge, unless retrofitted with double-hulls. Notwithstanding the phase-out period, OPA currently permits existing single-hull tankers to operate until the year 2015 if their operations within U.S. waters are limited to: o discharging at the Louisiana Offshore Oil Port, also known as the LOOP; or o unloading with the aid of another vessel, a process referred to in the industry as lightering, within authorized lightering zones more than 60 miles off-shore. Owners or operators of tankers operating in the waters of the United States must file vessel response plans with the U.S. Coast Guard, and their tankers are required to operate in compliance with their U.S. Coast Guard approved plans. These response plans must, among other things: o address a "worst case" scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a "worst case discharge"; o describe crew training and drills; and o identify a qualified individual with full authority to implement removal actions. We have obtained vessel response plans approved by the U.S. Coast Guard for our vessels operating in the waters of the United States. In addition, the U.S. Coast Guard has announced it intends to propose similar regulations requiring certain vessels to prepare response plans for the release of hazardous substances. In addition, the United States Clean Water Act prohibits the discharge of oil or hazardous substances in United States navigable waters and imposes strict liability in the form of penalties for unauthorized discharges. The Clean Water Act also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA, discussed above. The United States Environmental Protection Agency, or EPA, has exempted the discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. ports from Clean Water Act permitting requirements. However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the exemption in EPA's regulations for all discharges incidental to the normal operation of a vessel as of September 30, 2008, and directing the EPA to develop a system for regulating all discharges from vessels by that date. Although the EPA has indicated that it will appeal this decision, if the exemption is repealed, we may be subject to Clean Water Act permit requirements that could include ballast water treatment obligations that could increase the cost of operating in the United States. For example, this could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters. The National Invasive Species Act, or NISA, was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. NISA established a ballast water management program for ships entering U.S. waters. Under NISA, mid-ocean ballast water exchange is voluntary, except for ships heading to the Great Lakes, Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil. However, NISA's exporting and record-keeping requirements are mandatory for vessels bound for any port in the United States. Although ballast water exchange is the primary means of compliance with the act's guidelines, compliance can also be achieved through the retention of ballast water onboard the ship, or the use of environmentally sound alternative ballast water management methods approved by the U.S. Coast Guard. If the mid-ocean ballast exchange is made mandatory throughout the United States, or if water treatment requirements or options are instituted, the costs of compliance could increase for ocean carriers. Our operations occasionally generate and require the transportation, treatment and disposal of both hazardous and non-hazardous wastes that are subject to the requirements of the U.S. Resource Conservation and Recovery Act, or RCRA, or comparable state, local or foreign requirements. In addition, from time to time we arrange for the disposal of hazardous waste or hazardous substances at offsite disposal facilities. If such materials are improperly disposed of by third parties, we might still be liable for clean up costs under applicable laws. Several of our vessels currently carry cargoes to U.S. waters regularly and we believe that all of our vessels are suitable to meet OPA and other U.S. environmental requirements and that they would also qualify for trade if chartered to serve U.S. ports. European Union Tanker Restrictions In July 2003, in response to M/T Prestige oil spill in November 2002, the European Union adopted regulation that accelerates the IMO single hull tanker phase-out timetable. Under the regulation no oil tanker is allowed to operate under the flag of a EU member state, nor shall any oil tanker, irrespective of its flag, be allowed to enter into ports or offshore terminals under the jurisdiction of a EU member state after the anniversary of the date of delivery of the ship in the year specified in the following table, unless such tanker is a double hull oil tanker: - -------------------------------------------------------------------------------- Category of Oil Tankers Date or Year - -------------------------------------------------------------------------------- Category 1 oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy diesel oil or 2003 for ships delivered in 1980 or earlier lubricating oil as cargo, and of 2004 for ships delivered in 1981 30,000 dwt and above carrying 2005 for ships delivered in 1982 or later other oils, which do not comply with the requirements for protectively located segregated ballast tanks - -------------------------------------------------------------------------------- Category 2 - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy diesel oil or 2003 for ships delivered in 1975 or earlier lubricating oil as cargo, and of 2004 for ships delivered in 1976 30,000 dwt and above carrying 2005 for ships delivered in 1977 other oils, which do comply with 2006 for ships delivered in 1978 and 1979 the protectively located 2007 for ships delivered in 1980 and 1981 segregated ballast tank 2008 for ships delivered in 1982 requirements 2009 for ships delivered in 1983 2010 for ships delivered in 1984 or later and Category 3 - oil tankers of 5,000 dwt and above but less than the tonnage specified for Category 1 and 2 tankers. - -------------------------------------------------------------------------------- Furthermore, under the regulation, all oil tankers of 5,000 dwt or less must comply with the double hull requirements no later than the anniversary date of delivery of the ship in the year 2008. The regulation, however, provides that oil tankers operated exclusively in ports and inland navigation may be exempted from the double hull requirement provided that they are duly certified under inland water legislation. The European Union, following the lead of certain European Union nations such as Italy and Spain, as of October 2003, has also banned all single- hull tankers of 600 dwt and above carrying HGO, regardless of flag, from entering or leaving its ports or offshore terminals or anchoring in areas under its jurisdiction. Commencing in 2005, certain single- hull tankers above 15 years of age will also be restricted from entering or leaving European Union ports or offshore terminals and anchoring in areas under European Union jurisdiction. The European Union is also considering legislation that would: (1) ban manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in a six -month period) from European waters and create an obligation of port states to inspect vessels posing a high risk to maritime safety or the marine environment; and (2) provide the European Union with greater authority and control over classification societies, including the ability to seek to suspend or revoke the authority of negligent societies. It is impossible to predict what legislation or additional regulations, if any, may be promulgated by the European Union or any other country or authority. Vessel Security Regulations Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the U.S Maritime Transportation Security Act of 2002, or MTSA, came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed to protect ports and international shipping against terrorism. After July 1, 2004, to trade internationally, a vessel must obtain an International Ship Security Certificate from a recognized security organization approved by the vessel's flag state. Among the various requirements are: o on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status; o on-board installation of ship security alert systems, which do not sound on the vessel but only alerts the authorities on shore; o the development of vessel security plans; o ship identification number to be permanently marked on a vessel's hull; o a continuous synopsis record kept onboard showing a vessel's history including, name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and o compliance with flag state security certification requirements. The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non-U.S. vessels that have on board, as of July 1, 2004, a valid ISSC attesting to the vessel's compliance with SOLAS security requirements and the ISPS Code. We have implemented the various security measures addressed by MTSA, SOLAS and the ISPS Code, and our fleet is in compliance with applicable security requirements. Inspection by Classification Societies Every seagoing vessel must be "classed" by a classification society. The classification society certifies that the vessel is "in class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned. The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned. For maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed as follows: Annual Surveys: For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate. Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship's hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. At an owner's application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal. All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years. Most vessels are also dry-docked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects are found, the classification surveyor will issue a "recommendation" which must be rectified by the ship owner within prescribed time limits. Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society which is a member of the International Association of Classification Societies. All our vessels are certified as being "in class" by the American Bureau of Shipping, Lloyd's Register of Shipping or Det Norske Veritas. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel. Risk of Loss and Liability Insurance General The operation of any cargo vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the United States market. While we carry loss of hire insurance to cover 100% of our fleet, we may not be able to maintain this level of coverage. Furthermore, while we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. Hull and Machinery Insurance We have obtained marine hull and machinery and war risk insurance, which includes the risk of actual or constructive total loss, general average, particular average, salvage, salvage charges, sue and labor, damage received in collision or contact with fixed or floating objects for all of the vessels in our fleet. The vessels in our fleet are each covered up to at least fair market value, with deductibles of $100,000 per vessel per incident, for the 11 Handymax tankers and $200,000 per vessel per incident, for the 13 Suezmax tankers. We also have arranged increased value coverage for some vessels. Under this increased value coverage, in the event of total loss of a vessel, we will recover for amounts not recoverable under the hull and machinery policy by reason of any under-insurance. Loss of Hire Insurance We have obtained also Loss of Hire Insurance to cover the loss of hire of each vessel for 90 days in excess of 30 days in case of an incident which is coverable, by Hull and Machinery policy. Protection and Indemnity Insurance Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which covers our third party liabilities in connection with our shipping activities. This includes third party liability and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third party property, pollution arising from oil or other substances, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs." Subject to the "capping" discussed below, our coverage, except for pollution, is unlimited. Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The fourteen P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I Association has capped its exposure to this pooling agreement at $4.25 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on its claim records as well as the claim records of all other members of the individual associations, and members of the pool of P&I Associations comprising the International Group. Competition We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as on our reputation as an operator. We arrange our time charters and voyage charters in the spot market through the use of brokers, who negotiate the terms of the charters based on market conditions. We compete primarily with owners of tankers in the Suezmax and Handymax class sizes. Ownership of tankers is highly fragmented and is divided among major oil companies and independent vessel owners. Seasonality We operate our tankers in markets that have historically exhibited seasonal variations in demand and, therefore, charter rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The tanker sector is typically stronger in the fall and winter months in anticipation of increased oil consumption of oil and petroleum in the northern hemisphere during the winter months. Our Handymax tankers carry, in part, refined petroleum products such as gasoline, jet fuel, kerosene, naphtha and heating oil. As a result, our revenues from our tankers may be weaker during the fiscal quarters ended June 30 and September 30, and, conversely, revenues may be stronger in fiscal quarters ended December 31 and March 31. Legal Proceedings Against Us The Company and certain of its executive officers and directors were named as defendants in a putative class action securities law suit brought in the United States District Court, Southern District of New York, alleging violations of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder. As of the date of this annual report, none of the defendants has been served in this action, which has been consolidated with nine additional putative class action law suits. The Court is currently considering a motion for the appointment of a lead plaintiff. The Company along with some of its directors has also been named as a nominal defendant in a derivative suit seeking damages from certain individual officers and directors of the Company, on behalf of the Company, for alleged breaches of fiduciary duties and violations of the Exchange Act. The Company has not been served in this action as of the date of this annual report. The Company intends to defend these suits vigorously. Further, we are party, as plaintiff or defendant, to a variety of lawsuits for damages arising principally from personal injury and property casualty claims. Most claims are covered by insurance, subject to customary deductibles. We believe that these claims will not, either individually or in the aggregate, have a material adverse effect on us, our financial condition or results of operations. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had a significant effect on our financial position, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position. C. Organizational Structure TOP Tankers Inc. is the sole owner of all outstanding shares of the wholly owned subsidiaries as of December 31, 2006. Top Tankers Inc. is the sole owner of all outstanding shares of the following subsidiaries: (a) TOP Tanker Management Inc., (b) Top Bulker Management Inc., (c) Top Tankers (U.K.) Limited, (d) Helidona Shipping Company Limited , (e) Gramos Shipping Company Inc., (f) Vermio Shipping Company Limited, (g) Rupel Shipping Company Inc., (h) Mytikas Shipping Company Ltd., (i) Litochoro Shipping Company Ltd., (j) Falakro Shipping Company Ltd., (k) Pageon Shipping Company Ltd., (l) Vardousia Shipping Company Ltd., (m) Psiloritis Shipping Company Ltd., (n) Parnon Shipping Company Ltd., (o) Menalo Shipping Company Ltd., (p) Pintos Shipping Company Ltd., (q) Pylio Shipping Company Ltd., (r) Idi Shipping Company Ltd., (s) Taygetus Shipping Company Ltd., (t) Kalidromo Shipping Company Limited, (u) Olympos Shipping Company Limited (Marshall Islands), (v) Olympos Shipping Company Limited, (British Cayman Islands), (w) Kisavos Shipping Company Limited, (x) Imitos Shipping Company Limited, (y) Parnis Shipping Company Limited, (z) Parnasos Shipping Company Limited, (aa) Vitsi Shipping Company Limited, (bb) Giona Shipping Company Limited, (cc) Lefka Shipping Company Limited, (dd) Agrafa Shipping Company Limited, (ee) Agion Oros Shipping Company Limited, (ff) Nedas Shipping Company Limited, (gg) Ilisos Shipping Company Limited, (hh) Sperhios Shipping Company Limited, (ii) Ardas Shipping Company Limited, (jj) Kifisos Shipping Company Limited, D. Properties, Plants and Equipment For a list of our fleet see "Business Overview - Our Fleet" above. In January 2006, we entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The office is located at 1, Vasilisis Sofias & Megalou Alexandrou Street, 151 24 Maroussi, Athens, Greece. The agreement is for duration of twelve years beginning May 2006 with a lessee's option for an extension of ten years. The monthly rental is Euro 120,000 adjusted annually for inflation increase plus 1%. In addition, our subsidiary TOP TANKERS (U.K.) LIMITED, a representative office in London, leases office space in London, from an unrelated third party. ITEM 4A. Unresolved Staff Comments None ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following is a discussion of our financial condition and results of operations for the years ended December 31, 2006, 2005 and 2004. You should read this section together with the consolidated financial statements including the notes to those financial statements for the periods mentioned above. We are a provider of international seaborne transportation services, carrying refined petroleum products and crude oil. As of December 31, 2006, our fleet consisted of 24 vessels, comprised of 11 Product tankers and 13 Suezmax tankers, with a total cargo carrying capacity of approximately 2.5 million deadweight tons, or dwt. We actively manage the deployment of our fleet between spot market voyage charters, which generally last from several days to several weeks, and time charters, which can last up to several years. A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed upon total amount. Under spot market voyage charters, we pay voyage expenses such as port, canal and fuel costs. A time charter is generally a contract to charter a vessel for a fixed period of time at a specified daily rate. Under time charters, the charterer pays voyage expenses such as port, canal and fuel costs. Under both types of charters, we pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, as well as for commissions on gross charter rates. We are also responsible for the vessel's intermediate and special survey costs. Vessels operating on time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in vessel rates although we are exposed to the risk of declining vessel rates, which may have a materially adverse impact on our financial performance. We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters, but only expect to enter into additional time charters if we can obtain contract terms that satisfy our criteria. A. Operating Results For discussion and analysis purposes only, we evaluate performance using time charter equivalent, or TCE, revenues. TCE revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter, as well as commissions. We believe that presenting voyage revenues net of voyage expenses neutralizes the variability created by unique costs associated with particular voyages or the deployment of vessels on the spot market and presents a more accurate representation of the revenues generated by our vessels. We calculate daily TCE rates by dividing TCE revenues by voyage days for the relevant time period. TCE revenues include demurrage revenue, which represents fees charged to charterers associated with our spot market voyages when the charterer exceeds the agreed upon time required to load or discharge a cargo. We calculate daily direct vessel operating expenses and daily general and administrative expenses for the relevant period by dividing the total expenses by the aggregate number of calendar days that we owned each tanker for the period. We depreciate our tankers on a straight-line basis over their estimated useful lives determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is based on cost less the estimated residual value. We capitalize the total costs associated with a drydocking, as deferred charges, and amortize these costs on a straight-line basis over the period when the next drydocking becomes due, which is typically 30 months. Regulations and/or incidents may change the estimated dates of next drydockings. In August and September 2005, we sold the M/T Restless, M/T Sovereign, M/T Relentless, M/T Invincible and M/T Victorious, and entered into bareboat charter agreements to leaseback the vessels, for a period of seven years. In March 2006, we sold the M/T Faithful, M/T Spotless, M/T Vanguard, M/T Doubtless, M/T Flawless, M/T Timeless, M/T Priceless and M/T Stopless and entered into bareboat charter agreements to leaseback the vessels, for a period of five years. In April 2006, we sold the M/T Limitless, M/T Endless, M/T Stainless, M/T Faultless and M/T Noiseless, and entered into bareboat charter agreements to leaseback the vessels, for a period of seven years. The charter back agreements are accounted for as operating leases and the gain on the sale was deferred and is being amortized to income over the lease period; lease payments relating to the bareboat charters of the vessels are separately reflected in the consolidated statements of income. According to the terms of the 2006 sale and leaseback transactions, 10% of the gross aggregate sales price, $55.0 million, has been withheld by the purchaser and will be paid to us not later than three months after the end of bareboat charter period or upon the resale of the vessels by the purchaser, if earlier. Consequently, we recognized this receivable from the purchaser at a discounted amount upon the sale of the vessels, classified as a non-current asset, and will accrete the balance of the receivable to the full $55.0 million, through deferred gain on sale and leaseback of vessels over the period of the bareboat charter or upon the resale of the vessels by the purchaser, if earlier. The purpose of the hold-back is to serve as security for the due and punctual performance and observance of all the terms and conditions from our behalf under the agreements. The purpose of the sale and leaseback transactions that were completed in 2006 was to take advantage of the high asset price environment prevailing in the market at the time and to maintain commercial and operations control of the vessels for a period of five to seven years. The majority of the net proceeds of the transaction, after debt repayment, were distributed as a special dividend to the Company's shareholders. Adjusted EBITDA, as defined in Footnote 3 to the "Selected Financial Data" in Item 3 above, decreased by $50.0 million, or 35.7%, to $90.1 million for 2006 compared to $140.1 million for the prior year. This decrease is due to the increase in charter hire expense to $96.3 million in 2006 from $7.2 million in 2005, as a result of the 13 sale and leaseback transactions concluded in 2006. Year ended December 31, 2006 compared to the year ended December 31, 2005 VOYAGE REVENUES--Voyage revenues increased by $65.8 million, or 26.9%, to $310.0 million for 2006 compared to $244.2 million for the prior year. This increase is due to the increase of our total voyage days for fleet to 8,634 days in 2006 from 7,436 days in 2005, as a result of the increase of our average number of vessels to 26.7 in 2006 from 21.7 in 2005, and to the increase of the average daily TCE rate achieved by our fleet by $1,618, or 5.8%, to $29,499 for 2006 compared to $27,881 for the prior year. VOYAGE EXPENSES--Voyage expenses primarily consist of port charges, including canal dues, bunkers (fuel costs) and commissions that are unique to a particular voyage. These expenses, which are paid by the charterer under a time charter contract, as well as commissions, increased $18.5 million, or 50.1%, to $55.4 million for 2006 compared to $36.9 million for the prior year. This increase is primarily due to the increase of our average number of vessels to 26.7 in 2006 from 21.7 in 2005, as well as the increase of our total spot market days for fleet to 2,411 days in 2006 from 1,869 days in 2005. Furthermore, the average market price for bunkers increased in 2006 approximately by 17.0%. NET VOYAGE REVENUES--Net voyage revenues, which are voyage revenues minus voyage expenses, increased by $47.4 million, or 22.9%, to $254.7 million for 2006 compared to $207.3 million for the prior year. This increase is the result of the increase of our total voyage days for fleet to 8,634 days in 2006 from 7,436 days in 2005, due to the increase of our average number of vessels to 26.7 in 2006 from 21.7 in 2005. 2005 2006 ---- ----- Dollars in thousands Voyage revenues................................. $244,215 $310,043 Less Voyage expenses............................ (36,889) (55,351) Net voyage revenues............................. $207,326 $254,692 ======== ======== The following describes our charter revenues for 2006 as compared to the prior year: Freight revenues: o Our tankers operated an aggregate of 2,411 days, or 27.9%, in the spot market during 2006, compared to 1,869 days, or 25.1%, in the spot market during the prior year. o The average daily spot rate was $45,328 for 2006 compared to average daily spot rate of $43,713 for the prior year. o Revenues from our vessels' spot trading increased by 33.8% to $109,286,000, compared to $81,700,000 in 2005. Spot market revenues were 42.9%, of net voyage revenue in 2006, compared to 39.4%, of net voyage revenue generated in the spot market during the prior year. Hire revenues: o Our tankers operated an aggregate of 6,223 days, or 72.1%, on time charter contracts during 2006, compared to 5,567 days, or 74.9%, on time charter contracts during the prior year. o The average daily time charter rate was $23,366 for 2006 compared to average daily time charter rate of $22,566 for the prior year. o Revenues from our time charter contracts increased by 15.7% to $145,406,000, compared to $125,626,000 in 2005. Time charter revenues were 57.1%, of net voyage revenue in 2006, compared to 60.6% during the prior year. CHARTER HIRE EXPENSE--Charter hire expense, which refers to lease payments for the 18 vessels sold and leased back, which are treated as operating leases, increased by $89.1 million, or 1,237.5%, to $96.3 million for 2006 compared to $7.2 million for the prior year. This increase is due to the 13 sale and leaseback deals which were concluded in 2006. OTHER VESSEL OPERATING EXPENSES--Other vessel operating expenses, which include crew costs, insurance, repairs and maintenance, spares, consumable stores and taxes increased by $18.8 million, or 39.7%, to $66.1 million for 2006 compared to $47.3 million for the prior year. This increase is primarily due to the increase of our total calendar days for fleet to 9,747 days in 2006 from 7,905 days in 2005, due to the increase of our average number of vessels to 26.7 in 2006 from 21.7 in 2005, and due to the increase of daily average other vessel operating expenses by $795, or 13.3%, to $6,780 for 2006 compared to $5,985 for the prior year. The increase of the daily average other vessel operating expenses is attributed mainly to the increase of our average number of suezmax tankers in 2006 from 8.3 in 2005 to 13.0 in 2006, and to the increased maintenance expense per vessel due to extensive repairs conducted in 2006. SUB-MANAGER FEES--Sub-Manager fees which relate to the fees paid to V.Ships Management Limited and Hanseatic Shipping Company Ltd., decreased by $0.4 million, or 12.9%, to $2.7 million for 2006 compared to $3.1 million for the prior year. This decrease is mainly due to the transfer of technical management and crewing of 10 vessels from Unicom Management to V.Ships Management Limited and Hanseatic Shipping Company Ltd. effectuated in the third quarter of 2005. Unicom Management charged a monthly fee of $14,000 per vessel for technical management and crewing, whereas V.Ships Management Limited and Hanseatic Shipping Company Ltd., charge for technical management and crewing a monthly fee per vessel of $10,000 and $7,083 respectively for technical management and crewing. OTHER GENERAL AND ADMINISTRATIVE EXPENSES--Other general and administrative expenses, which include all of our onshore expenses, decreased by $0.4 million, or 1.9%, to $20.3 million for 2006 compared to $20.7 million for the prior year. This decrease is mainly due to decreased compensation of our senior management and directors, which was in the aggregate amount of $4.2 million during 2006, compared to $8.1 million paid last year. Daily general and administrative expenses per tanker decreased by $652, or 21.6%, to $2,361 for 2006 compared to $3,013 for the prior year. FOREIGN CURRENCY GAINS OR LOSSES--We incurred a $255,000 foreign currency loss for 2006 compared to a gain of $68,000 for the prior year. GAIN ON SALE OF VESSELS--During 2006, we sold the vessels M/T Taintless, M/T Soundless and M/T Topless for a total consideration of $127.5 million, which resulted in a total book gain of $12.7 million. During 2005, we sold the vessels M/T Fearless and M/T Yapi for a total consideration of $38.3 million, which resulted in a total book gain of $10.1 million. DEPRECIATION AND AMORTIZATION--Depreciation and amortization, which include depreciation of tankers and amortization of drydockings, decreased by $4.6 million, or 8.7%, to $48.5 million for 2006 compared to $53.1 million for the prior year. 2005 2006 ---- ---- Dollars in thousands Vessels depreciation expense............................... $47,055 $35,266 Amortization of drydockings................................ 5,999 13,187 ------- ------- $53,054 $48,453 This decrease was due to the 13 sale and leaseback deals concluded during 2006 which resulted in a decrease in depreciation expense of $11.8 million. The sale and leasebacks were treated as operating leases for financial reporting purposes. As a result the vessels are not recorded as assets and therefore there is no depreciation expense. The decrease was partially balanced by an increase of $7.2 million in the amortization of drydockings, due to the fact that 8 out of 9 vessels drydocked during 2006, underwent their special surveys. AMORTIZATION OF DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS--Amortization of deferred gain on sale and leaseback of vessels increased by $7.3 million, or 912.5%, to $8.1 million for 2006 compared to $0.8 million for the prior year. This increase is due to the 13 sale and leaseback transactions concluded in 2006 and due to the 5 sale and leaseback transactions concluded in the third quarter of 2005. OPERATING INCOME--Operating income decreased by $45.5 million, or 52.4%, to $41.4 million for 2006 compared to $86.9 million for the prior year. Despite the increase of net voyage revenues by $47.4 million, or 22.9%, to $254.7 million for 2006 compared to $207.3 million for the prior year, this decrease is mainly due to: 1. The increase in other vessel operating expenses by $18.8 million, or 39.7%, to $66.1 million for 2006 compared to $47.3 million for the prior year. 2. The 13 sale and leaseback transactions concluded in 2006, which resulted in: o The increase of charter hire expense by $89.1 million, or 1,237.5%, to $96.3 million for 2006 compared to $7.2 million for the prior year, o the decrease of the vessel depreciation expense by $11.8 million, or 25.0%, to $35.3. million for 2006 compared to $47.1 million for the prior year, and o the amortization of deferred gain on sale and leaseback of vessels, which increased by $7.3 million, or 912.5%, to $8.1 million for 2006 compared to $0.8 million for the prior year. INTEREST AND FINANCE COSTS--Interest and finance costs increased by $9.0 million, or 44.5%, to $29.2 million for 2006 compared to $20.2 million for the prior year. This increase is mainly due to the fair market value of the interest rate swaps decreasing by $4.2 million and the write-off of the financing fees of $3.8 million associated with the prepayment of the loans due to the 13 sale and leaseback transactions concluded in 2006. INTEREST INCOME--Interest income increased by $1.2 million, or 66.7%, to $3.0 million for 2006 compared to $1.8 million for the prior year. This increase is due to the increase in cash and cash equivalents, associated mainly with the increase in proceeds from the sale of vessels in 2006. OTHER NET--We recognized an expense of $0.1 million during 2006 versus an income of $0.1 million during 2005. NET INCOME--Net income was $15.1 million for 2006 compared to net income of $68.7 million for the prior year. Year ended December 31, 2005 compared to the year ended December 31, 2004 VOYAGE REVENUES--Voyage revenues increased by $150.4 million, or 160.3%, to $244.2 million for 2005 compared to $93.8 million for the prior year. This increase is due to the acquisition of 3 tankers, 6 tankers and 5 tankers during the first, second and fourth quarters of 2005, respectively, which contributed $96.1 million in voyage revenues and is due to the overall increase in operating days which increased the voyage revenues generated by the remaining vessels to $148.1 million in 2005 from $93.8 million in 2004. VOYAGE EXPENSES--Voyage expenses primarily consist of port charges, including canal dues and bunkers (fuel costs) that are unique to a particular voyage. These expenses, which are paid by the charterer under a time charter contract, as well as commissions, increased $20.0 million, or 118.3%, to $36.9 million for 2005 compared to $16.9 million for the prior year. This increase is primarily due to the increase in the average number of tankers in our fleet during 2005 compared to the prior year, as well as the increase in the cost of fuel to operate the tankers. NET VOYAGE REVENUES--Net voyage revenues, which are voyage revenues minus voyage expenses, increased by $130.4 million, or 169.6%, to $207.3 million for 2005 compared to $76.9 million for the prior year. This increase is the result of the increase in the average number of tankers in our fleet and the overall increase in operating days during 2005 compared to the prior year. The average number of tankers in our fleet increased 126.0% to 21.7 tankers during 2005 compared to 9.6 tankers during the prior year. 2004 2005 ---- ---- Dollars in thousands Voyage revenues................................... $93,829 $244,215 Less Voyage expenses.............................. (16,898) (36,889) Net voyage revenues............................... $76,931 $207,326 ======== ======== The following describes our charter revenues for 2005 as compared to the prior year: Freight revenues: o Our tankers operated an aggregate of 1,869 days, or 25.1%, in the spot market during 2005, compared to 1,435 days, or 44.6%, in the spot market during the prior year. o $81,700,000, or 39.4%, of net voyage revenue was generated in the spot market during 2005, compared to $44,793,000, or 58.3%, of net voyage revenue generated in the spot market during the prior year. o The average daily spot rate was $43,713 for 2005 compared to average daily spot rate of $31,215 for the prior year. Hire revenues: o Our tankers operated an aggregate of 5,567 days, or 74.9%, on time charter contracts during 2005, compared to 1,780 days, or 55.4%, on time charter contracts during the prior year. o $125,626,000, or 60.6%, of net voyage revenue was generated by time charter contracts during 2005, compared to $32,138,000, or 41.7%, of net voyage revenue generated by time charter contracts during the prior year. o The average daily time charter rate was $22,566 for 2005 compared to average daily time charter rate of $18,055 for the prior year. CHARTER HIRE EXPENSE--Charter hire expense refers to lease payments for the 5 vessels sold and leased back in 2005, which are treated as operating leases, and amounted to $7.2 million. OTHER VESSEL OPERATING EXPENSES--Other vessel operating expenses, which include crew costs, insurance, repairs and maintenance, spares, consumable stores and taxes increased by $30.4 million, or 179.9%, to $47.3 million for 2005 compared to $16.9 million for the prior year. This increase is primarily due to the increase in the average number of tankers in our fleet, which increased 126.0% between the periods. Daily Other vessel operating expenses per tanker increased by $1,191, or 24.8%, to $5,985 for 2005 compared to $4,794 for the prior year. This increase is a result of the significant increase of our Suezmax vessels, which generally require higher operating expenses as compared to the Handymax vessels. MANAGEMENT FEES, SUB-MANAGER FEES AND OTHER GENERAL AND ADMINISTRATIVE EXPENSES--General and administrative expenses, which include all of our onshore expenses and the fees paid to V.Ships Management Limited, Unicom Management and Hanseatic Shipping Company Ltd., increased by $15.2 million, or 176.7%, to $23.8 million for 2005 compared to $8.6 million for the prior year. This increase is due to increased staff and additional administrative costs in connection with the operation of our larger fleet, and the duties typically associated with public companies and to the compensation of our senior management and directors, which was in the aggregate amount of $8.1 million in 2005, compared to $4.4 million paid in 2004. Daily general and administrative expenses per tanker increased $574, or 23.5%, to $3,013 for 2005 compared to $2,439 for the prior year. FOREIGN CURRENCY GAINS OR LOSSES--We incurred a $68,000 foreign currency gain for 2005 compared to a loss of $75,000 for the prior year. GAIN ON SALE OF VESSELS--During the third quarter of 2005 we sold the vessels M/T Fearless and M/T Yapi and we realized a total gain of $10.1 million. During 2004 we sold the vessels M/T Tireless and M/T Med Prologue and we realized a total gain of $0.6 million. DEPRECIATION AND AMORTIZATION--Depreciation and amortization, which include depreciation of tankers and amortization of drydockings, increased by $38.5 million, or 263.7%, to $53.1 million for 2005 compared to $14.6 million for the prior year. This increase is primarily due to the increase in the average number of tankers in our fleet, the increase in the book value of our fleet as a result of our acquisitions of tankers during 2005, and the amortization of capitalized expenses associated with drydockings that occurred for the first time to vessels that are part of our fleet. 2004 2005 ---- ---- Dollars in thousands Vessels depreciation expense.............................. $13,108 $47,055 Amortization of drydockings............................... 1,514 5,999 ------- ------- $14,622 $53,054 Depreciation of vessels increased by $34.0 million, or 259.5%, to $47.1 million for 2005 compared to $13.1 million for the prior period. This increase is due to the increase in the book value of our fleet as a result of our acquisitions of tankers during 2005 compared to the prior year. Amortization of drydockings increased by $4.5 million, or 300.0%, to $6.0 million for 2005 compared to $1.5 million for the prior year. This increase includes amortization associated with $10.5 million of capitalized expenditures relating to our tankers during 2005 compared to $7.4 million of capitalized expenditures during the prior year. This increase is the result of the amortization of capitalized expenses associated mainly with drydockings which took place in 2005, most of which relate to tankers which have capitalized drydocking expenditures for the first time since we acquired them. We anticipate that the amortization associated with drydockings will continue to increase in 2006 due to the increase in the average number of tankers in our fleet, the increase in costs associated with drydockings, and that we are currently drydocking vessels for the first time since these vessels became part of our fleet. AMORTIZATION OF DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS--Amortization of deferred gain on sale and leaseback of vessels amounted $0.8 million and is associated to the 5 sale and leaseback transactions completed in 2005. OPERATING INCOME--Operating income increased by $49.5 million, or 132.3%, to $86.9 million for 2005 compared to $37.4 million for the prior year. This increase is mainly due to the acquisition of 3 tankers, 6 tankers and 5 tankers during the first, second and fourth quarters of 2005, respectively, which contributed $96.1 million in voyage revenues and to the overall increase in operating days which increased the voyage revenues generated by the remaining vessels to $148.1 million in 2005 from $93.8 million in 2004. INTEREST AND FINANCE COSTS--Interest and finance costs increased by $15.0 million, or 288.5%, to $20.2 million for 2005 compared to $5.2 million for the prior year. This increase is the result of the increase in our weighted average outstanding debt as a result of our acquisitions of tankers. Interest expense is anticipated to decrease in 2006 as a result of the debt prepayment in connection with the sale and leaseback of 5 tankers in 2005. INTEREST INCOME--Interest income increased by $1.3 million, or 260.0%, to $1.8 million for 2005 compared to $0.5 million for the prior year. OTHER NET--We recognized an income of $0.1 million during 2005 and 2004. NET INCOME--Net income was $68.7 million for 2005 compared to net income of $32.8 million for the prior year. B. Liquidity and capital resources Liquidity and capital resources Since our formation, our sources of funds have been equity provided by our shareholders, long-term borrowings and operating cash flows. Our principal use of funds has been capital expenditures to establish and grow our fleet, maintain the quality of our vessels, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make principal repayments on outstanding loan facilities, and pay dividends. We expect to rely upon operating cash flows, long-term borrowings and equity financings to implement our growth plan. We believe that our current cash balance as well as operating cash flows will be sufficient to meet our liquidity needs for the next year. Our practice has been to acquire vessels using a combination of funds received from equity investors and bank debt secured by mortgages on our vessels. Our business is capital intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer vessels and the selective sale of older vessels. These acquisitions will be principally subject to management's expectation of future market conditions as well as our ability to acquire vessels on favorable terms. According to the terms of the 2006 sale and leaseback transactions, 10% of the gross aggregate sales price, $55.0 million, has been withheld by the purchaser and will be paid to us not later than three months after the end of bareboat charter period or upon the resale of the vessels by the purchaser, if earlier. Consequently, we recognized this receivable from the purchaser at a discounted amount upon the sale of the vessels, classified as a non-current asset, and will accrete the balance of the receivable to the full $55.0 million, through deferred gain on sale and leaseback of vessels over the period of the bareboat charter or upon the resale of the vessels by the purchaser, if earlier. The purpose of the hold-back is to serve as security for the due and punctual performance and observance of all the terms and conditions from our behalf under the agreements. As of December 31, 2006, we had total indebtedness under senior secured credit facilities of $220.0 million with our lenders, the Royal Bank of Scotland ("RBS") and HSH Nordbank ("HSH"), maturing in 2015 and 2013 respectively. As of April 19, 2007, and after giving effect to the payment of first installment paid in January 2007 for the two remaining newbuildings, our total indebtedness under the senior secured credit facilities is $225.7 million with $65.0 million undrawn under the RBS revolving credit facility. Cash and cash equivalents increased $12.5 million to $30.0 million as of December 31, 2006 compared to $17.5 million as of December 31, 2005. That increase results primarily from the increase of our total voyage days for fleet to 8,634 days in 2006 from 7,436 days in 2005, due to the increase of our average number of vessels to 26.7 in 2006 from 21.7 in 2005. Working capital is current assets minus current liabilities, including the current portion of long-term debt. Working capital surplus was $22.5 million as of December 31, 2006, compared to a working capital deficit of $11.0 million as of December 31, 2005. The current portion of long-term debt, net of unamortized deferred financing costs, included in our current liabilities was $16.6 million and $45.3 million as of December 31, 2006 and December 31, 2005, respectively. NET CASH FROM OPERATING ACTIVITIES--decreased 77.7% to $21.1 million during 2006, compared to $94.7 million during the prior year. This decrease is primarily attributable to the decrease in net income by $53.6 million, to $15.1 million in 2006 from $68.7 million in 2005 and to the increase in payments for drydockings by $24.0 million, to $34.5 million in 2006 from $10.5 million in 2005. NET CASH FROM (USED) IN INVESTING ACTIVITIES--2006 ended with net cash inflows of $531.6 million compared to net cash outflows of $524.9 million during the prior year. During 2006 we completed 13 sale and leaseback deals and sold 3 vessels resulting in net proceeds of $599.2 million, whereas in 2005, we completed 5 sale and leaseback deals and sold 2 vessels resulting in net proceeds of $153.1 million and we acquired 14 tankers at a total cost of $677.1 million. NET CASH FROM (USED IN) FINANCING ACTIVITIES--2006 ended with net cash outflows of $540.1 million compared to net cash inflows of $332.9 million during the prior year. The change in cash from (used in) financing activities relates to the following: o Net proceeds from borrowing under long-term debt were $20.0 million during 2006 compared to $472.5 million, in connection with the acquisition of 9 Suezmax tankers and 5 product tankers, during 2005. o Principal repayments of long-term debt were $369.5 million during 2006 compared to $100.0 million during the prior year. o Net issuance of common stock of $26.9 million during 2006. o Dividends of $217.5 million paid during 2006 compared to $30.5 million paid during the prior year. C. Research and Development, patents and licenses, etc. Not applicable. D. Trend Information Discussed under ITEM 5. E. Off Balance Sheet Arrangements We did not have any off-balance sheet arrangements, as of December 31, 2006. F. Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations and their maturity dates as of December 31, 2006.
Payments due by period ---------------------- 2-3 4-5 More than --- --- --------- Contractual Obligations: Total 1 year years years 5 years - ----------------------- ----- ------ ----- ----- ------- (in thousands of $) (1) Long term debt 280,667 29,421 53,052 49,058 149,136 - ------------------- ------- ------ ------ ------ ------- (2) Newbuildings 256,742 14,169 242,573 - - - ------------------ ------- ------ ------- - - (3) Operating leases 21,487 1,896 3,792 3,792 12,007 - -------------------- ------ ----- ----- ----- ------ (4) Lease payments under sale and leasebacks 618,529 118,865 237,847 194,029 67,788 - -------------------------------------------- ------- ------- ------- ------- ------ Total 1,177,425 164,351 537,264 246,879 228,931 - ----- --------- ------- ------- ------- -------
(1) Long Term Debt: As of December 31, 2006, the outstanding balance of our long-term debt of $220.0 million consisted of two credit facilities, with Royal Bank of Scotland, which we refer to as the RBS revolving credit facility and HSH Nordbank, which we refer to as the HSH credit facility. The above table also includes interest payments calculated using the Company's weighted average interest rate as of December 31, 2006, of 6.00%. RBS Revolving Credit Facility: As of December 31, 2006 the outstanding amount under the RBS revolving credit facility was $83.0 million, payable in 10 semi-annual installments of approximately $5.4 million starting April 30, 2011, plus a balloon payment of $29.0 million payable together with the last installment, if no further amounts are drawn. As of December 31, 2006, the undrawn amount under the RBS revolving credit facility amounted to $75.0 million. As of the date of this report and after giving effect to the payment of first installment in January 2007, of the two remaining newbuildings, the outstanding amount totaled $93.0 million, payable in 10 semi-annual installments of approximately $6.0 million starting April 30, 2011, plus a balloon payment of $33.0 million payable together with the last installment, if no further amounts are drawn. As of the date of this report the undrawn amount under the RBS revolving credit facility amounted to $65.0 million. Additional terms and conditions of the RBS credit facility are as follows: The initial interest rate on the RBS credit facility is 85 basis points over LIBOR. The interest rate will be adjusted quarterly to 100 basis points over LIBOR if the aggregate amount drawn to aggregate value of ships is greater than 60%. The RBS credit facility is collateralized by a first priority mortgage on each of the 2 out of 6 vessels we owned as of December 31, 2006 and by virtue of a deed of assignment in respect of each of the newbuildings contracts. The RBS credit facility contains, among other things, financial covenants requiring us to: ensure that the aggregate market value of our fleet at all times exceeds 130% of the aggregate outstanding principal amount under the credit facility; maintain minimum liquid funds with the lender of not less than the greater of $10.0 million or $0.5 million per vessel in our fleet; ensure that our total assets minus our debt will not at any time be less than $250.0 million and at all times exceed 35% of our total assets; ensure that EBITDA (as defined in the RBS credit facility) will at all times exceed 120% of the aggregate of interest expenses and debt due during a particular period; and meet minimum liquid funds requirements. The RBS credit facility also contains general covenants that require us to maintain adequate insurance coverage and obtain the bank's consent before we incur new indebtedness that is secured by the vessels mortgaged thereunder. In addition, the RBS credit facility prohibits us, without the lender's consent, from appointing a chief executive officer other than Evangelos Pistiolis and requires that the vessels mortgaged thereunder be managed by TOP Tanker Management, which will subcontract the technical management of the mortgaged vessels to V.Ships Management Limited, Hanseatic Shipping Company Ltd., and any other company acceptable to the lender. We will be permitted to pay dividends under the RBS credit facility so long as we are not in default of a loan covenant. A commitment fee of 0.35% per annum accrues on the amount of the undrawn balance under the revolving credit facility, which is payable quarterly in arrears. As of December 31, 2006, we had three interest rate swaps with RBS, summarized as follows: (i) for an initial notional amount of $36.5 million, with effective date of November 3, 2005 and for a period of four years, with a fixed interest rate of 4.66% plus the applicable bank margin, in order to hedge portion of the variable interest rate exposure. (ii) for a notional amount of $10.0 million, with effective date of September 30, 2006 and for a period of seven years, with an initial interest rate of 4.23%, in order to hedge portion of the variable interest rate exposure. (iii) for a notional amount of $10.0 million, with effective date of September 30, 2006 and for a period of seven years, with an initial interest rate of 4.11%, in order to hedge portion of the variable interest rate exposure. For the swaps (ii) and (iii) we will pay an initial fixed interest rate, as designated above, and will receive a floating interest rate, which is the 3-month LIBOR, as is determined on the reset dates. In the first period (fourth quarter of 2006), the difference between the 10-year swap rate and the 2-year swap rate was greater to minus 5 basis points, and we paid the initial fixed rate and received the floating interest rate. In the next three periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 0 basis points, then we will continue to pay the initial fixed rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 0 basis points, then we will pay the initial fixed rate, plus three times the difference between 0 basis points and the difference between the 10-year swap rate and the 2-year swap rate. In all subsequent periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 8 basis points, then we will continue to pay the previous rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 8 basis points, then we will pay the previous rate, plus three times the difference between 8 basis points and the difference between the 10-year swap rate and the 2-year swap rate. The interest rate that we will pay for those swaps is capped at 10.25%. DVB Credit Facility: In March 2005, we entered into a credit facility with DVB Bank, for a total of $56.5 million, to finance the purchase of 2 Suezmax tankers, the M/T Stopless and the M/T Stainless. The loan was payable in 28 varying quarterly installments beginning on July 29, 2005 and a balloon payment of $10.2 million, payable together with the last installment. The interest rate on the DVB credit facility was 125 basis points over LIBOR. Beginning on the date of the credit facility and ending on the final drawdown date, we paid the lender a quarterly commitment fee of 0.25% of the average undrawn amount of the loan. The DVB credit facility was collateralized by a first priority mortgage on the M/T Stopless and the M/T Stainless. A fee of 1% was paid upon drawdown of the loan. In March and April 2006, following the sale and leaseback of M/T Stopless and M/T Stainless we repaid in full $50.1 million for the then outstanding amount of the loan. HSH Credit Facility: In November 2005, we concluded a bank loan of $154.0 million to partially finance the acquisition cost of vessels M/T Stormless, M/T Ellen P., M/T Errorless and M/T Edgeless. The loan is divided into 2 tranches of $130.0 million and $24.0 million respectively. Tranche A is payable in 32 consecutive quarterly installments of $2.7 million each, starting March 13, 2006, plus a balloon payment of $42.0 million payable together with the last installment. Tranche B is payable in 16 consecutive quarterly installments of $1.5 million each, starting March 13, 2006. The initial interest rate in respect of Tranche A is 80 basis points over LIBOR. The interest rate will be adjusted to 90 basis points over LIBOR if the aggregate amount drawn to aggregate value of ships is greater than 60% but equal or below 70% and will be adjusted to 110 basis points over LIBOR if the aggregate amount drawn to aggregate value of ships is greater than 70%. The initial interest rate in respect of Tranche B is 110 basis points over LIBOR. The interest rate will be adjusted to 135 basis points over LIBOR if the aggregate amount drawn to aggregate value of ships is greater than 65% but equal or below 75% and will be adjusted to 160 basis points over LIBOR if the aggregate amount drawn to aggregate value of ships is greater than 75%.The loan was subject to a fee of 1% paid upon signing of the agreement. The HSH credit facility contains, among other things, financial covenants requiring us to: ensure that the aggregate market value of the mortgaged vessels is equal to at least 140% of the outstanding principal amount under the loan, until the Tranche B repayment and 130% thereafter, ensure that our total assets minus our debt will not at any time be less than $250.0 million or 35% of our total assets, to ensure that our EBITDA (as defined in the HSH credit facility agreement) will not at any time be less than 120% of the aggregate of interest expenses and debt due at a particular period, and maintain certain minimum liquid funds of not less than the greater of $10.0 million or $0.5 million per vessel in our fleet, including the sold and leased-back vessels. In addition, the HSH credit facility prohibits us, without the lender's consent, from appointing a chief executive officer other than Evangelos Pistiolis and requires that the mortgaged vessels are managed by TOP Tanker Management, which may subcontract the technical management of the mortgaged vessels to V.Ships Management Limited, Hanseatic Shipping Company Ltd., or any other company acceptable to the lender. In connection with the loan of $154.0 million discussed above, we entered into an interest rate swap agreement with declining notional balances in order to hedge its variable interest rate exposure, with effective date January 30, 2006, for an initial notional amount of $45.0 million and for a period of five years, with a fixed interest rate of 4.8% plus the applicable bank margin. Other Interest Rate Swaps: In July 2006, we entered with Deutsche Bank and Egnatia Bank into the following interest rate swap agreements. Under those agreements, we will pay an initial fixed interest rate, as designated below, and will receive a floating interest rate, which is the 3-month LIBOR, as is determined on the reset dates. If the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 5 basis points, then we will continue to pay the initial fixed rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 5 basis points, then we will pay the initial fixed rate, plus two times the difference between 5 basis points and the difference between the 10-year swap rate and the 2-year swap rate. The interest rate that we will pay is capped at 8.80%. (i) for a notional amount of $50.0 million, with effective date of July 3, 2006 and for a period of seven years, with an initial interest rate of 4.63%, in order to hedge portion of the variable interest rate exposure. (ii) for a notional amount of $10.0 million, with effective date of July 3, 2006 and for a period of seven years, with an initial interest rate of 4.70%, in order to hedge portion of the variable interest rate exposure. During the fourth quarter of 2006, the swap (i) was restructured and we will pay an initial fixed interest rate, as designated below, and will receive a floating interest rate, which is the 3-month LIBOR, as is determined on the reset dates. In the first period (fourth quarter of 2006), the difference between the 10-year swap rate and the 2-year swap rate was greater to minus 5 basis points, and we paid the initial fixed rate and received the floating interest rate. In the next three periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 0 basis points, then we will continue to pay the initial fixed rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 0 basis points, then we will pay the initial fixed rate, plus three times the difference between 0 basis points and the difference between the 10-year swap rate and the 2-year swap rate. In all subsequent periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 8 basis points, then we will continue to pay the previous rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 8 basis points, then we will pay the previous rate, plus three times the difference between 8 basis points and the difference between the 10-year swap rate and the 2-year swap rate. The interest rate that we will pay for the restructured swap is capped at 10.25%. (i) for a notional amount of $50.0 million, with effective date of September 29, 2006 and for a period of seven years, with an initial interest rate of 4.45%, in order to hedge portion of the variable interest rate exposure. (2) Newbuildings: In October 2006, we entered into an agreement for the construction of six handymax Product / Chemical tankers. The total contract price amounted to $285.4 million and is payable in five instalments as follows: 15% is payable upon arrangement of the refund guarantee, 15% is payable upon commencement of steel cutting, 20% is payable upon keel laying, 20% is payable upon launching and 30% upon delivery of the vessel. The vessels' construction will be partially financed from long-term bank financing. The first instalment for four of the six vessels of $28.7 million was paid in December 2006. The vessels are expected to be delivered during the first six months of 2009. In January 2007, we paid the first installment of $14.2 million, in relation to the two remaining newbuildings. Part of this installment was financed through the RBS revolving credit facility and amounted $10.0 million. (3) Operating Leases: In January 2006, we entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The office is located at 1, Vasilisis Sofias & Megalou Alexandrou Street, 151 24 Maroussi, Athens, Greece. The agreement is for duration of twelve years beginning May 2006 with a lessee's option for an extension of ten years. The monthly rental is Euro 120,000 adjusted annually for inflation increase plus 1%. (4) Lease payments under sale and leasebacks: In August and September 2005, we sold the M/T Restless, M/T Sovereign, M/T Relentless, M/T Invincible and M/T Victorious, and entered into bareboat charter agreements to leaseback the vessels, for a period of seven years. During 2005, lease payments relating to the bareboat charters of these vessels were $7.2 million. The total minimum lease payments required to be made after December 31, 2006, related to the bareboat charters of these vessels are $119.1 million. In March 2006, we sold the M/T Faithful, M/T Spotless, M/T Vanguard, M/T Doubtless, M/T Flawless, M/T Timeless, M/T Priceless and M/T Stopless, and entered into bareboat charter agreements to leaseback the vessels, for a period of five years. The total minimum lease payments required to be made after December 31, 2006, related to the bareboat charters of these vessels are $231.3 million. In April 2006, we sold the M/T Limitless, M/T Endless, M/T Stainless, M/T Faultless and M/T Noiseless, and entered into bareboat charter agreements to leaseback the vessels, for a period of seven years. The total minimum lease payments required to be made after December 31, 2006, related to the bareboat charters of these vessels are $268.1 million. During 2006, lease payments relating to the bareboat charters of the aforementioned vessels were $96.3 million. Other contractual obligations: TOP Tanker Management, our wholly-owned subsidiary, is responsible for the chartering, operational and technical management of our tanker fleet, including crewing, maintenance, repair, capital expenditures, drydocking, vessel taxes, maintaining insurance and other vessel operating expenses under management agreements with our vessel owning subsidiaries. As of December 31, 2006 TOP Tanker Management has subcontracted the day to day technical management and crewing of 5 Handymax tankers and 8 Suezmax tankers to V.Ships Management Limited, a ship management company and has subcontracted the day to day technical management and crewing of 5 Handymax tankers and 3 Suezmax tankers to Hanseatic Shipping Company Ltd, a ship management company operating in Cyprus. Additionally, TOP Tanker Management has subcontracted the crewing of 1 Handymax tanker and 2 Suezmax tankers to V. Ships Management Limited. TOP Tanker Management pays a monthly fee of $10,000 per vessel for technical management and crewing of the 13 vessels and $3,100 per vessel for the crewing of 3 vessels under its agreements with V. Ships Management and a monthly fee of $7,083 per vessel for the 8 vessels under its agreements with Hanseatic Shipping Company. The agreements between Top Tanker Management and V.Ships Management Limited and Hanseatic Shipping Company Ltd., continue until written notice of termination is given by either party. In such case, they terminate after a period of two or three months from the date upon which such notice was given. Accordingly, they are not included in the table of contractual obligations presented above. Other major capital expenditures include funding our maintenance program of regularly scheduled intermediate survey or special survey drydocking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Although we have some flexibility regarding the timing of this maintenance, the costs are relatively predictable. Management anticipates that these vessels which are younger than 15 years are required to undergo in-water intermediate surveys 2.5 years after a special survey drydocking and that vessels are to be drydocked every five years, while vessels 15 years or older are to be drydocked for an intermediate survey every 2.5 years in which case the additional intermediate survey drydockings take the place of in-water surveys. During 2006, we had 740 off-hire days associated with 9 drydockings and 170 off-hire days associated with 1 drydocking which as of the year-end was still in progress. During 2005, we had 270 off hire days associated with 8 drydockings. During 2004, we had 250 off hire days associated with 5 drydockings. During 2003 we had 83 off hire days associated with 2 drydockings. Each intermediate survey drydocking is estimated to require approximately 25 days and each special survey drydocking is estimated to require approximately 35 days. In addition to the costs described above, drydockings result in off hire time for a vessel, during which the vessel is unable to generate revenue. Off hire time includes the actual time the vessel is in the shipyard as well as ballast time to the shipyard from the port of last discharge. The ability to meet this maintenance schedule will depend on our ability to generate sufficient cash flows from operations or to secure additional financing. Critical Accounting Policies: The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies that involve a higher degree of judgment and the methods of their application. For a description of all of our significant accounting policies, see Note 2 to our consolidated financial statements included herein. Depreciation. We record the value of our vessels at their cost (which includes the contract price, pre-delivery costs incurred during the construction of newbuildings, capitalized interest and any material expenses incurred upon acquisition such as initial repairs, improvements and delivery expenses to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of initial delivery from the shipyard. Depreciation is based on cost of the vessel less its residual value which is estimated to be $160 per light-weight ton. A decrease in the useful life of the vessel or in the residual value would have the effect of increasing the annual depreciation charge. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, the vessel's useful life is adjusted at the date such regulations become effective. Deferred drydock costs. We follow the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking becomes due. Management anticipates that these vessels which are younger than 15 years will be required to undergo in-water intermediate surveys 2.5 years after a special survey drydocking and that such vessels will be drydocked every five years, while vessels 15 years or older will be drydocked for an intermediate survey every 2.5 years in which case the additional intermediate survey drydockings take the place of in-water surveys. Dry-docking costs for vessels sold and leased back are amortized on a straight line basis over the period through the next dry-docking becomes due or through the termination of the lease, whichever comes first. Costs capitalized as part of the drydock include all works required by the vessels' Classification Societies and for the maintenance of the vessels CAP rating, which may consist of actual costs incurred at the dry-dock yard, including dry-dock dues and general services for vessel preparation, coating of WBT/COT, steelworks, piping works and valves, machinery works and electrical works. All those works which are carried out during dry-dock time for routine maintenance according to the Company's Planned Maintenance System as well as modifications, improvements required by third parties (i.e Port Authorities, Oil Majors, standards set by the Company etc.) and not required by the vessels' Classification Societies are not capitalized but expensed as incurred. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the year of the vessel's sale. Impairment of long-lived assets. We evaluate the carrying amounts (primarily for vessels and related drydock costs) and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, we review certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. We determine undiscounted projected net operating cash flows for each vessel and compare them to the vessel carrying value including unamortized drydock costs. If our estimate of undiscounted future cash flows for any vessel is lower than the vessel's carrying value plus any unamortized drydock costs, the carrying value is written down, by recording a charge to operations, to the fair market value if the fair market value is lower than the vessel's carrying value. We obtain fair market valuations from reputable international sale and purchase brokers performed on an individual vessel basis. As vessel values are volatile, the actual fair market value of a vessel may differ significantly from estimated fair market values within a short period of time. Allowance for doubtful accounts. Revenue is based on contracted voyage and time charter parties and, although our business is with customers who we believe to be of the highest standard, there is always the possibility of dispute, mainly over terms, calculation and payment of demurrages. In such circumstances, we assess the recoverability of amounts outstanding and we estimate a provision if there is a possibility of non-recoverability, combined with the application of a historical recoverability ratio, for purposes of determining the appropriate provision for doubtful accounts. Although we believe our provisions to be based on fair judgment at the time of their creation, it is possible that an amount under dispute is not recovered and the estimated provision for doubtful recoverability is inadequate. G. Safe Harbor Matters discussed in this Item 5 include assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. Please see "Cautionary Statement Regarding Forward-Looking Statements" in this Report. ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management Set forth below are the names, ages and positions of our directors, executive officers and key employees. Our board of directors is elected annually on a staggered basis, and each director elected holds office for a three-year term. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. Name Age Position - ---- --- -------- Thomas F. Jackson ...................59 Director and Chairman of the Board Evangelos J. Pistiolis ..............34 Director, President and Chief Executive Officer Stamatios N. Tsantanis ..............35 Director and Chief Financial Officer Vangelis G. Ikonomou ................42 Director and Executive Vice President Michael G. Docherty .................47 Director Christopher J. Thomas ...............47 Director Roy Gibbs ...........................57 Director Stavros Emmanuel.....................64 Chief Operating Officer of TOP Tanker Management George Goumopoulos...................57 Chief Technical Officer of TOP Tanker Management Eirini Alexandropoulou ..............35 Secretary Biographical information with respect to each of our directors and executives is set forth below. Thomas F. Jackson is the Chairman of our Board of Directors since July 2004, and has over 27 years experience in the shipping industry. Mr. Jackson is also a Director of Paralos Finance Corporation, which he established in 2000 as a provider of financial advisory and consultancy services to select Greek shipping companies. Mr. Jackson commenced his banking career with National Westminster Bank in 1967, and moved to the Piraeus Branch, Greece in 1977. In 1986 he headed the Bank's Operations Department in Athens, and returned to Piraeus in 1989 where he assumed the role of Corporate and Shipping Marketing Manager. In 1994 he was appointed Head of Shipping for the Bank in Greece. Mr. Jackson is an Associate of the Institute of Financial Services (formerly the Chartered Institute of Bankers), and is a past lecturer for the Institutes examinations. Evangelos J. Pistiolis founded our Company in 2000, is our President and Chief Executive Officer and serves on our board of directors since July 2004. Mr. Pistiolis graduated from Southampton Institute of Higher Education in 1999 where he studied shipping operations and from Technical University of Munich in 1994 with a bachelor's degree in mechanical engineering. His career in shipping started in 1992 when he was involved with the day to day operations of a small fleet of drybulk carriers. From 1994 through 1995 he worked at Howe Robinson & Co. Ltd., a London shipbroker specializing in container vessels. While studying at the Southampton Institute of Higher Education, Mr. Pistiolis oversaw the daily operations of Compass United Maritime Container Vessels, a ship management company located in Greece. Stamatios N. Tsantanis is our Chief Financial Officer and serves on our board of directors since July 2004. Mr. Tsantanis was previously employed by Alpha Finance, a member of the Alpha Bank group, a leading Greek financial institution, from 1999 to 2004. In his capacity as a senior investment banker he participated in a number of equity, debt and convertible securities offerings in Europe and the United States in the transportation sector and shipping in particular. Prior to that, Mr. Tsantanis worked in the operations department of Athlomar Shipping and Trading. Mr. Tsantanis holds a Masters degree in Shipping Trade and Finance from the City University Business School in London, and a Bachelors degree in Shipping Economics from the University of Piraeus. Vangelis G. Ikonomou is our Executive Vice President and serves on our board of directors since July 2004. Prior to joining the Company, Mr. Ikonomou was the Commercial Director of Primal Tankers Inc. From 2000 to 2002, Mr. Ikonomou worked with George Moundreas & Company S.A. where he was responsible for the purchase and sale of second-hand vessels and initiated and developed a shipping industry research department. Mr. Ikonomou worked, from 1993 to 2000, for Eastern Mediterranean Maritime Ltd., a ship management company in Greece, in the commercial as well as the safety and quality departments. Mr. Ikonomou holds a Masters degree in Shipping Trade and Finance from the City University Business School in London, a Bachelors degree in Business Administration from the University of Athens in Greece and a Navigation Officer Degree from the Higher State Merchant Marine Academy in Greece. Michael G. Docherty serves on our board of directors since July 2004. Mr. Docherty is a founding partner of Independent Average Adjusters Ltd., an insurance claims adjusting firm located in Athens, Greece, which he co-founded in 1997. Mr. Docherty has 24 years of international experience handling maritime insurance claims. Christopher J. Thomas serves on our board of directors since July 2004. Mr. Thomas is also the Chief Financial Officer of Paragon Shipping Inc. From 2004 to 2006, Mr. Thomas was the Chief Financial Officer of DryShips Inc., which is a publicly traded company with securities registered under the Securities Exchange Act of 1934. From 1999 to 2004, Mr. Thomas was the Chief Financial Officer and a director of Excel Maritime Carriers Ltd., which is also a publicly traded company with securities registered under the Securities Exchange Act of 1934. Prior to joining Excel, Mr. Thomas was the Chief Financial Officer of Cardiff Marine Inc. Mr. Thomas holds a degree in Business Administration from Crawley University, England. Roy Gibbs serves on our board of directors since July 2004. Mr. Gibbs has been the chief executive officer of Standard Chartered Grindlays Bank, Greece, formerly ANZ Grindlays, since 1992. From 1988 to 1992, Mr. Gibbs was the chief manager of domestic banking at ANZ Grindlays, London. Prior to that he was assistant director for property, construction and shipping at ANZ London. Mr. Gibbs joined National and Grindlays Bank in 1965. Captain Stavros Emmanuel is the Chief Operating Officer of TOP Tanker Management since July 2004. He has 32 years experience in the shipping industry and expertise in operation and chartering issues. Prior to joining TOP Tanker Management, Captain Emmanuel served as General Manager of Primal Tankers Inc., where his responsibilities included chartering and operations management. Prior to joining Primal Tankers in 2000, Captain Emmanuel worked in various management capacities for Compass United Maritime. Captain Emmanuel obtained a Naval Officers degree from ASDEN Nautical Academy of Aspropyrgos, Greece and earned a Master Mariners degree in 1971. George Goumopoulos is the Chief Technical Officer of TOP Tanker Management since July 2004. Prior to joining TOP Tanker Management, Mr. Goumopoulos served as Technical Manager of Primal Tankers Inc. From 1981 to 2003. Mr. Goumopoulos worked for Athenian Sea Carriers as Fleet Manager, Deputy Technical Manager and finally as Technical Director. Mr. Goumopoulos holds a Bachelor degree from the University of Michigan, USA in Marine Engineering and Naval Architecture, where he also completed his postgraduate studies in the same fields. He holds a Diploma from NTUA (EMP Athens) in Marine Engineering and Naval Architecture. Eirini Alexandropoulou is our Secretary since August 2004. Mrs. Alexandropoulou's principal occupation for the past 8 years is as a legal advisor providing legal services to ship management companies with respect to corporate and commercial as well as shipping and finance law issues in Greece. From 2001 to 2004, Mrs. Alexandropoulou served as a legal advisor to Eurocarriers SA, a ship manager. Most recently, from 2000 to 2001, Mrs. Alexandropoulou served as a legal advisor to Belize's ship registry office in Piraeus. Mrs. Alexandropoulou has been a member of the Athens Bar Association since 1997 and has a law degree from the Law Faculty of the University of Athens. Committees of the Board of Directors We have established an audit committee comprised of three members, which pursuant to a written audit committee charter, is responsible for reviewing our accounting controls and recommending to the board of directors the engagement of our outside auditors. Each member is an independent director under the corporate governance rules of the Nasdaq National Market. The members of the audit committee are Messrs. Docherty, Gibbs and Thomas. While the Company is exempt from the requirement to have an audit committee financial expert, both Mr. Thomas and Mr. Gibbs meet the qualifications of an audit committee financial expert. B. Compensation We did not pay any compensation to members of senior management or our directors for the fiscal year ended December 31, 2002 or for the fiscal year ended December 31, 2003. We did not pay any benefits in 2002 or 2003. During the fiscal year ended December 31, 2004, 2005 and 2006, we paid to the members of our senior management and to our directors aggregate compensation of $4.4 million, $8.1 million and $4.2 million respectively. We do not have a retirement plan for our officers or directors. Equity Incentive Plan In April 2005 our board of directors has adopted the TOP Tankers Inc. 2005 Stock Incentive Plan, or the Plan, under which our officers, key employees and directors may be granted options to acquire common stock. A total of 1,000,000 shares of common stock were reserved for issuance under the Plan, which is administered by our board of directors. The Plan also provides for the issuance of stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units, and performance shares at the discretion of our board of directors. The Plan will expire 10 years from the date of its adoption. On July 1, 2005, January 3, 2006 and July 6, 2006 (the "grant dates") the Company granted restricted shares pursuant to the Company's 2005 Stock Incentive Plan ("the Plan"), which was adopted in April 2005 to provide certain key persons (the "Participants"), on whose initiatives and efforts the successful conduct of the Company's business depends, and who are responsible for the management, growth and protection of the Company's business, with incentives to: (a) enter into and remain in the service of the Company, a Company's subsidiary, or Company's joint venture, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance, and (d) enhance the long-term performance of the Company (whether directly or indirectly) through enhancing the long-term performance of a Company subsidiary or Company joint venture. A total of 1,000,000 shares of common stock were reserved for issuance under the Plan, which is administered by the Company's Board of Directors. The granted shares have no exercise price and constitute a bonus in nature. The Company's Board of Directors administers the Plan and, on July 1, 2005, identified 45 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 249,850 new shares were granted, out of which 190,000 shares were granted to the Company's CEO, 48,300 shares to 8 officers and independent members of the Board and the remaining 11,550 shares were granted to 36 employees. On January 3, 2006, the Company's Board of Directors identified 29 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 125,000 new shares were granted, out of which 80,000 shares were granted to the Company's CEO, 38,000 shares to 8 officers and independent members of the Board and the remaining 7,000 shares were granted to 20 employees. On July 6, 2006, the Company's Board of Directors identified 60 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 320,000 new shares were granted, out of which 221,250 shares were granted to the Company's CEO, 68,000 shares to 8 officers and independent members of the Board and the remaining 30,750 shares were granted to 51 employees. The "Restricted Stock Agreements" were signed between the Company and the Participants on the respective grant dates. Under these agreements, the Participants have the right to receive dividends and the right to vote the Shares, subject to the following restrictions: Company's CEO The Participant shall not sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any of the Shares other than to a company, which is wholly owned by the Participant. The restrictions lapse on the earlier of (i) one year from the grant date or (ii) termination of the Participant's employment with the Company for any reason. Other Participants The Participants shall not sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any of the Shares. The restrictions lapse on one year from the grant date conditioned upon the Participant's continued employment with the Company from the date of the agreement (i.e. July 1, 2005, January 3, 2006, or July 6, 2006) until the date the restrictions lapse (the "restricted period"). As the shares granted to the Company's CEO do not contain any future service vesting conditions, all such shares are considered vested shares on the grant date. On the other hand, in the event another Participant's employment with the Company terminates for any reason before the end of the restricted period, that Participant shall forfeit all rights to all Shares that have not yet vested as of such date of termination. However, it is the intention of the Company's Board of Directors not to seek repayment of the dividends earned during the restricted period, even if the unvested shares ultimately are forfeited. As these Shares granted to other Participants contain a time-based service vesting condition, such shares are considered non-vested shares on the grant date. A summary of the status of the Company's non-vested and vested shares as of December 31, 2006 and movement during the years ended December 31, 2005 and 2006, is presented below: Number of non-vested shares As at January 1, 2005 -- Granted 59,850 Forfeited (200) ------------------------------- As at December 31, 2005 59,650 ------------------------------- Granted 143,750 Vested (58,600) Forfeited (3,900) ------------------------------- As at December 31, 2006 140,900 =============================== Number of vested shares As at January 1, 2005 -- Granted 190,000 As at December 31, 2005 190,000 ------------------------------- Granted 301,250 Non-vested shares granted in 2005, vested during 2006 58,600 ------------------------------- As at December 31, 2006 549,850 =============================== During 2005, the employment of one of the other Participants was terminated and 200 restricted shares that were granted to him under the Plan were forfeited. During 2006, the employment of six of the other Participants was terminated and 3,900 restricted shares that were granted to them under the Plan were forfeited. C. Board practices and exemptions from Nasdaq corporate governance rules The Company has certified to Nasdaq that its corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. Therefore, the Company is exempt from all of Nasdaq's corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, notification of material non-compliance with Nasdaq corporate governance practices, and the establishment and composition of an audit committee that complies with SEC Rule 10A-3 and a formal written audit committee charter. The practices followed by the Company in lieu of Nasdaq's corporate governance rules are described below. o In lieu of a compensation committee comprised of independent directors, the full Board of Directors determines compensation. o In lieu of a nomination committee comprised of independent directors and a formal written charter addressing the nominations process, the full Board of Directors, as set forth in the Company's by-laws, regulates nominations. o The Company holds annual meetings of shareholders under the BCA, similar to Nasdaq requirements. o In lieu of obtaining an independent review of related party transactions for conflicts of interests, the disinterested members of the Board of Directors approve related party transactions under the BCA. o In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company complies with provisions of the BCA providing that the Board of Directors approves share issuances. o The Company's Board does not hold regularly scheduled meetings at which only independent directors are present. The Company complies with the Nasdaq corporate governance requirements pertaining to the board of directors, a majority of which must be independent, the disclosure of a going concern audit opinion, the distribution of annual and interim reports; shareholder meetings, quorum, peer review, and direct registration program and the disclosure of a notification of material non-compliance. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major shareholders The following table sets forth information regarding (i) the owners of more than five percent of our common stock that we are aware of and (ii) the total amount of capital stock owned by our officers and directors as of February 14, 2007. All of the shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held. Amount Percent Title of Class Identity of Person or Group Owned of Class - -------------- --------------------------- ----- -------- Common Stock, QVT Financial LP* 3,089,806 9.5% par value Kingdom Holdings Inc.** 2,361,181 7.3% $.01 per Evangelos Pistiolis*** 1,727,379 5.3% share Officers and directors other than Evangelos Pistiolis 200,000 0.6% All officers and directors 1,927,379 5.9% as a group - ---------- * As at March 9, 2007. ** A company owned primarily by adult relatives of our President, Chief Executive Officer and Director, Evangelos Pistiolis. *** By virtue of the shares owned indirectly through Sovereign Holdings Inc., a company wholly-owned by Evangelos Pistiolis. B. Related party transactions Up to June 30, 2004, the ship-owning companies had a management agreement with Primal Tankers Inc., which was wholly owned by the father of the Company's Chief Executive Officer, under which management services were provided in exchange for a fixed monthly fee per vessel, which was renewed annually. The fees charged by Primal Tankers Inc. during 2002, 2003 and 2004 amounted to $0.7 million, $1.7 million and $1.1 million, respectively. During 2004, Top Tanker Management Inc. acquired from Primal Tankers Inc. other fixed assets for a consideration of $0.1 million. In July 2004, the Company entered into an agreement to lease office space in Athens, Greece from Pyramis Technical Co. SA, which is wholly owned by the father of the Company's Chief Executive Officer. The agreement was for duration of six years beginning July 2004 with a lessee's option for an extension of four years. The monthly rental was Euro 39,000 and effective January 1, 2006 was adjusted for inflation to Euro 40,365. In January 2006 the Company entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The change in office location, due to necessary refurbishments, took place in October 2006; therefore, the Company paid to Pyramis Technical Co. S.A the October rent plus four rentals as termination compensation. In April and August 2006, the Company entered into an agreement with Pyramis Technical Co. S.A. for the renovation of the new premises. The total contracted cost totaled Euro 1,593,250. All transactions with Primal Tankers Inc. and Pyramis Techical Co. S.A. were performed at arm's length, on normal commercial terms. C. Interests of experts and counsel. Not applicable. D. Employees As of December 31, 2006, we had 3 employees, while our wholly-owned subsidiary, TOP Tanker Management, employed 68 employees, all of whom are shore-based. As of December 31, 2006 we employed also 589 sea going employees, indirectly through our sub-managers. E. Share ownership The common shares beneficially owned by our directors and senior managers and/or companies affiliated with these individuals are disclosed in "Item 7. Major Shareholders and Related Party Transactions" below. ITEM 8. FINANCIAL INFORMATION. A. Consolidated Statements and Other Financial Information. See Item 18. DIVIDEND POLICY The Company paid special dividends of $5.00 per share and $2.50 per share on March 27, 2006 and April 25, 2006, respectively. On April 6, 2006 our Board of Directors decided to discontinue the Company's policy of paying regular quarterly dividends. The declaration and payment of any future special dividends shall remain subject to the discretion of the Board of Directors and shall be based on general market and other conditions including the Company's earnings, financial strength and cash requirements and availability. We are permitted to pay dividends under the loans so long as we are not in default of a loan covenant and if such dividend payment would not result in a default of a loan covenant. B. Significant Changes. Not Applicable. ITEM 9. THE OFFER AND LISTING. Price Range of Common Stock The trading market for our common stock is the Nasdaq Global Select Market, on which the shares are listed under the symbol "TOPT." The following table sets forth the high and low closing prices for our common stock since our initial public offering of common stock at $11.00 per share on July 23, 2004, as reported by the Nasdaq Global Select Market. The high and low closing prices for our common stock for the periods indicated were as follows: HIGH LOW ---- --- For the Fiscal Year Ended December 31, 2006 .................. $18.22 $4.65 For the Fiscal Year Ended December 31, 2005 .................. $22.00 $12.27 For the Fiscal Year Ended December 31, 2004 (beginning July 23, 2004)..................................... $24.14 $10.51 For the Quarter Ended March 31, 2005................................................ $22.00 $14.25 June 30, 2005................................................. $19.38 $14.21 September 30, 2005............................................ $16.90 $13.75 December 31, 2005............................................. $15.01 $12.27 March 31, 2006................................................ $18.22 $11.90 June 30, 2006................................................. $12.62 $6.09 September 30, 2006............................................ $6.72 $5.50 December 31, 2006............................................. $6.35 $4.65 For the Month: HIGH LOW March 2007 (Only for the period of March 1-15) ............... $5.02 $4.66 February 2007 ................................................ $5.18 $4.79 January 2007 ................................................. $5.04 $4.65 December 2006................................................. $5.53 $4.65 November 2006................................................. $6.35 $5.04 October 2006 ................................................. $6.23 $5.60 ITEM 10. ADDITIONAL INFORMATION A. Share Capital Not applicable. B. Memorandum and Articles of Association Our purpose, as stated in Section B of our Articles of Incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our shareholders. Under our bylaws, annual shareholder meetings will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Marshall Islands. Special meetings of the shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes at any time by the board of directors. Notice of every annual and special meeting of shareholders shall be given at least 15 but not later than 60 days before such meeting to each shareholder of record entitled to vote thereat. Directors. Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for cumulative voting. The board of directors must consist of at least one member. The board of directors may change the number of directors only by the vote of not less than 66 2/3% of the entire board. Each director shall be elected to serve until the third succeeding annual meeting of shareholders and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. The board of directors has the authority to fix the amounts which shall be payable to the members of our board of directors for attendance at any meeting or for services rendered to us. Dissenters' Rights of Appraisal and Payment. Under the Business Corporation Act of the Republic of the Marshall Islands, or BCA, our shareholders have the right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of the articles, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that, among other things, the institution of proceedings in the circuit court in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the dissenting we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve shareholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser. Shareholders' Derivative Actions. Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relate. Anti-takeover Provisions of our Charter Documents. Several provisions of our articles of incorporation and by-laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors. Business Combinations The Company's Amended and Restated Articles of Incorporation include provision which prohibit the Company from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the person became an interested shareholder, unless: o prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the Board approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; o upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; o at or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the Board and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; and o the shareholder became an interested shareholder prior to the consummation of the initial public offering. Blank Check Preferred Stock Under the terms of our articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management. Classified Board of Directors Our articles of incorporation provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay shareholders who do not agree with the policies of the board of directors from removing a majority of the board of directors for two years. Election and Removal of Directors Our articles of incorporation prohibit cumulative voting in the election of directors. Our by-laws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our articles of incorporation also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors. Limited Actions by Shareholders Our articles of incorporation and our by-laws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our articles of incorporation and our by-laws provide that, subject to certain exceptions, only our board of directors may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our board of directors and shareholder consideration of a proposal may be delayed until the next annual meeting. Super-majority Required for Certain Amendments to Our By-Laws On February 28, 2007 we amended our by-laws to require that amendments to certain provisions of our by laws may be made when approved by 66 2/3% of the entire Board of Directors. These provisions that require 66 2/3% vote of the Board of Directors to be amended are provisions governing: the nature of business to be transacted at our annual meetings of shareholders, the calling of special meetings by our Board of Directors, any amendment to change the number of directors constituting our Board of Directors, the method by which our Board of Directors is elected, the nomination procedures of our board of directors, removal of our board of directors and the filling of vacancies on our Board of Directors. C. Material Contracts Long Term Debt As of December 31, 2006 we had long term debt obligations under two credit facilities, the RBS credit facility and the HSH Nordbank credit facility. For a full description of our credit facilities see "Tabular Disclosure of Contractual Obligations - Long Term Debt" above. Newbuildings As of December 31, 2006 we had commitments under 6 shipbuilding contracts for the construction of 6 Handymax Product / Chemical tankers scheduled for delivery during the first six months of 2009. For a full description of our newbuildings see "Tabular Disclosure of Contractual Obligations - Newbuildings" above. Office space lease In January 2006, we entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The agreement is for duration of twelve years beginning May 2006 with a lessee's option for an extension of ten years. For a full description of the office space lease see "Tabular Disclosure of Contractual Obligations - Operating leases" above. Sale and leaseback As of December 31, 2006 we had commitments under sale and leaseback agreements for 18 out of the 24 of our vessels under management. In March and April of 2006, the subsidiaries of the Company sold and subsequently leasedback 13 vessels for a period of five to seven years. The Company guaranteed to the buyers of the vessels the payment of all sums owed by its subsidiaries under the sale and leaseback charters and agreed to accept liability on behalf of its subsidiaries for the obligations of its subsidiaries to the buyers of its vessels. Financial undertakings of the Company are contained in the quadripartite deeds and the guarantees of these transactions. The quadripartite deeds and guarantees which are included as exhibits to this annual report contain restrictive covenants which state, among other things, that the Company agrees, as charter guarantor that it will at all times throughout the security period (as defined in the quadripartite deed) maintain a minimum amount of $20.0 million in its account with Fortis Bank commencing on the first drawdown date (as described in the quadripartite deeds) and December 15, 2006 and a minimum amount of $25.0 million in its account with Fortis Bank for the period between December 15, 2006 and the expiration of the guarantee. As guarantor, the Company is to further ensure that there are no encumbrances existing over the amounts it is to maintain in its account. Further, as guarantor the Company undertakes to maintain cash balances of at least $50.0 million in bank accounts in its name or in the name of its subsidiaries (including the $25.0 million maintained with Forties). The Company also undertakes to ensure that its net asset value at all time exceeds $125.0 million and that its book equity at all time exceeds $75.0 million, to endeavor that any excess cash flow from vessel operations will be paid into the Company's account with Fortis and to provide details regarding the operating expenses and earnings of its vessels to Fortis at three month intervals. For a full description of the sale and leaseback commitments see "Tabular Disclosure of Contractual Obligations - Lease payments under sale and leasebacks" above. Stockholders Rights Agreement We entered into a Stockholders Rights Agreement with Computershare Investor Services, LLC, as Rights Agent, as of August 19, 2005. Under this Agreement, we declared a dividend payable of one preferred share purchase right, or Right, to purchase one one-thousandth of the Company's Series A Participating Cumulative Preferred Stock for each outstanding share of TOP Tankers common stock, par value $0.01 per share. The Right will separate from the common stock and become exercisable after (1) a person or group acquires ownership of 15% or more of the company's common stock or (2) the 10th business day (or such later date as determined by the company's board of directors) after a person or group announces a tender or exchange offer which would result in that person or group holding 15% or more of the company's common stock. On the distribution date, each holder of a right will be entitled to purchase for $25 (the "Exercise Price") a fraction (1/1000th) of one share of the company's preferred stock which has similar economic terms as one share of common stock. If an acquiring person (an "Acquiring Person") acquires more than 15% of the company's common stock then each holder of a right (except that acquiring person) will be entitled to buy at the exercise price, a number of shares of the company's common stock which has a market value of twice the exercise price. Any time after the date an Acquiring Person obtains more than 15% of the company's common stock and before that Acquiring Person acquires more than 50% of the company's outstanding common stock, the company may exchange each right owned by all other rights holders, in whole or in part, for one share of the company's common stock. The rights expire on the earliest of (1) August 31, 2015 or (2) the exchange or redemption of the rights as described above. The company can redeem the rights at any time prior to a public announcement that a person has acquired ownership of 15% or more of the company's common stock. The terms of the rights and the Stockholder Rights Plan may be amended without the consent of the rights holders at any time on or prior to the Distribution Date. After the distribution date, the terms of the rights and the Stockholder Rights Plan may be amended to make changes, which do not adversely affect the rights of the rights holders (other than the Acquiring Person). The rights will not have any voting rights. The rights will have the benefit of certain customary anti-dilution protections Sales Agreement with Cantor Fitzgerald & Co. We entered into a Sales Agreement with Cantor Fitzgerald & Co. on April 13, 2006, pursuant to which we agreed that from time to time we will issue and sell and agreed upon number of our shares of common stock through Cantor Fitzgerald & Co. who will act as agent and/or principal for us in the sale of these shares. The agreement expired in October 2006. D. Exchange controls The Marshall Islands imposes no exchange controls on non-resident corporations. E. Tax Considerations The following is a discussion of the material Marshall Islands and United States federal income tax considerations relevant to an investment decision by a U.S. Holder and a non U.S. Holder, each as defined below, with respect to the common stock. This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities and investors whose functional currency is not the United States dollar, may be subject to special rules. You are encourages to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common stock. Marshall Islands Tax Considerations In the opinion of Seward & Kissel LLP, the following are the material Marshall Islands tax consequences of our activities to us and shareholders of our common stock. We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders. United States Federal Income Tax Considerations In the opinion of Seward & Kissel LLP, our United States counsel, the following are the material United States federal income tax consequences to us of our activities and to U.S. Holders and non U.S. Holders, each as defined below, of our common stock. The following discussion of United States federal income tax matters is based on the Internal Revenue Code of 1986, or the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, all of which are subject to change, possibly with retroactive effect. Treasury Regulations promulgated in August of 2003 interpreting Code Section 883, became effective on January 1, 2005 for calendar year taxpayers such as ourselves and our subsidiaries. The discussion below is based, in part, on the description of our business as described in "Business" above and assumes that we conduct our business as described in that section. Except as otherwise noted, this discussion is based on the assumption that we will not maintain an office or other fixed place of business within the United States. References in the following discussion to "we" and "us" are to TOP Tankers Inc. and its subsidiaries on a consolidated basis. United States Federal Income Taxation of Our Company Taxation of Operating Income: In General Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangements or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as "shipping income," to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as "U.S.-source shipping income." Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We are not permitted by law to engage in transportation that produces income which is considered to be 100% from sources within the United States. Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States Federal income tax. In the absence of exemption from tax under Section 883, our gross U.S. source shipping income would be subject to a 4% tax imposed without allowance for deductions as described below. Exemption of Operating Income from United States Federal Income Taxation Under Section 883 of the Code and the regulations thereunder, we will be exempt from United States federal income taxation on our U.S.-source shipping income if: (1) we are organized in a foreign country (our "country of organization") that grants an "equivalent exemption" to corporations organized in the United States; and (2) either (A) more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test," or (B) our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test". The Marshall Islands, Cyprus and Liberia, the jurisdictions where our ship-owning subsidiaries are incorporated, each grant an "equivalent exemption" to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. The regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be "primarily traded" on an established securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Our common stock, which is our sole class of issued and outstanding stock, is and we anticipate will continue to be "primarily traded" on the Nasdaq National Market. Under the regulations, our common stock will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing 50% or more of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on the market which we refer to as the listing threshold. Since our common stock, our sole class of stock, is listed on the Nasdaq National Market, we will satisfy the listing requirement. It is further required that with respect to each class of stock relied upon to meet the listing threshold, (i) such class of stock be traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stock traded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year. We believe we will satisfy the trading frequency and trading volume tests. Even if this were not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied if, as is the case with our common stock, such class of stock is traded on an established market in the United States and such stock is regularly quoted by dealers making a market in such stock. Notwithstanding the foregoing, the regulations provide, in pertinent part, that each class of our stock will not be considered to be "regularly traded" on an established securities market for any taxable year in which 50% or more of each class of our outstanding shares of the stock are owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of each class of our outstanding stock, which we refer to as the "5 Percent Override Rule." For purposes of being able to determine the persons who own 5% or more of our stock, or "5% Shareholders," the regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the "SEC," as having a 5% or more beneficial interest in our common stock. The regulations further provide that an investment company identified on a SEC Schedule 13G or Schedule 13D filing which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% shareholder for such purposes. In the event the 5 Percent Override Rule is triggered, the regulations provide that the 5 Percent Override Rule will not apply if we can establish that among the closely-held group of 5% Shareholders, there are sufficient 5% Shareholders that are considered to be qualified shareholders for purposes of Section 883 to preclude non-qualified 5% Shareholders in the closely-held group from owning 50% or more of each class of our stock for more than half the number of days during such year. We believe that we currently satisfy the Publicly--Traded Test and are not subject to the 5 percent override Rule and we will take this position for U.S. federal income tax reporting purposes. However, there are factual circumstances beyond our control which could cause us to lose the benefit of this exemption. Taxation in the Absence of Code Section 883 Exemption To the extent the benefits of Code Section 883 are unavailable, our U.S. source shipping income, to the extent not considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on our shipping income would never exceed 2% under the 4% gross basis tax regime. To the extent the benefits of the Code Section 883 exemption are unavailable and our U.S. source shipping income is considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, any such "effectively connected" U.S. source shipping income, net of applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject to the 30% "branch profits" taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of its U.S. trade or business. Our U.S. source shipping income would be considered "effectively connected" with the conduct of a U.S. trade or business only if: o We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and o substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States. We do not have currently or intend to have, or permit circumstances that would result in having any vessel operating to the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S. source shipping income will be "effectively connected" with the conduct of a U.S. trade or business. United States Taxation of Gain on Sale of Vessels Regardless of whether we qualify for exemption under Code Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States. United States Federal Income Taxation of U.S. Holders As used herein, the term "U.S. Holder" means a beneficial owner of common stock that o is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, o owns the common stock as a capital asset, generally, for investment purposes, and o owns less than 10% of our common stock for United States federal income tax purposes. If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you should consult your tax advisor. Distributions Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in his common stock on a dollar for dollar basis and thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as "passive category income" or, in the case of certain types of U.S. Holders, "general category income" for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes. Dividends paid on our common stock to a U.S. Holder who is an individual, trust or estate (a "U.S. Individual Holder") should be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates (through 2010) provided that (1) the common stock is readily tradable on an established securities market in the United States (such as the Nasdaq National Market on which our stock is currently traded); (2) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be); and (3) the U.S. Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend. Therefore, there is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Any dividends paid by the Company which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder. Special rules may apply to any "extraordinary dividend" generally, a dividend in an amount which is equal to or in excess of ten percent of a shareholder's adjusted basis (or, at the election of the U.S. Individual Holder, the stock's then fair market value) in a share of common stock paid by us. If we pay an "extraordinary dividend" on our common stock that is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend. Sale, Exchange or other Disposition of Common Stock Assuming we do not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such stock. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder's ability to deduct capital losses is subject to certain limitations. Passive Foreign Investment Company Status and Significant Tax Consequences Special United States federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a passive foreign investment company for United States federal income tax purposes. In general, we will be treated as a passive foreign investment company with respect to a U.S. Holder if, for any taxable year in which such holder held our common stock, either o at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or o at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. For purposes of determining whether we are a passive foreign investment company, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25 percent of the value of the subsidiary's stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute "passive income" unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business. Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a passive foreign investment company with respect to any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we were a passive foreign investment company. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing passive foreign investment companies, the Internal Revenue Service or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a passive foreign investment company with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future. As discussed more fully below, if we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a "Qualified Electing Fund," which election we refer to as a "QEF election." As an alternative to making a QEF election, a U.S. Holder should be able to make a "mark-to-market" election with respect to our common stock, as discussed below. Taxation of U.S. Holders Making a Timely QEF Election If a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an "Electing Holder," the Electing Holder must report each year for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions were received from us by the Electing Holder. The Electing Holder's adjusted tax basis in the common stock will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common stock and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common stock. A U.S. Holder would make a QEF election with respect to any year that our company is a passive foreign investment company by filing one copy of IRS Form 8621 with his United States federal income tax return and a second copy in accordance with the instructions to such form. If we were to be treated as a passive foreign investment company for any taxable year, we would provide each U.S. Holder with all necessary information in order to make the qualified electing fund election described below. Taxation of U.S. Holders Making a "Mark-to-Market" Election Alternatively, if we were to be treated as a passive foreign investment company for any taxable year and, as we anticipate, our stock is treated as "marketable stock," a U.S. Holder would be allowed to make a "mark-to-market" election with respect to our common stock, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the common stock at the end of the taxable year over such holder's adjusted tax basis in the common stock. The U.S. Holder would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the common stock over its fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in his common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Holder. Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election Finally, if we were to be treated as a passive foreign investment company for any taxable year, a U.S. Holder who does not make either a QEF election or a "mark-to-market" election for that year, whom we refer to as a "Non-Electing Holder," would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on our common stock in a taxable year in excess of 125 percent of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock), and (2) any gain realized on the sale, exchange or other disposition of our common stock. Under these special rules: o the excess distribution or gain would be allocated ratably over the Non-Electing Holders aggregate holding period for the common stock; o the amount allocated to the current taxable year would be taxed as ordinary income; and o the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. These penalties would not apply to a qualified pension, profit sharing or other retirement trust or other tax-exempt organization that did not borrow money or otherwise utilize leverage in connection with its acquisition of our common stock. If a Non-Electing Holder who is an individual dies while owning our common stock, such holders successor generally would not receive a step-up in tax basis with respect to such stock. United States Federal Income Taxation of "Non-U.S. Holders" A beneficial owner of common stock that is not a U.S. Holder is referred to herein as a "Non-U.S. Holder." Dividends on Common Stock Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States. Sale, Exchange or Other Disposition of Common Stock Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless: o the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or o the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. If the Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, if you are a corporate Non-U.S. Holder, your earnings and profits that are attributable to the effectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Backup Withholding and Information Reporting In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. In addition, such payments will be subject to backup withholding tax if you are a non-corporate U.S. Holder and you: o fail to provide an accurate taxpayer identification number; o are notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or o in certain circumstances, fail to comply with applicable certification requirements. Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or W-8IMY, as applicable. If you sell your common stock to or through a United States office or broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common stock through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States. F. Dividends and paying agents Not applicable G. Statement by experts Not applicable H. Documents on display. We file annual reports and other information with the SEC. You may read and copy any document we file with the SEC at its public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of this information by mail from the public reference section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public at the web site maintained by the SEC at http://www.sec.gov, as well as on our website at http://www.toptankers.com. I. Subsidiary Information Not Applicable Incorporation by Reference This Form 20-F is hereby incorporated by reference to the registration statement on Form F-3 filed on August 1, 2005 (Registration No. 333-127086). ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK A. Quantitative information about market risk Interest Rate Fluctuation. The international tanker shipping industry is capital intensive, requiring significant amounts of investment. Much of this investment is provided in the form of long-term debt. Our debt usually contains interest rates that fluctuate with LIBOR. Increasing interest rates could adversely impact future earnings. Our interest expense is affected by changes in the general level of interest rates. As an indication of the extent of our sensitivity to interest rate changes, the following table sets forth the sensitivity of all credit facilities in U.S. dollars to a 100 basis points increase in LIBOR on December 31 of each repayment year up to December 31, 2012. The following table takes into account the interest rate swap agreements. Interest Expense Sensitivity to 100 Basis Point Change in LIBOR December 31, 2007.............................................. 670,602 December 31, 2008.............................................. 1,469,617 December 31, 2009.............................................. 2,390,318 December 31, 2010.............................................. 2,587,540 December 31, 2011.............................................. 2,126,378 December 31, 2012.............................................. 1,674,736 Foreign Exchange Rate Risk. We generate all of our revenues in U.S. dollars but incur approximately 6% of our expenses in currencies other than U.S. dollars. For accounting purposes, expenses incurred in other currencies are translated into U.S. dollars at the exchange rate prevailing on the date of each transaction. We constantly monitor the U.S Dollar exchange rate and we try to achieve more favorable exchange rates from the financial institutions we work with. Inflation. Although inflation has had a moderate impact on our trading fleet's operating and voyage expenses in recent years, management does not consider inflation to be a significant risk to operating or voyage costs in the current economic environment. However, in the event that inflation becomes a significant factor in the global economy, inflationary pressures would result in increased operating, voyage and financing costs. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not Applicable. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES Neither we nor any of our subsidiaries have been subject to a material default in the payment of principal, interest, a sinking fund or purchase fund installment or any other material default that was not cured within 30 days. In addition, the payment of our dividends are not, and have not been in arrears or have not been subject to a material delinquency that was not cured within 30 days. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not Applicable. ITEM 15. CONTROLS AND PROCEDURES a) Disclosure of Controls and procedures. Management assessed the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this annual report (as of December 31, 2006). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of the evaluation date. b) Management's annual report on internal controls over financing reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) promulgated under the Securities Exchange Act of 1934. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: o Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; o Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of Company's management and directors; and o Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management conducted the evaulation of the effectiveness of the internal controls over financial reporting using the control criteria framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) published in its report entitled Internal Control-Integrated Framework. Our management with the participation of our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of the design and operation of the Company's internal controls over financial reporting pursuant to Rule 13a-15(f) of the Securities Exchange Act of 1934, as of December 31, 2006. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's internal controls over financial reporting are effective as of December 31, 2006. This annual report does not include an attestation report of the Company's current registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's current registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report. c) Changes in internal controls over financial reporting There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report that have materially effected or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT We have established an audit committee comprised of three members which is responsible for reviewing our accounting controls and recommending to the board of directors the engagement of our outside auditors. Each member is an independent director under the corporate governance rules of the Nasdaq National Market. The members of the audit committee are Messrs. Docherty, Gibbs and Thomas. While the Company is exempt from the requirement to have an audit committee financial expert, both Mr. Thomas and Mr. Gibbs meet the qualifications of an audit committee financial expert. ITEM 16B. CODE OF ETHICS The Company's Board of Directors has adopted a Corporate Code of Business Ethics and Conduct that applies to all employees, directors and officers, that complies with applicable guidelines issued by the SEC. The finalized Code of Ethics has been approved by the Board of Directors and was distributed to all employees, directors and officers. We will also provide any person a hard copy of our code of ethics free of charge upon written request. Shareholders may direct their requests to the attention of Mrs Eirini Alexandropoulou at the Company's registered address and phone numbers. ITEM 16C. PRINCIPAL AUDITOR FEES AND SERVICES In November 2006, we announced the resignation of our former principal auditors, Ernst and Young (Hellas), Certified Auditors Accountants S.A., and in December 2006 we announced the appointment of Deloitte, Hadjipavlou, Sofianos & Cambanis S.A. (Deloitte) as our principal auditors for the year ended December 31, 2006. For the 2006 audit, Ernst and Young (Hellas) and Deloitte billed us audit fees of Euro 365,800 and Euro 400,000 respectively. Additionally, in 2006, Ernst and Young (Hellas) billed us audit related fees of Euro 84,726. Our principal auditors for the year ended December 31, 2005 were Ernst and Young (Hellas), Certified Auditors Accountants S.A.. For the 2005 audit they billed us audit fees of Euro 220,000. Additionally, in 2005, they billed us audit related fees of Euro 117,000. Our audit committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services. ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES See Item 16A above. ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES None. PART III ITEM 17. FINANCIAL STATEMENTS Not Applicable. ITEM 18. FINANCIAL STATEMENTS The following financial statements, together with the reports of Deloitte, Hadjipavlou, Sofianos & Cambanis S.A. and Ernst and Young (Hellas), Certified Auditors Accountants S.A., thereon, are filed as part of this report: TOP TANKERS INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ------------ Reports of Independent Registered Public Accounting Firms F-1 / F-2 Consolidated Balance Sheets as of December 31, 2005 and 2006 F-3 Consolidated Statements of Income for the years ended December 31, 2004, 2005 and 2006 F-4 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2004, 2005 and 2006 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006 F-6 Notes to Consolidated Financial Statements F-7 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Top Tankers Inc. We have audited the accompanying consolidated balance sheet of Top Tankers Inc. and subsidiaries (the "Company") as of December 31, 2006, and the related statements of income, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Company for the years ended December 31, 2005 and 2004 were audited by other auditors whose report, dated February 24, 2006, expressed an unqualified opinion on those statements. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to, nor have we been engaged to perform an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such 2006 consolidated financial statements present fairly, in all material respects, the financial position of Top Tankers Inc and subsidiaries as of December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte., Hadjipavlou, Sofianos & Cambanis S.A. Athens, Greece April 12, 2007 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of TOP Tankers Inc. We have audited the accompanying consolidated balance sheets of TOP Tankers Inc. as of December 31, 2004 and 2005, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TOP Tankers Inc. at December 31, 2004 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A. Athens, Greece February 24, 2006 TOP TANKERS INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND 2006 (Expressed in thousands of U.S. Dollars - except share and per share data) ASSETS 2005 2006 --------- --------- CURRENT ASSETS: Cash and cash equivalents 17,462 29,992 Accounts receivable trade, net 39,527 27,187 Insurance claims 258 247 Inventories (Note 4) 6,308 6,460 Advances to various creditors 3,083 3,707 Prepayments and other 936 5,206 --------- --------- Total current assets 67,574 72,799 --------- --------- INTEREST RATE SWAPS (Note 8) 425 - --------- --------- FIXED ASSETS: Advances for vessels under construction (Note 5) - 28,683 Vessels, net (Notes 6 and 8) 886,754 306,418 Other fixed assets, net (Note 3) 1,128 3,195 --------- --------- Total fixed assets 887,882 338,296 --------- --------- OTHER NON CURRENT ASSETS: Deferred charges, net (Note 7) 11,516 31,850 Long-term receivables (Note 11) - 29,790 Restricted cash (Notes 8 and 11) 13,500 50,000 --------- --------- Total assets 980,897 522,735 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt (Note 8) 45,329 16,588 Accounts payable 12,405 14,991 Accrued liabilities (Note 9) 13,297 7,354 Unearned revenue 5,112 1,676 --------- --------- Total current liabilities 76,143 40,609 --------- --------- INTEREST RATE SWAPS (Note 8) - 3,384 --------- --------- LONG-TERM DEBT, net of current portion (Note 8) 518,774 201,464 --------- --------- DEFERRED GAIN ON SALE AND LEASEBACK OF VESSELS (Note 11) 16,322 79,423 --------- --------- COMMITMENTS AND CONTINGENCIES (Note 10) --------- --------- STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value; 20,000,000 shares authorized; none issued (Note 12) - - Common stock, $0.01 par value; 100,000,000 shares authorized; 28,080,640 and 32,429,105 shares issued and outstanding at December 31, 2005 and 2006, respectively (Note 12) 280 324 Additional paid-in capital (Note 12) 297,716 116,755 Accumulated other comprehensive income (loss) (Notes 8 and 13) 98 (6) Retained earnings 71,564 80,782 --------- --------- Total stockholders' equity 369,658 197,855 --------- --------- Total liabilities and stockholders' equity 980,897 522,735 ========= ========= The accompanying notes are an integral part of these consolidated statements. TOP TANKERS INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 (Expressed in thousands of U.S. Dollars - except share and per share data)
2004 2005 2006 ------------- ---------------- --------------- REVENUES: Voyage revenues (Note 1) 93,829 244,215 310,043 ------------- ---------------- --------------- EXPENSES: Voyage expenses (Note 15) 16,898 36,889 55,351 Charter hire expense (Note 11) - 7,206 96,302 Amortization of deferred gain on sale and leaseback of vessels (Note 11) - (837) (8,110) Other vessel operating expenses (Note 15) 16,859 47,315 66,082 Depreciation (Note 6) 13,108 47,055 35,266 Amortization of dry-docking costs (Note 7) 1,514 5,999 13,187 Management fees charged by a related party 1,120 - - (Note 3) Sub-Manager fees (Note 1) 803 3,159 2,755 Other general and administrative expenses 6,656 20,659 20,261 Foreign currency (gains) / losses, net 75 (68) 255 Gain on sale of vessels (Note 6) (638) (10,115) (12,667) ------------- ---------------- --------------- Operating income 37,434 86,953 41,361 ------------- ---------------- --------------- OTHER INCOME (EXPENSES): Interest and finance costs (Notes 8 and 17) (5,201) (20,177) (29,175) Interest income 481 1,774 3,022 Other, net 80 134 (67) ------------- ---------------- --------------- Total other income (expenses), net (4,640) (18,269) (26,220) ------------- ---------------- --------------- Net Income 32,794 68,684 15,141 ============= ================ =============== Earnings per share, basic and diluted (Note 14) 2.54 2.46 0.47 ============= ================ =============== Weighted average common shares outstanding, basic 12,922,449 27,926,771 30,550,274 ============= ================ =============== Weighted average common shares outstanding, diluted 12,922,449 27,932,012 30,603,868 ============= ================ ===============
The accompanying notes are an integral part of these consolidated statements. TOP TANKERS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 (Expressed in thousands of U.S. Dollars - except share and per share data)
Accumulated Other Common Stock Additional Comprehensive Comprehensive ----------------------- Paid-in Income Retained Income # of Shares Par Value Capital (loss) Earnings Total --------- ----------- ----------- ---------- ---------- ------------ ---------- BALANCE, December 31, 2003 6,000,000 60 13,351 - 2,908 16,319 =========== ========= ========== ========== ============ ========== Net income 32,794 - - - - 32,794 32,794 Dividends paid ($0.39 per share) - - - - - (2,318) (2,318) Contributions to additional paid-in capital - - - 17,077 - - 17,077 Issuance of common stock - 21,830,990 218 263,812 - - 264,030 Dividends declared ($0.21 per share) - - - - - (5,845) (5,845) Other comprehensive income- - Unrealized loss on cash flow hedges (248) - - - (248) - (248) --------- Comprehensive income 32,546 - - - - - - ========= ----------- --------- ---------- ---------- ------------ ---------- BALANCE, December 31, 2004 27,830,990 278 294,240 (248) 27,539 321,809 =========== ========= ========== ========== ============ ========== Net income 68,684 - - - - 68,684 68,684 Dividends paid ($0.21 per share) - - - - - (5,844) (5,844) Dividends paid ($0.21 per share) - - - - - (5,897) (5,897) Dividends paid ($0.25 per share) - - - - - (7,020) (7,020) Dividends paid ($0.21 per share) - - - - - (5,898) (5,898) Issuance of restricted shares, net of forfeitures - 249,650 2 3,476 - - 3,478 Other comprehensive income - Unrealized gain on cash flow hedges 1,517 - - - 1,517 - 1,517 - Reclassification of gains to earnings due to discontinuance of cash flow hedges (1,171) - - - (1,171) - (1,171) --------- Comprehensive income 69,030 - - - - - - ========= ----------- --------- ---------- ---------- ------------ ---------- BALANCE, December 31, 2005 28,080,640 280 297,716 98 71,564 369,658 =========== ========= ========== ========== ============ ========== Net income 15,141 - - - - 15,141 15,141 Dividends paid ($0.21 per share) - - - - - (5,923) (5,923) Dividends paid ($5.00 per share) - - - (141,028) - (141,028) Dividends paid ($2.50 per share) - - - (70,515) - (70,515) Issuance of restricted shares, net of forfeitures - 441,100 5 3,705 - - 3,710 Issuance of common stock - 3,907,365 39 26,877 - - 26,916 Other comprehensive income - Accumulated unrecognized actuarial losses - - - - (6) - (6) - Reclassification of gains to earnings due to (98) - - - (98) - (98) discontinuance of cash flow hedges --------- Comprehensive income 15,043 - - - - - - ========= ----------- --------- ---------- ---------- ------------ ---------- BALANCE, December 31, 2006 32,429,105 324 116,755 (6) 80,782 197,855 =========== ========= ========== ========== ============ ==========
The accompanying notes are an integral part of these consolidated statements. TOP TANKERS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 (Expressed in thousands of U.S. Dollars)
2004 2005 2006 -------------- ------------- ------------- Cash Flows from Operating Activities: Net income 32,794 68,684 15,141 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 13,108 47,055 35,594 Amortization of dry-docking costs 1,514 5,999 13,187 Amortization and write off of deferred financing costs 755 1,407 4,534 Stock-based compensation expense - 3,478 3,710 Change in fair value of financial instruments - (327) 3,711 Amortization of deferred gain on sale and leaseback of vessels - (837) (8,110) Gain on sale of other fixed assets - - (10) Gain on sale of vessels (638) (10,115) (12,667) (Increase) Decrease in: Accounts receivable (19,153) (19,556) 12,340 Insurance claims 967 (160) 11 Inventories (2,712) (3,087) (152) Due from related parties (219) 219 - Advances to creditors - (1,230) (624) Prepayments and other (2,647) (15) (4,270) Increase (Decrease) in: Accounts payable 7,331 2,047 2,586 Due to related parties (105) - - Accrued liabilities 3,072 9,531 (5,949) Unearned revenue 1,899 2,058 (3,436) Payments for dry-docking (7,365) (10,478) (34,526) -------------- ------------- ------------- Net Cash from Operating Activities 28,601 94,673 21,070 -------------- ------------- ------------- Cash Flows from (used in) Investing Activities: Advances for vessel acquisitions / under construction (25,650) - (28,683) Vessel acquisitions and improvements (327,629) (677,111) (18) Advances to related parties 319 - - Increase in restricted cash - - ( 36,500) Net proceeds from sale of vessels 8,536 153,085 599,176 Net proceeds from sale of fixed assets - - 255 Acquisition of other fixed assets (475) (833) (2,639) -------------- ------------- ------------- Net Cash from (used in) Investing Activities (344,899) (524,859) 531,591 -------------- ------------- ------------- Cash Flows from (used in) Financing Activities: Proceeds from long-term debt 281,900 472,549 20,000 Principal payments of long-term debt (4,251) (31,180) (19,119) Repayment of long-term debt (115,260) (68,853) (350,399) Increase in restricted cash (9,700) (3,500) - Contributions to additional paid-in capital 17,077 - - Issuance of common stock 264,030 - 26,916 Payment of financing costs (2,755) (5,632) (63) Dividends paid (2,318) (30,504) (217,466) -------------- ------------- ------------- Net Cash from (used in) Financing Activities 428,723 332,880 (540,131) -------------- ------------- ------------- Net increase (decrease) in cash and cash equivalents 112,425 (97,306) 12,530 Cash and cash equivalents at beginning of year 2,343 114,768 17,462 -------------- ------------- ------------- Cash and cash equivalents at end of year 114,768 17,462 29,992 ============== ============= ============= SUPPLEMENTAL CASH FLOW INFORMATION Interest paid 3,157 18,683 22,307 ============== ============= =============
The accompanying notes are an integral part of these consolidated statements. TOP TANKERS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2006 (Expressed in thousands of United States Dollars - except share and per share data, unless otherwise stated F-9 1. Basis of Presentation and General Information: The accompanying consolidated financial statements include the accounts of Top Tankers Inc. (formerly Ocean Holdings Inc.), ("TOP") and its wholly-owned subsidiaries (collectively the "Company"). Ocean Holdings Inc. was formed on January 10, 2000, under the laws of Marshall Islands, was renamed to Top Tankers Inc. in May 2004 and is the sole owner of all outstanding shares of the following subsidiaries: (a) TOP Tanker Management Inc., (the "Manager") established on May 24, 2004, under the laws of Marshall Islands, is responsible for all of the chartering, operational and technical management of the Company's fleet. Up to June 30, 2004 the operations of the vessels were managed by Primal Tankers Inc., a related Liberian corporation which was wholly owned by the father of the Company's Chief Executive Officer (Note 3). Since July 1, 2004 the Company's ship-owning subsidiaries have a management agreement with the Manager, under which management services are provided in exchange for a fixed monthly fee per vessel. The Manager has subcontracted the day to day technical management of the vessels to unaffiliated ship management companies, Unicom Management Services Ltd, V. Ships Management Limited and Hanseatic Shipping Company Ltd (collectively the "Sub-Managers"). The Sub-Managers provide day to day operational and technical services to the Company's vessels at a fixed monthly fee per vessel. Such fees for the years ended December 31, 2004, 2005 and 2006 totaled $ 803, $ 3,159 and $ 2,755 respectively and are separately reflected in the accompanying consolidated statements of income. At December 31, 2005 and 2006 the amount due to the Sub-Managers totaled $ 2,714 and $ 1,739 respectively and is included in Accounts Payable in the accompanying consolidated balance sheets. (b) Top Bulker Management Inc, incorporated on April 7, 2005 under the laws of Marshall Islands, for the purpose to undertake the management of a fleet of bulk carriers which have not been acquired to date. (c) Top Tankers (U.K.) Limited, incorporated in England and Wales on January 12, 2005, as a representative office in London. Top Tankers (U.K) Limited entered into a lease agreement for office space in London. The original agreement had a one year duration ending December 31, 2005 and in early January 2006 was extended for one year. The annual rental was Great Britain Pounds ("GBP") 123,600, payable quarterly in advance. (d) Helidona Shipping Company Limited ("Helidona"), incorporated in the Marshall Islands in May 2003, owner of the 29,998 DWT (built in 1989), tanker vessel "Yapi", which was sold in September 2005. (e) Gramos Shipping Company Inc. ("Gramos"), incorporated in the Marshall Islands in January 2003, owner of the 45,720 DWT (built in 1992), tanker vessel "Faithful", which was acquired in July 2003 from Vermio Shipping Company Limited, which is a subsidiary of TOP, incorporated in the Marshall Islands in December 2001, owner of vessel "Faithful" for the period from February 2002 to July 2003. The vessel was sold and leased back in March 2006. (f) Rupel Shipping Company Inc. ("Rupel"), incorporated in the Marshall Islands in January 2003, owner of the 44,646 DWT (built in 1992) tanker vessel "Fearless", which was sold in July 2005. (g) Mytikas Shipping Company Ltd. ("Mytikas"), incorporated in the Marshall Islands in February 2004, owner of the 136,055 DWT (built in 1993) tanker vessel "Limitless", which was acquired in March 2004 and sold and leased back in April 2006. (h) Litochoro Shipping Company Ltd. ("Litochoro"), incorporated in the Marshall Islands in March 2004, owner of the 135,915 DWT (built in 1992) tanker vessel "Endless", which was acquired in March 2004 and sold and leased back in April 2006. (i) Falakro Shipping Company Ltd. ("Falakro"), incorporated in Liberia in July 2004, owner of the 47,076 DWT (built in 1991) tanker vessel "Doubtless", which was acquired in August 2004 and sold and leased back in March 2006. (j) Pageon Shipping Company Ltd. ("Pageon"), incorporated in Cyprus in July 2004, owner of the 47,084 DWT (built in 1992) tanker vessel "Vanguard", which was acquired in August 2004 and sold and leased back in March 2006. (k) Vardousia Shipping Company Ltd. ("Vardousia"), incorporated in Cyprus in July 2004, owner of the 47,084 DWT (built in 1992) tanker vessel "Invincible", which was acquired in August 2004 and sold and leased back in September 2005. (l) Psiloritis Shipping Company Ltd. ("Psiloritis"), incorporated in Liberia in July 2004, owner of the 47,084 DWT (built in 1991) tanker vessel "Victorious", which was acquired in August 2004 and sold and leased back in September 2005. (m) Parnon Shipping Company Ltd. ("Parnon"), incorporated in Cyprus in July 2004, owner of the 47,084 DWT (built in 1992) tanker vessel "Relentless", which was acquired in August 2004 and sold and leased back in September 2005. (n) Menalo Shipping Company Ltd. ("Menalo"), incorporated in Cyprus in July 2004, owner of the 47,084 DWT (built in 1991) tanker vessel "Restless", which was acquired in August 2004 and sold and leased back in August 2005. (o) Pintos Shipping Company Ltd. ("Pintos"), incorporated in Cyprus in July 2004, owner of the 47,084 DWT (built in 1992) tanker vessel "Sovereign", which was acquired in August 2004 and sold and leased back in August 2005. (p) Pylio Shipping Company Ltd. ("Pylio"), incorporated in Liberia in July 2004, owner of the 154,970 DWT (built in 1991) tanker vessel "Flawless", which was acquired in September 2004 and sold and leased back in March 2006. (q) Idi Shipping Company Ltd. ("Idi"), incorporated in Liberia in July 2004, owner of the 47,094 DWT (built in 1991) tanker vessel "Spotless", which was acquired in September 2004 and sold and leased back in March 2006. (r) Taygetus Shipping Company Ltd. ("Taygetus"), incorporated in Liberia in July 2004, owner of the 154,970 DWT (built in 1991) tanker vessel "Timeless", which was acquired in September 2004 and sold and leased back in March 2006. (s) Kalidromo Shipping Company Limited ("Kalidromo"), incorporated in the Marshall Islands in May 2003, owner of the 31,766 DWT (built in 1980) tanker vessel "Tireless", which was sold in September 2004. (t) Olympos Shipping Company Limited ("Olympos"), incorporated in the Marshall Islands in May 2003, owner of the 29,990 DWT (built in 1985), tanker vessel "Med Prologue" which was sold in December 2004 and Olympos Shipping Company Limited, which is a subsidiary of TOP, incorporated in British Cayman Islands in December 1999, former owner of the vessel. (u) Kisavos Shipping Company Limited ("Kisavos"), incorporated in the Marshall Islands in November 2004, owner of the 154,970 DWT (built in 1991) tanker vessel "Priceless", which was acquired in February 2005 and sold and leased back in March 2006. (v) Imitos Shipping Company Limited ("Imitos"), incorporated in the Marshall Islands in November 2004, owner of the 149,554 DWT (built in 1992) tanker vessel "Noiseless", which was acquired in April 2005 and sold and leased back in April 2006. (w) Parnis Shipping Company Limited ("Parnis"), incorporated in the Marshall Islands in November 2004, owner of the 149,599 DWT (built in 1992) tanker vessel "Stainless", which was acquired in April 2005 and sold and leased back in April 2006. (x) Parnasos Shipping Company Limited ("Parnasos"), incorporated in Liberia in November 2004, owner of the 154,970 DWT (built in 1992) tanker vessel "Faultless", which was acquired in April 2005 and sold and leased back in April 2006. (y) Vitsi Shipping Company Limited ("Vitsi"), incorporated in Liberia in November 2004, owner of the 154,970 DWT (built in 1991) tanker vessel "Stopless", which was acquired in April 2005 and sold and leased back in March 2006. (z) Giona Shipping Company Limited ("Giona"), incorporated in Marshall Islands in March 2005, owner of the 46,217 DWT (built in 1999) tanker vessel "Taintless", which was acquired in March 2005 and sold in November 2006. (aa) Lefka Shipping Company Limited ("Lefka"), incorporated in Marshall Islands in March 2005, owner of the 46,168 DWT (built in 1999) tanker vessel "Dauntless", which was acquired in March 2005. (bb) Agrafa Shipping Company Limited ("Agrafa"), incorporated in Marshall Islands in March 2005, owner of the 46,185 DWT (built in 1999) tanker vessel "Soundless", which was acquired in April 2005 and sold in November 2006. (cc) Agion Oros Shipping Company Limited ("Agion Oros"), incorporated in Marshall Islands in February 2005, owner of the 47,262 DWT (built in 1998) tanker vessel "Topless", which was acquired in April 2005 and sold in December 2006. (dd) Nedas Shipping Company Limited ("Nedas"), incorporated in Marshall Islands in April 2005, owner of the 150,038 DWT (built in 1993) tanker vessel "Stormless", which was acquired in October 2005. (ee) Ilisos Shipping Company Limited ("Ilisos"), incorporated in Marshall Islands in April 2005, owner of the 46,346 DWT (built in 2003) tanker vessel "Ioannis P.", which was acquired in November 2005. (ff) Sperhios Shipping Company Limited ("Sperhios"), incorporated in Marshall Islands in April 2005, owner of the 146,286 DWT (built in 1996) tanker vessel "Ellen P.", which was acquired in November 2005. (gg) Ardas Shipping Company Limited ("Ardas"), incorporated in Marshall Islands in April 2005, owner of the 147,048 DWT (built in 1993) tanker vessel "Errorless", which was acquired in November 2005. (hh) Kifisos Shipping Company Limited ("Kifisos"), incorporated in Marshall Islands in April 2005, owner of the 147,048 DWT (built in 1994) tanker vessel "Edgeless", which was acquired in December 2005. The Company is engaged in the ocean transportation of crude oil and refined petroleum products worldwide through the ownership and operation of the tanker vessels mentioned above. On December 31, 2006, eight vessels were operating under voyage charters, fifteen vessels under long-term time charters, with an estimated average duration of 36 months and one vessel was undergoing her special survey. Twelve out of fifteen time charters include profit sharing agreements, which are settled on a calendar quarter basis. During 2006, 40% of the Company's voyage revenues derived from these time charter agreements. During 2004, 2005 and 2006 two charterers individually accounted for more than 10% of the Company's voyage revenues as follows: Charterer 2004 2005 2006 --------- ---- ---- ---- A 29% 20% 11% B 15% 32% 29% The Voyage revenues in the accompanying consolidated statements of income are analyzed as follows: Voyage Revenues 2004 2005 2006 --------------- ---- ---- ---- Freight revenues 47,259 115,079 158,558 Hire revenues 46,570 129,136 151,485 Total 93,829 244,215 310,043 2. Significant Accounting Policies: (a) Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with U.S generally accepted accounting principles ("US GAAP") and include the accounts and operating results of Top Tankers Inc. and its wholly-owned subsidiaries referred to in Note 1. All significant intercompany balances and transactions have been eliminated in consolidation. (b) Use of Estimates: The preparation of consolidated financial statements in conformity with U.S generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Other Comprehensive Income (Loss): The Company follows the provisions of Statement of Financial Accounting Standards "Statement of Comprehensive Income" (SFAS 130), which requires separate presentation of certain transactions, which are recorded directly as components of stockholders' equity. (d) Foreign Currency Translation: The Company's functional currency is the U.S. Dollar because all vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company's books of accounts are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated to reflect the year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidated statements of income. (e) Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. In relation to the sale and leaseback transactions, the Company should maintain during the bareboat charter period consolidated cash balances of at least $ 50,000, which will be presented separately as restricted cash. (f) Accounts Receivable--Trade: The amount shown as Accounts Receivable--Trade at each balance sheet date, includes estimated recoveries from charterers for hire, freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually, combined with the application of a historical recoverability ratio, for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts at December 31, 2005 and 2006 totalled $ 316 and $ 283, and is summarized as follows: Provision for doubtful accounts ----------------- Balance, December 31, 2004 132 --Additions 337 --Reversals / write-offs (153) ----------------- Balance, December 31, 2005 316 --Additions 508 -- Reversals / write-offs (541) Balance, December 31, 2006 283 ----------------- (g) Insurance Claims: Insurance claims, relating mainly to crew medical expenses and hull and machinery incidents are recorded upon collection or agreement with the relevant party of the collectible amount. (h) Inventories: Inventories consist of bunkers, lubricants and consumable stores which are stated at the lower of cost or market. Cost, which consists of the purchase price, is determined by the first in, first out method. (i) Vessel Cost: Vessels are stated at cost, which consists of the contract price, pre-delivery costs incurred during the construction of newbuildings, capitalized interest and any material expenses incurred upon acquisition (improvements and delivery costs). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise these amounts are charged to expense as incurred. (j) Impairment of Long-Lived Assets: The Company applies Statement of Financial Accounting Standards ("SFAS 144") "Accounting for the Impairment or Disposal of Long-lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including unamortized drydock costs, may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset as provided by third parties. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company's vessels. The review for impairment of each vessel's carrying amount as of December 31, 2004, 2005 and 2006, did not result in an indication that the carrying amounts are not recoverable. Furthermore, in the period a long-lived asset meets the "held for sale" criteria of SFAS No. 144, a loss is recognized for any initial adjustment of the long-lived asset's carrying amount to fair value less cost to sell. For the years ended December 31, 2004, 2005 and 2006, no such adjustments were identified. (k) Vessel Depreciation: Depreciation is calculated using the straight-line method over the estimated useful life of the vessels, after deducting the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is adjusted at the date such regulations are adopted. (l) Other fixed assets, net: Other fixed assets, net consists of furniture, office equipment, cars and leasehold improvements, stated at cost, which consists of the purchase / contract price less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets, as presented below: Description Useful Life (years) ----------- ------------------- Leasehold improvements 12 Cars 6 Office equipment 5 Furniture and fittings 5 Computer equipment 3 (m) Accounting for Dry-Docking Costs: The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking becomes due. Costs capitalized as part of the drydock include all works required by the vessels' Classification Societies and for the maintenance of the vessels Condition Assessment Program ("CAP") rating, which may consist of actual costs incurred at the dry-dock yard, including but not limited to, dry-dock dues and general services for vessel preparation, coating of Water Ballast Tanks/Cargo Oil Tanks ("WBT/COT"), steelworks, piping works and valves, machinery works and electrical works. All those works which are carried out during dry-dock time for routine maintenance according to the Company's Planned Maintenance System as well as modifications, improvements required by third parties (i.e Port Authorities, Oil Majors, standards set by the Company etc.) and not required by the vessels' Classification Societies are not capitalized but expensed as incurred. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the year of the vessel's sale. (n) Sale and Leaseback Transactions: The gains on sale on vessel sale and leaseback transactions are deferred and amortized to income over the lease period. Dry-docking costs for vessels sold and leased back are amortized on a straight line basis over the period through the next dry-docking becomes due or through the termination of the lease, whichever comes first. (o) Financing Costs: Fees incurred and paid to the lenders for obtaining new loans or refinancing existing ones are recorded as a contra to debt and such fees are amortized to interest expense over the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed when a repayment or refinancing is made and charged to interest and finance costs. (p) Pension and Retirement Benefit Obligations--Crew: The ship-owning companies included in the consolidation, employ the crew on board, under short-term contracts (usually up to nine months) and accordingly, they are not liable for any pension or post retirement benefits. (q) Staff leaving Indemnities - Administrative personnel: The Company's employees are entitled to termination payments in the event of dismissal or retirement with the amount of payment varying in relation to the employee's compensation, length of service and manner of termination (dismissed or retired). Employees who resign, or are dismissed with cause are not entitled to termination payments. The Company's liability on an actuarially determined basis, at December 31, 2005 and 2006 amounted to $ 116 and $ 190, respectively. (r) Accounting for Revenue and Expenses: Revenues are generated from voyage and time charter agreements. Time charter revenues are recorded over the term of the charter as service is provided. Profit sharing represents the excess between an agreed daily base rate and the actual rate generated by the vessel every quarter, if any, and is settled and recorded on a quarterly basis. Under a voyage charter the revenues, including demurrages and associated voyage costs, with the exception of port expenses which are recorded as incurred, are recognized on a proportionate performance method over the duration of the voyage. A voyage is deemed to commence upon the completion of discharge of the vessel's previous cargo and is deemed to end upon the completion of discharge of the current cargo. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeded the stipulated time in the voyage charter. Vessel operating expenses are accounted for on the accrual basis. Unearned revenue represents cash received prior to year-end related to revenue applicable to periods after December 31 of each year. (s) Repairs and Maintenance: All repair and maintenance expenses are expensed in the year incurred. Such costs are included in Other vessel operating expenses in the accompanying consolidated statements of income. (t) Stock Incentive Plan: All share-based compensation provided to employees and to non-employee directors, for their services as directors, is included in Other general and administrative expenses in the consolidated income statements. The shares that do not contain any future service vesting conditions are considered vested shares and recognized in full on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and recognized over the vesting period. The shares, vested and non-vested are measured at fair value, which is equal to the market value of the Company's common stock on the grant date. (u) Earnings per Share: Basic earnings per share are computed by dividing net income by the weighted average number of common shares deemed outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. (v) Segment Reporting: The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not have discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. (w) Related Parties: The Company considers as related parties the affiliates of the Company; entities for which investments are accounted for by the equity method by the Company; trusts for the benefit of employees, such as pension and profit-sharing trusts, that are managed by or under the trusteeship of management; principal owners of the Company; its management; members of the immediate families of principal owners of the Company and its management; and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Another party also is a related party if it can significantly influence the management or operating policies of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. An Affiliate is a party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or has common control with the Company. Control is the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an enterprise through ownership, by contract and otherwise. Immediate Family is family members whom a principal owner or a member of management might control or influence or by whom they might be controlled or influenced because of the family relationship. Management is the persons who are responsible for achieving the objectives of the Company and who have the authority to establish policies and make decisions by which those objectives are to be pursued. Management normally includes members of the board of directors, the CEO, CFO, Vice President in charge of principal business functions and other persons who perform similar policy making functions. Persons without formal titles may also be members of management. Principal owners are owners of record or known beneficial owners of more than 10% of the voting interests of the Company. (x) Derivatives: Statement of Financial Accounting Standards ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities" (as amended) establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives' fair value recognized currently in earnings unless specific hedge accounting criteria are met. During 2004, 2005 and 2006, the Company engaged in interest rate swap agreements in order to hedge the exposure of interest rate fluctuations associated with the cash flows on a portion of the Company's variable rate borrowings (Note 8). For swap agreements that are designated and qualified as cash flow hedges their fair value is included in financial instruments in the accompanying consolidated balance sheets with changes in the effective portion of the instruments' fair value recorded in accumulated other comprehensive income (loss). The ineffective portion of the change in fair value of the derivative financial instruments is immediately recognized in the income statement as a component of interest and finance costs. If the hedged item is a forecasted transaction that becomes probable of not occuring, then the derivative financial instrument no longer qualifies as an effective cash flow hedge from that date and, as a result, cumulative fair value changes that were previously recorded in accumulated other comprehensive income (loss) are immediately reclassified into earnings as a component of interest and finance costs. In all other instances, when a derivative financial instrument ceases to qualify as an effective cash flow hedge but if it is still possible the hedged forecasted transaction may occur, hedge accounting ceases from that date and the instrument is prospectively marked to market through earnings, but previously recorded changes in fair value remain in accumulated other comprehensive income until the hedged item affects earnings or until it becomes probable that the hedged forecasted transaction will not occur. The off-balance sheet risk in outstanding option agreements involves the risk of a counter party not performing under the terms of the contract. The Company monitors its positions, the credit ratings of counterparties and the level of contracts it enters into with any one party. The Company has a policy of entering into contracts with parties that meet stringent qualifications and, given the high level of credit quality of its derivative counterparty, the Company does not believe it is necessary to obtain collateral for such arrangements. (y) Consolidation of Variable Interest Entities: FASB Interpretation No. 46R addresses the consolidation of business enterprises (variable interest entities) to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. The Interpretation focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company's exposure (variable interest) to the economic risks and potential rewards from the variable interest entity's assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the value of the variable interest entity's assets and liabilities. Variable interests may arise from financial instruments, service contracts, and other arrangements. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary would be required to include assets, liabilities, and the results of operations of the variable interest entity in its financial statements. (z) Recent Accounting Pronouncements: i) FASB Statement No. 154: In May 2005, the FASB issued FASB Statement No. 154, "Accounting Changes and Error Corrections" (SFAS No. 154). SFAS No. 154 is a replacement of APB Opinion No. 20, "Accounting Changes" (APB 20) and FASB Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements" (SFAS No. 3). SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as the required method for reporting a voluntary change in accounting principle. APB 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also requires that a change in method of depreciation, amortization, or depletion for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is effected by a change in accounting principle. APB 20 previously required that such a change be reported as a change in accounting principle. SFAS No. 154 carries forward many provisions of APB 20 without change, including the provisions related to the reporting of a change in accounting estimate, a change in the reporting entity, and the correction of an error. SFAS No. 154 also carries forward the provisions of SFAS No. 3 that govern reporting accounting changes in interim financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005. The Company has adopted this pronouncement effective January 1, 2006. ii) FASB Interpretation No. 48: In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which supplements SFAS No. 109, "Accounting for Income Taxes", by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is "more-likely-than-not" to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. The Company estimates that this statement will not have a significant impact on its financial position. iii) FASB Statement No. 157: In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). SFAS 157 addresses standardizing the measurement of fair value for companies that are required to use a fair value measure of recognition for recognition or disclosure purposes. The FASB defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date". SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact, if any, of SFAS 157 on its financial position, results of operations and cash flows. iv) FSP No. AUG AIR-1: In September 2006, the FASB Staff issued FSP No. AUG AIR-1, "Accounting for Planned Major Maintenance Activities," ("FSP No. AUG AIR-1"). FSP No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods, if no liability is required to be recorded for an asset retirement obligation based on a legal obligation for which the event obligating the entity has occurred. FSP No. AUG AIR-1 also requires disclosures regarding the method of accounting for planned major maintenance activities and the effects of implementing the FSP. The guidance in FSP No. AUG AIR-1 is effective for the Company as of January 1, 2007. The adoption of FSP No. AUG AIR-1 will not have a material impact on the financial position, results of operations or cash flows of the Company. v) SAB 108: On September 13, 2006, the SEC released staff accounting bulleting ("SAB") No. 108, which provides guidance on materiality. SAB No. 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement, contains guidance on correcting errors under the dual approach, and provides transition guidance for correcting errors existing in prior years. If prior-year errors that had been previously considered immaterial (based on the appropriate use of the registrant's prior approach) now are considered material based on the approach in the SAB, the registrant need not restate prior period financial statements. SAB No. 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. This statement is effective for the Company for the fiscal year ended December 31, 2006. The effect of implementing SAB No. 108 amounted $ 226, is included in Amortization of dry-docking costs and related to the write-off of unamortized balance of bunkers consumed that previously deferred as part of the dry-docking costs. vi) FASB Statement No. 158: In September 2006, the FASB issued FASB Statement No. 158, "Employer's Accounting for Defined Benefit Pension and Other Postretirement Plans" (SFAS No. 158). SFAS No. 158 is an amendment of FASB Statements No. 87, "Employers' Accounting for Pensions" (SFAS No. 87), No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" (SFAS No. 88), No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS No. 106) and No. 132(R) "Employers' Disclosures about Pensions and Other Postretirement Benefits--an amendment of FASB Statements No. 87, 88, and 106" (SFAS No. 132(R)). SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. This Statement requires an employer that is a business entity and sponsors one or more single-employer defined benefit plans to: a) recognize the funded status of a benefit plan--measured as the difference between plan assets at fair value (with limited exceptions) and the benefit obligation--in its statement of financial position. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation, b) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to FASB Statement No. 87, Employers' Accounting for Pensions, or No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. Amounts recognized in accumulated other comprehensive income, including the gains or losses, prior service costs or credits, and the transition asset or obligation remaining from the initial application of Statements 87 and 106, are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements, c) measure defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position (with limited exceptions) and d) disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The Company has adopted this pronouncement effective December 31, 2006. The adoption of FASB 158 did not have a material impact on its financial consolidated position, results of operations or cash flows. viii) FASB Statement No. 159: In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"), which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Earlier adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, "Fair Value Measurements". The Company is currently evaluating the impact of SFAS 159, but does not expect the adoption of SFAS 159 to have a material impact on its financial consolidated position, results of operations or cash flows. (aa) Reclassification of Prior Year Balances: Certain amounts in the 2005 and 2004 consolidated financial statements have been reclassified to conform to the 2006 presentation. The reclassifications had no impact on the results of operations of the Company. Charter Hire Expense for the year ended December 31, 2005 has been presented on a separate line in the consolidated income statements to conform to the current year presentation. Charter Hire Expense was previously reported within Vessel Operating Expenses. Advances to various creditors for the year ended December 31, 2005 has been presented on a separate line in the consolidated balance sheets to conform to the current year presentation. Advances to various creditors was previously reported within Prepayments and other. Deferred gain on sale and leaseback of vessels, current portion for the year ended December 31, 2005 has been included in Deferred gain on sale and leaseback of vessels in the consolidated balance sheets to conform to the current year presentation. Deferred gain on sale and leaseback of vessels, current portion was previously reported on a separate line in current liabilities. 3. Transactions with Related Parties: (a) Primal Tankers Inc.: As discussed in Note 1, up to June 30, 2004, the Company's ship-owning subsidiaries had management agreements with Primal Tankers Inc., under which management services were provided in exchange for a fixed monthly fee per vessel, which was renewed annually. The fees charged by Primal Tankers Inc. during 2004 amounted to $ 1,120 and they are separately reflected in the 2004 accompanying consolidated statement of income. During 2004, the Manager acquired from Primal Tankers Inc. other fixed assets for a consideration of $ 150. (b) Pyramis Technical Co. S.A.: On July 9, 2004, the Company entered into an agreement to lease office space in Athens, Greece from Pyramis Technical Co. SA, which is wholly owned by the father of the Company's Chief Executive Officer. The agreement was for duration of six years beginning July 2004 with a lessee's option for an extension of four years. The monthly rental was Euro 39,000 and effective January 1, 2006 was adjusted for inflation to Euro 40,365. Other general and administrative expenses for the years ended December 31, 2004, 2005 and 2006 include $ 281, $ 586 and $ 705, respectively of rentals paid to Pyramis Technical Co. S.A. In January 2006 the Company entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The change in office location, due to necessary refurbishments, took place in October 2006; therefore, the Company paid to Pyramis Technical Co. S.A the October rent plus four rentals as termination compensation. In April and August 2006, the Company entered into an agreement with Pyramis Technical Co. S.A. for the renovation of the new premises. The total contracted cost totaled Euro 1,593,250, of which Euro 1,187,169.24 ($ 1,514) were paid during 2006. The amount of $ 1,799 related to renovation works, discussed above, is included in Other fixed assets, net, in the accompanying 2006 consolidated balance sheet and is depreciated over the lease period, which is 12 years. 4. Inventories: The amounts shown in the accompanying consolidated balance sheets are analyzed as follows: 2005 2006 ----- ----- Bunkers 3,976 4,624 Lubricants 1,501 1,319 Consumable stores 831 517 ----- ----- 6,308 6,460 ===== ===== 5. Advances for Vessels under Construction: In October 2006, the Company entered into an agreement for the construction of six handymax Product / Chemical tankers. The total contract price amounted to $ 285,380 and is payable in five instalments as follows: 15% is payable upon arrangement of the Refund Guarantee, 15% is payable upon commencement of steel cutting, 20% is payable upon keel laying, 20% is payable upon launching and 30% upon delivery of the vessel. The vessels' construction will be partially financed from long-term bank financing discussed in Note 8. The first instalment for four of the six vessels of $ 28,638 was paid in December 2006 and is included in Advances for Vessels under Construction, in the 2006 accompanying consolidated balance sheet. The Advances for Vessels under Construction also include $ 34 and $ 11 relating to capitalized interest and costs respectively, in accordance with the accounting policy discussed in Note 2(i) above. The vessels are expected to be delivered during the first six months of 2009. 6. Vessels, net: The amounts in the accompanying consolidated balance sheets are analyzed as follows: Vessel Accumulated Net Book Cost Depreciation Value -------- ------------ -------- Balance, December 31, 2004 373,551 (17,554) 355,997 --Acquisitions 702,761 -- 702,761 --Disposals (139,921) 14,828 (125,093) --Depreciation -- (46,911) (46,911) --------- --------- --------- Balance, December 31, 2005 936,391 (49,637) 886,754 --Acquisitions 18 -- 18 --Disposals (605,085) 59,997 (545,088) --Depreciation -- (35,266) (35,266) --------- --------- --------- Balance, December 31, 2006 331,324 (24,906) 306,418 ========= ========= ========= Acquisitions during the year ended December 31, 2005 represent (a) the acquisition cost of the five vessels discussed in Note 1(u) through Note 1(y) for a total amount of $ 249,340, (b) the acquisition cost of the four vessels discussed in Note 1(z) through Note 1(cc) for a total amount of $ 163,629 and (c) the acquisition cost of the five vessels discussed in Note 1(dd) through Note 1(hh) for a total amount of $ 289,792. In September and December 2004 vessels Tireless and Med Prologue, respectively, were sold for an aggregate price of $ 8,900. These sales, after the related sales expenses of $ 364 and the unamortized dry-docking costs written off of $ 1,265, resulted in a gain of $ 638, which is separately reflected in the accompanying 2004 consolidated statement of income. In July and September 2005, vessels Fearless and Yapi were sold for an aggregate price of 38,348. These sales, after the related sale expenses of $ 5,968 and the unamortized dry-docking costs written-off of $ 716, resulted in a gain of $ 10,115, which is separately reflected in the accompanying 2005 consolidated statement of income. In August and September 2005, the Company sold the Restless, Sovereign, Relentless, Invincible and Victorious for an aggregate price of 120,705, net of related sales expenses of $ 5,545, and entered simultaneously into bareboat charter agreements to leaseback the vessels for a period of seven years (Note 11). In March and April 2006, the Company sold the Flawless, Timeless, Priceless, Stopless, Doubtless, Vanguard, Faithful, Spotless, Limitless, Endless, Faultless, Noiseless and Stainless for an aggregate price of $ 529,616, net of related sales expenses of $ 20,384, and entered simultaneously into bareboat charter agreements to leaseback the vessels for periods of five to seven years (Note 11). According to the terms of the agreements, 10% of the gross aggregate sales price, $ 55,000, has been withheld by the purchaser and will be paid to the Company not later than three months after the end of bareboat charter period or upon the resale of the vessels by the purchaser, if earlier. In November and December 2006, vessels Taintless, Soundless and Topless were sold for an aggregate price of $ 127,450. These sales, after the related sale expenses of $ 2,890 resulted in a gain of $ 12,667, which is separately reflected in the accompanying 2006 consolidated statement of income. All Company's vessels, having a total carrying value of $ 306,418 at December 31, 2006, have been provided as collateral to secure the loans discussed in Note 8. 7. Deferred Charges: The unamortized amounts included in the accompanying consolidated balance sheets represent dry-docking costs and financing fees for the undrawn portion of the revolving credit facility (Note 8) and are analyzed as follows: Dry- Financing Docking Fees Total ------- --------- ------- Balance, December 31, 2004 6,748 -- 6,748 --Additions 10,478 1,022 11,500 --Write-off due to sale of vessels (Note 6) (716) -- (716) --Amortization (5,999) (17) (6,016) -------- -------- -------- Balance, December 31, 2005 10,511 1,005 11,516 --Fees prior presented contra to debt -- 249 249 --Additions 34,526 -- 34,526 --Amortization (13,187) (1,254) (14,441) -------- -------- -------- Balance, December 31, 2006 31,850 -- 31,850 ======== ======== ======== Write-off of deferred dry-docking costs due to sale of vessels is included in gain on sale of vessels in the accompanying consolidated statements of income. 8. Long-term Debt: The amounts in the accompanying consolidated balance sheets are analyzed as follows: Borrower(s) 2005 2006 ----------------------------------- -------- -------- (a) The Company 512,315 218,052 (b) Vitsi 25,894 -- (c) Parnis 25,894 -- -------- -------- Total 564,103 218,052 Less- current portion (45,329) (16,588) -------- -------- Long-term portion 518,774 201,464 ======== ======== (a) The Company: At December 31, 2006, the Company had a revolving credit facility outstanding of $ 83,000 and a loan outstanding of $ 137,000. The outstanding amount under the revolving credit facility of $ 83,000 is payable in 10 semi-annual instalments of approximately $ 5,395 starting on April 30, 2011 plus a balloon payment of $ 29,050 payable together with the final instalment, if no further amounts are drawn. The applicable interest rate as of December 31, 2006 is 5.97%. As of December 31, 2006, the undrawn amount amounted to $ 75,000. The loan of $ 137,000 was drawn down in 2005 and originally amounted to $ 154,000. It was obtained to partially finance the acquisitions of the vessels Stormless, Ellen P., Errorless and Edgeless (Note 6). The loan consists of 2 tranches of $ 130,000 (Tranche A) and $ 24,000 (Tranche B). Tranche A is payable in 32 consecutive quarterly instalments of $ 2,750 each, starting on March 13, 2006 plus a balloon payment of $ 42,000 payable together with the final instalment. Tranche B is payable in 16 consecutive quarterly instalments of $ 1,500 each, starting on March 13, 2006. The Company paid a fee of 1% upon signing of the agreement, or $ 1,540. The loan bears interest at LIBOR plus a margin and as of December 31, 2006 is 6.15%. At December 31, 2005, the Company had a revolving credit facility outstanding of $ 178,255 and loans outstanding of $ 339,000. At December 31, 2005, the outstanding balance under one loan and the revolving credit facility together wsa $ 363,255. In August and September 2005, following the sale of Fearless and Yapi discussed in Note 6 and the sale and leaseback of Restless, Sovereign, Relentless, Invincible and Victorious discussed in Notes 6 and 11, the Company prepaid $ 68,853 of the then outstanding amount of the loan. In November 2005, the loan was restructured and the Company simultaneously entered into an additional $ 206,000 revolving credit facility with the same lender. The restructured loan of $ 195,657 was to refinance the then outstanding amount and was payable in 15 semi-annual instalments. The first instalment of $ 10,657 was paid on November 30, 2005 to be followed by 14 semi-annual instalments of $ 10,500 each, from May 31, 2006 to November 2012, plus a balloon payment of $ 38,000 payable together with the last instalment. The revolving credit facility was concluded in order to refinance the then outstanding amount of $ 144,000 and to partially finance up to an additional amount of $ 206,000 the acquisition of tankers meeting specific criteria. The $ 206,000 was subject to a fee of 0.5% paid on signing of the agreement. On November 8, 2005, $ 34,255 was drawn down to partially finance the acquisition cost of vessel Ioannis P (Note 6). The restructured loan and the revolving credit facility bear interest at LIBOR plus a margin. In March and April 2006, following the sale and leaseback of Flawless, Timeless, Priceless, Doubtless, Vanguard, Faithful, Spotless, Limitless, Endless, Faultless and Noiseless discussed in Notes 6 and 11, the Company prepaid in full $ 185,000 of the loan outstanding amount of the loan and $ 20,255 of the then outstanding amount of the revolving credit facility. Following the prepayment of $ 20,255 of the revolving credit facility, the undrawn amount of $ 192,000 was cancelled in August 2006. In November and December 2006, following the sale of Taintless, Soundless and Topless discussed in Note 6, the Company prepaid $ 95,000 of the then outstanding amount of the revolving credit facility. On December 21, 2006, $ 20,000 was drawn down to partially finance the construction of four vessels (Note 5). (b), (c) Vitsi - Parnis: Loan for an amount of $ 56,500 divided into two tranches, obtained in March 2005, to partially finance the acquisition cost of vessels Stainless and Stopless (Note 6). The loan was payable in 28 varying quarterly instalments starting July 29, 2005, plus a balloon payment of $ 10,170 payable together with the last instalment. The loan was subject to a fee of 1% paid on draw down. In March and April 2006, following the sale and leaseback of Stopless and Stainless, discussed in Notes 6 and 11, the Company repaid in full $ 50,144 for the then outstanding amount of the loan. The loans are secured as follows: o First priority mortgages over the Company's vessels; o Assignments of insurance and earnings of the mortgaged vessels; o Corporate guarantee of the TOP Tankers Inc; o Pledge over the earnings accounts of the vessels. Debt Covenants: The loans contain financial covenants, calculated on a consolidated basis, requiring the Company to ensure that the aggregate market value of the mortgaged vessels at all times exceed 140% of the aggregate outstanding principal amounts under the loans, to ensure that total assets minus total debt will not at any time be less than $ 250,000 and to maintain liquid funds which at any time be not less than the higher of $ 10,000 or $ 500 per vessel. As a result, the minimum liquid funds required under the loan covenants of $ 12,000 on a consolidated basis, as of December 31, 2006, are included in restricted cash in the accompanying consolidated balance sheets. The Company is permitted to pay dividends under the loans so long as they are not in default of a loan covenant or if such dividend payment would not result in a default of a loan covenant. The Company's management believes that as of December 31, 2006, the Company is in compliance with loan covenants. Interest Expense: Interest expense for the years ended December 31, 2004, 2005 and 2006, amounted to $ 4,161, $ 19,700 and $ 20,750 respectively and is included in interest and finance costs in the accompanying consolidated statements of income (Note 17). The weighted average interest rates, including swaps and the relevant bank margins, for 2005 and 2006 were 4.65% and 5.21%, respectively. Scheduled Principal Repayments: The annual principal payments required to be made after December 31, 2006, are as follows: Year ending December 31, Amount ------------------------ -------- 2007 17,000 2008 17,000 2009 17,000 2010 11,000 2011 and thereafter 158,000 -------- 220,000 Less unamortized financing fees (1,948) -------- 218,052 ======== Interest Rate Swaps: The fair value of the interest rate swaps in the accompanying consolidated balance sheets are analyzed as follows:
Interest Notional Rate Fair SWAP Amount Period Effective Date Payable Value - Asset (Liability) ---- ------ ------ -------------- ---- ------------------------- December December 31, 2005 31, 2006 -------- -------- (i) $ 100,500 5 years November 3, 2005 4.63% $ 327 -- (ii) $ 36,550 4 years November 3, 2005 4.66% $ 98 $ 283 (iii) $ 45,000 5 years January 30, 2006 4.80% -- $ 273 (iv) $ 10,000 7 years September 30, 2006 4.23% -- ($ 569) (v) $ 10,000 7 years September 30, 2006 4.11% -- ($ 514) (vi) $ 50,000 7 years September 29, 2006 4.45% -- ($ 2,383) (vii) $ 10,000 7 years July 3, 2006 4.70% -- ($ 474) ----- --------- $ 425 ($ 3,384) ===== =========
During August and September 2005, as a result of the sale of vessels and prepayment of the loan of $ 68,853 mentioned in (a) above, the Company terminated the then existing swap of $ 98,500, which at that time was in a gain position. The swap's termination resulted in a reclassification adjustment from other comprehensive income to earnings for the accumulated swap gain of $ 1,171, which is included in interest and finance costs (Note 17). In November 2005, upon the loan restructuring discussed under (a) above, the then existing swaps were restructured into a new swap with declining notional balances in order to hedge the variable interest rate exposure, with effective date November 3, 2005; for an initial notional amount of $ 100,500 and for a period of five years, with a fixed interest rate of 4.63% plus the applicable bank margin (SWAP (i)). The then existing swap of $ 36,550 was also amended to a new swap with declining notional balances in order to hedge the variable interest rate exposure, with effective date November 3, 2005; for an initial notional amount of $ 36,550 and for a period of four years, with a fixed interest rate of 4.66% plus the applicable bank margin (SWAP (ii)). As a result of the sale and leaseback of vessels and full prepayment of the loans of $ 185,000, discussed above, the Company on March 31, 2006, terminated the non-qualifying swap with an initial notional amount of $ 100,500 (SWAP (i)), which at that time was in a gain position. In connection with the loan of $ 154,000 discussed above, the Company entered into an interest rate swap agreement with declining notional balances in order to hedge its variable interest rate exposure, with effective date January 30, 2006, for an initial notional amount of $ 45,000 and for a period of five years, with a fixed interest rate of 4.8% plus the applicable bank margin (SWAP (iii)). In July 2006, the Company entered into the following interest rate swap agreements. Under those agreements, the Company will pay an initial fixed interest rate, as indicated below, and will receive a floating interest rate, which is the 3-month LIBOR, as is determined on the reset dates. If the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 5 basis points, then the Company will continue to pay the initial fixed rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 5 basis points, then the Company will pay the initial fixed rate, plus two times the difference between 5 basis points and the difference between the 10-year swap rate and the 2-year swap rate. The interest rate that the Company will pay is capped at 8.80%. (a) for a notional amount of $ 10,000, with effective date of July 5, 2006 and for a period of seven years, with an initial interest rate of 4.52%. (b) for a notional amount of $ 10,000, with effective date of July 24, 2006 and for a period of seven years, with an initial interest rate of 4.40%. (c) for a notional amount of $ 50,000, with effective date of July 3, 2006 and for a period of seven years, with an initial interest rate of 4.63%. (d) for a notional amount of $ 10,000, with effective date of July 3, 2006 and for a period of seven years, with an initial interest rate of 4.70% (SWAP (vii)). During the fourth quarter of 2006, the swaps (a), (b) and (c) were restructured and the Company will pay an initial fixed interest rate, as indicated in the table above (SWAPS (iv), (v) and (vi) respectively), and will receive a floating interest rate, which is the 3-month LIBOR, as is determined on the reset dates. In the first period (fourth quarter of 2006), the difference between the 10-year swap rate and the 2-year swap rate was greater to minus 5 basis points, and the Company paid the initial fixed rate and received the floating interest rate. In the next three periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 0 basis points, then the Company will continue to pay the initial fixed rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 0 basis points, then the Company will pay the initial fixed rate, plus three times the difference between 0 basis points and the difference between the 10-year swap rate and the 2-year swap rate. In all subsequent periods, if the difference between the 10-year swap rate and the 2-year swap rate is greater or equal to 8 basis points, then the Company will continue to pay the previous rate and continue to receive the respective floating rate. If the difference between the 10-year swap rate and the 2-year swap rate is less than 8 basis points, then the Company will pay the previous rate, plus three times the difference between 8 basis points and the difference between the 10-year swap rate and the 2-year swap rate. The interest rate that the Company will pay for the restructured swaps is capped at 10.25%. As of December 31, 2005 and 2006, the swaps' fair values, based on third party valuations, are assets of $ 425 and a net liability of ($ 3,384), respectively. The 2005 change in fair value of $ 327 on the swap agreements with initial notional balances of $ 98,500, $ 93,500 and $ 27,931 was recorded in interest and finance costs, as the Company considered that the future cash outflows hedged by these swaps were probable of not occurring. The change in fair value of $ 98 of the swap agreement with initial notional balance of $ 36,550 (SWAP (ii)) was recorded in other comprehensive income (loss) as the Company considered that the related future cash outflows being hedged were probable of occurring. The 2006 fair value change on the swap agreements was recorded in interest and finance costs (Note 17), as the Company considered that the future cash outflows hedged by these swaps were probable of not occurring. The total impact in the consolidated income statements for the years ended December 31, 2005 and 2006, arising from the swaps termination and year-end swap valuations, is a gain of $ 1,498 and a loss of ($ 2,733) respectively and is included in interest and finance costs (Note 17). 9. Accrued Liabilities: The amounts in the accompanying consolidated balance sheets are analyzed as follows: 2005 2006 ------ ------ Interest on long-term debt 2,187 630 Vessels' operating and voyage expenses 4,222 5,455 General and administrative expenses 6,888 1,269 ------ ------ Total 13,297 7,354 ====== ====== 10. Commitments and Contingencies: As at December 31, 2006 the Company had under construction six handymax Product / Chemical tankers scheduled for delivery between January and June 2009, at a total cost of $ 285,380. The remaining expected payments as of December 31, 2006 are $ 14,169 in 2007, $ 128,421 in 2008 and $ 114,152 in 2009. In March and April 2006, the Company entered into Sale and Leaseback agreements for 13 vessels for a period of five to seven years. According to the terms of the transactions, 10% of the gross aggregate sales price, $ 55,000, has been withheld by the purchaser to serve as security for the due and punctual performance and observance of all the terms and conditions of the Company under the agreements. Not later than three months after the end of bareboat charter period or upon the resale of the vessels by the purchaser, if earlier, $ 47,000 out of the $ 55,000 will become payable to the Company. According to the agreement with one of the owners-lessors for four vessels, the owner-lessor may forfeit a payment of up to $ 8,000, or may be required to pay up to $ 16,000, based on the residual value of these four vessels. During December 2006, the Company was named defendant on various putative class action securities law suits brought in the United States District Court, Southern District of New York. The Company maintains a Directors and Officers liability insurance which covers the Company and its directors for up to $ 20,000. The Company has retained a law firm specializing in relevant litigation, that has estimated the cost of the first year's legal expenses as approximately matching the deductible of this policy of $ 250. Therefore, this amount is included in Other general and administrative expenses in the 2006 consolidated statement of income. The Company's management has assessed that at this stage, it is premature for any further provision in the financial statements. Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. A minimum of up to $1 billion of the liabilities associated with the individual vessels actions, mainly for sea pollution, are covered by the Protection and Indemnity (P&I) Club insurance. 11. Sale and Leaseback of Vessels: The Company entered into sales and leaseback transactions in 2005 and 2006 as follows: (a) In August and September 2005, the Company sold the vessels Restless, Sovereign, Relentless, Invincible and Victorious and realized a total gain of $ 17,159. The Company entered into bareboat charter agreements to leaseback the vessels for a period of seven years. The charter back agreements are accounted for as operating leases and the gain on the sale was deferred and is being amortized to income over the seven-year lease period; the amortization of $ 837 and $ 2,451 is included in Amortization of deferred gain on sale and leaseback of vessels, in the accompanying 2005 and 2006 consolidated statements of income, respectively. During the years ended December 31, 2005 and 2006, lease payments relating to the bareboat charters of the vessels were $ 7,206 and $ 21,061, respectively and are included in Charter hire expense in the 2005 and 2006 accompanying consolidated statements of income. (b) In March 2006, the Company sold the vessels Flawless, Timeless, Priceless, Stopless, Doubtless, Vanguard, Faithful and Spotless to two unrelated parties (buyers/lessors) for $ 292,000; of which 90% or $ 262,800 was paid upon closing of the sale. Simultaneous with the sale of the eight vessels, the Company entered into bareboat charter agreements to leaseback the same eight vessels for a period of five years with no lease renewal option. Another unrelated party assumed in June 2006 the rights and obligations of one of the buyers/lessors through a novation agreement with no other changes to the terms and conditions of the agreements. The obligations of the Company under the respective bareboat charter agreements were secured by the unpaid sales price representing 10% of the total sales price or $ 29,200. The unpaid sales price is payable to the Company within three months after the expiry of the individual bareboat charter agreements or termination of the leases, if earlier. The collection of the unpaid sales price is secured by a second priority mortgage on the corresponding vessels with the Company having no recourse to the owners or investors of the buyers/lessors. In addition, the agreements allow the buyers/lessors to sell the vessels covered by the bareboat charter agreements. In respect of the agreements with one of the buyers/lessors, in the event of sale of the vessels prior to the termination of the bareboat charter agreements, the corresponding unpaid sales price, up to a maximum amount of $ 2,000 for each vessel, shall be used to cover any shortfall between the net sales proceeds and the sum of the: (i) outstanding amount under financing obtained by the buyer in connection with the acquisition of the vessel, and (ii) the principal amount of the investment made by the investors of the buyer/lessor. The bareboat charter agreements are accounted for as operating leases and the gain on the sale of $ 23,840 was deferred and is being amortized to income over the five-year lease period. The deferred gain was calculated by deducting from the sales price the carrying amount of the vessels, the expenses related to the sale and the unpaid sales price (which is treated as a residual value guarantee and will be recognized in income upon collection). The amortization of the deferred gain amounted to $ 3,775 for the year ended December 31, 2006 is included in Amortization of deferred gain on sale and leaseback of vessels in the accompanying consolidated statements of income. The total lease payments for the year ended December 31, 2006 related to the foregoing leases were $ 43,701 and are included in Charter Hire Expense in the accompanying consolidated statements of income. (c) In April 2006, the Company sold the vessels Limitless, Endless, Stainless, Faultless and Noiseless to an unrelated party (buyer/lessor) for $ 258,000; of which 90% or $ 232,200 was paid upon closing of the sale. Simultaneous with the sale of the five vessels, the Company entered into bareboat charter agreements to leaseback the five vessels for a period of seven years with no lease renewal option. The obligations of the Company under the respective bareboat charter agreements were secured by the unpaid sales price representing 10% of the total sales price or $ 25,800. The unpaid sales price is payable to the Company within three months after the expiry of the individual bareboat charter agreements or upon termination of the leases, if earlier. The collection of the unpaid sales price is secured by a second priority mortgage on the corresponding vessels with the Company having no recourse to the shareholders (owners) of the buyer/lessor. The bareboat charter agreements are accounted for as operating leases and the gain on the sale of $ 17,580 was deferred and is being amortized to income over the seven-year lease period. The deferred gain was calculated by deducting from the sales price the carrying amount of the vessels, the expenses related to the sale and the unpaid sales price (which is treated as a residual value guarantee and will be recognized in income upon collection). The amortization of the deferred gain amounted to $ 1,884 for the year ended December 31, 2006 and is included in Amortization of deferred gain on sale and leaseback of vessels in the accompanying consolidated statements of income. The total lease payments for the year ended December 31, 2006 related to the foregoing leases were $ 31,540 and are included in Charter Hire Expense in the accompanying consolidated statements of income. The Company's future minimum lease payments required to be made after December 31, 2006, related to the foregoing bareboat charter agreements, are as follows: Year ending December 31, Amount ------------------------ ------- 2007 118,865 2008 118,982 2009 118,865 2010 118,865 2011 and thereafter 142,952 ------- 618,529 ======= The sale and leaseback transactions entered into in 2006 contain financial covenants, calculated on a consolidated basis, requiring the Company to ensure that the net assets value of the Company's vessels (owned and those covered by bareboat charter agreements) at all times exceed $ 125,000 and book equity at all times exceed $ 75,000. Furthermore, a minimum amount of $ 20,000 through December 15, 2006 and $ 25,000 thereafter and until the final date of the bareboat charters, shall be maintained on deposit by the Company. The Company during the bareboat charter period will maintain consolidated cash balances of at least $ 50,000, including the $ 20,000 / $ 25,000, mentioned above. The $ 50,000 required to be maintained is presented separately as restricted cash. The amount of $ 13,500 discussed in Note 8 will also be included in the $ 50,000 minimum consolidated cash balances. As disclosed above, a portion of the sales price (representing 10% of the gross aggregate sales price) in the amount of $ 55,000 has been withheld by the buyers/lessors and will be paid to the Company not later than three months after the end of bareboat charter period or upon the resale of the vessels, if earlier. Consequently, such unpaid sales price was recorded as asset at its discounted amount. The discount will be accreted through deferred gain on sale and leaseback of vessels over the period of the bareboat charter agreements or through the date of the resale of the vessels, if earlier. As of December 31, 2006 the present value of the unpaid sales price was $29,790. Furthermore, the Company has agreed with the lessors through a separate performance guarantee deeds that it irrevocably and unconditionally guarantees the due and punctual payment of all sums payable by the Company to the lessors under or pursuant to the agreements. The term of the performance guarantees covers the period of the leases. 12. Common Stock and Additional Paid-In Capital: On May 10, May 27, 2004 and July 22, 2005 the Company's Articles of Incorporation were amended. Under the amended articles of incorporation the Company was renamed to TOP Tankers Inc. and currently, its authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share and 20,000,000 preferred shares with par value of $0.01. The Board of Directors shall have the authority to establish such series of preferred stock and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions as shall be stated in the resolutions providing for the issue of such preferred stock. On July 23, 2004 the Company completed its initial public offering in the United States under the United States Securities Act of 1933, as amended. In this respect 12,278,570 shares of common stock at par value of $ 0.01 were issued for $ 11.00 per share. The net proceeds to the Company totaled $ 124,563 of which approximately $ 109,000 were used to acquire the ten vessels discussed in Note 1(i) through Note 1(r). On November 5, 2004 the Company completed a follow on public offering in the United States under the United States Securities Act of 1933, as amended. In this respect 9,552,420 shares of common stock at par value of $ 0.01 were issued for $ 15.50 per share. The net proceeds to the Company totaled $ 139,467. From April till July 2006, the Company conduced at-the market sales of shares through a "controlled equity offering". A total of 3,907,365 shares of common stock at par value of $ 0.01 were issued and sold in the market. The net proceeds to the Company totaled $ 26,916. 13. Stock Incentive Plan: On July 1, 2005, January 3, 2006 and July 6, 2006 (the "grant dates") the Company granted restricted shares pursuant to the Company's 2005 Stock Incentive Plan ("the Plan"), which was adopted in April 2005 to provide certain key persons (the "Participants"), on whose initiatives and efforts the successful conduct of the Company's business depends, and who are responsible for the management, growth and protection of the Company's business, with incentives to: (a) enter into and remain in the service of the Company, a Company's subsidiary, or Company's joint venture, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance, and (d) enhance the long-term performance of the Company (whether directly or indirectly) through enhancing the long-term performance of a Company subsidiary or Company joint venture. A total of 1,000,000 shares of common stock were reserved for issuance under the Plan, which is administered by the Company's Board of Directors. The granted shares have no exercise price and constitute a bonus in nature. The Company's Board of Directors administers the Plan and, on July 1, 2005, identified 45 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 249,850 new shares were granted, out of which 190,000 shares were granted to the Company's CEO, 48,300 shares to 8 officers and independent members of the Board and the remaining 11,550 shares were granted to 36 employees. On January 3, 2006, the Company's Board of Directors identified 29 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 125,000 new shares were granted, out of which 80,000 shares were granted to the Company's CEO, 38,000 shares to 8 officers and independent members of the Board and the remaining 7,000 shares were granted to 20 employees. On July 6, 2006, the Company's Board of Directors identified 60 key persons (including the Company's CEO and other 8 officers and independent members of the Board) to whom shares of restricted common stock of the Company (the "Shares") were granted. For this purpose 320,000 new shares were granted, out of which 221,250 shares were granted to the Company's CEO, 68,000 shares to 8 officers and independent members of the Board and the remaining 30,750 shares were granted to 51 employees. The "Restricted Stock Agreements" were signed between the Company and the Participants on the respective grant dates. Under these agreements, the Participants have the right to receive dividends and the right to vote the Shares, subject to the following restrictions: Company's CEO ------------- The Participant shall not sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any of the Shares other than to a company, which is wholly owned by the Participant. The restrictions lapse on the earlier of (i) one year from the grant date or (ii) termination of the Participant's employment with the Company for any reason. Other Participants ------------------ The Participants shall not sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any of the Shares. The restrictions lapse on one year from the grant date conditioned upon the Participant's continued employment with the Company from the date of the agreement (i.e. July 1, 2005, January 3, 2006, or July 6, 2006) until the date the restrictions lapse (the "restricted period"). As the shares granted to the Company's CEO do not contain any future service vesting conditions, all such shares are considered vested shares on the grant date. On the other hand, in the event another Participant's employment with the Company terminates for any reason before the end of the restricted period, that Participant shall forfeit all rights to all Shares that have not yet vested as of such date of termination. Dividends earned during the restricted period will not be returned to the Company, even if the unvested shares are ultimately forfeited. As these Shares granted to other Participants contain a time-based service vesting condition, such shares are considered non-vested shares on the grant date. A summary of the status of the Company's vested and non-vested shares as of December 31, 2006 and movement during the years ended December 31, 2005 and 2006, is presented below: Weighted average grant Number of date fair value per non-vested shares non-vested share -------------------------------------------- As at January 1, 2005 -- -- -------------------------------------------- Granted 59,850 $15.82 Forfeited (200) $15.82 -------------------------------------------- As at December 31, 2005 59,650 $15.82 -------------------------------------------- Granted 143,750 $8.26 Vested (58,600) $12.71 Forfeited (3,900) $10.64 -------------------------------------------- As at December 31, 2006 140,900 $9.54 ============================================ Number of non-vested shares ----------------- As at January 1, 2005 -- ----------------- Granted 190,000 As at December 31, 2005 190,000 ----------------- Granted 301,250 Non-vested shares granted in 2005, vested during 2006 58,600 ----------------- As at December 31, 2006 549,850 ================= During 2005, the employment of one of the other Participants was terminated and 200 restricted shares that were granted to him under the Plan were forfeited. During 2006, the employment of six of the other Participants was terminated and 3,900 restricted shares that were granted to them under the Plan were forfeited. Effective January 1, 2005, the Company adopted FASB Statement 123(R) for purposes of accounting for share-based payments. As the Company did not engage in share-based compensation arrangements prior to the date of adoption, all share-based compensation provided to employees (and provided to non-employee directors for their services as directors) is recognized in accordance with the provisions of Statement 123(R) and classified as Other general and administrative expenses in the consolidated income statement. The fair value of each share granted on July 1, 2005, January 3, 2006 and July 6, 2006 were $ 15.82, $ 12.71 and $ 6.23, respectively, which are equal to the market value of the Company's common stock on those dates. The grant date fair values of the vested shares granted to the CEO amounted to $ 3,006, $ 1,017 and $ 1,378, respectively and were recognized in full as compensation in the third quarter of 2005, in the first quarter of 2006 and in the third quarter of 2006, respectively, on the grant dates. The grant date fair values of the non-vested shares granted to the remaining Participants, net of forfeitures, amounted to $ 927, $ 558 and $ 604, respectively and are being recognized ratably as compensation in the consolidated income statements over the one-year vesting period, of which $ 472 and $ 1,315 was recognized in the years ended December 31, 2005 and 2006, respectively. In total $ 3,478 and $ 3,710 of share-based compensation expense was recognized in the accompanying 2005 and 2006 consolidated income statements, respectively, classified as Other general and administrative expenses. As of December 31, 2006, the total unrecognized compensation cost related to non-vested share awards is $ 302, which is expected to be recognized by June 30, 2007. The dividends declared on shares granted under the Plan are recognized in the financial statements as a charge to retained earnings, except for the dividends declared on non-vested shares that are forfeited or expected to be forfeited before the end of the vesting period. In that case, dividends declared on such shares are recognized as compensation in the consolidated income statement. Due to the low historical employee turnover, the Company's management assumes no non-vested shares will be forfeited before the end of the vesting period. The amount of dividends on the granted shares, recognized as a charge to retained earnings, is presented in the following table: ------------------------------------------------------------ Type of Quarterly Special Total Dividends Shares Dividend Dividend ----------------------- granted per share per share Paid in Q3 Paid in Q4 2005 2005 ------------------------------------------------------------ Vested 0.21 0.25 87 40 Non-vested 0.21 0.25 27 13 ------------------------------------------------------------ ---------------------------------------------------- Total Dividends --------------- Type of Quarterly Special Paid in year Shares Dividend Dividend ended December granted per share per share 31, 2006 ---------------------------------------------------- Vested 0.21 7.50 2,082 Non-vested 0.21 7.50 807 ---------------------------------------------------- 14. Earnings Per Common Share: All shares issued (including non-vested shares issued under the Company's Incentive Plan) are the Company's common stock and have equal rights to vote and participate in dividends. However, for the purposes of calculating basic earnings per share, such non-vested shares are not considered outstanding until the time-based vesting restriction has lapsed. Furthermore, dividends declared during the year for non-vested shares are deducted from net income as reported for purposes of calculating net income available to common shareholders for the computation of basic earnings per share. For purposes of calculating diluted earnings per share, dividends declared during the year for non-vested shares are not deducted from net income as reported since such calculation assumes non-vested shares were fully vested from the grant date. However, the denominator of the diluted earnings per share calculation includes the incremental shares assumed issued under the treasury stock method weighted for the period the non-vested shares were outstanding. We have excluded the dilutive impact of all 59,650 and 140,900 non-vested shares outstanding as of December 31, 2005 and 2006, respectively, for purposes of calculating diluted earnings per share for those years because the effect of the application of the treasury stock method to such securities would be antidilutive to basic earnings per share. The components of the calculation of basic and diluted earnings per share for the years ended December 31, 2004, 2005 and 2006 are as follows: --------------------------------------------------------------------------- 2004 2005 2006 ---- ---- ---- Net Income as reported: $32,794 $68,684 $15,141 Less: Dividends declared during the year for non-vested shares -- (40) (807) ============ ============ ============ Net income available to common shareholders 32,794 68,644 14,334 ============ ============ ============ Weighted average common shares outstanding, basic 12,922,449 27,926,771 30,550,274 Add: Dilutive effect of non-vested shares -- 5,241 53,594 Weighted average common shares outstanding, diluted 12,922,449 27,932,012 30,603,868 Earnings per share, basic and diluted 2.54 2.46 0.47 =========================================================================== 15. Voyage and Other Vessel Operating Expenses: The amounts in the accompanying consolidated statements of income are analyzed as follows: Voyage Expenses 2004 2005 2006 --------------- ------ ------ ------ Port charges 5,181 9,271 11,265 Bunkers 8,588 19,893 33,937 Commissions 3,129 7,725 10,149 ------ ------ ------ Total 16,898 36,889 55,351 ====== ====== ====== Other vessel operating expenses 2004 2005 2006 ------------------------------- ------ ------ ------ Crew wages and related costs 7,285 18,119 26,919 Insurance 2,873 6,561 7,000 Repairs and maintenance 2,842 11,449 16,330 Spares and consumable stores 3,804 10,992 15,668 Taxes (Note 18) 55 194 165 ------ ------ ------ Total 16,859 47,315 66,082 ====== ====== ====== 16. Leases: In January 2006, the Manager entered into an agreement to lease office space in Athens, Greece, with an unrelated party. The office is located at 1, Vasilisis Sofias & Megalou Alexandrou Street, 151 24 Maroussi, Athens, Greece. The agreement is for duration of twelve years beginning May 2006 with a lessee's option for an extension of ten years. The monthly rental is Euro 120,000 adjusted annually for inflation increase plus 1%. Other general and administrative expenses for the year ended December 31, 2006, include $ 1,272 of office rentals. The minimum rentals payable under non-cancelable operating leases for each of the years ending December 31, 2007 through May 1, 2018 before any adjustment for inflation (approximately 3% annually) and annual increase (1%), translated using the exchange rate of $/Euro at December 31, 2006 are: Year Amount ------------------- ------ 2007 1,896 2008 1,896 2009 1,896 2010 1,896 2011 and thereafter 13,903 ------ 21,487 ====== 17. Interest and Finance Costs: The amounts in the accompanying consolidated statements of income are analyzed as follows: 2004 2005 2006 ------- ------- ------- Interest on long-term debt (Note 8) 4,161 19,700 20,784 Less: Capitalized interest (Note 5) -- -- (34) Bank charges 285 568 1,158 Non-qualifying swaps' fair value change/ reclassification gain from swap termination -- (1,498) 2,733 Amortization and write-off of financing fees 755 1,407 4,534 ------- ------- ------- Total 5,201 20,177 29,175 ======= ======= ======= In 2005 and 2006, the Company following the loan prepayments discussed in Note 8(a) terminated the related interest rate swap agreements. The termination resulted in a reclassification gain of $ 1,171 and $ 98, respectively, from other comprehensive income, which is included in non-qualifying swaps' fair value change / reclassification gain from swap termination in the table above. 18. Income Taxes: Marshall Islands, Cyprus and Liberia do not impose a tax on international shipping income. Under the laws of Marshall Islands, Cyprus and Liberia, the countries of the companies' incorporation and vessels' registration, the companies are subject to registration and tonnage taxes, which have been included in vessels' operating expenses in the accompanying consolidated statements of income. Pursuant to the United States Internal Revenue Code of 1986, as amended (the "Code"), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the company operating the ships meets both of the following requirements, (a) the Company is organized in a foreign country that grants an equivalent exception to corporations organized in the United States and (b) either (i) more than 50% of the value of the Company's stock is owned, directly or indirectly, by individuals who are "residents" of the Company's country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States (50% Ownership Test) or (ii) the Company's stock is "primarily and regularly traded on an established securities market" in its country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States (Publicly-Traded Test). Under the regulations, a Company's stock will be considered to be "regularly traded" on an established securities market if (i) one or more classes of its stock representing more than 50 percent of its outstanding shares, by voting power and value, is listed on the market and is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year; and (ii) the aggregate number of shares of stock traded during the taxable year is at least 10% of the average number of shares of the stock outstanding during the taxable year. The Marshall Islands, Cyprus and Liberia, the jurisdictions where the Company and its ship-owning subsidiaries are incorporated, grant an "equivalent exemption" to United States corporations. Therefore, the Company is exempt from United States federal income taxation with respect to U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met. The Company believes that for periods prior to its initial public offering in July 2004, it satisfied the 50% Ownership Test. The Company also believes that for periods subsequent to its initial public offering, it satisfies the Publicly-Traded Test on the basis that more than 50% of the value of its stock is primarily and regularly traded on the Nasdaq National Market and, therefore, the Company and its subsidiaries are entitled to exemption from U.S. federal income tax, in respect of their U.S. source shipping income. 19. Financial Instruments: The principal financial assets of the Company consist of cash on hand and at banks, accounts receivable due from charterers and interest rate swap agreements. The principal financial liabilities of the Company consist of long-term bank loans and accounts payable due to suppliers. (a) Interest rate risk: The Company's interest rates and long-term loan repayment terms are described in Note 8. (b) Concentration of Credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions with which it places its temporary cash investments. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its accounts receivable. (c) Fair value: The carrying values of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loan discussed in Note 8 bearing interest at variable interest rates approximates the recorded value. The carrying value of the interest rate swap agreements approximates their fair value as the fair value estimates the amount the Company would have received, had the interest rate swap agreements been terminated on the balance sheet date. 20. Subsequent Events: (a) Advances for vessels under construction: In January 2007, the Company paid the first installment of $ 14,169, in relation to the two remaining vessels. The construction cost will be partially financed through long-term bank financing. (b) Putative class action law suits: As of February 22, 2007, the Company has not been served with any of the shareholders' actions. The Company has obtained information relating to the substance of the plaintiffs allegations based on its monitoring of publicly available docket sheets. In addition, the Company has appointed a law firm specializing in securities litigation. (c) London Office: In February 2007, Top Tankers (U.K.) Limited, entered into a new lease agreement for office space in London. The agreement is for duration of 9 months ending November 2007. The monthly lease is GBP 5,300, payable monthly in advance. (d) Sale of Vessel: Based on the Memorandum of Agreement dated March 30, 2007, the Company agreed to sell the vessel Errorless to an unrelated party for a consideration of $ 52,500, resulting in a gain of approximately $ 1,100, which is expected to be recognised in the second quarter of 2007. Following the sale of the vessel an amount of approximately $ 22,500 will be used to partly repay the outstanding indebtness. The vessel is expected to be delivered to her new owners in the second quarter of 2007. ITEM 19. EXHIBITS Number Description of Exhibits ------ ----------------------- 1.1 Amended and Restated Articles of Incorporation of TOP Tankers Inc.(1) 1.2 Amendment to Amended and Restated Articles of Incorporation of Top Tankers Inc. 1.3 Amended and Restated By-Laws of the Company as adopted on February 28, 2007.(2) 4.1 TOP Tankers Inc. 2005 Stock Option Plan.(3) 4.2 Loan Agreement between the Company and the Royal Bank of Scotland plc dated August 10, 2004 and supplemented September 30, 2004.(4) 4.3 Loan Agreement between the Company and DVB Bank dated March 10, 2005.(5) 4.4 Credit Facility between the Company and the Royal Bank of Scotland dated November 1, 2005.(6) 4.4.1 Supplement to credit facility between the Company and the Royal Bank of Scotland dated December 21, 2006. 4.5 Credit Facility between the Company and HSH NORDBANK, AG, dated November 7, 2005.(7) 4.6 Sales Agreement between the Company and Cantor Fitzgerald & Co. dated April 13, 2006.(8) 4.7 Shareholder Rights Agreement with Computershare Investor Services, LLC, as Rights Agent as of August 19, 2005.(9) 4.8 Memorandum of Agreement by and between Kisavos Shipping Company Limited and Komarf Hope 27 Shipping Company dated March 9, 2006 relating to the purchase and sale of the M/T Priceless. 4.9 Charter party by and between Kisavos Shipping Company Limited and Komarf Hope 27 Shipping Company in relation to the M/T Priceless, dated March 9, 2006. 4.10 Quadripartite Agreement by and among the Company, Kisavos Shipping Company Limited, Komarf Hope 27 Shipping Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Priceless. 4.11 Guarantee given by the Company to Komarf Hope 27 Shipping Co. dated March 15, 2006 in connection with the charter party relating to the M/T Priceless. 4.12 Memorandum of Agreement by and between Taygetus Shipping Company Limited and Komarf Hope 28 Shipping Co. dated March 9, 2006 relating to the purchase and sale of the M/T Timeless. 4.13 Charter party by and between Taygetus Shipping Company Limited and Komarf Hope 28 Shipping Co. in relation to the Timeless, dated March 9, 2006. 4.14 Quadripartite Agreement by and among the Company, Taygetus Shipping Company Limited, Komarf Hope 28 Shipping Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Timeless. 4.15 Guarantee given by the Company to Komarf Hope 28 Shipping Co., dated March 15, 2006 in connection with the charter party relating to the M/T Timeless. 4.16 Memorandum of Agreement by and between Pylio Shipping Company Limited and Komarf Hope 29. Shipping Co. dated March 9, 2006 relating to the purchase and sale of the M/T Flawless. 4.17 Charter party by and between Pylio Shipping Company Limited and Komarf Hope 29 Shipping Co. in relation to the M/T Flawless, dated March 9, 2006. 4.18 Quadripartite Agreement by and among the Company, Pylio Shipping Company Limited, Komarf Hope 29 Shipping Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Flawless. 4.19 Guarantee given by the Company to Komarf Hope 29 Shipping Co., dated March 15, 2006 in connection with the charter party relating to the M/T Flawless. 4.20 Memorandum of Agreement by and between Vitsi Shipping Company Limited and Komarf Hope 30 Shipping Co. dated March 9, 2006 relating to the purchase and sale of the M/T Stopless. 4.21 Charter party by and between Vitsi Shipping Company Limited and Komarf Hope 30 Shipping Co. in relation to the Stopless, dated March 9, 2006. 4.22 Quadripartite Agreement by and among the Company, Vitsi Shipping Company Limited, Komarf Hope 30 Shipping Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Stopless. 4.23 Guarantee given by the Company to Komarf Hope 30 Shipping Co., dated March 15, 2006 in connection with the charter party relating to the M/T Stopless. 4.24 Memorandum of Agreement by and between Parnasos Shipping Company Limited Partankers III AS, dated March 4, 2006 relating to the purchase and sale of the M/T Faultless 4.25 Charter party by and between Parnasos Shipping Company Limited and Partankers III AS, in relation to the M/T Faultless, dated April 4, 2006 4.26 Memorandum of Agreement by and between Imitos Shipping Company Limited Partankers III AS, dated March 4, 2006 relating to the purchase and sale of the M/T Noiseless. 4.27 Charter party by and between Imitos Shipping Company Limited and Partankers III AS, in relation to the M/T Noiseless, dated April 4, 2006. 4.28 Memorandum of Agreement by and between Parnis Shipping Company Limited Partankers III AS, dated March 4, 2006 relating to the purchase and sale of the M/T Stainless. 4.29 Charter party by and between Parnis Shipping Company Limited and Partankers III AS, in relation to the M/T Stainless, dated April 4, 2006. 4.30 Memorandum of Agreement by and between Mytikas Shipping Company Limited and Partankers III AS dated April 4, 2006 relating to the purchase and sale of the M/T Limitless. 4.31 Charter party by and between Mytkas Shipping Company Limited and Partankers III AS in relation to the M/T Limitless, dated April 4, 2006. 4.32 Memorandum of Agreement by and between Litochoro Shipping Company Limited and Partankers III AS dated April 4, 2006 relating to the purchase and sale of the M/T Endless. 4.33 Charter party by and between Litochoro Shipping Company Limited and Partankers III AS in relation to the M/T Endless, dated April 4, 2006. 4.34 Guarantee given by the Company to Partankers III AS in connection with the charter parties relating to the M/T Faultless, M/T Stainless, M/T Noiseless, M/V Limitless, M/V Endless dated April 4, 2006. 4.35 Memorandum of Agreement by and between Idi Shipping Company Limited and Kemp Maritime S.A. dated March 14, 2006 relating to the purchase and sale of the M/T Spotless. 4.36 Charter party by and between Idi Shipping Company Limited and Kemp Maritime S.A. in relation to the M/T Spotless, dated March 14, 2006. 4.37 Quadripartite Agreement by and among the Company, Idi Shipping Company Limited, Kemp Maritime S.A. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Spotless. 4.38 Second Priority Quadripartite Agreement by and among the Company, Idi Shipping Company Limited, Kemp Maritime S.A. and Mass Capital Investments B.V. dated March 15, 2006 relating to the M/T Spotless. 4.39 Guarantee given by the Company to Kemp Maritime S.A. dated March 14, 2006 in connection with the charter party relating to the M/T Spotless. 4.40 Memorandum of Agreement by and between Falarko Shipping Company Limited and Tucker Navigation Co. dated March 14, 2006 relating to the purchase and sale of the M/T Doubtless. 4.41 Charter party by and between Falarko Shipping Company Limited and Tucker Navigation Co. in relation to the M/T Doubtless, dated March 14, 2006. 4.42 Quadripartite Agreement by and among the Company, Falarko Shipping Company Limited, Tucker Navigation Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Doubtless. 4.43 Second Priority Quadripartite Agreement by and among the Company, Falarko Shipping Company Limited, Tucker Navigation Co. and Mass Capital Investments B.V. dated March 15, 2006 relating to the M/T Doubtless. 4.44 Guarantee given by the Company to Tucker Navigation Co. dated March 14, 2006 in connection with the charter party relating to the M/T Doubtless. 4.45 Memorandum of Agreement by and between Pageon Shipping Company Limited and Comoros Shipping Limited dated March 14, 2006 relating to the purchase and sale of the M/T Vanguard. 4.46 Charter party by and between Pageon Shipping Company Limited and Comoros Shipping Limited. in relation to the M/T Vanguard, dated March 14, 2006. 4.47 Quadripartite Agreement by and among the Company, Pageaon Shipping Company Limited, Comoros Shipping Limited and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Vanguard. 4.48 Second Priority Quadripartite Agreement by and among the Company, Pageon Shipping Company Limited, Comoros Shipping Limited and Mass Capital Investments B.V. dated March 15, 2006 relating to the M/V Vanguard. 4.49 Guarantee given by the Company to Comoros Shipping Limited. dated March 14, 2006 in connection with the charter party relating to the M/V Vanguard. 4.50 Memorandum of Agreement by and between Gramos Shipping Company Limited and Starcraft Marine Co. dated March 14, 2006 relating to the purchase and sale of the M/T Faithful. 4.51 Charter party by and between Gramos Shipping Company Limited and Starcraft Marine Co. in relation to the M/T Faithful, dated March 14, 2006. 4.52 Quadripartite Agreement by and among the Company, Gramos Shipping Company Limited, Starcraft Marine Co. and Fortis Bank (Nederland) N.V. dated March 15, 2006 relating to the M/T Faithful. 4.53 Second Priority Quadripartite Agreement by and among the Company, Gramos Shipping Company Limited Starcraft Marine Co. and Mass Capital Investments B.V. dated March 15, 2006 relating to the M/T Faithful. 4.54 Guarantee given by the Company to Starcraft Marine Co. dated March 14, 2006 in connection with the charter party relating to the M/T Faithful. 4.55 Supplemental Agreement relating to the Memorandum of Agreement dated March 14, 2006 relating to the M/V Spotless made by and among Idi Shipping Company Limited, Kemp Maritime S.A. and ICON Spotless LLC dated June 16, 2006. 4.56 Addendum No. 1 to charter party by and between Idi Shipping Company Limited and Kemp Maritime S.A. in relation to the M.V. Spotless, dated March 14, 2006 dated June 16, 2006. 4.57 Quadripartite Agreement by and among the Company, Idi Shipping Company ICON Spotless LLC and Fortis Bank (Nederland) N.V. dated June 16, 2006 relating to the M/T Spotless. 4.58 Guarantee given by the Company to ICON Spotless LLC dated June 13, 2006 in connection with the charter party relating to the M/T Spotless. 4.59 Supplemental Agreement relating to the Memorandum of Agreement dated March 14, 2006 relating to the M/V Doubtless made by and among Falarko Shipping Company Limited, Tucker Navigation Co. and ICON Spotless LLC dated June 16, 2006. 4.60 Addendum No. 1 to charter party by and between Falarko Shipping Company Limited and Tucker Navigation Co. in relation to the M.V. Doubtless, dated March 14, 2006 dated June 16, 2006. 4.61 Quadripartite Agreement by and among the Company, Falarko Shipping Company ICON Doubtless LLC and Fortis Bank (Nederland) N.V. dated June 16, 2006 relating to the M/T Doubtless. 4.62 Guarantee given by the Company to ICON Spotless LLC dated June 13, 2006 in connection with the charter party relating to the M/T Doubtless. 4.63 Supplemental Agreement relating to the Memorandum of Agreement dated March 14, 2006 relating to the M/V Vanguard made by and among Pageon Shipping Company Limited, Comoros Shipping Limited and Isomar Marine Company Limited dated June 16, 2006. 4.64 Addendum No. 1 to charter party by and between Pageon Shipping Company Limited and Comoros Shipping Limited in relation to the M.V. Vanguard, dated March 14, 2006 dated June 16, 2006. 4.65 Quadripartite Agreement by and among the Company, Pageon Shipping Company Isomar Marine Company Limited and Fortis Bank (Nederland) N.V. dated June 16, 2006 relating to the M/T Doubtless 4.66 Guarantee given by the Company to Isomar Shipping Company Limited dated June 13, 2006 in connection with the charter party relating to the M/T Vanguard 4.67 Supplemental Agreement relating to the Memorandum of Agreement dated March 14, 2006 relating to the M/V Faithful made by and among Gramos Shipping Company Limited, Starcraft Marine Co. and ICON Faithful LLC dated June 16, 2006. 4.68 Addendum No. 1 to charter party by and between Gramos Shipping Company Limited and Starcraft Marine Co. in relation to the M.V. Faithful, dated March 14, 2006 dated June 16, 2006. 4.69 Quadripartite Agreement by and among the Company, Gramos Shipping Company ICON Faithful LLC and Fortis Bank (Nederland) N.V. dated June 16, 2006 relating to the M/T Faithful. 4.70 Guarantee given by the Company to ICON Faithful LLC dated June 13, 2006 in connection with the charter party relating to the M/T Faithful. 8.1 List of subsidiaries of the Company. 12.1 Rule 13a-14(a)/15d-14(a) Certification of the Company's Chief Executive Officer. 12.2 Rule 13a-14(a)/15d-14(a) Certification of the Company's Chief Financial Officer. 13.1 Certification of the Company's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 13.2 Certification of the Company's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 15.1 Consent of Independent Registered Public Accounting Firm. 15.2 Consent of Independent Registered Public Accounting Firm. - ---------- (1) Incorporated by reference from Exhibit 3.1 to the company's Registration Statement on Form F-1, filed on October 18, 2004 (File No. 333-119806). (2) Incorporated by reference from our 6-K filed on March 9, 2007. (3) Incorporated by reference from Exhibit 4.1 to the Company's Annual Report on Form 20-F, filed on April 13, 2006. (4) Incorporated by reference from Exhibit 10.1 to the Company's Registration Statement on Form F-1, filed on November 12, 2004 (File No. 333-119806). (5) Incorporated by reference from Exhibit 4.3 to the Company's Annual Report on Form 20-F, filed on April 13, 2006 (File No. 000-50859). (6) Incorporated by reference from Exhibit 4.4 to the Company's Annual Report on Form 20-F, filed on April 13, 2006 (File No. 000-50859). (7) Incorporated by reference from Exhibit 4.5 to the Company's Annual Report on Form 20-F, filed on April 13, 2006 (File No. 000-50859). (8) Incorporated by reference from Exhibit 4.6 to the Company's Annual Report on Form 20-F, filed on April 13, 2006 (File No. 000-50859). (9) Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8A (File No. 000-50859). SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf. TOP Tankers Inc. By: /s/ Evangelos Pistiolis ------------------------------------ Name: Evangelos Pistiolis Title: Chief Executive Officer April 20, 2006 SK 23116 0001 756596 v8 EX-1.2 2 d759408_ex1-2.txt Exhibit 1.2 ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF TOP TANKERS INC. UNDER SECTION 90 OF THE BUSINESS CORPORATIONS ACT I, Evangelos J. Pistiolis, President/Director of TOP TANKERS INC., a corporation organized and existing under the laws of the Republic of the Marshall Islands, for the purpose of amending the Articles of Incorporation of said Corporation pursuant to Section 90 of the Business Corporations Act, hereby certify: 1. The name of the Corporation is: TOP TANKERS INC. 2. The Articles of Incorporation were filed with the Registrar of Corporations on the 10th day of January, 2000 under the name of "OCEAN HOLDINGS INC.", Articles of Amendment were filed with the Registrar of Corporations on the 30th day of April, 2004 changing the name of the Corporation to "TRANS OCEAN PETROLEUM TANKERS INC.", Articles of Amendment were filed with the Registrar of Corporations on the 10th day of May, 2004 changing the name of the Corporation to "TOP TANKERS INC." and Amended and Restated Articles of Incorporation were filed with the Registrar of Corporations on the 21st day of July, 2004. 3. Section D of the Articles of Incorporation, as heretofore amended and restated, is hereby amended in its entirety to read as follows: D. The aggregate number of shares of stock that the Corporation is authorized to issue is One Hundred Twenty Million (120,000,000) registered shares, of which One Hundred Million (100,000,000) shall be designated common shares with a par value of one United States cent (US$0.01) per share, and Twenty Million (20,000,000) shall be designated preferred shares with a par value of one United States cent (US$0.01) per share. The Board of Directors shall have the authority to authorize the issuance from time to time of one or more classes of preferred shares with one or more series within any class thereof, with such voting powers, full or limited, or without voting powers and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions thereon as shall be set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such preferred shares. 4. The amendment to the Articles of Incorporation, as heretofore amended and restated, was authorized by vote of the holders of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders. IN WITNESS WHEREOF, I have executed these Articles of Amendment on this 22n1 day of July, 2005. /s/ Evangelos J. Pistiolis ------------------------------- Name: Evangelos J. Pistiolis Title: President/Director EX-4.1 3 d579584_ex4-1.txt STOCKHOLDERS RIGHTS AGREEMENT This Stockholders Rights Agreement (this "Rights Agreement") is made and entered into as of August 19, 2005, by and between TOP Tankers Inc., a Marshall Islands corporation (the "Company"), and Computershare Investor Services, LLC, as Rights Agent (the "Rights Agent"). WHEREAS, the Board of Directors of the Company (the "Board") has (a) authorized and declared a dividend of one right (the "Right") for each share of the Company's common stock, par value $.01 per share (the "Common Stock") held of record as of the Close of Business (as hereinafter defined) on September 7, 2005 (the "Record Date") and (b) has further authorized the issuance of one Right in respect of each share of Common Stock that shall become outstanding (i) at any time between the Record Date and the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date (as such terms are hereinafter defined) or (ii) upon the exercise or conversion, prior to the earlier of the Redemption Date or the Final Expiration Date, of any option or other security exercisable for or convertible into shares of Common Stock, which option or other such security is outstanding on the Distribution Date; and WHEREAS, each Right represents the right of the holder thereof to purchase one one-thousandth of a share of Series A Participating Preferred Stock (as such number may hereafter be adjusted pursuant to the provisions hereof), upon the terms and subject to the conditions set forth herein, having the rights, preferences and privileges set forth in the Certificate of Designations of Series A Participating Preferred Stock, attached hereto as Exhibit A. NOW THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the parties hereby agrees as follows: 1. Certain Definitions. "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity holding shares of Common Stock for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15% or more of the shares of Common Stock of the Company then outstanding; provided, however, that a Person who (i) becomes the Beneficial Owner of 15% or more of the shares of Common Stock of the Company then outstanding by reason of share purchases by the Company and (ii) then after such share purchases by the Company, becomes the Beneficial Owner of any additional shares of Common Stock of the Company (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock), such Person shall be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional shares of Common Stock of the Company such Person does not beneficially own 15% or more of the shares of Common Stock of the Company then outstanding. Notwithstanding the foregoing, (i) if the Company's Board of Directors determines in good faith that a Person who would otherwise be an "Acquiring Person," as defined herein, has become such inadvertently (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of the shares of Common Stock that would otherwise cause such Person to be an "Acquiring Person," as defined herein, or (B) such Person was aware of the extent of the shares of Common Stock it beneficially owned but had no actual knowledge of the consequences of such beneficial ownership under this Agreement) and without any intention of changing or influencing control of the Company, and if such Person divested or divests as promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an "Acquiring Person," as defined herein, then such Person shall not be deemed to be or to have become an "Acquiring Person" for any purposes of this Agreement; and (ii) if, as of the date hereof, any Person is the Beneficial Owner of 15% or more of the shares of Common Stock outstanding, such Person shall not be or become an "Acquiring Person," as defined herein, unless and until such time as such Person shall become the Beneficial Owner of additional shares of Common Stock in an amount equal to 20% of the Company's outstanding common stock (calculated without including the shares of Common Stock already held by such Person), other than pursuant to a grant under a Company equity incentive plan, a dividend or distribution paid or made by the Company on the outstanding shares of Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding shares of Common Stock, unless, upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person is not then the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding. "Adjustment fraction" shall have the meaning set forth in Section 11(a)(i) hereof. "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement. A Person shall be deemed the "Beneficial Owner" of and shall be deemed to "Beneficially Own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or successor law or regulation); (ii) which such Person or any of such Person's Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed pursuant to this subsection (ii)(A) to be the Beneficial Owner of, or to beneficially own, (1) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or (2) securities which a Person or any of such Person's Affiliates or Associates may be deemed to have the right to acquire pursuant to any merger or other acquisition agreement between the Company and such Person (or one or more of its Affiliates or Associates) if such agreement has been approved by the Board of Directors of the Company prior to there being an Acquiring Person; or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this subsection (ii)(B) if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to subsection (ii)(B) above) or disposing of any securities of the Company; provided, however, that in no case shall an officer or director of the Company be deemed (x) the Beneficial Owner of any securities beneficially owned by another officer or director of the Company solely by reason of actions undertaken by such persons in their capacity as officers or directors of the Company or (y) the Beneficial Owner of securities held of record by the trustee of any employee benefit plan of the Company or any Subsidiary of the Company for the benefit of any employee of the Company or any Subsidiary of the Company, other than the officer or director, by reason of any influence that such officer or director may have over the voting of the securities held in the plan. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which the New York Stock Exchange is authorized or obligated by law or executive order to close. "Close of Business" on any given date shall mean 5:00 P.M., New York time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day. "Common Stock" shall have the meaning set forth in the preamble. Common Stock when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. "Common Stock Equivalents" shall have the meaning set forth in Section 11(a)(iii) hereof. "Company" shall have the meaning set forth in the preamble, subject to the terms of Section 13(a)(iii)(C) hereof. "Current Per Share Market Price" of any security (a "Security" for purposes of this definition), for all computations other than those made pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading Days immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any Security on any date shall be deemed to be the average of the daily closing prices per share of such Security for the ten (10) consecutive Trading Days immediately prior to such date; provided, however, that in the event that the Current Per Share Market Price of the Security is determined during a period following the announcement by the issuer of such Security of (i) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such shares or (ii) any subdivision, combination or reclassification of such Security, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the Current Per Share Market Price shall be appropriately adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last sale price or, if such last sale price is not reported, the average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Security, the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used. If the Preferred Shares are not publicly traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to be the Current Per Share Market Price of the shares of Common Stock as determined pursuant to this definition, as appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof, multiplied by 1000. If the Security is not publicly held or so listed or traded, Current Per Share Market Price shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. "Current Value" shall have the meaning set forth in Section 11(a)(iii) hereof. "Distribution Date" shall mean the earlier of (i) the Close of Business on the tenth day after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of Business on the tenth Business Day (or such later date as may be determined by action of the Company's Board of Directors) after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if, assuming the successful consummation thereof, such Person would be an Acquiring Person. "Equivalent Shares" shall mean Preferred Shares and any other class or series of capital stock of the Company which is entitled to the same rights, privileges and preferences as the Preferred Shares. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof. "Exercise Price" shall have the meaning set forth in Section 4(a) hereof. "Expiration Date" shall mean the earliest to occur of: (i) the Close of Business on the Final Expiration Date, (ii) the Redemption Date, or (iii) the time at which the Board of Directors orders the exchange of the Rights as provided in Section 24 hereof. "Final Expiration Date" shall mean August 31, 2015. "Nasdaq" shall mean the National Association of Securities Dealers, Inc. Automated Quotations System. "Person" shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. "Post-event Transferee" shall have the meaning set forth in Section 7(e) hereof. "Preferred Shares" shall mean shares of Series A Participating Preferred Stock, $0.01 par value, of the Company. "Pre-event Transferee" shall have the meaning set forth in Section 7(e) hereof. "Principal Party" shall have the meaning set forth in Section 13(b) hereof. "Record Date" shall have the meaning set forth in the recitals at the beginning of this Rights Agreement. "Redemption Date" shall have the meaning set forth in Section 23(a) hereof. "Redemption Price" shall have the meaning set forth in Section 23(a) hereof. "Rights Agent" shall mean Computershare Investor Services, LLC, or its successor or replacement as provided in Sections 19 and 21 hereof. "Rights Certificate" shall mean a certificate substantially in the form attached hereto as Exhibit B. "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii) hereof. "Section 13 Event" shall mean any event described in clause (i), (ii) or (iii) of Section 13(a) hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Shares Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such; provided that, if such Person is determined not to have become an Acquiring Person as defined herein, then no Shares Acquisition Date shall be deemed to have occurred. "Spread" shall have the meaning set forth in Section 11(a)(iii) hereof. "Subsidiary" of any Person shall mean any corporation or other entity of which an amount of voting securities sufficient to elect a majority of the directors or Persons having similar authority of such corporation or other entity is beneficially owned, directly or indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person. "Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof. "Summary of Rights" shall mean a summary of this Agreement substantially in the form attached hereto as Exhibit C. "Total Exercise Price" shall have the meaning set forth in Section 4(a) hereof. "Trading Day" shall mean a day on which the principal national securities exchange on which a referenced security is listed or admitted to trading is open for the transaction of business or, if a referenced security is not listed or admitted to trading on any national securities exchange, a Business Day. A "Triggering Event" shall be deemed to have occurred upon any Person, becoming an Acquiring Person. 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the shares of Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. 3. Issuance of Rights Certificates. (a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates for shares of Common Stock registered in the names of the holders thereof (which certificates shall also be deemed to be Rights Certificates) and not by separate Rights Certificates and (ii) the right to receive Rights Certificates will be transferable only in connection with the transfer of shares of Common Stock. Until the earlier of the Distribution Date or the Expiration Date, the surrender for transfer of certificates for shares of Common Stock shall also constitute the surrender for transfer of the Rights associated with the shares of Common Stock represented thereby. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, postage-prepaid mail, to each record holder of shares of Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Rights Certificate evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11 hereof, then at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of the Distribution Date, the Rights will be evidenced solely by such Rights Certificates and may be transferred by the transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of shares of Common Stock, and the holders of such Rights Certificates as listed in the records of the Company or any transfer agent or registrar for the Rights shall be the record holders thereof. (b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of the Summary of Rights by first-class, postage-prepaid mail, to each record holder of shares of Common Stock as of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company's transfer agent and registrar. With respect to certificates for shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof together with the Summary of Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for transfer of any certificate for shares of Common Stock outstanding on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the shares of Common Stock represented thereby. (c) Unless the Board of Directors by resolution adopted at or before the time of the issuance of any shares of Common Stock specifies to the contrary, Rights shall be issued in respect of all shares of Common Stock that are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date or, in certain circumstances provided in Section 22 hereof, after the Distribution Date. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear the following legend: THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT BETWEEN TOP TANKERS INC. AND COMPUTERSHARE INVESTOR SERVICES, LLC, AS THE RIGHTS AGENT, DATED AS OF AUGUST 19, 2005, (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF TOP TANKERS INC. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. TOP TANKERS INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID. With respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the shares of Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the shares of Common Stock represented thereby. (d) In the event that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such shares of Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock which are no longer outstanding. 4. Form of Rights Certificates. (a) The Rights Certificates (and the forms of election to purchase shares of Common Stock and of assignment to be printed on the reverse thereof) shall be substantially in the form of Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or a national market system, on which the Rights may from time to time be listed or included, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date (or in the case of Rights issued with respect to shares of Common Stock issued by the Company after the Record Date, as of the date of issuance of such shares of Common Stock) and on their face shall entitle the holders thereof to purchase such number of one- thousandths of a Preferred Share as shall be set forth therein at the price set forth therein (such exercise price per one one-thousandth of a Preferred Share being hereinafter referred to as the "Exercise Price" and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right being hereinafter referred to as the "Total Exercise Price"), but the number and type of securities purchasable upon the exercise of each Right and the Exercise Price shall be subject to adjustment as provided herein. (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Company's Board of Directors has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT. 5. Countersignature and Registration. (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President or any Vice President, either manually or by facsimile signature, and by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature, and shall have affixed thereto the Company's seal (if any) or a facsimile thereof. The Rights Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates on behalf of the Company had not ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office designated for such purposes, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Rights Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Rights Certificates, entitling the registered holder to purchase a like number of one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets, as the case may be) as the Rights Certificate or Rights Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Rights Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to the person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will make and deliver a new Rights Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. 7. Exercise of Rights; Exercise Price; Expiration Date of Rights. (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date and prior to the Close of Business on the Expiration Date by surrender of the Rights Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the Exercise Price for each one-thousandth of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) as to which the Rights are exercised. (b) The Exercise Price for each one-thousandth of a Preferred Share issuable pursuant to the exercise of a Right shall initially be twenty-five Dollars ($25), shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below. (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of the Exercise Price for the number of one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Rights Certificate in accordance with Section 9(e) hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent for the Preferred Shares) a certificate or certificates for the number of one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests or (B) if the Company shall have elected to deposit the total number of one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the case may be) as are to be purchased (in which case certificates for the Preferred Shares (or, following a Triggering Event, other securities, cash or other assets as the case may be) represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt thereof, deliver such cash to or upon the order of the registered holder of such Rights Certificate. The payment of the Exercise Price (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and an amount equal to any applicable transfer tax required to be paid by the holder of such Rights Certificate in accordance with Section 9(e) hereof, may be made in cash or by certified bank check, cashier's check or bank draft payable to the order of the Company. In the event that the Company is obligated to issue securities of the Company other than Preferred Shares, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate. (d) In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Rights Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such (a "Post-Event Transferee"), (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Company's Board of Directors has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e) (a "Pre-Event Transferee") or (iv) any subsequent transferee receiving transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, either directly or through one or more intermediate transferees, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or to any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any of such Acquiring Person's Affiliates, Associates or transferees hereunder. (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall, in addition to having complied with the requirements of Section 7(a), have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 9. Reservation and Availability of Preferred Shares. (a) The Company covenants and agrees that it will use its best efforts to cause to be reserved and kept available out of its authorized and unissued Preferred Shares not reserved for another purpose (and, following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities), the number of Preferred Shares (and, following the occurrence of the Triggering Event, Common Stock and/or other securities) that will be sufficient to permit the exercise in full of all outstanding Rights. (b) If the Company shall hereafter list any of its Preferred Shares on a national securities exchange, then so long as the Preferred Shares (and, following the occurrence of a Triggering Event, shares of Common Stock and/or other securities) issuable and deliverable upon exercise of the Rights may be listed on such exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable (but only to the extent that it is reasonably likely that the Rights will be exercised), all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. (c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Triggering Event in which the consideration to be delivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the date of expiration of the Rights. The Company may temporarily suspend, for a period not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement and notify the Rights Agent that the exercisability of the Rights has been temporarily suspended, as well as a public announcement and notification to the Rights Agent at such time as the suspension is no longer in effect. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction, unless the requisite qualification in such jurisdiction shall have been obtained, or an exemption therefrom shall be available, and until a registration statement has been declared effective. (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (or other securities of the Company) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such securities (subject to payment of the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessable shares. (e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the original issuance or delivery of the Rights Certificates or of any Preferred Shares (or other securities of the Company) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares (or other securities of the Company) in a name other than that of, the registered holder of the Rights Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depositary receipts for Preferred Shares (or other securities of the Company) upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. 10. Record Date. Each Person in whose name any certificate for a number of one-thousandths of a Preferred Share (or other securities of the Company) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of Preferred Shares (or other securities of the Company) represented thereon, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Total Exercise Price with respect to which the Rights have been exercised (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a holder of Preferred Shares (or other securities of the Company) for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 11. Adjustment of Exercise Price, Number of Shares or Number of Rights. The Exercise Price, the number and kind of shares or other property covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) Notwithstanding anything in this Agreement to the contrary, in the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares (by reverse stock split or otherwise) into a smaller number of Preferred Shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall be adjusted so that the Exercise Price thereafter shall equal the result obtained by dividing the Exercise Price in effect immediately prior to such time by a fraction (the "Adjustment Fraction"), the numerator of which shall be the total number of Preferred Shares (or shares of capital stock issued in such reclassification of the Preferred Shares) outstanding immediately following such time and the denominator of which shall be the total number of Preferred Shares outstanding immediately prior to such time; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of such Right; and (2) the number of one-thousandths of a Preferred Share (or share of such other capital stock) issuable upon the exercise of each Right shall equal the number of one-thousandths of a Preferred Share (or share of such other capital stock) as was issuable upon exercise of a Right immediately prior to the occurrence of the event described in clauses (A)-(D) of this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however, that, no such adjustment shall be made pursuant to this Section 11(a)(i) to the extent that there shall have simultaneously occurred an event described in clause (A), (B), (C) or (D) of Section 11(n) with a proportionate adjustment being made thereunder. Each share of Common Stock that shall become outstanding after an adjustment has been made pursuant to this Section 11(a)(i) shall have associated with it the number of Rights, exercisable at the Exercise Price and for the number of one-thousandths of a Preferred Share (or shares of such other capital stock) as one share of Common Stock has associated with it immediately following the adjustment made pursuant to this Section 11(a)(i). (ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall have occurred, then promptly following such Triggering Event each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive for each Right, upon exercise thereof in accordance with the terms of this Agreement and payment of the Exercise Price in effect immediately prior to the occurrence of the Triggering Event, in lieu of a number of one-thousandths of a Preferred Share, such number of shares of Common Stock of the Company as shall equal the result obtained by multiplying the Exercise Price in effect immediately prior to the occurrence of the Triggering Event by the number of one-thousandths of a Preferred Share for which a Right was exercisable (or would have been exercisable if the Distribution Date had occurred) immediately prior to the first occurrence of a Triggering Event, and dividing that product by 50% of the Current Per Share Market Price for shares of Common Stock on the date of occurrence of the Triggering Event; provided, however, that the Exercise Price and the number of shares of Common Stock of the Company so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 11(e) hereof to reflect any events occurring in respect of the shares of Common Stock of the Company after the occurrence of the Triggering Event. (iii) In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the Company may, if the Company's Board of Directors determines that such action is necessary or appropriate and not contrary to the interest of holders of Rights and, in the event that the number of shares of Common Stock which are authorized by the Company's Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to permit the exercise in full of the Rights, or if any necessary regulatory approval for such issuance has not been obtained by the Company, the Company shall: (A) determine the excess of (1) the value of the shares of Common Stock issuable upon the exercise of a Right (the "Current Value") over (2) the Exercise Price (such excess, the "Spread") and (B) with respect to each Right, make adequate provision to substitute for such shares of Common Stock, upon exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other equity securities of the Company (including, without limitation, shares or units of shares of any series of preferred stock which the Company's Board of Directors has deemed to have the same value as Common Stock (such shares or units of shares of preferred stock are herein called "Common Stock Equivalents")), except to the extent that the Company has not obtained any necessary stockholder or regulatory approval for such issuance, (4) debt securities of the Company, except to the extent that the Company has not obtained any necessary stockholder or regulatory approval for such issuance, (5) other assets or (6) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Company's Board of Directors based upon the advice of a nationally recognized investment banking firm selected by the Company's Board of Directors; provided, however, if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Triggering Event and (y) the date on which the Company's right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Exercise Price, Common Stock (to the extent available), except to the extent that the Company has not obtained any necessary stockholder or regulatory approval for such issuance, and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Company's Board of Directors shall determine in good faith that it is likely that sufficient additional Common Stock could be authorized for issuance upon exercise in full of the Rights or that any necessary regulatory approval for such issuance will be obtained, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares or take action to obtain such regulatory approval (such period, as it may be extended, the "Substitution Period"). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares, to take any action to obtain any required regulatory approval and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the Current Per Share Market Price of the Common Stock on the Section 11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to have the same value as the Common Stock on such date. (b) In case the Company shall, at any time after the date of this Agreement, fix a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling such holders (for a period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase Preferred Shares or Equivalent Shares or securities convertible into Preferred Shares or Equivalent Shares at a price per share (or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Shares) less than the then Current Per Share Market Price of the Preferred Shares or Equivalent Shares on such record date, then, in each such case, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as the case may be, which the aggregate offering price of the total number of Preferred Shares or Equivalent Shares, as the case may be, to be offered or issued (and/or the aggregate initial conversion price of the convertible securities to be offered or issued) would purchase at such current market price, and the denominator of which shall be the number of Preferred Shares and Equivalent Shares (if any) outstanding on such record date, plus the number of additional Preferred Shares or Equivalent Shares, as the case may be, to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Company's Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Preferred Shares and Equivalent Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Exercise Price shall be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed. (c) In case the Company shall, at any time after the date of this Agreement, fix a record date for the making of a distribution to all holders of the Preferred Shares or of any class or series of Equivalent Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend, if any, or a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11(b)), then, in each such case, the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Per Share Market Price of a Preferred Share or an Equivalent Share on such record date, less the fair market value per Preferred Share or Equivalent Share (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the case may be, and the denominator of which shall be such Current Per Share Market Price of a Preferred Share or Equivalent Share on such record date; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been in effect if such record date had not been fixed. (d) Notwithstanding anything to the contrary, no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price; provided, however, that any adjustments which by reason of this Section 11(d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one hundred-thousandth of a Preferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(d), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which requires such adjustment or (ii) the Expiration Date. (e) If as a result of an adjustment made pursuant to Section 11(a) or 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right and, if required, the Exercise Price thereof, shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like terms to any such other shares. (f) All Rights originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of one-thousandths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (g) Unless the Company shall have exercised its election as provided in Section 11(h), upon each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Preferred Shares (calculated to the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x) the number of Preferred Shares covered by a Right immediately prior to this adjustment, by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. (h) The Company may elect on or after the date of any adjustment of the Exercise Price as a result of the calculations made in Section 11(b) or (c) to adjust the number of Rights, in substitution for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one hundred-thousandth) obtained by dividing the Exercise Price in effect immediately prior to adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of the Exercise Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Exercise Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Exercise Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. (i) Irrespective of any adjustment or change in the Exercise Price or the number of Preferred Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Exercise Price per one one-thousandth of a Preferred Share and the number of one-thousandths of a Preferred Share which were expressed in the initial Rights Certificates issued hereunder. (j) Before taking any action that would cause an adjustment reducing the Exercise Price below the par or stated value, if any, of the number of one-thousandths of a Preferred Share issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue as fully paid and nonassessable shares such number of one-thousandths of a Preferred Share at such adjusted Exercise Price. (k) In any case in which this Section 11 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the number of one-thousandths of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one-thousandths of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares (fractional or otherwise) upon the occurrence of the event requiring such adjustment. (l) Notwithstanding anything in this Section 11 to the contrary, prior to the Distribution Date, the Company shall be entitled to make such reductions in the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares or Common Stock, (ii) issuance wholly for cash of any Preferred Shares or Common Stock at less than the current market price, (iii) issuance wholly for cash of Preferred Shares or Common Stock or securities which by their terms are convertible into or exchangeable for Preferred or Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares or Common Stock shall not be taxable to such stockholders. (m) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. (n) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the outstanding Common Stock (by reverse stock split or otherwise) into a smaller number of shares of Common Stock, or (D) issue any shares of its capital stock in a reclassification of the shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such event, except as otherwise provided in this Section 11(a) and Section 7(e) hereof: (1) each share of Common Stock (or shares of capital stock issued in such reclassification of the Common Stock) outstanding immediately following such time shall have associated with it the number of Rights as were associated with one share of Common Stock immediately prior to the occurrence of the event described in clauses (A)-(D) above; (2) the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall be adjusted so that the Exercise Price thereafter shall equal the result obtained by multiplying the Exercise Price in effect immediately prior to such time by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the event described in clauses (A)-(D) above, and the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such event; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of such Right; and (3) the number of one-thousandths of a Preferred Share (or shares of such other capital stock) issuable upon the exercise of each Right outstanding after such event shall equal the number of one- thousandths of a Preferred Share (or shares of such other capital stock) as were issuable with respect to one Right immediately prior to such event. Each share of Common Stock that shall become outstanding after an adjustment has been made pursuant to this Section 11(n) shall have associated with it the number of Rights, exercisable at the Exercise Price and for the number of one-thousandths of a Preferred Share (or shares of such other capital stock) as one share of Common Stock has associated with it immediately following the adjustment made pursuant to this Section 11(n). If an event occurs which would require an adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. 12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of a Rights Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the Company to make such certification or give such notice shall not affect the validity of such adjustment or the force or effect of the requirement for such adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment contained therein and shall not be deemed to have knowledge of such adjustment unless and until it shall have received such certificate. 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that, following a Shares Acquisition Date, directly or indirectly: (i) the Company shall consolidate with, or merge with and into, any other Person (other than a wholly-owned Subsidiary of the Company in a transaction the principal purpose of which is to change the state of incorporation of the Company and which complies with Section 11(m) hereof); (ii) any Person shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such merger, all or part of the shares of Common Stock shall be changed into or exchanged for stock or other securities of any other person (or the Company); or (iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or one or more of its wholly owned Subsidiaries in one or more transactions, each of which individually (and together) complies with Section 11(m) hereof), then, concurrent with and in each such case: (a) each holder of a Right (except as provided in Section 7(e) hereof) shall thereafter have the right to receive, upon the exercise thereof, at a price equal to the Total Exercise Price applicable immediately prior to the occurrence of the Section 13 Event in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal Party (as hereinafter defined), free of any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by dividing such Total Exercise Price by 50% of the Current Per Share Market Price of the shares of Common Stock of such Principal Party on the date of consummation of such Section 13 Event, provided, however, that the Exercise Price and the number of shares of Common Stock of such Principal Party so receivable upon exercise of a Right shall be subject to further adjustment as appropriate in accordance with Section 11(e) hereof; (b) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (c) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (d) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of its Common Stock) in connection with the consummation of any such transaction as may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (e) upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect of such Principal Party, each holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Total Exercise Price as provided in this Section 13(a), such cash, shares, rights, warrants and other property which such holder would have been entitled to receive had such holder, at the time of such transaction, owned the shares of Common Stock of the Principal Party receivable upon the exercise of such Right pursuant to this Section 13(a), and such Principal Party shall take such steps (including, but not limited to, reservation of shares of stock) as may be necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and other property. (f) For purposes hereof, the "earning power" of the Company and its Subsidiaries shall be determined in good faith by the Company's Board of Directors on the basis of the operating earnings of each business operated by the Company and its Subsidiaries during the three fiscal years preceding the date of such determination (or, in the case of any business not operated by the Company or any Subsidiary during three full fiscal years preceding such date, during the period such business was operated by the Company or any Subsidiary). (b) For purposes of this Agreement, the term "Principal Party" shall mean: (i) in the case of any transaction described in clause (i) or (ii) of Section 13(a) hereof: (A) the Person that is the issuer of the securities into which the shares of Common Stock are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer the shares of Common Stock of which have the greatest aggregate market value of shares outstanding, or (B) if no securities are so issued, (x) the Person that is the other party to the merger, if such Person survives said merger, or, if there is more than one such Person, the Person the shares of Common Stock of which have the greatest aggregate market value of shares outstanding or (y) if the Person that is the other party to the merger does not survive the merger, the Person that does survive the merger (including the Company if it survives) or (z) the Person resulting from the consolidation; and (ii) in the case of any transaction described in clause (iii) of Section13(a) hereof, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if more than one Person that is a party to such transaction or transactions receives the same portion of the assets or earning power so transferred and each such portion would, were it not for the other equal portions, constitute the greatest portion of the assets or earning power so transferred, or if the Person receiving the greatest portion of the assets or earning power cannot be determined, whichever of such Persons is the issuer of shares of Common Stock having the greatest aggregate market value of shares outstanding; provided, however, that in any such case described in the foregoing clause (b)(i) or (b)(ii), if the shares of Common Stock of such Person are not at such time or have not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary of another Person the shares of Common Stock of which are and have been so registered, the term "Principal Party" shall refer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of which are and have been so registered, the term "Principal Party" shall refer to whichever of such Persons is the issuer of shares of Common Stock having the greatest aggregate market value of shares outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall bear the obligations set forth in this Section 13 in the same ratio as its interest in such Person bears to the total of such interests. (c) The Company shall not consummate any Section 13 Event unless the Principal Party shall have a sufficient number of authorized shares of Common Stock that have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement confirming that such Principal Party shall, upon consummation of such Section 13 Event, assume this Agreement in accordance with Sections 13(a) and 13(b) hereof, that all rights of first refusal or preemptive rights in respect of the issuance of shares of Common Stock of such Principal Party upon exercise of outstanding Rights have been waived, that there are no rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights and that such transaction shall not result in a default by such Principal Party under this Agreement, and further providing that, as soon as practicable after the date of such Section 13 Event, such Principal Party will: (i) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date, and similarly comply with applicable state securities laws; (ii) use its best efforts to list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on a national securities exchange or to meet the eligibility requirements for quotation on Nasdaq and list (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on Nasdaq; and (iii) deliver to holders of the Rights historical financial statements for such Principal Party which comply in all respects with the requirements for registration on Form F-1 (or any successor form) under the Exchange Act. In the event that at any time after the occurrence of a Triggering Event some or all of the Rights shall not have been exercised at the time of a transaction described in this Section 13, the Rights which have not theretofore been exercised shall thereafter be exercisable in the manner described in Section 13(a) (without taking into account any prior adjustment required by Section 11(a)(ii)). (d) In case the "Principal Party" for purposes of Section 13(b) hereof has provision in any of its authorized securities or in its certificate of incorporation or by-laws or other instrument governing its corporate affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to Section 13 hereof), in connection with, or as a consequence of, the consummation of a Section 13 Event, shares of Common Stock or Equivalent Shares of such Principal Party at less than the then Current Per Share Market Price thereof or securities exercisable for, or convertible into, shares of Common Stock or Equivalent Shares of such Principal Party at less than such then Current Per Share Market Price, or (ii) providing for any special payment, tax or similar provision in connection with the issuance of the shares of Common Stock of such Principal Party pursuant to the provisions of Section 13 hereof, then, in such event, the Company hereby agrees with each holder of Rights that it shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been canceled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with or as a consequence of, the consummation of the proposed transaction. (e) The Company covenants and agrees that it shall not, at any time after the Distribution Date, effect or permit to occur any Section 13 Event, if (i) at the time or immediately after such Section 13 Event there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such Section 13 Event, the stockholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(b) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates or (iii) the form or nature of organization of the Principal Party would preclude or limit the exercisability of the Rights. (f) The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable, as determined pursuant to this Agreement. (b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share). Interests in fractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided, that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a Preferred Share. For purposes of this Section 14(b), the current market value of a Preferred Share shall be one thousand times the closing price of a share of Common Stock (as determined pursuant to the terms hereof) for the Trading Day immediately prior to the date of such exercise. (c) The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock upon the exercise or exchange of Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of Common Stock. For purposes of this Section 14(c), the current market value of a share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to the terms hereof) for the Trading Day immediately prior to the date of such exercise. (d) The holder of a Right by the acceptance of the Right expressly waives his or her right to receive any fractional Rights or any fractional shares (other than fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of a Right. 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the shares of Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the shares of Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the shares of Common Stock), may, in his or her own behalf and for his or her own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his or her right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement. 16. Agreement of Rights Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the shares of Common Stock; (b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; and (c) subject to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name the Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose to be the holder of the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof. 18. The Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. In no event will the Rights Agent be liable for special, indirect, incidental or consequential loss or damage of any kind whatsoever, even if the Rights Agent has been advised of the possibility of such loss or damage. (b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Rights Certificate or certificate for the Preferred Shares or shares of Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document reasonably believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof. 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the written advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such written advice or opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Current Per Share Market Price) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any change in the exercisability of the Rights or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing such change or adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to this Agreement or any Rights Certificate or as to whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Rights Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be less than five (5) Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company. 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' written notice mailed to the Company and to each transfer agent of the Preferred Shares and the Common Stock by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' written notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Stock by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after receiving written notice of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his or her Rights Certificate for inspection by the Company), then the registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise corporate trust or stockholder services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares and the Common Stock, and mail a written notice thereof to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement or upon the exercise, conversion or exchange of other securities of the Company outstanding at the date hereof or upon the exercise, conversion or exchange of securities hereinafter issued by the Company and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued and this sentence shall be null and void ab initio if, and to the extent that, such issuance or this sentence would create a significant risk of or result in material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued or would create a significant risk of or result in such options' or employee plans' or arrangements' failing to qualify for otherwise available special tax treatment and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 23. Redemption. (a) The Company may, at its option and with the approval of the Board of Directors, at any time prior to the Close of Business on the earlier of (i) the Shares Acquisition Date and (ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being herein referred to as the "Redemption Price") and the Company may, at its option, pay the Redemption Price either in shares of Common Stock (based on the Current Per Share Market Price thereof at the time of redemption) or cash. Such redemption of the Rights by the Company may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. The date on which the Board of Directors elects to make the redemption effective shall be referred to as the "Redemption Date". (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give or any defect in, any such notice shall not affect the validity of such redemption. Within ten (10) days after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection with the purchase of shares of Common Stock prior to the Distribution Date. 24. Exchange. (a) Subject to applicable laws, rules and regulations, and subject to subsection 24(c) below, the Company may, at its option, by action of the Board of Directors, at any time after the occurrence of a Triggering Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then outstanding. (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to subsection 24(a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights. (c) In the event that there shall not be sufficient shares of Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with Section 24(a), the Company shall either take such action as may be necessary to authorize additional shares of Common Stock for issuance upon exchange of the Rights or alternatively, at the option of a majority of the Board of Directors, with respect to each Right (i) pay cash in an amount equal to the Current Value (as hereinafter defined), in lieu of issuing shares of Common Stock in exchange therefor, or (ii) issue debt or equity securities or a combination thereof, having a value equal to the Current Value, in lieu of issuing shares of Common Stock in exchange for each such Right, where the value of such securities shall be determined by a nationally recognized investment banking firm selected by majority vote of the Board of Directors, or (iii) deliver any combination of cash, property, shares of Common Stock and/or other securities having a value equal to the Current Value in exchange for each Right. For purposes of this Section 24(c) only, the Current Value shall mean the product of the Current Per Share Market Price of shares of Common Stock on the date of the occurrence of the event described above in subparagraph (a), multiplied by the number of shares of Common Stock for which the Right otherwise would be exchangeable if there were sufficient shares available. To the extent that the Company determines that some action need be taken pursuant to clauses (i), (ii) or (iii) of this Section 24(c), the Board of Directors may temporarily suspend the exercisability of the Rights for a period of up to sixty (60) days following the date on which the event described in Section 24(a) shall have occurred, in order to seek any authorization of additional shares of Common Stock and/or to decide the appropriate form of distribution to be made pursuant to the above provision and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended. (d) The Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In lieu of such fractional shares of Common Stock, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock (as determined pursuant to the terms hereof). (e) The Company may, at its option, by majority vote of the Board of Directors, at any time before any Person has become an Acquiring Person, exchange all or part of the then outstanding Rights for rights of substantially equivalent value, as determined reasonably and with good faith by the Board of Directors, based upon the advice of one or more nationally recognized investment banking firms. (f) Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to subsection 24(e) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of rights in exchange therefor as has been determined by the Board of Directors in accordance with subsection 24(e) above. The Company shall give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the transfer agent for the shares of Common Stock of the Company. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Rights will be effected. 25. Notice of Certain Events. (a) In case the Company shall propose to effect or permit to occur any Triggering Event or Section 13 Event, the Company shall give notice thereof to each holder of Rights in accordance with Section 26 hereof at least twenty (20) days prior to occurrence of such Triggering Event or such Section 13 Event. (b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Sections 11(a)(ii) and 13 hereof. 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: TOP Tankers Inc. 109-111 Messogion Avenue Politia Centre Athens, Greece 115 26 Attention: Stamatios Tsantanis with a copy to: Seward & Kissel LLP One Battery Park Plaza New York, New York 10004 Attention: Gary J. Wolfe, Esq. Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Computershare Investor Services, LLC 350 Indiana Street, Suite 800 Golden, Colorado 80401 Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 27. Supplements and Amendments. Prior to the occurrence of a Distribution Date, the Company may supplement or amend this Agreement in any respect without the approval of any holders of Rights and the Rights Agent shall, if the Company so directs, execute such supplement or amendment. From and after the occurrence of a Distribution Date, the Company and the Rights Agent may from time to time supplement or amend this Agreement without the approval of any holders of Rights in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) shorten or lengthen any time period hereunder or (iv) to change or supplement the provisions hereunder in any manner that the Company may deem necessary or desirable and that shall not adversely affect the interests of the holders of Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided, this Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of shares of Common Stock. 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 29. Determinations and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board, or the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other parties and (y) not subject the Board to any liability to the holders of the Rights. 30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, the shares of Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, the shares of Common Stock). 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close of Business on the tenth day following the date of such determination by the Board of Directors. 32. Governing Law. This Agreement and each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of New York and for all purposes shall be governed by and construed in accordance with the laws of such jurisdiction applicable to contracts to be made and performed entirely within such jurisdiction. 33. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 34. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties have executed this Stockholder Rights Agreement as of the date first written above. TOP TANKERS INC. By: ----------------------------- Name: Evangelos J. Pistiolis Title: President COMPUTERSHARE INVESTOR SERVICES, LLC By: ----------------------------- Name: Title: Exhibit A CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A PARTICIPATING PREFERRED STOCK OF TOP TANKERS INC. The undersigned, Mr. Evangelos J. Pistiolis and Mrs. Eirini Alexandropoulou do hereby certify: 1. That they are the duly elected and acting President and Secretary, respectively, of TOP Tankers Inc., a Marshall Islands corporation (the "Company"). 2. That pursuant to the authority conferred by the Company's Amended and Restated Articles of Incorporation, the Company's Board of Directors on August 19, 2005 adopted the following resolution designating and prescribing the relative rights, preferences and limitations of the Company's Series A Participating Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors (the "Board") of the Company by the Articles of Incorporation, the Board does hereby establish a series of preferred stock, par value $0.01 per share, and the designation and certain powers, preferences and other special rights of the shares of such series, and certain qualifications, limitations and restrictions thereon, are hereby fixed as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock". The Series A Participating Preferred Stock shall have a par value of $0.01 per share, and the number of shares constituting such series shall initially be 1,000,000, which number the Board may from time to time increase or decrease (but not below the number then outstanding). Section 2. Proportional Adjustment. In the event the Company shall at any time after the issuance of any share or shares of Series A Participating Preferred Stock (i) declare any dividend on the common stock of the Company par value $0.01 per share (the "Common Stock") payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Company shall simultaneously effect a proportional adjustment to the number of outstanding shares of Series A Participating Preferred Stock. Section 3. Dividends and Distributions. (a) Subject to the prior and superior right of the holders of any shares of any series of preferred stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive when, as and if declared by the Board out of funds legally available for the purpose, quarterly dividends payable in quarterly in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. (b) The Company shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (a) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock). (c) Dividends shall begin to accrue on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date immediately preceding the date of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 4. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (a) Each share of Series A Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Company . (b) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Company . (c) Except as required by law, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 5. Certain Restrictions. (a) The Company shall not declare any dividend on, make any distribution on, or redeem or purchase or otherwise acquire for consideration any shares of Common Stock after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock unless concurrently therewith it shall declare a dividend on the Series A Participating Preferred Stock as required by Section 3 hereof. (b) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 3 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Company shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; (ii) declare or pay dividends on, make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (c) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (a) of this Section 5, purchase or otherwise acquire such shares at such time and in such manner. Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance set forth herein and, in the Articles of Incorporation, as then amended. Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Company , the holders of shares of Series A Participating Preferred Stock shall be entitled to receive an aggregate amount per share equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued and unpaid dividends on such shares of Series A Participating Preferred Stock. Section 8. Consolidation, Merger, etc. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. Section 9. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Company's preferred stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 11. Amendment. The Articles of Incorporation of the Company shall not be further amended in any manner which would materially alter or change the powers, preference or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority of the outstanding shares of Series A Participating Preferred Stock, voting separately as a class. Section 12. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock. RESOLVED FURTHER, that the President or any Vice President and the Secretary or any Assistant Secretary of this Company be, and they hereby are, authorized and directed to prepare and file a Certificate of Designation of Rights, Preferences and Privileges in accordance with the foregoing resolution and the provisions of Marshall Islands law and to take such actions as they may deem necessary or appropriate to carry out the intent of the foregoing resolution." REMAINDER OF PAGE INTENTIONALLY LEFT BLANK We further declare under penalty of perjury that the matters set forth in the foregoing Certificate of Designation are true and correct of our own knowledge. Executed in Athens, Greece on August __, 2005. -------------------------------- Evangelos J. Pistiolis President and Chief Executive Officer -------------------------------- Eirini Alexandropoulou Secretary Exhibit B [FORM OF RIGHTS CERTIFICATE] Exhibit C SUMMARY OF RIGHTS Distribution and Transfer of Rights: Distribution Date: The rights will separate from the common stock and become exercisable after (1) a person or group acquires ownership of 15% or more of the company's common stock or (2) the 10th business day (or such later date as determined by the company's board of directors) after a person or group announces a Preferred Stock Purchaseable Upon tender or exchange offer which Exercise of Rights: would result in that person or group holding 15% or more of the company's common stock. Preferred Stock Purchaseable On the Distribution Date, each holder of a Upon Exercise of Rights: right will be entitled to purchase for $25 (the "Exercise Price") a fraction (1/1000th) of one share of the company's preferred stock which has similar economic terms as one share of common stock. Flip-in: If an acquiring person (an "Acquiring Person") acquires more than 15% of the company's common stock then each holder of a right (except that acquiring person) will be entitled to buy at the Exercise Price, a number of shares of the company's common stock which has a market value of twice the Exercise Price. Flip-over: If after an Acquiring Person acquires more than 15% of the company's common stock, the company merges into another company (either as the surviving corporation or as the disappearing entity) or the company sells more than 50% of its assets or earning power, then each holder of a right (except for those owned by the acquirer) will be entitled to purchase at the Exercise Price, a number of shares of common stock of the surviving entity which has a then current market value of twice the Exercise Price. Exchange Provision: Any time after the date an Acquiring Person obtains more than 15% of the company's common stock and before that Acquiring Person acquires more than 50% of the company's outstanding common stock, the company may exchange each right owned by all other rights holders, in whole or in part, for one share of the company's common stock. Redemption of Rights: The company can redeem the rights at any time prior to a public announcement that a person has acquired ownership of 15% or more of the company's common stock. Expiration of Rights: The rights expire on the earliest of (1) August 31, 2015 or (2) the exchange or redemption of the rights as described above. Amendment of Terms The terms of the rights and the of Rights: Stockholder Rights Plan may be amended without the consent of the rights holders at any time on or prior to the Distribution Date. After the Distribution Date, the terms of the rights and the Stockholder Rights Plan may be amended to make changes, which do not adversely affect the rights of the rights holders (other than the Acquiring Person). Voting Rights: The rights will not have any voting rights. Anti-dilution Provisions: The rights will have the benefit of certain customary anti-dilution protections 23116.0001 #579584v2 EX-4.4.1 4 d759408_41-1.txt Exhibit 4.4.1 Private & Confidential Dated 21 December 2006 TOP TANKERS INC. (1) and THE ROYAL BANK OF SCOTLAND plc (2) ____________________ FIRST SUPPLEMENTAL AGREEMENT ____________________ NORTON ROSE Contents Clause Page 1 Definitions..................................................... 1 2 Agreement of the Bank........................................... 2 3 Amendments to Principal Agreement .............................. 2 4 Representations and warranties ................................. 4 5 Conditions ..................................................... 5 6 Security Documents.............................................. 6 Schedule 1 Supplemental Letter (Security Documents).........................9 THIS AGREEMENT is dated fRVR,NRT 2006 and made BETWEEN: (1) TOP TANKERS INC. with its principal place of business at 1, Vas. Sofias & Meg. Alexandrou Str., 151 24 Maroussi, Greece (the "Borrower"); (2) THE ROYAL BANK OF SCOTLAND plc, acting for the purposes of this Agreement through its office at the Shipping Business Centre, 5-10 Great Tower Street, London, EC3P 3HX, England (the "Bank"). WHEREAS: (A) this Agreement is supplemental to a facilities agreement dated 1 November 2005 (the "Principal Agreement") made between (1) the Borrower and (2) the Bank pursuant to which the Bank agreed to make a term loan facility of up to $195,656,899.82 and a revolving credit facility of up to $350,000,000 available to the Borrower upon the terms and conditions set out in the Principal Agreement; (B) pursuant to clause 2.4.5 of the Principal Agreement a Request has been made by the Borrower to drawdown a part of Facility B for the purpose of financing part of the purchase price of four Additional Ships which are newbuildings; (C) the Bank has accepted the Borrower's Request and has agreed to make available four Advances under Facility B each in the amount of five million eleven thousand six hundred and fifty Dollars ($5,011,650) (being 70% of the first instalment payable under each of the Contracts relating to the Additional Ships which are newbuildings) subject to the terms of the Principal Agreement including, without limitation, the satisfaction of all relevant conditions precedent; (D) the Bank and the Borrower confirm and agree that Facility B is in the current amount of $158,000,000 of which sum $96,000,000 has already been drawn down; and (E) the Borrower has requested that the terms of the Principal Agreement be revised and this Agreement sets out the terms and conditions upon which the Bank shall, at the request of the Borrower, agree to such revision. NOW IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Defined expressions Words and expressions defined in the Principal Agreement shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. 1.2 Definitions In this Agreement, unless the context otherwise requires: "Effective Date" means the date, no later than 22 December 2006, on which the Bank notifies the Borrower in writing that the Bank has received the documents and evidence specified in clause 5 in a form and substance satisfactory to it; and "Supplemental Letters" means the letters supplemental to the Security Documents executed or (as the context may require) to be executed by the Security Parties who are not party to this Agreement in favour of the Bank in the form set out in Schedule 1. References in the Principal Agreement to "this Agreement" shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Principal Agreement as amended by this Agreement and words such as "herein", "hereof', "hereunder", "hereafter", "hereby" and "hereto", where they appear in the Principal Agreement, shall be construed accordingly. 1.4 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.5 Construction of certain terms Clause 1.4 of the Principal Agreement shall apply to this agreement mutatis mutandis as if set out herein and as if references therein to "this Agreement" were references to this Agreement. 2 Agreement of the Bank The Bank, relying upon the representations and warranties on the part of the Borrower contained in clause 4, agrees with the Borrower that, subject to the terms and conditions of this Agreement and in particular, but without prejudice to the generality of the foregoing, fulfilment on or before 22 December 2006 of the conditions contained in clause 5, the Bank agrees to the amendment of the Principal Agreement on the terms set out in clause 3. 3 Amendments to Principal Agreement 3.1 Amendments The Principal Agreement shall, with effect from the Effective Date, be amended in accordance with the following provisions (and the Principal Agreement will continue to be binding upon each of the parties hereto upon such terms as so amended): 3.1.1 by inserting the following new definition in clause 1.2 of the Principal Agreement in alphabetical order: ""First Supplemental Agreement" means the agreement dated Zi Deter 2006 supplemental to this Agreement made between (1) the Borrower and (2) the Bank;"; 3.1.2 by inserting the words "and as supplemented and amended by the First Supplemental Agreement," after the words "means this Agreement" in the definition of "Security Documents" in clause 1.2 of the Principal Agreement; 3.1.3 by deleting the definition of "Security Requirement" in clause 1.2 of the Principal Agreement and inserting the following new definition in its place: '"'Security Requirement" means, subject to the provisions of clause 4.5, the amount in Dollars (as certified by the Bank whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower and the Bank) which is at any relevant time one hundred and thirty per cent (130%) (or for the purposes of clause 4.5 only one hundred and sixty seven per cent (167%)) of (a) the Loan and (b) the notional or actual costs as certified by the Bank in its discretion at any relevant time of cancelling, netting out, terminating, liquidating, transferring or assigning the rights, benefits and obligations created by any Transaction or the Master Swap Agreement;"; 3.1.4 by deleting the definition of "Security Value" in clause 1.2 of the Principal Agreement and inserting the following new definition in its place: ""Security Value" means the amount in Dollars (as certified by the Bank whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower and the Bank) which, at any relevant time, is the aggregate of (a) the charter-free market value of the Mortgaged Ships as most recently determined in accordance with clause 8.22; (b) the value of any Additional Ships which are newbuildings as most recently determined in accordance with clause 8.2.2 less any part of the Contract Price which has not been paid by the Borrower or the relevant Owner to the relevant Builder under the relevant Contract; and (c) the market value of any additional security for the time being actually provided to the Bank pursuant to clause 8.2;"; 3.1.5 by deleting the definition of "Ship Security Documents" in clause 1.2 of the Principal Agreement and inserting the following new definition in its place: ""Ship Security Documents" means in respect of each Ship the relevant Mortgage, the relevant Deed of Covenant and/or General Assignment, the relevant Manager's Undertakings and in the case of an Additional Ship which is a newbuilding the Pre-delivery Security Assignment and "Ship Security Document" means any of them;"; 3.1.6 by deleting clause 2.4.10(a) of the Principal Agreement and inserting the following wording in its place: "the ratio of the Loan to the Fair Market Value of all the Mortgaged Ships not exceeding 75% both prior to and immediately following the drawdown of the relevant Advance of Facility B; and"; 3.1.7 by adding a new clause 8.1.18 as follows: "8.1.18 Newbuilding in the case of an Additional Ship which is a newbuilding and in respect of which the Borrower or the relevant Owner (as appropriate) is not utilising the facilities made available pursuant to this Agreement to finance all instalments of the Contract Price or the entire Contract Price, pay all instalments of the Contract Price or any part of the Contract Price not being financed under this Agreement in full and in a timely manner and otherwise in accordance with the terms of the relevant Contract and will not incur any Borrowed Money to assist it to finance any part of the Contract Price except for Borrowed Money pursuant to the Security Documents."; 3.1.8 by deleting clause 10.1.31 and replacing it with the following: "10.1.31 Non-Delivery of Ship: a Ship is not delivered to and accepted by the Borrower or the relevant Owner under a Contract either: (a) on or before the Termination Date (or such later date as the Bank in its absolute discretion may agree in writing); and/or (b) on the date that it is obliged to take Delivery of the relevant Ship in accordance with any relevant Contract and its failure to take such Delivery will constitute a breach of the provisions of the relevant Contract; or"; 3.1.9 by adding a new clause 10.1.39 as follows: "10.1.39 Newbuilding: the Borrower or the relevant Owner as the case may be fails to pay all instalments of the Contract Price or any part of the Contract Price not being financed under this Agreement in full and in a timely manner and otherwise in accordance with the terms of the relevant Contract for an Additional Ship which is a newbuilding or the Bank determines in its reasonable opinion that the Borrower or the relevant Owner will not be in a position to pay all such instalments of the Contract Price or any part of the Contract Price not being financed under this Agreement as aforesaid; and"; 3.1.10 by adding a new clause 10.1.40 reading as follows: "10.1.40 Failure to create a Mortgage: The Borrower or the relevant Owner fails to execute and register at the Registry a valid and effective Mortgage over any Additional Ship which is a newbuilding immediately following Delivery of such Additional Ship pursuant to the relevant Contract or the Bank determines in its reasonable opinion that the Borrower or the relevant Owner will not (or is unlikely to) be able and/or willing to execute and register at the Registry such Mortgage immediately upon Delivery of such Additional Ship."; 3.1.11 by deleting clause 16.1.3(a) and replacing it with the following: "(a) to the Borrower and any Owner at: c/o Top Tankers Inc. 1, Vas. Sofias & Meg. Alexandrou Str. 151 24 Maroussi Greece Fax no: +30 210 699 5361 Attention: Mrs Eirini Alexandropoulou"; 3.1.12 by inserting the words "(including without limitation in the case of an Additional Ship which is a newbuilding the Pre-delivery Security Assignment)" after the words "the Ship Security Documents" in paragraph (I), Part 3 of Schedule 3 to the Principal Agreement; 3.1.13 by inserting the words "other than with respect to any Refund Guarantee which the Borrower and/or the relevant Owner shall provide in original form and which Refund Guarantee shall be in a form and substance acceptable to the Bank" at the end of paragraph (e), Part 3 of Schedule 3 to the Principal Agreement; and 3.1.14 by deleting the words "clause 9.2" in the heading of Part 4 of Schedule 3 to the Principal Agreement and replacing them with the words "clause 9.4". 4 Representations and warranties 4.1 Primary representations and warranties The Borrower represents and warrants to the Bank that: 4.1.1 Existing representations and warranties the representations and warranties set out in clause 7 of the Principal Agreement were true and correct on the date of the Principal Agreement and are true and correct, including to the extent that they may have been or shall be amended by this Agreement, as if made at the date of this Agreement with reference to the facts and circumstances existing at such date; 4.1.2 Corporate power the Borrower has power to execute, deliver and perform its obligations under this Agreement and all documents and other instruments to be executed by it in accordance with this Agreement to which it is or is to be a party and all necessary corporate, shareholder and other action has been taken by the Borrower to authorise the execution, delivery and performance of this Agreement and all documents and other instruments to which it is or is to be a party; 4.1.3 Binding obligations this Agreement constitutes valid and legally binding obligations of the Borrower enforceable in accordance with its terms; 4.1.4 No conflict with other obligations the execution, delivery and performance of this Agreement by the Borrower will not (a) contravene any existing law, statute, rule or regulation or any judgment, decree or permit to which the Borrower is subject, (b) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrower is a party or is subject or by which it or any of its property is bound, (c) contravene or conflict with any provision of the constitutional documents of the Borrower or (d) result in the creation or imposition of or oblige the Borrower to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertaking, assets, rights or revenues of the Borrower; 4.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to this Agreement and this Agreement is in proper form for its enforcement in the courts of each Relevant Jurisdiction; 4.1.6 Choice of law the choice of English law to govern this Agreement and the submission by the Borrower to the non-exclusive jurisdiction of the English courts are valid and binding; and 4.1.7 Consents obtained every consent, authorisation, licence or approval of, or registration or declaration to, governmental or public bodies or authorities or courts required by the Borrower in connection with the execution, delivery, validity, enforceability or admissibility in evidence of this Agreement or the performance by the Borrower of its obligations under this Agreement has been obtained or made and is in full force and effect and there has been no default in the observance of any conditions or restrictions (if any) imposed in, or in connection with, any of the same. 4.2 Repetition of representations and warranties Each of the representations and warranties contained in clause 4.1 of this Agreement and clause 7 of the Principal Agreement shall be deemed to be repeated by the Borrower on the date of execution of this Agreement as if made with reference to the facts and circumstances existing on such day. 5 Conditions 5.1 Documents and evidence The agreement of the Bank referred to in clause 2 shall be subject to the receipt by the Bank of the following conditions precedent in a form and substance satisfactory to the Bank in its sole discretion: 5.1.1 the Supplemental Letters duly executed; 5.1.2 evidence as to the due authority of the person(s) signing and/or executing this Agreement and the Supplemental Letters hereto; 5.1.3 evidence that the Borrower has properly and validly executed this Agreement and is binding upon it; 5.1.4 evidence that each Security Party has properly and validly executed a Supplemental Letter in relation to those Security Documents to which it is a party and is binding upon it; 5.1.5 evidence that the Borrower and each of the other Security Parties has obtained all consents and authorisations necessary to enable each of them to enter into this Agreement in the case of the Borrower and the Supplemental Letters in the case of the Security Parties and all documents and other instruments to be executed by each of them in connection therewith or pursuant thereto; 5.1.6 evidence that the Borrower is in good standing under the laws of the Marshall Islands and that each Owner is in good standing under the laws of the Relevant Jurisdiction; 5.1.7 if so required by the Bank, legal opinions in relation to the laws of the Marshall Islands and Liberia in favour of the Bank confirming (inter alia) the due execution of this Agreement and the Supplemental Letters; and 5.1.8 an original or certified true copy of a letter from the Borrower's agent for receipt of service of proceedings accepting its appointment under this Agreement as the Borrower's process agent. 5.2 General conditions precedent The agreement of the Bank referred to in clause 2 shall be further subject to: 5.2.1 the representations and warranties in clause 4 being true and correct on the Effective Date as if each was made with respect to the facts and circumstances existing at such time; and 5.2.2 no Default having occurred and continuing at the time of the Effective Date. 5.3 Waiver of conditions precedent The conditions specified in this clause 5 are inserted solely for the benefit of the Bank and may be waived by the Bank in whole or in part with or without conditions. 6 Security Documents The Borrower further acknowledges and agrees, for the avoidance of doubt, that: 6.1.1 each of the Security Documents to which it is a party, and its obligations thereunder, shall remain in full force and effect notwithstanding the amendments made to the Principal Agreement by this Agreement; and 6.1.2 with effect from the Effective Date, references to "the Agreement" or "the Loan Agreement" in any of the Security Documents to which it is a party shall henceforth be reference to the Principal Agreement as amended by this Agreement and as from time to time hereafter amended. 7 Expenses The Borrower hereby undertakes to pay all legal and other expenses or disbursements incurred by the Bank in the negotiation, preparation and execution of this Agreement and in connection with the fulfilment of the conditions specified in clause 5. 8 Miscellaneous and notices 8.1 Notices The provisions of clause 16.1 of the Principal Agreement shall extend and apply to the giving or making of notices or demands hereunder as if the same were expressly stated herein. 8.2 Third Party Rights No term of this Agreement shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. 8.3 Counterparts This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. 9 Law and jurisdiction This Agreement shall be governed by, and construed in accordance with, English law and the provisions of clause 17 of the Principal Agreement shall be deemed incorporated herein mutatis mutandis as if the same were expressly stated herein. IN WITNESS WHEREOF the parties to this Agreement have caused this Agreement to be duly executed on the date first above written. SIGNED for and on behalf of ) /s/ Stamotis Tsautauis TOP TANKERS INC. ) ----------------------- by Stamotis Tsautouis ) Attorney-in-fact SIGNED for and on behalf of ) /s/ Graham Locker THE ROYAL BANK OF SCOTLAND plc ) ----------------------- by Graham Locker ) Authorized Signature EX-4.8 5 d759408_ex4-8.txt Exhibit 4.8 MEMORANDUM OF AGREEMENT Dated: 09/03/2006 Kisavos Shipping Company Limited, Marshall Islands hereinafter called the Sellers, have agreed to sell, and KOMARF HOPE 27 Company, Marshall Islands hereinafter called the Buyers, have agreed to buy Name: M/T Priceless Classification Society/Class: Det Norske Veritas Built: 1991 By: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea Flag: Marshall Islands Place of registration: Marshall Islands Call Sign: V7DB3 Grt/Nrt: 79718/46569 Official Number: 1598 hereinafter called the Vessel, on the following terms and conditions: Definition "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase price (See also Clause 17) USD 48,000,000.- cash (United States Dollars Forty Eight Million only). 2. Deposit As security for the correct fulfillment of this Agreement the Buyers shall pay a deposit of 2,5% (two and a half per cent) of the Purchase Price within three (3) banking days from the date of this Agreement signed by both parties by fax. This deposit shall be placed with The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01,Swift:RBOSGB2L, Account Key: KISHCO-USD1, lban:GB44 RBOS 1663 0000 3369 83 Beneficiary: Kisavos Shipping Company Ltd, Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX in the name of the Sellers 3. Payment (Subject to Clause 17) The said Purchase Price shall be paid in full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift:RBOSGB2L, Account Key: KISHCO-USD1, lban:GB44 RBOS 1663 0000 3369 83 Beneficiary: Kisavos Shipping Company Ltd, Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX on delivery of vessel in accordance with clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Singapore within February, 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notice, time and place of delivery a) When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery on or before March 15, 2006. b) After the receipt of the notice of Readiness for Delivery, the Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea on March 15, 2006 or, if later, on such other date as agreed between the Sellers and the Buyers that reasonably takes into account the time needed for the BBC (as defined in Clause 17) and the related financing transactions to take into effect (the procedure of which shall be as provided for in Clause 5 of the BBC). c) Expected time of delivery: Between 15th March 2006 and 30th March, 2006 Date of cancelling (see clauses 5c), 6b b)(iii) and 14): 30th April, 2006 If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. No Drydocking/Divers Inspection Clause to apply. a)** deleted b)** deleted c) deleted 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Sellers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Seller's flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s),shall be excluded without compensation. Captain's Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation. (See also Clause 19) The place of closing: Athens, Greece In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: a) Legal Bill of Sale in a form recordable in ____________ (the country in which the Buyers are to register the Vessel), warranting that the Vessel is free from all encumbrances, mortgages and maritime liens or any other debts or claims whatsoever, duly notarially attested and legalized by the consul of such country or other competent authority. b) Current Certificate of Ownership issued by the competent authorities of the flag state of the Vessel. c) Confirmation of Class issued within 72 hours prior to delivery. d) Current Certificate issued by the competent authorities stating that the Vessel is free from register encumbrances. e) Recordation of Bill of Sale evidencing the sale of the Vessel to the Buyers issued by the Marshall Islands registry. f) Any such additional documents as may reasonably be required by the competent authorities for the purpose of registering the Vessel provided the Buyers notify the Sellers of any such documents as soon as possible after the date of this Agreement. In addition to the documents above Buyers will furnish Sellers with the following documents: a) Minutes of the Board of Directors resolving the Purchase of the Vessel and acceptance of delivery of the vessel b) Power of Attorney as per the minutes above c) Certificate of Incorporation dated not earlier than thirty (30) days from delivery. At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at Sellers' expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes,etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers account, where as similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation' by Class or relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyer's inspection according to Clause 4 a) or 4 b), if applicable, or the buyers inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this agreement shall be the relevant date. * Notes, if any, in the surveyor's reports which are accepted by the Classification Society without condition/recommendation are not to be taken account. 12. Name/markings 13. Buyers' default This clause shall apply only in the event that the default in this clause is attributable to the Buyers' gross negligence or wilful misconduct. Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest: Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default This clause shall apply only in the event that the default in this clause is attributable to the Sellers' gross negligence or wilful misconduct. Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives deleted 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b)* deleted c)* deleted *17. Seller's Credit Notwithstanding anything herein to the contrary (including, Clause 3), Sellers's credit (in the amount of 10% of the Purchase Price, "Seller's Credit") shall be made in accordance with, and as more fully described in, the bareboat charterparty entered into on the same done herewith by and between the Sellers as charterers and the Buyers as owners ("BBC"). 18. Bareboat Charterparty Under the BBC, the Vessel shall be chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery to and acceptance by the Sellers (as Charterers) under the BBC. 19. deleted 20. Remaining Stores, etc. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. The Sellers shall comply with the Buyers' requests which may be made for the Buyers' compliance with the loan and guarantee facility agreement entered into on, or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein. For and on behalf of For and on behalf of Kisavos Shipping Company Ltd. KOMARF HOPE 27 Shipping Company /s/ Stamatis Tsantanis /s/ K.H. Kwan - ----------------------------- ------------------------------- EX-4.9 6 d759408_ex4-9.txt Exhibit 4.9 1. Shipbroker 2. Place and date Seoul 09/03/2006 3. Owners/Place of business (Cl. 1) KOMARF HOPE 27 Shipping Company, Marshall Islands 4. Bareboat Charterers/Place of business Kisavos Shipping Company Limited, Marshall Islands 5. Vessel's name, call sign and flag (CL 1 and 3) M/T Priceless. V7DB53, Marshall Islands 6. Type of Vessel Suez Max 7. GT/NT 79718/46569 8. When/Where built 1991 Hyundai Heavy industries Co. Ltd. Ulsan, Korea 9. Total DWT (abt.) In metric tons on summer freeboard 10. Classification society (C1. 3) Det Norske Veritus 11. Date of last special survey by the Vessel's classification society 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) See Clause 4. 15. Cancelling date (Cl. 5) April 30, 2006 16. Port or Place of redelivery (Cl. 15) Not applicable. 17. No. of months' validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months 18. Running days' notice if other than stated In Cl. 4 See Clause 5 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) 21. Charter period (Cl. 2) Five (5) years (however, subject to Cl. 32) 22. Charter hire (Cl. 11) US$ 750,000 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(ii)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. to PART IV 25. Currency and method of payment (Cl. 11) US Dollars, in same day funds 26. Place of payment; also slate beneficiary and bank account (Cl. 11) As to be notified by the Owners to the Charterers 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) 12(b) applies. 1st priority mortgage dated on or around the date herewith in favor of Fortis Bank ("Agent") as trustee for the benefit of itself, the relevant lenders ("Lenders") and swap providers. 2nd priority mortgage dated on or around the date herewith in favor of the Charterers securing the Sellers Credit (as defined in Clause 32(a)) 3rd priority mortgage. dated on or around the date herewith in favor of the shareholder of the Owners securing the Shareholder's Funds (as defined in the Loan Agreement defined in Clause 33) Financial Instrument to also include. without limitation. the intercreditor agreement and any other agreements in connection with financings related to this Charter. 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Each insurance to cover 130% of the Outstanding Project Cost: however, P&I Club insurance to cover the maximum cover available on the market. Clause 14 is not applicable. 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) No 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) No 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) No 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) No 45. Country of the Underlying Registry (only to be filled in if PART V applies) No 46. Number of additional clauses covering special provisions, if agreed) 32, 33, 34 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ K.H. Kwan /s/ Stamatis Tsantanis - ---------------------------- -------------------------------- K.H. Kwan Stamatis Tsantanis Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1 Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to' let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel to be delivered under this Charter by the Owners to the Charterers shall be on an as is where is basis (and, at any rate, as delivered under the MOA (as defined in Clause 4) by the Charterers as sellers to the Owners as buyers) and without any warranty by the Owner. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the Memorandum of Agreement entered into on the same date herewith by and between the Charterers as sellers and the Owners as buyers ("MOA"). 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) Should the Vessel not be delivered latest by the canceling date indicated in Box 15 or the cancellation date as otherwise agreed by and between the Owners and the Charterers hereunder, the Owners shall propose a new date of cancellation that reasonably takes into account the time needed for this Charter and the related financing transactions to take into effect and the Owners shall accept such proposal. (b) Notwithstanding Clause 5(a) above, if it appears with reasonable certainty the delivery of the Vessel under this Charter cannot be made due to the failure in the related financing transactions or otherwise, this Charter may be cancelled by a mutual agreement between the Owners and the Charterers. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Charterers shall bear all expenses of the On-hire Survey including loss of time, if any, and the Charterers shall also bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charters have not dry-docked her in accordance with Clause 10(g). The costs and fees for such inspection of survey shall be paid by the Charters; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charters' account and form part of the Charter Period. The Charters shall also permit the Owners to inspect the Vessel's log book whenever requested and shall whenever required by the Owners furnish them with full information regarding and casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare part, appliances and of all consumable stores on board the Vessel shall be made by the Charters in conjunction with the Owners on redelivery of the Vessel. The Charters and the Owners, respectively, shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of delivery, respectively. The Charters shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charters and under their complete control in every respect. The Charters shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charters' loss of time) more than the percentage stated in Box 23, or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29, then the Charterers at their own expense shall bear cost of compliance. (iii) Financial Security - The Charters shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state of municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charters shall make and maintain all arrangement by bond or otherwise as may be necessary to satisfy such requirements at the Charters' sole expense and the Charters shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation for the Vessel - The Charters shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter; provided. however, that. all tonnage taxes and other ownership related expenses shall be paid by the Owners. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charters shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charters shall also have the liberty, with the Owners' consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting arid re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charters' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii), the Charters shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charters shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charters shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provide the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contacts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charters shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management -- Commercial, technical and/or operational management. of Vessels to be executed by Top Tanker Management Inc. or any other company acceptable to the Agent and KOMARF for the Charter Period. (i) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation and applicable law. (k) Financial Statements-The Charterers shall submit to the Owners the audited annual accounts within 180 days of the year end and semi-annual management accounts within 90 days of the half- year end. (l) Survey Reports - The Charterers shall supply the Owners the class survey reports regularly including annual survey and the follow-up reports showing the recommendation, if any, has been cleared at the Charterer's expense. The Charterers shall put its best efforts to keep the condition of the Vessels in compliance with all class certificates during the Charter Period. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall on a monthly basis pay to the Owners for the hire of the Vessel a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. Each hire shall be made free and clear of any right of set-off, reduction or delay whatsoever. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, the hire shall be paid by the Charterers to the Owners as provided for hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(0 shall be made immediately, whether or not the Owners have given invoice therefor to the Charterers. 12. Mortgage (only to apply if Box 28 has been appropriately filled in) (a) deleted (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgage(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the motgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers which shall not be unreasonably withheld. (optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Further, during the Charter Period, the Charterers shall at their expense take our effect MI 1, MAP and COFR insuring the Vessel and other insurances as the Agent or the shareholder of the Owners may reasonably require. Insurance policies for each insurance above shall name the Owners, the Lenders and the Charterers as beneficiaries. and shall be assigned in favor of them. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account. (b) deleted (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become and actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Agent who shall distribute the moneys in accordance with the Financial Instrument. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and all other occurrence as required under the Financial Instrument. (e) Subject to the Financial Instrument, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverages of each insurance mentioned the provisions of sub-clause 13(a), the insured amount shall be the sum indicated in Box 29. 14. deleted 15. Redelivery At the expiration of the Charter Period or, if earlier, on the date of sale of the Vessel as provided for under Clause 32. the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port in such ready safe berth as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running ,days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery (which shall include the port or place of delivery as directed by the Owners) and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery (which shall be the port or place of delivery as directed by the Owners). Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 percent, for the number of days by which the Charter Period or the date of sale is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was t delivered free of class conditions/recommendations, fair wear and tear not affecting class excepted. On re-delivery, The Vessel shall have been drydocked as per class requirement. The Vessel upon redelivery shall have her survey cycles up to date and the trading and the national and international class certificates valid for at least the number of months agreed in Box 17. 6 months 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fasten during the Charter Period a notice reading to the effect of the following: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatever. Further, the Vessel is subject to the first priority mortgage dated [0] in favor of Fortis Bank as trustee acting for itself and the mortgagees thereunder, the second priority mortgage dated [o] in favor of [specify the Charterers name], and the third priority mortgage dated [o] in favor of [specify the shareholder of the Owners name]" 17. Indemnity (a) The Charterers shall indemnify the Owners, Korea Marine Fund Corporation (a Korean corporation: "KOMARF"), the Owners, the Agent and the Lenders and their respective successors, assigns, agents, directors, shareholders and officers (collectively, "Indemnified Parties") from and against any loss, damage, claim, cost and expense incurred by them -arising out of or in relation to the operation of the Vessel by the Charterers (including, without limitation, costs of operating and maintaining the Vessels (whether by the time-charterers or the subcharterers or by whomsoever leased. used or operated), environmental claim or those based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generally of the foregoing, the Charterers agree to indemnify the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter. 19. Salvage All Salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Indemnified Parties against any sums whatsoever which the Indemnified Parties shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction in navigation. 21. General Average The Owner shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except in accordance with the Financial Instrument. (b) The Owners shall not sell the Vessel during the currency of this Charter except as provided in Clause 32. 23. Contacts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules, The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. (b) The Charterers are to procure that all passenger tickets issued during the Charter Period for the carriage of passengers and their luggage under this Charter shall contain a paramount clause incorporating any legislation relating to carrier's liability for passengers and their luggage compulsorily applicable in the trade; if no such legislation exists, the passenger tickets shall incorporate the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto. Delete as applicable 25. Requisition/Acquisition (a) In the event of the Requisition for Hire for the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported). Acts of piracy, acts of terrorists, acts of hostility of malicious damage, blockades (whether imposed against vessels of certain flags or ownership or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel, be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should requires payment of premiums and /or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty. (i) to comply with all orders, directions, recommendations or advise as to departures, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to five the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) In any and all events of the event of outbreak of war (whether there be a declaration of war or not), the hire shall continue to be paid in accordance with Clause 11.] 27. deleted 28. Termination (a) Charterers' Default Subject to the Financial Instrument, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognized at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charters fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) Provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) The Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel covered by Insurance Despite the Vessel becoming a total loss or is declared as a constructive or compromised or arranged total loss, so long as it is fully covered by insurance, the Charterers shall continue to pay the hire at the time and in the manner as provided herein for a maximum period of forty (40) days or until the insurance proceeds shall be paid, whichever occurs first:, and any money paid by the Charterers to the Owners as hire will be returned to the Charterers once the insurance proceeds are paid. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Agent's prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorized representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (b) deleted (c) deleted (d) Notwithstanding (a), (b) or (c) above, the parties may agree .at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's cost and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing arbitration. (Note : The parties should be aware that the mediation process may not necessarily interrupt time limits) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions (a) Sellers' Credit: The sellers' credit (in the amount of 10% of the Purchase Price under the MOA. "Sellers' Credit") shall be paid to the Charterers in a lump sum payment upon the sale of the Vessels and receipt of the full amount of sales proceeds. but not later than three (3) months after the expiry of the Charter Period. For the avoidance of doubt no interest shall accrue on the Sellers' Credit. (b) In the event that the BBC is terminated before the scheduled expiry of the Charter Period due to reasons attributable to the Charterer, the Owner shall be entitled to forfeit an amount of the Seller's Credit up to a maximum of the aggregate remaining monthly payments under the BBC after the termination without prejudice to its claims for damages and other rights under applicable law or in equity. The Sellers' Credit shall be secured by a second priority mortgage over the Vessel ranking behind the first priority mortgages granted to the Agent and the Swap Parties. Guarantee: Top Tankers Inc. shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety. Each of the Charterers and the charterers to KOMARF HOPE 28 Shipping Company, KOM A.RF HOPE 29 Shipping Company and KOMARF HOPE 30 Shipping Company (each a Liberian company; collectively, "Other Charterers") shall also jointly and severally guarantee the performance of the charters by the other Charterers. (c) Sale of Vessel during the Six-Month Sales Period: The "Six-Months Sales Period" shall mean the period from the date falling three months prior to the expiry of the Charter Period to the date falling three months after the expiry of the Charter Period. The "Outstanding 'Project Cost" shall mean. collectively, (i) all sums outstanding under the Main Financing Documentation. (ii) the principal amount of the investment into the SIC by its investors, and (iii) the Seller's Credit. The following is applicable when the Vessel is sold during the Six-Month Sales Period: If the net sale proceeds of the Vessel ("Net Sales Proceeds") is lower than the Outstanding Project Cost, such shortfall shall be first covered by the Charterers LID to the amount of USD two (2) million, and the Owners will deduct such amount from the Sellers' Credit payable to the Charterers in respect of that Vessel. If the Net Sales Proceeds are higher than the Outstanding Project Cost, as to such surplus, the first USD two (2) million shall belong to the Charterers and the Owners will pay such amount to the Charterers in respect of that Vessel upon sale of that Vessel, and any excess thereof shall belong to the Owners. (d) Sale of the Vessel after the Six Months Sales Period: The evaluation value ("Evaluation Value") of the Vessel shall be the average of the quote obtained from the Selected Evaluation Firms, with each quote referring to the Vessel price as of the (expiry date of the Charter Period. The Selected Evaluation Finns shall be two of the following firms selected by a mutual agreement between the Charterers and the Owners: One from Clarksons or Simpson Spence & Young and the other from Platou or Fearnlevs. The following is applicable when the Vessel is not sold prior to the expiry of Six-Month Sales Period: If in respect of any Vessel the Evaluation Value for that Vessel is lower than the Outstanding Project Cost relating to that Vessel as of the end of the Charter Period, the Owner will deduct such amount up to USD 2 million from the Sellers' Credit payable to the Charterers in respect of that Vessel. If in respect of any Vessel the Evaluation Value for that Vessel is higher than the Outstanding Project Cost relating to that Vessel, the Owners will pay such amount up to USD 2 million to the Charterers in respect of that Vessel on the date of expiration of the Six-Month Sales Period. The foregoing mechanism shall not be affected even where the actual sales price of the Vessel is different from the Evaluation Value. (f) Sale of the Vessel before the Six Months Sales Period: The Owners may sell the Vessels at any time after three (3) years from the commencement of the Charter Period. subject. however, to an approval thereof by the relevant subcharterer(s). if any. If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Seller's Credit in respect of that Vessel in full, and an additional amount up to: o USD 4 million if the sale is concluded during the 4th year of the Charter. o USD 3 million if the sale is concluded during the 5th year of the Charter (however, excluding the Six-Month Sales Period). Any excess thereof shall belong to the Owners. All of the above amounts shall be payable immediately upon the delivery of the Vessels to the new owners, and, simultaneously therewith, this Charter will be terminated. Further, at any time after three (3) years from the commencement of the Charter Period, the Vessel, subject to the Charterers' approval (which shall not be unreasonably withheld), may be sold by the Owners with this Charter maintained by the new owners. In such cases of sale, the following paragraph shall be applicable: If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit wiith payable.to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Sellers' Credit in respect of that Vessel in full, and as to any surplus his the first USD two (2) million shall belong to Top Tankers Inc. (each of such Sellers' Credit and such first USD two (2) million to be payable at the time of the sale of the Vessel), and any excess thereof shall belong to the Owner. (g) Sales Mechanism: Whether the Vessel is sold during, after or before the Six-Month Sales Period, as to the Vessel, the Owners will give the Charterers the right of first refusal. Subject to the Charterers' right of first refusal specified above (i.e., such right of first refusal shall be deemed waived when a waiver by the Charterers is obtained or when the Charterers fail to exercise such right after a prior notice of one (1) week by the Owners), the Owners shall have no obligation to give the Charterers an opportunity to hid when it plans to sell the Vessels. The Owners shall have an absolute and free discretion in selecting the buyer of the Vessel and in determining the mechanisms for the sale of the Vessel. The Vessel and the other vessels owned by the Other Charterers (collectively, "Vessels") may be sold at one time or at different times through separate sales transactions and varying mechanisms. (h) Extension of Charter Period: For the effective sale of the Vessels after the Charter Period, the Charter Period may be extended by a period of not longer than three (3) months at the option of the Owners, in which case the hire shall be USD 5,000 per day during such extended three (3) month Charter Period. Further. the Owners shall have the right to require the Charterers to manage the Vessel for a period of up to one (1) year after expiration of the Charter Period pursuant to the ship management agreement between the Owner and the Charterer (or any other company nominated by the Charterer), providing that (i) as to the costs incurred for the technical management of the Vessel shall be borne by the Owners on an net cost amount basis: and (ii) as to the income from commercial operation of the Vessel shall be distributed between the Charterers4nd the Owners on a 40% to 60% basis. The Charterers shall make their best efforts to assist the Owners in the sale of the Vessels. (i) Time Charter Assignment: As to the time-charter or sub-charter by the Charterers of the Vessel during the Charter Period, such time-charter or sub-charter shall be assigned to the Owners and the Agent and other relevant parties under the main financing and investment documentation for security. (j) Compliance with the Financial Instrument: The Charterers shall comply with the Financial. Instrument as required by the Agent (including, without limitation, its requirement to maintain a minimum consolidated cash balance of USD 50 million at all times with the Agent). 33. Compliance with the Owners' requests The Charterers shall, throughout the Charter Period, comply with the Owners' requests which may he made from time to time for the Owners' compliance with the provisions of the loan and guarantee facility agreement entered into on. or to be entered into around. the even date herewith by and among, inter alia, the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein (the "Loan Agreement"). 34. Hell & High Water Clause This Charter is a "hell and high water" bareboat charter and, notwithstanding anything in this Charter to the contrary (however, excluding clause 28(c) of this Charter), the C'harterer's obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character (including, for the avoidance of doubt, any loss of the Vessel as provided in clause 28(c) of this Charter or any other termination of this Charter pursuant to clause 28( b) of this Charter or for any other reason whatsoever (other than clause 28(a) and (d) of this Charter) whether provided for in this Charter or available to the Charterer by operation of law or otherwise). If for any reason whatsoever this Charter shall be terminated in whole or in part for any of the reasons specifically provided herein or by operation of law or otherwise, the Charterer nonetheless agrees to nay to the Owner or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; Each payment of hire made by the Charterer shall he final, and the Charterer will not seek to recover all or any part of such payment from the Owner for any reason whatsoever, except manifest error. EX-4.10 7 d759408_ex4-10.txt Exhibit 4.10 Private & Confidential Dated 15 March 2006 ------------------- KOMARF HOPE 27 SHIPPING COMPANY as Owner (1) KISAVOS SHIPPING CO. LTD. as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) ----------------------------------- QUADRIPARTITE DEED relating to m.v. "Priceless" ----------------------------------- NORTON ROSE Contents Clause Page 1 Definitions ..........................................................2 2 Representations and warranties........................................9 3 Assignment...........................................................12 4 Owner's Assignment...................................................13 5 Continuing security and other matters................................14 6 Charterer's undertakings.............................................16 7 General Undertakings.................................................18 8 Covenants concerning insurance and operational matters ..............18 9 Powers of Mortgagee to protect security and remedy defaults .........30 10 Powers of Mortgagee on Event of Default..............................30 11 Application of moneys................................................31 12 Remedies cumulative and other provisions.............................32 13 Costs and indemnity..................................................32 14 Attorney.............................................................33 15 Further assurance....................................................33 16 Sale of Ship.........................................................33 17 Continuation of Charter Period.......................................35 18 Notices..............................................................35 19 Counterparts.........................................................36 20 Severability of provisions...........................................36 21 Law and jurisdiction ................................................36 Schedule 1 Forms of Loss Payable Clauses.....................................38 Schedule 2 Forms of Notices of Assignment of Insurances......................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) KOMARF HOPE 27 SHIPPING COMPANY a company incorporated under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner"); (2) KISAVOS SHIPPING CO. LTD., a company incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan and guarantee facility agreement (the "Loan and Guarantee Facility Agreement") dated 9 March 2006 and made between (1) the Owner (therein referred to as the "Borrower"), (2) the banks and financial institutions whose names are set out at Schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, security agent and trustee (the "Agent"), (4) Fortis Bank (Nederland) N.V. as guarantee bank (the "Guarantee Bank "), (5) Fortis Bank (Nederland) N.V. as arranger (the "Arranger") and (6) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider" and together with the Agent, the Arranger and the Account Bank (as defined in the Loan and Guarantee Facility Agreement), the Guarantee Bank and the Banks, the "Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Owner, upon the terms and conditions therein, a maximum aggregate amount of up to thirty three million and six hundred thousand Dollars ($33,600,000) and the Guarantee Bank agreed to issue and/or maintain the Guarantee (as defined in the Loan and Guarantee Facility Agreement (the "Guarantee") in favour of the Beneficiary (as defined in the Loan and Guarantee Facility Agreement); (C) by a 1992 ISDA Master Agreement dated 9 March 2006 (the "Master Swap Agreement") made between (1) the Owner and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Owner in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.1 of the Loan and Guarantee Facility Agreement, each of the Creditors has appointed the Mortgagee as its agent, security agent and trustee and pursuant to a deed of trust dated q March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Creditors; (E) pursuant to the Loan and Guarantee Facility Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as security for the payment by the Owner of the Outstanding Indebtedness (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 9 March 2006 made between the Owner and the Charterer, the Owner has agreed to let and the Charterer has agreed to take the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan and Guarantee Facility Agreement provided (inter alia) that as a condition precedent to the advance of the Loan the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Creditors under the Loan and Guarantee Facility Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan and Guarantee Facility Agreement and the Mortgage and to the security thereby created and is the Quadripartite Deed referred to in the Loan and Guarantee Facility Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount' means five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner pursuant to the Charterer; "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account' means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as Account Bank) with account number 0240756I5017407192 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Classification" means the classification +1 Al tanker for oil ESP EO PP3 with the Classification Society or such other classification as the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification in relation to the Ship for the purposes of the Security Documents; "Classification Society" means Det Norske Veritas or such other classification society which the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification Society in relation to the Ship for the purposes of the Security Documents; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Owner or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Commercial Management Agreement" means the agreement made or (as the context may require) to be made between the Charterer and the Commercial Manager in a form previously approved in writing by the Agent providing (inter alia) for the Commercial Manager to commercially manage the Ship; "Commercial Manager" means Top Tanker Management Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MN 96960 or any other person appointed by the Charterer with the prior written consent of the Agent as commercial manager of the Ship and includes its successors in title; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default' means any of the events or circumstances described in clause 10.1 of the Loan and Guarantee Facility Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan and Guarantee Facility Agreement (as conclusively certified by the Mortgagee); "Flag State" means the Marshall Islands or such other state or territory acceptable to the Agent designated in writing by the Agent (acting on the instructions of the Majority Banks), at the request of the Owner, as being the "Flag State" of the Ship for the purposes of the Security Documents; "Guarantee" means the guarantee described in recital (B) above; "Guarantee Amount" means any amount owing by the Guarantee Bank to the Beneficiary under or pursuant to the Guarantee, which amount is indemnified by the Owner in accordance with the Loan and Guarantee Facility Agreement; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan and Guarantee Facility Agreement at any relevant time; "Loan and Guarantee Facility Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the General Assignment) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Management Agreements" means the Commercial Management Agreement and the Technical Management Agreement and "Management Agreement" means either of them; "Managers" means the Commercial Manager and the Technical Manager and "Manager means either of them; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Owner dated9 March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operating Account" means the interest bearing Dollar account of the Owner opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Operating Account for the purposes of this Agreement; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set out in rule 1.1.2 of the Code; "Outstanding Indebtedness" means the aggregate of the Loan and the Guarantee Amount the Master Swap Agreement Liabilities, and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Owner to the Mortgagee and/or any of the other Creditors, whether actually or contingently, present or future, under or pursuant to the Loan and Guarantee Facility Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; ( (b) the Charter Guarantee; (c) the Charter Earnings; and ( (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Jurisdiction" means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan and Guarantee Facility Agreement, this Deed, the Mortgage, the General Assignment, the Master Swap Agreement, the Share Pledge, the Charter Guarantee and any other such document as is defined in the Loan and Guarantee Facility Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, the Guarantee Amount, any interest thereon, and the moneys from time to time owing by the Owner pursuant to the Loan and Guarantee Facility Agreement and/or the Master Swap Agreement Liabilities (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Parties" means, collectively, the Owner, the Managers, the Charterer, or any other person who may at any time be a party to any of the Security Documents (other than the Creditors and the Charter Guarantor) and "Security Party" means any one of them; "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Shareholder" means Dongbuka No.27 Ship Investment Company of Mora-dong 795-22, Sasang-gu,Pusan , Republic of Korea; "Share Pledge" means the pledge made or (as the context may require) to be made between the Shareholder and the Agent (as security agent and trustee on behalf of the Creditors) in substantially the form set out in Schedule 17, of its rights, title and interest in and to all the shares in the Owner; "Ship" means the vessel m.v. "Priceless" registered as a Marshall Islands ship under Official Number 1598 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; and "SMC" means a safety management certificate issued in respect of a Ship in accordance with rule 13 of the ISM Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Technical Manager's Undertaking" means an undertaking and assignment in relation to the Ship executed or (as the context may require) to be executed by the Technical Manager in favour of the Agent (as security agent and trustee on behalf of the Creditors); "Technical Manager" means V. Ships Management Limited of Eaglehurst, Belmont Hill, Douglas, Isle of Man, IM1 4NY or any other person appointed by the Commercial Manager with the prior written consent of the Agent as technical manager of the Ship and includes its successors in title and assignees; "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan and Guarantee Facility Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan and Guarantee Facility Agreement but in case of any conflict between the two instruments, the provisions of the Loan and Guarantee Facility Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's Continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of the Marshall Islands as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and has power to execute and deliver and perform its obligations under the Charter Guarantee and the Security Documents, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's Continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charterers obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and each of the Charter Guarantee and this Deed are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by it of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's Initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's Initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.5 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed; 2.6 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness, the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness, the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Operating Account until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings and the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the other Creditors in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee and/or the other Creditors) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the other Creditors or any of them any right or remedy of the Mortgagee and/or the other Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the other Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the other Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan and Guarantee Facility Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the other Creditors fully indemnified against any loss suffered by the Mortgagee and the other Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the other Creditors or any of them under the Loan and Guarantee Facility Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the other Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the other Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner or any other person liable in respect of any Outstanding Indebtedness and/or the Master Swap Agreement Liability; or 5.6.4 claim any set-off or counterclaim against the Owner or any other person liable or claim or prove in competition with the Mortgagee and/or the other Creditors or any of them in the liquidation of the Owner or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the other Creditors or any of them for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any money received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the other Creditors' claims against the Owner or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the other Creditors or any of them by the Owner or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Sub-chartering it will not without the prior written consent of the Mortgagee sub-let the Ship on demise charter for any period; 6.1.5 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 12.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.6 Sister ship arrest it will, in the event of the Ship at any time being arrested, seized, detained or subjected to distress or levied upon by reason of any process, claim or Encumbrance of whatsoever nature arising out of the use or operation of the Ship by the Charterer or any of its agents, employees or sub-charterers or any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers, at its own expense take prompt action to secure the release of the Ship and be responsible for discharging each and every liability in connection with any such process, claim or Encumbrance; 6.1.7 Sister ship indemnity it will indemnify the Owner and the Mortgagee and the other Creditors and hold each of them harmless against all liabilities of whatsoever nature (including penalties claims demands orders or judgments) which the Owner or the Mortgagee and/or the other Creditors or any of them may suffer or incur in respect of the Ship and which arise out of the use or operation of the Ship or of any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers; 6.1.8 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.9 Ship's name and registration (a) it will not change the name of the Ship; (b) it will not do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in the Ship not being eligible for registration under the laws and flag of the Flag State on and after Delivery or result in such registration being forfeited or imperilled or which could or might result in the Ship being required to be registered otherwise than under the laws and flag of the Flag State; 6.1.10 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.11 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.12 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.13 Notification of certain events it will notify the Mortgagee forthwith by telex confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 General Undertakings 7.1 The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 1.2.10) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that, for the first nine (9) months after the Drawdown Date, a minimum amount of twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account and that for the period commencing nine months after the Drawdown Date and ending on the final date of the Security Period, a minimum amount of twenty five million dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that at any time there are no Encumbrances whatsoever existing over or in relation to such minimum amounts; 7.2.2 ensure that an aggregate minimum amount of fifty million Dollars shall at all times during the Security Period be standing to the credit of accounts of the Charter Guarantor (including the Charter Guarantor's Account) and the Charter Guarantor shall evidence compliance with the terms of this clause at no later than three (3) monthly intervals throughout the Security Period or otherwise promptly upon the Mortgagee's first written request; 7.2.3 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.4 provide details to the Agent at three (3) monthly intervals evidencing the operating expenses and the Earnings of the Ship; 7.2.5 ensure that on the Drawdown Date, the minimum average length of time that Fleet Vessels are employed on time charter for is eighteen months; 7.2.6 ensure that its Net Asset Value at all times exceeds $125,000,000; and 7.2.7 ensure that its Book Equity shall at all times exceed $75,000,000. 7.2.8 For the purpose of this clause 7.2 and clause 7.3, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation not being, in any such case, a revaluation of all the Group's fixed assets in accordance with a valuation report from independent valuers approved by the Mortgagee so long as any such revaluation is carried out not more frequently than once every five years. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any Time Charters entered into in relation to the ship, or else any other charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus the aggregate of the Charter Earnings and the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Fleet Vessels" means any vessels owned, or chartered on long-term demise charter to any member of the Group; "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.9 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.10 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.2 and 7.2.7 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.11 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner and the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan and Guarantee Facility Agreement); and (B) such amount as will be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Guarantee Amount; (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 5.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause (a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity (g) associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause (a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause (i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Marshall Islands ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Marshall Islands flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Marshall Islands law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by telex thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any Time Charter, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager or the Technical Manager, or terminate or amend the terms of the Management Agreements; 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first preferred mortgage in favour of [here insert name of Mortgagee] of [here insert address of Mortgagee]. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement' with the United States Customs Service and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, ail Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; and 8.1.20 Compliance with ISM Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC in respect of such Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (c) procure that the Ship will comply at all times with the ISPS Code; and 8.1.24 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8 the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan and Guarantee Facility Agreement, or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in respect of: recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall be applied in the manner specified in clause 13.1 of the Loan and Guarantee Facility Agreement and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 and 5.2 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee and/or any of the other Creditors (as security agent and trustee for and on behalf of the Creditors) on demand on a full indemnity basis all reasonable expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the other Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed . 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the other Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the other Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Sale of Ship 16.1 Termination of Charter Notwithstanding anything contained in the Charter, if and when the Mortgagee becomes entitled to put into force and exercise all the powers possessed by it as mortgagee of the Ship or otherwise pursuant to the Mortgage or at any time thereafter, the Mortgagee shall be entitled (but not bound) to determine the Charter at any time by notice in writing to the Owner and the Charterer which notice shall operate to determine the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo if any) upon which the Ship was engaged at the time when the said notice to determine was given. Upon determination of the Charter pursuant to this clause 16.1 hereof all liabilities whatsoever of the Owner thereunder shall be absolutely discharged and extinguished. 16.2 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clause 16.1 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.3 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.3.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.3.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.3.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.3.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.4 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.5 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.6 Sale free of Charter Without prejudice to clause 16.1, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan and Guarantee Facility Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan and Guarantee Facility Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or telex or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a telex or facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o Korea Marine Fund Corporation 22F, Kyobo Bidg., 1, Jongno 1-ga Jongno-gu, Seoul, Korea Fax No. : +(822) 3210-0100 Attention: Kyung-Hwan Cho (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention Stamatis Tsantanis (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: 00 3110 401 5323 Attention: Gees Kamphof (d) to the Charter Guarantor at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner the Charterer and the Charter Guarantor irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charterer and the Charter Guarantor irrevocably designate, appoint and empower DLA Piper Rudnick Gray Cary UK LLP at present of 3 Noble Street, London EC2V 7EE (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ London (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated 2006, KOMARF HOPE 27 Shipping Company Limited (the "Owner") and by a Quadripartite Deed dated 2006, KISAVOS SHIPPING CO. LTD. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Priceless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which KOMARF HOPE 27 Shipping Company Limited of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner") or KISAVOS SHIPPING CO. LTD. (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KOMARF HOPE 27 SHIPPING of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner") and KISAVOS SHIPPING CO. LTD (the "Charterer") of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 the owners and demise charterers respectively of the m.v. "Priceless" HEREBY GIVE NOTICE that by a General Assignment dated 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) and by a Quadripartite Deed dated 2006 and entered into by the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. Signed For and on behalf of KOMARF HOPE 27 Shipping Company Limited Dated 2006 Signed For and on behalf of KISAVOS SHIPPING CO. LTD Dated 2006 SIGNED, SEALED and DELIVERED as a ) DEED by Jun Hyung Jon ) for and on behalf of ) /s/ Jun Hyung Jon KOMARF HOPE 27 SHIPPING COMPANY ) ---------------------- pursuant to a Unanimous Written ) Authorized Signatory Consent of Board of Directors and ) Sole Shareholder dated 9 March 2006 ) in the presence of: Witness: /s/ Byung Young Yu Name: Byung Young Yu Address: 22F, Kyobo Bldg., 1, Jongno 1-gu, Hongno-gu, Seoul, 110-714 Occupation: Deputy General Manager, KOMARF SIGNED, SEALED and DELIVERED as a ) DEED by ) for and on behalf of ) KISAVOS SHIPPING CO. LTD. ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 2006 ) in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a ) DEED by ) for and on behalf of ) KOMARF HOPE 27 SHIPPING COMPANY ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 2006 ) in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a ) DEED by Stamatis Tsantanis ) for and on behalf of ) /s/ C. Kamphof KISAVOS SHIPPING CO. LTD ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 8 March 2006 ) in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 155 26. Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a ) DEED by Stamatis Tsantanis ) for and on behalf of ) /s/ C. Kamphof TOP TANKERS INC. ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 8 March 2006 ) in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 155 26. Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a ) DEED by ) for and on behalf of ) FORTIS BANK (NEDERLAND) N.V. ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 2006 ) in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a ) DEED by Stamatis Tsantanis ) for and on behalf of ) TOP TANKERS INC. ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 8 March 2006 ) in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a ) DEED by Cees Kamphof ) for and on behalf of ) /s/ C. Kamphof FORTIS BANK (NEDERLAND) N.V. ) ---------------------- pursuant to a power of attorney ) Attorney-in-Fact dated 8 March 2006 ) in the presence of: Witness: /s/ G.J. Meyee Name: G.J. Meyee Address: Cooloungelgs 3012 AE Rottendam The Netherlands Occupation: Secretary EX-4.11 8 d759408_ex4-11.txt Exhibit 4.11 CERTIFIED TRUE COPY Norton Rose ---------------------- NORTON ROSE KEMPSON HOUSE CAMOMILE STREET LONDON EC3A 7AN 8 August 2006 Guarantee 15 March 2006 To: KOMARF HOPE 27 Shipping Company (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. "Priceless" (the "Ship") to KISAVOS SHIPPING CO. LTD (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 9 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, TOP TANKERS INC. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 11 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to such assignment. 12 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 13 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 14 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED BY for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney Dated March 2006 In the presence of: Witness: Name: Address: Occupation EXECUTED as a DEED BY Stamatis Tsantanis for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney Dated 8 March 2006 In the presence of: Witness: Name: Andreas Louka Address: Top Tanker Management Inc., 109-111 Messogion Av, 1SS26 Greece Occupation Advocate EX-4.12 9 d759408_ex4-12.txt Exhibit 4.12 MEMORANDUM OF AGREEMENT Dated: 09/03/2006 Taygetus Shipping Company Limited, Liberia hereinafter called the Sellers, have agreed to sell, and KOMARF HOPE 28 Shipping Company, Liberia hereinafter called the Buyers, have agreed to buy Name: M/T Timeless Classification Society/Class: Det Norske Veritas Built: 1991 By: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea Flag: Liberia Place of registration: Monrovia, Liberia Call Sign: ELNX9 Grt/Nrt: 79718 / 46569 Official Number: 9480 hereinafter called the Vessel, on the following terms and conditions: Definition "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase price. (See also Clause 17) USD 48,000,000.- cash (United States Dollars Forty Eight Million only). 2. Deposit. As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 2,5% (two and a half per cent) of the Purchase Price within three (3) banking days from the date of this Agreement signed by both parties by fax. This deposit shall be placed with The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01,Swift: RBOSGB2L, Account Key: TASHCO-USD1, lban: GB82 RBOS 1663 0000 3151 53 Beneficiary: Taygetus Shipping Company LW, Correspondent Bank: American Express Bank Limited, New York Swift AEIBUS33XXX in the name of the Sellers. 3. Payment (Subject to Clause 17). The said Purchase Price shall be paid in full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift: RBOSGB2L, Account Key: TASHCO-USD1, lban: GB82 RBOS 1663 00003151 53 Beneficiary: Taygetus Shipping Company Ltd, Correspondent Bank: American Express Bank Limited, New York Swift AEIBUS33XXX on delivery of vessel in accordance with clause 5. 4. Inspections. a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Quintero Chile within March, 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* Paragaph deleted. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notice, time and place of delivery. a) When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery on or before March 15, 2006. b) After the receipt of the notice of Readiness for Delivery. the Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea on March 15, 2006 or, if later, on such other date as agreed between the Sellers and the Buyers that reasonably takes into account the time needed for the BBC (as defined in Clause 17) and the related financing transactions to take into effect (the procedure of which shall be as provided for in Clause 5 of the BBC). c) Expected time of delivery: Between 15th March 2006 and 30th March, 2006 Date of cancelling (see clauses 5 c), 6 b) (iii) and 14): 30th April, 2006 If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling dale. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. No Drydocking/Divers Inspection Clause to apply. a)** Paragraph deleted. b)** Paragraph deleted. c) Paragraph deleted. 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Sellers account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Seller's flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s),shall be excluded without compensation. Captain's Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) Paragraph deleted. 18. Documentation. (See also Clause 19) The place of closing: Athens, Greece In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents, namely: a) Legal Bill of Sale in a form recordable in ____________ (the country in which the Buyers are to register the Vessel), warranting that the Vessel is free from all encumbrances, mortgages and maritime liens or any other debts or claims whatsoever, duly notarially attested and legalized by the consul of such country or other competent authority. b) Current Certificate of Ownership issued by the competent authorities of the flag state of the Vessel. c) Confirmation of Class issued within 72 hours prior to delivery. d) Current Certificate issued by the competent authorities stating that the Vessel is free from register encumbrances. e) Recordation of Bill of Sale evidencing the sale of the Vessel to the Buyers issued by the Liberia registry. f) Any such additional documents as may reasonably be required by the competent authorities for the purpose of registering the Vessel provided the Buyers notify the Sellers of any such documents as soon as possible after the date of this Agreement. In addition to the documents above Buyers will furnish Sellers with the following documents: a) Minutes of the Board of Directors resolving the Purchase of the Vessel and acceptance of delivery of the vessel b) Power of Attorney as per the minutes above c) Certificate of Incorporation dated not earlier than thirty (30) days from delivery. At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at Sellers' expense, if they so request. The Sellers may keep the Vessel' s log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes,etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers account, where as similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyer's inspection according to Clause 4 a) or 4 b), if applicable, or the buyers inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this agreement shall he the relevant date. * Notes, if any, in the surveyor's reports which are accepted by the Classification Society without condition/recommendation are not to be taken account. 12. Name / Markings Paragraph deleted. 13. Buyers' default This clause shall apply only in the event that the default in this clause is attributable to the Buyers' gross negligence or wilful misconduct. Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and then shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not he paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers If the deposit does not cover their loss , the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default This clause shall apply only in the event that the default in this clause is attributable to the Sellers' gross negligence or wilful misconduct. Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 6. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shalt make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives Paragraph deleted. 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party' s arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If Iwo arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b)* Paragraph deleted c)* Paragraph deleted 17. Seller's Credit. Notwithstanding anything herein to the contrary (including, Clause 3), Sellers's credit (in the amount of 10% of the Purchase Price, "Sellers's Credit) shall be made in accordance with, and as more fully described in, the bareboat charterparty entered into on the same date herewith by and between the Sellers as charterers and the Buyers as owners ("BBC"). 18. Bareboat Charterparty Under the BBC, the Vessel shall be chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery to and acceptance by the Sellers (as Charterers) under the BBC. 19. Paragraph deleted. 20. Remaining Stores, Stores, etc. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. The Sellers shall comply with the Buyers' requests which may be made for the Buyers' compliance with the loan and guarantee facility agreement entered into on, or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower, Fortis Bank (Nederland) W. V. as agent and arranger and the lenders specified therein. For and on behalf of For and on behalf of Taygetus Shipping Company Ltd KOMARF HOPE 28 Shipping Company /s/ Stamatis Tsantanis /s/ K. H. Kwan ------------------------------- ------------------------------- EX-4.13 10 d759408_ex4-13.txt Exhibit 4.13 1. Shipbroker 2. Place and date Seoul, 09/03/2006 3. Owners/Place of business (Cl. 1) KOMARF HOPE 28 Shipping Company. Liberia 4. Bareboat Charterers/Place of business Taygerus Shipping Company Limited. Liberia 5. Vessel's name, call sign and lag (Cl. 1 and 3) M/T Timeless, ELNX9, Liberia. 6. Type of Vessel Suez Max 7. GT/NT 79718/46569 8. When/Where built 1991 Hyundai Heavy Industries Co., Ltd., Ulsan, Korea. 9. Total DWT (abt.) In metric tons on summer freeboard 10. Classification society (C1. 3) Det Norske Veritas 11. Date of last special survey by the Vessel's classification society 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) See Clause 4. 15. Cancelling date (Cl. 5) April 30 2006 16. Port or Place of redelivery (Cl. 15) Not applicable. 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Six (6) months. 18. Running days' notice if other than stated in Cl. 4 See Clause 5. 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) 21. Charter period (Cl. 2) Five (5) years (however, subject to Cl. 32) 22. Charter hire (Cl. 11) US$ 750,000 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. to Cl. 11(f) and, if applicable, acc. to PART IV 25. Currency and method of payment (Cl. 11) US Dollars, in same day funds 26. Place of payment; also state beneficiary and bank account (Cl. 11) As to be notified by the Owners to the Charterers 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) 12(b) applies. 1st priority mortgage, dated on or around the date herewith in favor of Fortis Bank ("Agent") as trustee for the benefit of itself, the relevant lenders ("Lenders") and swap providers. 2nd priority mortgage dated on or around the date herewith in favor of the Charterers securing the Seller's Credit (as defined in Clause 32(a)). 3rd priority mortgage dated on or around the date herewith in favor of the shareholder of the Owners securing the Shareholder's Funds (as defined in the Loan Agreement defined in Clause 33). Financial Instrument to also include, without limitation, the intercreditor agreement and any other agreements in connection with financings related to this Charter. 29. Insurance (hull and machinery and war risks)(state value acc. to Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Each insurance to cover 130% of the Outstanding Project Cost; however, P&I Club insurance to cover the maximum cover available on the market. Clause 14 is not applicable. 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) Not applicable. 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Not applicable. 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) No 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) No 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) No 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) No 45. Country of the Underlying Registry (only to be filled in if PART V applies) No 46. Number of additional clauses covering special provisions, if agreed) 32, 33, 34 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) - ------------------------------- ------------------------------- PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel to be delivered under this Charter by the Owners to the Charterers shall be on an as is where is basis (and, at any rate, as delivered under the MOA (as defined in Clause 4) by the Charterers as sellers to the Owners as buyers) and without any warranty by the Owner. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the Memorandum of Agreement entered into on the same date herewith by and between the Charterers as sellers and the Owners as buyers ("MOA"). 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) Should the Vessel not be delivered latest by the canceling date indicated in Box 15 or the cancellation date as otherwise agreed by and between the Owners and the Charterers hereunder, the Owners shall propose a new date of cancellation that reasonably takes into account the time needed for this Charter and the related financing transactions to take into effect and the Owners shall accept such proposal. (b) Notwithstanding Clause 5(a) above, if it appears with reasonable certainty the delivery of the Vessel under this Charter cannot be made due to the failure in the related financing transactions or otherwise, this Charter may be cancelled by a mutual agreement between the Owners and the Charterers. (c) Paragraph deleted. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the "Cargo permitted to' be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Charterers shall bear all expenses of the On-hire Survey including loss of time, if any, and the Charterers shall also bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charters have not dry-docked her in accordance with Clause 10(g). The costs and fees for such inspection of survey shall be paid by the Charters; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charters' account and form part of the Charter Period. The Charters shall also permit the Owners to inspect the Vessel's log book whenever requested and shall whenever required by the Owners furnish them with full information regarding and casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare part, appliances and of all consumable stores on board the Vessel shall be made by the Charters in conjunction with the Owners redelivery of the Vessel. The Charters and the Owners, respectively, shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of delivery, respectively. The Charters shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery Of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charters and under their complete control in every respect. The Charters shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charters' loss of time) more than the percentage stated in Box 23, or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29, then the Charterers at their own expense shall bear (iii) Financial Security - The Charters shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state of municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charters shall make and maintain all arrangement by bond or otherwise as may be necessary to satisfy such requirements at the Charters' sole expense and the Charters shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation for the Vessel - The Charters shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use, and operation of the Vessel under this Charter; provided, however, that, all tonnage taxes and other ownership related expenses shall be paid by the Owners. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charters shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charters shall also have the liberty, with the Owners' consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charters' expense and time. (e) Changes to the Vessel - Subject to Clause l0(a)(ii), the Charters shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charters shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charters shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provide the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contacts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charters shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management Commercial, technical and/or operational management of the Vessels to be executed by Top Tanker Management Inc. or any other company acceptable to the Agent and KOMARF for the Charter Period. (i) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation and applicable law. (k) Financial Statements - The Charterers shall submit to the Owners the audited annual accounts within 180 days of the year end and semi-annual management accounts within 90 days of the half- year end. (l) Survey Reports - The Charterers shall supply the Owners the class survey reports regularly including annual survey and the follow-up reports showing the recommendation, if any, has been cleared at the Charterer's expense. The Charterers shall put its best efforts to keep the condition of the Vessels in compliance with all class certificates during the Charter Period. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall on a monthly basis pay to the Owners for the hire of the Vessel a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. Each hire shall be made free and clear of any right of set-off, reduction or delay whatsoever. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, the hire shall be paid by the Charterers to the Owners as provided hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately, whether or not the Owners have given invoice therefor to the Charterers. 12. Mortgage (only to apply if Box 28 has been appropriately filled in) (a) Paragraph deleted. (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgage(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the motgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers which shall not be unreasonably withheld. (optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Further, during the Charter Period, the Charterers shall at their expense take our effect MIL MAP and COFR insuring the Vessel and other insurances as the Agent or the shareholder of the Owners may reasonably require. Insurance policies for each insurance above shall name the Owners, the Lenders and the Charterers as beneficiaries, and shall be assigned in favor of them. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account. (b) Paragraph deleted. (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become and actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Agent who shall distribute the moneys in accordance with the Financial Instrument. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and all other occurrence as required under the Financial Instrument. (e) Subject to the Financial Instrument, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverages of each insurance mentioned the provisions of sub-clause 13(a), the insured amount shall be the sum indicated in Box 29. 14. Paragraph deleted. 15. Redelivery At the expiration of the Charter Period or, if earlier, on the date of sale of the Vessel as provided for under Clause 32, the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port in such ready safe berth as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery (which shall include the port or place of delivery as directed by the Owners) and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery (which shall be the port or place of delivery as directed by the Owners). Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 percent, for the number of days by which the Charter Period or the date of sale is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered free of class conditions/recommendations, fair wear and tear not affecting class excepted. On re-delivery, The Vessel shall have been drydocked as per class requirement. The Vessel upon redelivery shall have her survey cycles up to date and the trading and the national and international class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fasten during the Charter Period a notice reading to the effect of the following: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatever. Further, the Vessel is subject to the first priority mortgage dated [ ] in favor of Fortis Bank as trustee acting for itself and the mortgagees thereunder, the second priority mortgage, dated [ ] in favor of [specify the Charterers name], and the third priority mortgage dated [ ] in favor of [specify the shareholder of the Owners name]" 17. Indemnity (a) The Charterers shall indemnify the Owners, Korea Marine Fund Corporation (a Korean corporation: "KOMARF"), the Owners, the Agent and the Lenders and their respective successors, assigns, agents, directors, shareholders and officers (co11ectively, "Indemnified Parties") from and against any loss, damage, claim, cost and expense incurred by them arising out of or in relation to the operation of the Vessel by the Charterers (including, without limitation, costs of Operating and maintaining the Vessels (whether by the time-charterers or the subcharterers or by whomsoever leased, used or operated). environmental claim or those based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generally of the foregoing, the Charterers agree to indemnify the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter. 19. Salvage All Salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Indemnified Parties against any sums whatsoever which the Indemnified Parties shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction in navigation. 21. General Average The Owner shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except in accordance with the Financial Instrument. (b) The Owners shall not sell the Vessel during the currency of this Charter except as provided in Clause 32. 23. Contacts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules, The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. (b) The Charterers are to procure that all passenger tickets issued during the Charter Period for the carriage of passengers and their luggage under this Charter shall contain a paramount clause incorporating any legislation relating to carrier's liability for passengers and their luggage compulsorily applicable in the trade; if no such legislation exists, the passenger tickets shall incorporate the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto. Delete as applicable 24. Paragraph deleted. 25. Requisition/Acquisition (a) In the event of the Requisition for Hire for the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. 25. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported). Acts of piracy, acts of terrorists, acts of hostility of malicious damage, blockades (whether imposed against vessels of certain flags or ownership or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel, be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should requires payment of premiums and /or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty. (i) to comply with all orders, directions, recommendations or advise as to departures, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to five the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) In any and all events of outbreak of war (whether there be a declaration of war or not), the hire shall continue to be paid in accordance with Clause 11. 27. Paragraph deleted. 28. Termination (a) Charterers' Default Subject to the Financial Instrument, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognized at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charters fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) Provided that the Owners shall have the option, by written notice to the Charterers, to give the Charters a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) The Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (l4) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel covered by Insurance Despite the Vessel becoming a total loss or is declared as a constructive or compromised or arranged total loss, so long as it is fully covered by insurance, the Charterers shall continue to pay the hire at the time and in the manner as provided herein for a maximum period of forty (40) days or until the insurance proceeds shall he paid, whichever occurs first, and- any money paid by the Charterers to the Owners as hire will be returned to the Charterers once the insurance proceeds are paid. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Agent's prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossesion In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorized representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (b) Paragraph deleted. (c) Paragraph deleted. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's cost and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing arbitration. (Note : The parties should be aware that the mediation process may not necessarily interrupt time limits) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions (a) Sellers' Credit: The sellers' credit (in the amount of 10% of the Purchase Price under the MOA, "Sellers' Credit") shall be paid to the Charterers in a lump sum payment upon the sale of the Vessels and receipt of the full amount of sales proceeds, but not later than three (3) months after the expiry of the Charter Period. For the avoidance of doubt, no interest shall accrue on the Sellers' Credit. In the event that the BBC is terminated before the scheduled expiry of the Charter Period due to reasons attributable to the Charterer, the Owner shall be entitled to forfeit amount of the Seller's Credit up to a maximum of the aggregate remaining monthly payments under the BBC after the termination without prejudice to its claims for damages and other rights under applicable law or in equity. The Sellers' Credit shall be secured by a second priority mortgage over the Vessel ranking behind the first priority mortgages granted to the Agent and the Swap Parties. (b) Guarantee: Top Tankers Inc. shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety. Each of the Charterers and the charterers to KOMARF HOPE 27 Shipping Company, KOMARF HOPE 29 Shipping Company and KOMARF HOPE 30 Shipping Company (each a Liberian company; collectively, "Other Charterers") shall also jointly and severally guarantee the performance of the charters by the other Charterers. (c) Sale of Vessel during the Six-Month Sales Period: The "Six-Months Sales Period" shall mean the period from the date falling three months prior to the expiry of the Charter Period to the date falling three months after the expiry of the Charter Period. The "Outstanding Project Cost" shall mean, collectively, (i) all sums outstanding under the Main Financing Documentation, (ii) the principal amount of the investment into the SIC by its investors, and (iii) the Seller's Credit. The following is applicable when the Vessel is sold during the Six-Month Sales Period: If the net sale proceeds of the Vessel ("Net Sales Proceeds") is lower than the Outstanding Project Cost, such shortfall shall be first covered by the Charterers up to the amount of USD two (2) million, and the Owners will deduct such amount from the Sellers' Credit payable to the Charterers in respect of that Vessel. If the Net Sales Proceeds are higher than the Outstanding Project Cost, as to such surplus, the first USD two (2) million shall belong to the Charterers and the Owners will pay such amount to the Charterers in respect of that Vessel upon sale of that Vessel, and any excess thereof shall belong to the Owners. (d) Sale of the Vessel after the Six Months Sales Period: The evaluation value ("Evaluation Value") of the Vessel shall be the average of the quote obtained from the Selected Evaluation Firms, with each quote referring to the Vessel price as of the expiry date of the Charter Period. The Selected Evaluation Finns shall be two of the following firms selected by a mutual agreement between the Charterers and the Owners: One from Clarksons or Simpson Spence & Young and the other from Platou or Fearnleys. The following is applicable when the Vessel is not sold prior to the expiry of Six-Month Sales Period: If in respect of any Vessel the Evaluation Value for that Vessel is lower than the Outstanding Project Cost relating to that Vessel as of the end of the Charter Period, the Owner will deduct such amount up to USD 2 million from the Sellers' Credit payable to the Charterers in respect of that Vessel. If in respect of any Vessel the Evaluation Value for that Vessel is higher than the Outstanding Project Cost relating to that Vessel, the Owners will pay such amount up to USD 2 million to the Charterers in respect of that Vessel on the date of expiration of the Six-Month Sales Period. The foregoing mechanism shall not be affected even where the actual sales price of the Vessel is different from the Evaluation Value. (f) Sale of the Vessel before the Six Months Sales Period: The Owners may sell the Vessels at any time after three (3) years from the commencement of the Charter Period, subject, however, to an approval thereof by the relevant subcharterer(s), if any. If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Seller's Credit in respect of that Vessel in full, and an additional amount to: o USD 4 million if the sale is concluded during the 4th year of the Charter. o USD 3 million if the sale is concluded during, the 5th year of the Charter (however, excluding the Six-Month Sales Period). Any excess thereof shall belong to the Owners. All of the above amounts shall be payable immediately upon the delivery of the Vessels to the new owners, and, simultaneously therewith, this Charter will be terminated. Further, at any time after three (3) Years from the commencement of the Charter Period, the Vessel, subject to the Charterers' approval (which shall not be unreasonably withheld), may be sold by the Owners with this Charter maintained by the new owners. In such cases of sale, the following paragraph shall be applicable: If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Sellers' Credit in respect of that Vessel in full, and, as to any surplus, the first USD two (2) million shall belong to Top Tankers Inc. (each of such Sellers' Credit and such first USD two (2) million to be payable at the time of the sale of the Vessel), and any excess thereof shall belong to the Owner. (g) Sales Mechanism: Whether the Vessel is sold during, after or before the Six-Month Sales Period, as to the Vessel, the Owners will give the Charterers the right of first refusal. Subject to the Charterers' right of first refusal specified above (i.e., such right of first refusal shall be deemed waived when a waiver by the Charterers is obtained or when the Charterers fail to exercise such right after a prior notice of one (l) week by the Owners), the Owners shall have no obligation to give the Charterers an opportunity to bid when it plans to sell the Vessels. The Owners shall have an absolute and free discretion in selecting the buyer of the Vessel and in determining the mechanisms for the sale of the Vessel. The Vessel and the other vessels owned by the Other Charterers (collectively, "Vessels") may be sold at one time or at different times through separate sales transactions and varying mechanisms. (h) Extension of Charter Period: For the effective sale of the Vessels after the Charter Period, the Charter Period may be extended by a period of not longer than three (3) months at the option of the Owners, in which case the hire shall be USD 5,000 per day during such extended three (3) month Charter Period. Further, the Owners shall have the right to require the Charterers to manage the Vessel for a period of up to one (1) year after expiration of the Charter Period pursuant to the ship management agreement between the Owner and the Charterer (or any other company nominated by the Charterer), providing that (i) as to the costs incurred for the technical management of the Vessel shall be borne by the Owners on an net cost amount basis; and (ii) as to the income from commercial operation of the Vessel shall be distributed between the Charterers and the Owners on a 40% to 60% basis. The Charterers shall make their best efforts to assist the Owners in the sale of the Vessels. (i) Time Charter Assignment: As to the time-charter or sub-charter by the Charterers of the Vessel during the Charter Period, such time-charter or sub-charter shall be assigned to the Owners and the Agent and other relevant parties under the main financing and investment documentation for security. (j) Compliance with the Financial Instrument: The Charterers shall comply with the Financial. Instrument as required by the Agent (including, without limitation, its requirement to maintain a minimum consolidated cash balance of USD 50 million at all times with the Agent). 33. Compliance with the Owners' requests The Charterers shall, throughout the Charter Period, comply with the Owners' requests which may be made from time to time for the Owners' compliance with the provisions of the loan and guarantee facility agreement entered into on, or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein (the "Loan Agreement"). 34. Hell & High Water Clause This Charter is a "hell and high water" bareboat charter and. notwithstanding anything in this Charter to the contrary (however, excluding clause 28(c) of this Charter), the Charterer's obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character (including, for the avoidance of doubt, any loss of the Vessel as provided in clause 28(c) of this Charter or any other termination of this Charter pursuant to clause 28(b) of this Charter or for any other reason whatsoever (other than clause 28(a) and (d) of this Charter) whether provided for in this Charter or available to the Charterer by operation of law or otherwise). If for any reason whatsoever this Charter shall be terminated in whole or in part for any of the reasons specifically provided herein or by operation of law or otherwise, the Charterer nonetheless agrees to pay to the Owner or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become clue and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; Each payment of hire made by the Charterer shall be final, and the Charterer will not seek to recover all or any part of such payment from the Owner for any reason whatsoever, except for manifest error. EX-4.14 11 d759408_ex4-14.txt Exhibit 4.14 Private & Confidential Dated 15 March 2006 KOMARF HOPE 28 SHIPPING COMPANY as Owner (1) TAYGETUS SHIPPING CO. LTD. as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) ----------------------------------------------- QUADRIPARTITE DEED relating to m.v. "Timeless" ----------------------------------------------- NORTON ROSE Contents Clause Page 1 Definitions ...............................................................2 2 Representations and warranties.............................................9 3 Assignment................................................................12 4 Owner's Assignment........................................................13 5 Continuing security and other matters.....................................14 6 Charterer's undertakings..................................................16 7 General Undertakings......................................................18 8 Covenants concerning insurance and operational matters....................18 9 Powers of Mortgagee to protect security and remedy defaults ..............30 10 Powers of Mortgagee on Event of Default...................................30 11 Application of moneys.....................................................31 12 Remedies cumulative and other provisions..................................32 13 Costs and indemnity.......................................................32 14 Attorney..................................................................33 15 Further assurance.........................................................33 16 Sale of Ship..............................................................33 17 Continuation of Charter Period............................................35 18 Notices...................................................................35 19 Counterparts..............................................................36 20 Severability of provisions................................................36 21 Law and jurisdiction .....................................................36 Schedule 1 Forms of Loss Payable Clauses......................................38 Schedule 2 Forms of Notices of Assignment of Insurances.......................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) KOMARF HOPE 28 SHIPPING COMPANY a company incorporated under the laws of the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Owner"); (2) TAYGETUS SHIPPING CO. LTD., a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan and guarantee facility agreement (the "Loan and Guarantee Facility Agreement") dated 9 March 2006 and made between (1) the Owner (therein referred to as the "Borrower"), (2) the banks and financial institutions whose names are set out at Schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, security agent and trustee (the "Agent"), (4) Fortis Bank (Nederland) N.V. as guarantee bank (the "Guarantee Bank "), (5) Fortis Bank (Nederland) N.V. as arranger (the "Arranger") and (6) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider" and together with the Agent, the Arranger and the Account Bank (as defined in the Loan and Guarantee Facility Agreement), the Guarantee Bank and the Banks, the "Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Owner, upon the terms and conditions therein, a maximum aggregate amount of up to thirty three million and six hundred thousand Dollars ($33,600,000) and the Guarantee Bank agreed to issue and/or maintain the Guarantee (as defined in the Loan and Guarantee Facility Agreement (the "Guarantee") in favour of the Beneficiary (as defined in the Loan and Guarantee Facility Agreement); (C) by a 1992 ISDA Master Agreement dated 9 March 2006 (the "Master Swap Agreement") made between (1) the Owner and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Owner in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.1 of the Loan and Guarantee Facility Agreement, each of the Creditors has appointed the Mortgagee as its agent, security agent and trustee and pursuant to a deed of trust dated 9 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Creditors; (E) pursuant to the Loan and Guarantee Facility Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Owner of the Outstanding Indebtedness (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter) dated9 MARCH 2006 made between the Owner and the Charterer, the Owner has agreed to let and the Charterer has agreed to take the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan and Guarantee Facility Agreement provided (inter alia) that as a condition precedent to the advance of the Loan the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Creditors under the Loan and Guarantee Facility Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan and Guarantee Facility Agreement and the Mortgage and to the security thereby created and is the Quadripartite Deed referred to in the Loan and Guarantee Facility Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner pursuant to the Charterer; "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context ma require) to be opened with the Mortgagee (acting as Account Bank) with account number _____________ and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Classification" means the classification +1 A1 tanker for oil ESP EO PP3 with the Classification Society or such other classification as the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification in relation to the Ship for the purposes of the Security Documents; "Classification Society" means Det Norske Veritas or such other classification society which the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification Society in relation to the Ship for the purposes of the Security Documents; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Owner or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Commercial Management Agreement" means the agreement made or (as the context may require) to be made between the Charterer and the Commercial Manager in a form previously approved in writing by the Agent providing (inter alia) for the Commercial Manager to commercially manage the Ship; "Commercial Manager" means Top Tanker Management Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MN 96960 or any other person appointed by the Charterer with the prior written consent of the Agent as commercial manager of the Ship and includes its successors in title; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan and Guarantee Facility Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan and Guarantee Facility Agreement (as conclusively certified by the Mortgagee); "Flag State" means the Republic of Liberia or such other state or territory acceptable to the Agent designated in writing by the Agent (acting on the instructions of the Majority Banks), at the request of the Owner, as being the "Flag State" of the Ship for the purposes of the Security Documents; "Guarantee" means the guarantee described in recital (B) above; "Guarantee Amount" means any amount owing by the Guarantee Bank to the Beneficiary under or pursuant to the Guarantee, which amount is indemnified by the Owner in accordance with the Loan and Guarantee Facility Agreement; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan and Guarantee Facility Agreement at any relevant time; "Loan and Guarantee Facility Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the General Assignment) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Management Agreements" means the Commercial Management Agreement and the Technical Management Agreement and "Management Agreement" means either of them; "Managers" means the Commercial Manager and the Technical Manager and "Manager" means either of them; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Owner dated 9 March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operating Account" means the interest bearing Dollar account of the Owner opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Operating Account for the purposes of this Agreement; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set out in rule 1.1.2 of the Code; "Outstanding Indebtedness" means the aggregate of the Loan and the Guarantee Amount the Master Swap Agreement Liabilities, and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Owner to the Mortgagee and/or any of the other Creditors, whether actually or contingently, present or future, under or pursuant to the Loan and Guarantee Facility Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Jurisdiction" means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan and Guarantee Facility Agreement, this Deed, the Mortgage, the General Assignment, the Master Swap Agreement, the Share Pledge, the Charter Guarantee and any other such document as is defined in the Loan and Guarantee Facility Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, the Guarantee Amount, any interest thereon, and the moneys from time to time owing by the Owner pursuant to the Loan and Guarantee Facility Agreement and/or the Master Swap Agreement Liabilities (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Parties" means, collectively, the Owner, the Managers, the Charterer, or any other person who may at any time be a party to any of the Security Documents (other than the Creditors and the Charter Guarantor) and "Security Party" means any one of them; "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder, "Shareholder" means Dongbuka No. 28 Ship Investment Company of Mora-dong 795-22, Sasang-gu,Pusan, Republic of Korea; "Share Pledge" means the pledge made or (as the context may require) to be made between the Shareholder and the Agent (as security agent and trustee on behalf of the Creditors) in substantially the form set out in Schedule 17, of its rights, title and interest in and to all the shares in the Owner; "Ship" means the vessel m.v. "Timeless" registered as a Liberian ship under Official Number 9480 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; and "SMC" means a safety management certificate issued in respect of a Ship in accordance with rule 13 of the ISM Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Technical Manager's Undertaking" means an undertaking and assignment in relation to the Ship executed or (as the context may require) to be executed by the Technical Manager in favour of the Agent (as security agent and trustee on behalf of the Creditors); "Technical Manager means V. Ships Management Limited of Eaglehurst, Belmont Hill, Douglas, Isle of Man, IM1 4NY or any other person appointed by the Commercial Manager with the prior written consent of the Agent as technical manager of the Ship and includes its successors in title and assignees; "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan and Guarantee Facility Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan and Guarantee Facility Agreement but in case of any conflict between the two instruments, the provisions of the Loan and Guarantee Facility Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's Continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and has power to execute and deliver and perform its obligations under the Charter Guarantee and the Security Documents, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's Continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charterer's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and each of the Charter Guarantee and this Deed are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by it of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's Initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's Initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.5 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed; 2.6 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness, the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness, the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Operating Account until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings and the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the other Creditors in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee and/or the other Creditors) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the other Creditors or any of them any right or remedy of the Mortgagee and/or the other Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the other Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the other Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan and Guarantee Facility Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the other Creditors fully indemnified against any loss suffered by the Mortgagee and the other Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the other Creditors or any of them under the Loan and Guarantee Facility Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the other Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the other Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterers Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterers rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner or any other person liable in respect of any Outstanding Indebtedness and/or the Master Swap Agreement Liability; or 5.6.4 claim any set-off or counterclaim against the Owner or any other person liable or claim or prove in competition with the Mortgagee and/or the other Creditors or any of them in the liquidation of the Owner or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the other Creditors or any of them for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any money received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the other Creditors' claims against the Owner or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the other Creditors or any of them by the Owner or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Sub-chartering it will not without the prior written consent of the Mortgagee sub-let the Ship on demise charter for any period; 6.1.5 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 12.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.6 Sister ship arrest it will, in the event of the Ship at any time being arrested, seized, detained or subjected to distress or levied upon by reason of any process, claim or Encumbrance of whatsoever nature arising out of the use or operation of the Ship by the Charterer or any of its agents, employees or sub-charterers or any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers, at its own expense take prompt action to secure the release of the Ship and be responsible for discharging each and every liability in connection with any such process, claim or Encumbrance; 6.1.7 Sister ship indemnity it will indemnify the Owner and the Mortgagee and the other Creditors and hold each of them harmless against all liabilities of whatsoever nature (including penalties claims demands orders or judgments) which the Owner or the Mortgagee and/or the other Creditors or any of them may suffer or incur in respect of the Ship and which arise out of the use or operation of the Ship or of any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers; 6.1.8 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.9 Ship's name and registration (a) it will not change the name of the Ship; (b) it will not do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in the Ship not being eligible for registration under the laws and flag of the Flag State on and after Delivery or result in such registration being forfeited or imperilled or which could or might result in the Ship being required to be registered otherwise than under the laws and flag of the Flag State; 6.1.10 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.11 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.12 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.13 Notification of certain events it will notify the Mortgagee forthwith by telex confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 General Undertakings 7.1 The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 1.2.10) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that, for the first nine (9) months after the Drawdown Date, a minimum amount of twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account and that for the period commencing nine months after the Drawdown Date and ending on the final date of the Security Period, a minimum amount of twenty five million dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that at any time there are no Encumbrances whatsoever existing over or in relation to such minimum amounts; 7.2.2 ensure that an aggregate minimum amount of fifty million Dollars shall at all times during the Security Period be standing to the credit of accounts of the Charter Guarantor (including the Charter Guarantor's Account) and the Charter Guarantor shall evidence compliance with the terms of this clause at no later than three (3) monthly intervals throughout the Security Period or otherwise promptly upon the Mortgagee's first written request; 7.2.3 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.4 provide details to the Agent at three (3) monthly intervals evidencing the operating expenses and the Earnings of the Ship; 7.2.5 ensure that on the Drawdown Date, the minimum average length of time that Fleet Vessels are employed on time charter for is eighteen months; 7.2.6 ensure that its Net Asset Value at all times exceeds $125,000,000; and 7.2.7 ensure that its Book Equity shall at all times exceed $75,000,000. 7.2.8 For the purpose of this clause 7.2 and clause 7.3, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation not being, in any such case, a revaluation of all the Group's fixed assets in accordance with a valuation report from independent valuers approved by the Mortgagee so long as any such revaluation is carried out not more frequently than once every five years. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any Time Charters entered into in relation to the ship, or else any other charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus the aggregate of the Charter Earnings and the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Fleet Vessels" means any vessels owned, or chartered on long-term demise charter to any member of the Group; "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.9 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.10 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.2 and 7.2.7 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.11 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner and the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan and Guarantee Facility Agreement); and (B) such amount as will be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Guarantee Amount; (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 5.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause (a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause (a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause (i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by telex thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any Time Charter, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager or the Technical Manager, or terminate or amend the terms of the Management Agreements; 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first preferred mortgage in favour of [here insert name of Mortgagee] of [here insert address of Mortgagee]. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs Service and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; and 8.1.20 Compliance with ISM Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC in respect of such Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (c) procure that the Ship will comply at all times with the ISPS Code; and 8.1.24 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8 the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan and Guarantee Facility Agreement, or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owners Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall be applied in the manner specified in clause 13.1 of the Loan and Guarantee Facility Agreement and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 and 5.2 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee and/or any of the other Creditors (as security agent and trustee for and on behalf of the Creditors) on demand on a full indemnity basis all reasonable expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the other Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the other Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the other Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterers Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Sale of Ship 16.1 Termination of Charter Notwithstanding anything contained in the Charter, if and when the Mortgagee becomes entitled to put into force and exercise all the powers possessed by it as mortgagee of the Ship or otherwise pursuant to the Mortgage or at any time thereafter, the Mortgagee shall be entitled (but not bound) to determine the Charter at any time by notice in writing to the Owner and the Charterer which notice shall operate to determine the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo if any) upon which the Ship was engaged at the time when the said notice to determine was given. Upon determination of the Charter pursuant to this clause 16.1 hereof all liabilities whatsoever of the Owner thereunder shall be absolutely discharged and extinguished. 16.2 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clause 16.1 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.3 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.3.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.3.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.3.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.3.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.4 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.5 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.6 Sale free of Charter Without prejudice to clause 16.1, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan and Guarantee Facility Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan and Guarantee Facility Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or telex or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a telex or facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o Korea Marine Fund Corporation 22F, Kyobo Bidg., 1, Jongno 1-ga Jongno-gu, Seoul, Korea Fax no.: (822) 3210-0100 Attention: Kyung-Hwan Cho (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no.: 00 3110 401 5323 Attention: Gees Kamphof (d) to the Charter Guarantor at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner the Charterer and the Charter Guarantor irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charterer and the Charter Guarantor irrevocably designate, appoint and empower DLA Piper Rudnick Gray Cary UK LLP at present of 3 Noble Street, London EC2V 7EE (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ London (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated 2006, KOMARF HOPE 28 Shipping Company Limited (the "Owner") and by a Quadripartite Deed dated 2006, TAYGETUS SHIPPING CO. LTD. of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Timeless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which KOMARF HOPE 28 Shipping Company Limited of 80 Broad Street, Monrovia, Liberia (the "Owner") or TAYGETUS SHIPPING CO. LTD. (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KOMARF HOPE 28 SHIPPING of 80 Broad Street, Monrovia, Liberia (the "Owner") and TAYGETUS SHIPPING CO. LTD. (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia the owners and demise charterers respectively of the m.v. "Timeless" HEREBY GIVE NOTICE that by a General Assignment dated 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) and by a Quadripartite Deed dated 2006 and entered into by the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ---------------------------------- Signed For and on behalf of KOMARF HOPE 28 Shipping Company Limited Dated [__] 2006 - ---------------------------------- Signed For and on behalf of TAYGETUS SHIPPING CO. LTD. Dated [__] 2006 SIGNED, SEALED and DELIVERED as a ) DEED by Jun Hyung Jon ) /s/ Jun Hyung Jon for and on behalf of KOMARF HOPE 28 ) ---------------------- SHIPPING COMPANY ) Authorized Signatory pursuant to a Unanimous Written ) Consent of Board of Directors and ) Sole Shareholder ) - ---------------------------------- in the presence of: Witness: /s/ Byung Young Yu Name: Byung Young Yu Address: 22F, Kyobo Bidg., 1, Jongno 1-ga Jongno-gu Seoul, Korea Occupation: Deputy General Manager, Komarf SIGNED, SEALED and DELIVERED as a ) DEED by ) for and on behalf of ) ---------------------- TAYGETUS SHIPPING COMPANY ) Attorney-in-fact pursuant to a power of attorney ) dated 2006 ) - ---------------------------------- in the presence of: SIGNED, SEALED and DELIVERED ) as a DEED by ) for and on behalf of Kamphof Hope 28 ) SHIPPING COMPANY ) pursuant to a power of attorney ) dated 2006 ) Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a ) DEED by Stamatis Tsantanis ) for and on behalf of ) ---------------------- TAYGETUS SHIPPING CO. LTD. ) Attorney-in-fact pursuant to a power of attorney ) dated 8 March 2006 ) - ---------------------------------- in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc., 109-111 Messogion Avenue 155 26 Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a ) DEED by Stamatis Tsantanis ) for and on behalf of ) ---------------------- TOP TANKERS INC. ) Attorney-in-fact pursuant to a power of attorney ) dated 8 March 2006 ) - ---------------------------------- in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc., 109-111 Messogion Avenue 155 26 Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a ) DEED by CEES KAMPHOF ) for and on behalf of ) ---------------------- FORTIS BANK (NEDERLAND) N.V. ) Attorney-in-fact pursuant to a power of attorney ) dated 8 March 2006 ) - ---------------------------------- in the presence of: Witness: Name: G. J. Mayer Address: Coolsingle 93 3012 AE Rotterdam The Netherlands Occupation: Secretary EX-4.15 12 d759408_ex4-15.txt Exhibit 4.15 Guarantee 15 March 2006 To: KOMARF HOPE 28 Shipping Company (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. "Timeless" (the "Ship") to TAYGETUS SHIPPING CO. LTD (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 9 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, TOP TANKERS INC. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 11 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to such assignment. 12 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 13 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1 K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 14 No term of this. Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED BY: Stamatis Tsantanis for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney Dated 8 March 2006 In the presence of Witness: /s/ Andreas Louka Name: Andreas Louka Address: Top Tanker Management Inc. 109-111 Messogron Av. 15526 Greece Occupation: Advocate EX-4.16 13 d759408_ex4-16.txt Exhibit 4.16 MEMORANDUM OF AGREEMENT 09/03/2006 Pylio Shipping Company Limited, Liberia hereinafter called the Sellers, have agreed to sell, and KOMARF HOPE 29 Company, Liberia hereinafter called the Buyers, have agreed to buy Name: M/T Flawless Classification Society/Class: Det Norske Veritas Built: 1991 By: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea Flag: Liberia Place of registration: Monrovia, Liberia Call Sign: ELNX4 Grt/Nrt: 79718 / 46569 Official Number: 9475 hereinafter called the Vessel, on the following terms and conditions: Definition "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase price (See also Clause 17) USD 48,000,000.- cash (United States Dollars Forty Eight Million only). 2. Deposit As security for the correct fulfilment of this Agreement the Buyers shall pay a deposit of 2.5% (two and a half per cent) of the Purchase Price within three (3) banking days from the date of this Agreement signed by both parties by fax. This deposit shall be placed with The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift:RBOSGB2L, Account Key: PYSHCO-USD1, lban:GB10 RBOS 1663 0000 3151 88 Beneficiary: Pylio Shipping Co Ltd, Correspondent Bank: American Express Bank Limited, New York -- Swift AEIBUS33XXX in the name of the Sellers 3. Payment (Subject to Clause 17) The said Purchase Price shall be paid in full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01,Swift:RBOSGB2L, Account Key: PYSHCO-USD1, lban:GB10 RBOS 1663 0000 3151 88 Beneficiary: Pylio Shipping Co Ltd, Correspondent Bank: American Express Bank Limited, New York -- Swift AEIBUS33XXX on delivery of Vessel, in accordance with Clause 5. a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Suez within February, 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* Paragraph deleted. * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notice, time and place of delivery a) When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery on or before March 15, 2006. b) After the receipt of the notice of Readiness for Delivery, the Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage at/in or at high sea on March 15, 2006 or, if later, on such other date as agreed between the Sellers and the Buyers that reasonably takes into account the time needed for the BBC (as defined in Clause 17) and the related financing transactions to take into effect (the procedure of which shall be as provided for in Clause 5 of the BBC). c) Expected time of delivery: Between 15th March 2006 and 30th March, 2006 Date of canceling (see Clause 5 c), 6 b) (iii) and 14): 30th April, 2006 If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have option of either cancelling this Agreement in accordance with Clause 14 within 2 days of receipt of the notice or of accepting the new date as the cancelling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. No Drydocking/Divers Inspection Clause to apply. a)** Paragraph deleted. b)** Paragraph deleted. c) Paragraph deleted. 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Sellers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Seller's flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s),shall be excluded without compensation. Captain's Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation. (See also Clause 19) The place of closing: Athens, Greece In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with documents namely: a) Legal Bill of Sale in a form recordable in (the country in which the Buyers are to register the Vessel), warranting that the Vessel is free from encumbrances, mortgages and maritime liens or any other debts or legalized by the consul of such country or other competent authority. b) Current Certificate of Ownership issued by the competent authorities of the flag state of the Vessel. c) Confirmation of Class issued within 72 hours prior to delivery. d) Current Certificate issued by the competent authorities stating that the Vessel is free from register encumbrances. e) Recordation of Bill of Sale evidencing the sale of the Vessel to the Buyers issued by the Liberia registry. f) Any such additional documents as may reasonably be required by the competent authorities for the purpose of registering the Vessel provided the Buyers notify the Sellers of any such documents as soon as possible after the date of this Agreement. In addition to the documents above Buyers will furnish Sellers the following documents: a) Minutes of the Board of Directors resolving the Purchase of the Vessel and acceptance of delivery of the vessel b) Power of Attorney as per the minutes above c) Certificate of Incorporation dated not earlier than thirty (30) days from delivery. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at Sellers' expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers account, where as similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or relevant authorities at the time of delivery. "Inspection" in this Clause 11 shall mean the Buyer's inspection according to Clause 4 a) or 4 b), if applicable, or the Buyer's inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's reports which are accepted by the Classification Society without condition/recommendation are not to be taken account. 12. Name/markings 13. Buyers default This clause shall apply only in the event that the default in this clause is attributable to the Buyers' gross negligence or wilful misconduct. Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default This clause shall apply only in the event that the default in this clause is attributable to the Sellers' gross negligence or wilful misconduct. Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after the Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party' s arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b)* Paragraph deleted. c)* Paragraph deleted. 17. Seller's Credit Notwithstanding anything herein to the contrary (including, Clause 3), Seller's credit (in the amount of 10% of the Purchase Price, "Sellers Credit") shall be made in accordance with, and as more fully described in, the bareboat charterparty entered into on the same date herewith by and between the Sellers as charterers and the Buyers as owners ("BBC"). 18. Bareboat Charterparty Under the BBC, the Vessel shall be chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery to and acceptance by the Sellers (as Charterers) under the BBC. 19. Paragraph deleted. 20. Remaining Stores, etc. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. The Sellers shall comply with the Buyers' request which may be made for the Buyer's compliance with the loan and guarantee facility agreement entered into on, or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein. EX-4.17 14 d759408_ex4-17.txt Exhibit 4.17 1. Shipbroker 2. Place and date Seoul, 09/03/2006 3. Owners/Place of business (Cl. 1) KOMARF HOPE 29 Shipping Company, Liberia 4. Bareboat Charterers/Place of business Pylio Shipping Company Limited, Liberia 5. Vessel's name, call sign and lag (Cl. 1 and 3) M/T Flawless, ELNX4, Liberia 6. Type of Vessel Suez Max 7. GT/NT 79718/46569 8. When/Where built 1991 Hyundai Heavy Industries Co., Ltd., Ulsan, Korea 9. Total DWT (abt.) In metric tons on summer freeboard Det Norske Veritus 10. Classification society (C1. 3) 11. Date of last special survey by the Vessel's classification society 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) See Clause 4. 15. Cancelling date (Cl. 5) April 30, 2006 16. Port or Place of redelivery (Cl. 15) Not applicable. 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Six (6) months. 18. Running days' notice if other than stated In Cl. 4 See Clause 5. 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) 21. Charter period (Cl. 2) Five (5) years (however, subject to Cl. 32) 22. Charter hire (Cl. 11) US$750,000 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV 25. Currency and method of payment (Cl. 11) US Dollars, In same day funds 26. Place of payment; also slate beneficiary and bank account (Cl. 11) As to be notified by the owners to the Charters. 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) 12(b) applies. 1st priority mortgage, dated on or around the date herewith in favor of Fortis Bank ("Agent") as trustee for the benefit of itself, the relevant lenders ("Lenders") and swap providers. 2nd priority mortgage dated on or around the date herewith in favor of the Charterers securing the Seller's Credit (as defined in Clause 32(a)). 3rd priority mortgage dated on or around the date herewith in favor of the shareholder of the Owners securing the Shareholder's Funds (as defined in the Loan Agreement defined in Clause 33) Financial Instrument to also include, without limitation, the intercreditor agreement and any other agreements in connection with financings related to this Charter. 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Each insurance to cover 130% of the Outstanding Project Cost; however, P&I Club insurance to cover the maximum cover available on the market. Clause 14 is not applicable. 30. Additional insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) No 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) No 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) No 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) No 45. Country of the Underlying Registry (only to be filled in if PART V applies) No 46. Number of additional clauses covering special provisions, if agreed) 32, 33, 34 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ K. H. Kwan /s/ Stamatis Tsantanis - ---------------------------- ------------------------- Attorney-in-fact PART II "BARCON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) (a) through (c) Paragraphs deleted The Vessel to be delivered under this Charter by the Owners to the Charterers shall be on an as is where is basis (and, at any rate, as delivered under the MOA (as defined in Clause 4) by the Charterers as sellers to the Owners as buyers) and without any warranty by the Owner. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the Memorandum of Agreement entered into on the same date herewith by and between the Charterers as sellers and the Owners as buyers ("MOA"). (a) Should the Vessel not be delivered latest by the canceling date indicated in Box 15 or the cancellation date as otherwise agreed by and between the Owners and the Charterers hereunder, the Owners shall propose a new date of cancellation that reasonably takes into account the time needed for this Charter and the related financing transactions to lake into effect and the Owners shall accept such proposal. (b) Notwithstanding Clause 5(a) above, if it appears with reasonable certainty the delivery of the Vessel under this Charter cannot be made due to the failure in the related financing transactions or otherwise, this Charter may be cancelled by a mutual agreement between the Owners and the Charterers. (c) Paragraph deleted 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Charterers shall bear all expenses of the On-hire Survey including loss of time, if any, and the Charterers shall also bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charters have not dry-docked her in accordance with Clause 10(g). The costs and fees for such inspection of survey shall be paid by the Charters; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charters' account and form part of the Charter Period. The Charters shall also permit the Owners to inspect the Vessel's log book whenever requested and shall whenever required by the Owners furnish them with full information regarding and casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare part, appliances and of all consumable stores on board the Vessel shall be made by the Charters in conjunction with the Owners on redelivery of the Vessel. The Charters and the Owners, respectively, shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of delivery, respectively. The Charters shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs -- During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charters and under their complete control in every respect. The Charters shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements -- In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charters' loss of time) more than the percentage stated in Box 23, or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29, then the Charterers at their own expense shall bear the cost of compliance. (iii) Financial Security - The Charters shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state of municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charters shall make and maintain all arrangement by bond or otherwise as may be necessary to satisfy such requirements at the Charters' sole expense and the Charters shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation for the Vessel - The Charters shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter; provided, however, that, all tonnage taxes and other ownership related expenses shall be paid by the Owners. The Master, shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charters shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charters shall also have the liberty, with the Owners' consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charters' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii), the Charters shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charters shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charters shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provide the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contacts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charters shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management -- Commercial, technical and/or operational management of the Vessels to be executed by Top Tanker Management Inc. or any other company acceptable to the Agent and KOMARF for the Charter Period. (j) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation and applicable law. (k) Financial Statements - The Charterers shall submit to the Owners the audited annual accounts within 180 days of the year end and semi-annual management accounts within 90 days of the half- year end. (l) Survey Reports - The Charterers shall supply the Owners the class survey reports regularly including annual survey and the follow-up reports showing the recommendation, if any, has been cleared at the Charterer's expense. The Charterers shall put its best efforts to keep the condition of the Vessels in compliance with all class certificates during the Charter Period. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall on a monthly basis pay to the Owners for the hire of the Vessel a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. Each hire shall be made free and clear of any right of set-off, reduction or delay whatsoever. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, the hire shall be paid by the Charterers to the Owners as provided for hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply: (g) Payment of interest due under sub-clause 11(f) shall be made immediately, whether or not the Owners have given invoice therefor to the Charterers. 12. Mortgage (only to apply if Box 28 has been appropriately filled in) (a) Paragraph deleted (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgage(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the motgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers which shall not be unreasonably withheld. (optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Further during the Charter Period, the Charterers shall at their expense take our effect MU, MAP and COFR insuring the Vessel and other insurances as the Agent or the shareholder of the Owners may reasonably require. Insurance policies for each insurance above shall name the Owners, the Lenders and the Charterers as beneficiaries. and shall be assigned in favor of them. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account. (b) Paragraph deleted (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become and actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Agent who shall distribute the moneys in accordance with the Financial Instrument. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and all other occurrence as required under the Financial Instrument. (e) Subject to the Financial Instrument, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverages of each insurance mentioned the provisions of sub-clause 13(a), the insured amount shall be the sum indicated in Box 29. 14. Paragraphs deleted 15. Redelivery At the expiration of the Charter Period or, if earlier, on the date of sale of the Vessel as provided for under Clause 32, the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port in such ready safe berth as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery (which shall include the port or place of delivery as directed by the Owners) and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery (which shall be the port or place of delivery as directed by the Owners). Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 percent, for the number of days by which the Charter Period or the date of sale is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered free of class conditions/recommendations, fair wear and tear not affecting class excepted. On re-delivery, The Vessel shall have been dry docked as per class requirement. The Vessel upon redelivery shall have her survey cycles up to date and the trading and the national and international class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fasten during the Charter Period a notice reading to the effect of the following: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatever. Further, the Vessel is subject to the first priority mortgage dated [o] in favor of Fortis Bank as trustee acting for itself and the mortgagees thereunder, the second priority mortgage dated [o] in favor of [specify the Charterers name], and the third priority mortgage dated [o] in favor of (specify the shareholder of the Owners name]" 17. Indemnity (a) The Charterers shall indemnify the Owners, Korea Marine Fund Corporation (a Korean corporation: "KOMARF"). the Owners, the Agent and the Lenders and their respective successors, assigns, agents. directors, shareholders and officers (collectively, "Indemnified Parties") from and against any loss, damage, claim, cost and et---expense incurred by them arising out of or in relation to the operation of the Vessel by the Charterers (including, without limitation, costs of operating and maintaining the Vessels (whether by the time-charterers or the subcharterers or by whomsoever leased, used or operated), environmental claim or those based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generally of the foregoing, the Charterers agree to indemnify the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter. 19. Salvage All Salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Indemnified Parties against any sums whatsoever which the Indemnified Parties shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction in navigation. 21. General Average The Owner shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except in accordance with the Financial Instrument. (b) The Owners shall not sell the Vessel during the currency of this Charter except as provided in Clause 32. 23. Contacts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules, The documents shall also contain the New Jason Clause and the Both to Blame Collision Clause. (b) The Charterers are to procure that all passenger tickets issued during the Charter Period for the carriage of passengers and their luggage under this Charter shall contain a paramount clause incorporating any legislation relating to carrier's liability for passengers and their luggage compulsorily applicable in the trade; if no such legislation exists, the passenger tickets shall incorporate the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto. Delete as applicable 24. Paragraph deleted 25. Requisition/Acquisition (a) In the event of the Requisition for Hire for the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charcters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not he deemed thereby or thereupon to be frustrated or otherwise terminated and the Charcters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported). Acts of piracy, acts of terrorists, acts of hostility of malicious damage, blockades (whether imposed against vessels of certain flags or ownership or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel, be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should requires payment of premiums and /or calls because, pursuant to the Charterers'orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty. (i) to comply with all orders, directions, recommendations or advise as to departures, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to five the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) In any and all events of outbreak of war (whether there be a declaration of war or not), the hire shall continue to be paid in accordance with Clause 11. 27. Paragraph deleted 28. Termination (a) Charterers' Default Subject to the Financial instrument, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognized at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charters fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) Provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) The Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel covered by insurance Despite the Vessel becoming a total loss or is declared as a constructive or compromised or arranged total loss, so long as it is fully covered by insurance. the Charterers shall continue to pay the hire at the time and in the manner as provided herein for a maximum period of forty (40) days or until the insurance proceeds shall be paid, whichever occurs first:, and- any money paid by the Charterers to the Owners as hire will be returned to the Charterers once the insurance proceeds are paid. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Agent's prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorized representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (b) Paragraph deleted (c) Paragraph deleted (d) Nothwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's cost and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing arbitration. (Note : The parties should be aware that the mediation process may not necessarily interrupt time limits) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions (a) Sellers' Credit: The sellers' credit (in the amount of 10% of the Purchase Price under the MOA, "Sellers' Credit") shall be paid to the Charterers in a lump sum payment upon the sale of the Vessels and receipt of the full amount of sales proceeds, but not later than three (3) months after the expiry of the Charter Period. For the avoidance of doubt. no interest shall accrue on the Sellers' Credit. In the event that the BBC is terminated before the scheduled expiry of the Charter Period due to reasons attributable to the Charterer. the Owner shall be entitled to forfeit. an amount of the Seller's Credit up to a maximum of the aggregate remaining monthly payments under the BBC after the termination without prejudice to its claims for damages .and other rights under applicable law or in equity. The Sellers' Credit shall be secured by a second priority mortgage over the Vessel ranking behind the first priority mortgages granted to the Agent and the Swap Parties. (b) Guarantee: Top Tankers Inc. shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety. Each of the Charterers and the charterers to KOMARF HOPE 27 Shipping Company, KOMARF HOPE 28 Shipping Company and KOMARF HOPE 30 Shipping Company (each a Liberian company; collectively, "Other Charterers") shall also jointly and severally guarantee the performance of the charters by the other Charterers. (c) Sale of Vessel during the Six-Month Sales Period: The "Six-Months Sales Period" shall mean the period from the date falling three months prior to the expiry of the Charter Period to the date falling three months after the expiry of the Charter Period.. The "Outstanding Project Cost" shall mean, collectively, (i) all sums outstanding under the Main Financing Documentation, (ii) the principal amount of the investment into the SIC by its investors, and (iii) the Seller's Credit. The following is applicable when the Vessel is sold during the Six-Month Sales Period: If the net sale proceeds of the Vessel ("Net Sales Proceeds") is lower than the Outstanding Project Cost, such shortfall shall be first covered by the Charterers up to the amount of USD two (2) million. and the Owners will deduct such amount from the Sellers' Credit payable to the Charterers in respect of that Vessel. 1.1 the Net Sales Proceeds are higher than the Outstanding Project Cost, as to such surplus, the first USD two (2) million shall belong to the Charterers and the Owners will pay such amount to the Charterers in respect of that Vessel upon sale of that Vessel, and any excess thereof shall belong to the Owners. (d) Sale of the Vessel. after the Six Months Sales Period: The evaluation value ("Evaluation Value") of the Vessel shall he the average of the quote obtained from the Selected Evaluation Firms, with each quote referring to the Vessel price as of the expiry date of the Charter Period. The Selected Evaluation Finns shall he two of the (.)following firms selected by a mutual agreement between the Charterers and the Owners: One from Clarksons or Simpson Spence & Young and the other from Platou or Fearnleys. The following is applicable when the Vessel is not sold prior to the expiry of Six-Month Sales Period: If in respect of any Vessel. the Evaluation 'Value for that Vessel is lower than the Outstanding Project Cost relating to that Vessel as of the end of the Charter Period, the Owner will deduct :such amount up to USD 2 million from the Sellers' Credit payable to the Charterers in respect of that Vessel. if in respect of any Vessel the Evaluation Value for that Vessel is higher than the Outstanding Project Cost relating to that Vessel, the Owners will pay such amount up to USD 2 million to the Charterers in respect of that Vessel on the date of expiration of the Six-Month Sales Period. The foregoing mechanism shall not be affected even where the actual sales price of the Vessel is different from the Evaluation Value. (f) Sale of the Vessel before the Six Months Sales Period: The Owners may sell the Vessels at any time after three (3) years from the commencement of the Charter Period, subject, however, to an approval thereof by the relevant subcharterer(s). if any. If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost. the Owners will pay the Charterers the Seller's Credit in respect of that Vessel in full, and an additional amount up to: o USD 4 million if the sale is concluded during the 4th year of the Charter. o USD 3 million if the sale is concluded during the 5th year of the Charter (however, excluding the Six-Month Sales Period). Any excess thereof shall belong to the Owners. All of the above amounts shall be payable immediately upon the delivery of the Vessels to the new owners. and, simultaneously therewith, this Charter will be terminated. Further, at any time after three (3) years from the commencement of the Charter Period, the Vessel, subject to the Charterers' approval (which shall not be unreasonably withheld), may be sold by the Owners with this Charter maintained by the new owners. hi such cases of sale, the following paragraph shall he applicable: If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost. the Owners will pay the Charterers the Sellers' Credit in respect of that Vessel in full, and, as to any surplus. the first USD two (2) million shall belong to Top Tankers Inc. (each of such Sellers' Credit and such first USD two (2) million to be payable at the time of the sale of the Vessel), and any excess thereof shall belong to the Owner. (g) Sales Mechanism: Whether the Vessel is sold during, after or before the Six-Month Sales Period, as to the Vessel, the Owners will give the Charterers the right of first refusal. Subject to the Charterers' right of first refusal specified above (i.e., such right of first refusal shall be deemed waived when a waiver by the Charterers is obtained or when the Charterers fail to exercise such right after a prior notice of one (I ) week by the Owners), the Owners shall have no obligation to give the Charterers an opportunity to bid when it plans to sell the Vessels. The Owners shall have an absolute and free discretion in selecting the buyer of the Vessel and in determining the mechanisms for the sale of the Vessel. The Vessel and the other vessels owned by the Other Charterers (collectively, "Vessels") may be sold at one time or at different times through separate sales transactions and varying mechanisms. (h) Extension. of Charter Period: For the effective sale of the Vessels after the Charter Period, the Charter Period may be extended by a period of not longer than three (3) months at the option of the Owners, in which case the hire shall be USD 5,000 per day during such extended three (3) month Charter Period. Further. the Owners shall have the right to require the Charterers to manage the Vessel for a period of up to one (1) year after expiration of the Charter Period pursuant to the ship management agreement between the Owner and the Charterer (or any other company nominated by the Charterer), providing that (i) as to the costs incurred for the technical management of the Vessel shall be borne by the Owners on an net cost amount basis: and (ii) as to the income from commercial operation of the Vessel shall he distributed between the Charterers and the Owners on a 40% to 60o basis. The Charterers shall make their best efforts to assist the Owners in the sale of the Vessels. (i) Time Charter Assignment: As to the time-charter or sub-charter by the Charterers of the Vessel during the Charter Period, such time-charter or sub-charter shall be assigned to the Owners and the Agent and other relevant parties under the main financing and investment documentation for security. (j) Compliance with the Financial instrument: The Charterers shall comply with the Financial Instrument as required by the Agent (including. without limitation. its requirement to maintain a minimum consolidated cash balance of USD 50 million at all times with the Agent). 33. Compliance with the Owners' requests The Charterers shall, throughout the Charter Period, comply with the Owners' requests which may he made from time to time for the Owners' compliance with the provisions of the loan and guarantee facility agreement entered into on. or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower. Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein (the "Loan Agreement"). 34. Hell & High Water Clause This Charter is a "hell and high water" bareboat charter and, notwithstanding anything in this Charter to the contrary (however, excluding clause 28(c) of this Charter), the Charterer's obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character (including, for the avoidance of doubt. any loss of the Vessel as provided in clause 28(c) of this Charter or any other termination of this Charter pursuant to clause 28(b) of this Charter or for any other reason whatsoever (other than clause 28(a) and (d) of this Charter) whether provided for in this Charter or available to the Charterer by operation of law or otherwise). .1f for any reason whatsoever this Charter shall be terminated in whole or in part for any of the reasons specifically provided herein or by operation of law or otherwise, the Charterer nonetheless agrees to pay to the Owner or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; Each payment of hire made by the Charterer shall be final,, and the Charterer will not seek to recover all or any part of such payment from the Owner for any reason whatsoever, except for manifest error. PART III - PART V Paragraphs deleted EX-4.18 15 d759408_ex4-18.txt Exhibit 4.18 Private & Confidential Dated 15 March 2006 KOMARF HOPE 29 SHIPPING COMPANY as Owner (1) PYLIO SHIPPING CO. LTD. as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) QUADRIPARTITE DEED relating to m.v. "Flawless" NORTON ROSE Contents Clause Page 1 Definitions .......................................................2 2 Representations and warranties.....................................9 3 Assignment........................................................12 4 Owner's Assignment................................................13 5 Continuing security and other matters.............................14 6 Charterers undertakings...........................................16 7 General Undertakings..............................................18 8 Covenants concerning insurance and operational matters............23 9 Powers of Mortgagee to protect security and remedy defaults ......30 10 Powers of Mortgagee on Event of Default...........................30 11 Application of moneys.............................................31 12 Remedies cumulative and other provisions..........................32 13 Costs and indemnity...............................................32 14 Attorney..........................................................33 15 Further assurance.................................................33 16 Sale of Ship......................................................33 17 Continuation of Charter Period....................................35 18 Notices...........................................................35 19 Counterparts......................................................36 20 Severability of provisions........................................36 21 Law and jurisdiction .............................................36 Schedule 1 Forms of Loss Payable Clauses..................................38 Schedule 2 Forms of Notices of Assignment of Insurances...................39 THIS QUADRIPARTITE DEED is 15 March 2006 BETWEEN: (1) KOMARF HOPE 29 SHIPPING COMPANY a company incorporated under the laws of the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Owner"); (2) PYLIO SHIPPING CO. LTD., a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan and guarantee facility agreement (the "Loan and Guarantee Facility Agreement") dated 9 March 2006 and made between (1) the Owner (therein referred to as the "Borrower"), (2) the banks and financial institutions whose names are set out at Schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, security agent and trustee (the "Agent"), (4) Fortis Bank (Nederland) N.V. as guarantee bank (the "Guarantee Bank "), (5) Fortis Bank (Nederland) N.V. as arranger (the "Arranger) and (6) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provide?' and together with the Agent, the Arranger and the Account Bank (as defined in the Loan and Guarantee Facility Agreement), the Guarantee Bank and the Banks, the "Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Owner, upon the terms and conditions therein, a maximum aggregate amount of up to thirty three million and six hundred thousand Dollars ($33,600,000) and the Guarantee Bank agreed to issue and/or maintain the Guarantee (as defined in the Loan and Guarantee Facility Agreement (the "Guarantee") in favour of the Beneficiary (as defined in the Loan and Guarantee Facility Agreement); (C) by a 1992 ISDA Master Agreement dated 9 March 2006 (the "Master Swap Agreement") made between (1) the Owner and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Owner in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.1 of the Loan and Guarantee Facility Agreement, each of the Creditors has appointed the Mortgagee as its agent, security agent and trustee and pursuant to a deed of trust dated 9 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Creditors; (E) pursuant to the Loan and Guarantee Facility Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Owner of the Outstanding Indebtedness (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 9 March 2006 made between the Owner and the Charterer, the Owner has agreed to let and the Charterer has agreed to take the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan and Guarantee Facility Agreement provided (inter alia) that as a condition precedent to the advance of the Loan the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Creditors under the Loan and Guarantee Facility Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan and Guarantee Facility Agreement and the Mortgage and to the security thereby created and is the Quadripartite Deed referred to in the Loan and Guarantee Facility Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterers rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner pursuant to the Charterer; "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context mad require) to be opened with the Mortgagee (acting as Account Bank) with account number 024075615017407192 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Classification" means the classification +1 Al tanker for oil ESP E0 PP3 with the Classification Society or such other classification as the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification in relation to the Ship for the purposes of the Security Documents; "Classification Society" means Det Norske Veritas or such other classification society which the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification Society in relation to the Ship for the purposes of the Security Documents; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Owner or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Commercial Management Agreement" means the agreement made or (as the context may require) to be made between the Charterer and the Commercial Manager in a form previously approved in writing by the Agent providing (inter alia) for the Commercial Manager to commercially manage the Ship; "Commercial Manager" means Top Tanker Management Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 or any other person appointed by the Charterer with the prior written consent of the Agent as commercial manager of the Ship and includes its successors in title; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan and Guarantee Facility Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan and Guarantee Facility Agreement (as conclusively certified by the Mortgagee); "Flag State" means the Republic of Liberia or such other state or territory acceptable to the Agent designated in writing by the Agent (acting on the instructions of the Majority Banks), at the request of the Owner, as being the "Flag State" of the Ship for the purposes of the Security Documents; "Guarantee" means the guarantee described in recital (B) above; "Guarantee Amount" means any amount owing by the Guarantee Bank to the Beneficiary under or pursuant to the Guarantee, which amount is indemnified by the Owner in accordance with the Loan and Guarantee Facility Agreement; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan and Guarantee Facility Agreement at any relevant time; "Loan and Guarantee Facility Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the General Assignment) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Management Agreements" means the Commercial Management Agreement and the Technical Management Agreement and "Management Agreement" means either of them; "Managers" means the Commercial Manager and the Technical Manager and "Manager means either of them; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Owner dated9 March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operating Account" means the interest bearing Dollar account of the Owner opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Operating Account for the purposes of this Agreement; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set out in rule 1.1.2 of the Code; "Outstanding Indebtedness" means the aggregate of the Loan and the Guarantee Amount the Master Swap Agreement Liabilities, and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Owner to the Mortgagee and/or any of the other Creditors, whether actually or contingently, present or future, under or pursuant to the Loan and Guarantee Facility Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Jurisdiction" means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan and Guarantee Facility Agreement, this Deed, the Mortgage, the General Assignment, the Master Swap Agreement, the Share Pledge, the Charter Guarantee and any other such document as is defined in the Loan and Guarantee Facility Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, the Guarantee Amount, any interest thereon, and the moneys from time to time owing by the Owner pursuant to the Loan and Guarantee Facility Agreement and/or the Master Swap Agreement Liabilities (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Parties" means, collectively, the Owner, the Managers, the Charterer, or any other person who may at any time be a party to any of the Security Documents (other than the Creditors and the Charter Guarantor) and "Security Party" means any one of them; "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Shareholder" means Dongbuka No. 29 Ship Investment Company of Mora-dong 795-22 ,Sasang-gu,Pusan , Republic of Korea; "Share Pledge" means the pledge made or (as the context may require) to be made between the Shareholder and the Agent (as security agent and trustee on behalf of the Creditors) in substantially the form set out in Schedule 17, of its rights, title and interest in and to all the shares in the Owner; "Ship" means the vessel m.v. "Flawless registered as a Liberian ship under Official Number 9475 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; and "SMC" means a safety management certificate issued in respect of a Ship in accordance with rule 13 of the ISM Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Technical Manager's Undertaking" means an undertaking and assignment in relation to the Ship executed or (as the context may require) to be executed by the Technical Manager in favour of the Agent (as security agent and trustee on behalf of the Creditors); "Technical Manager" means Hanseatic Shipping Co. Ltd. of P.0 Box 50127, 3601 Limassol, Cyprus or any other person appointed by the Commercial Manager with the prior written consent of the Agent as technical manager of the Ship and includes its successors in title and assignees; "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan and Guarantee Facility Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan and Guarantee Facility Agreement but in case of any conflict between the two instruments, the provisions of the Loan and Guarantee Facility Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's Continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and has power to execute and deliver and perform its obligations under the Charter Guarantee and the Security Documents, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's Continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charterers obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and each of the Charter Guarantee and this Deed are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by it of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's Initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's Initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.5 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed; 2.6 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness, the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness, the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Operating Account until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings and the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the other Creditors in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee and/or the other Creditors) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the other Creditors or any of them any right or remedy of the Mortgagee and/or the other Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the other Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the other Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan and Guarantee Facility Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the other Creditors fully indemnified against any loss suffered by the Mortgagee and the other Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the other Creditors or any of them under the Loan and Guarantee Facility Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the other Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the other Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner or any other person liable in respect of any Outstanding Indebtedness and/or the Master Swap Agreement Liability; or 5.6.4 claim any set-off or counterclaim against the Owner or any other person liable or claim or prove in competition with the Mortgagee and/or the other Creditors or any of them in the liquidation of the Owner or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the other Creditors or any of them for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any money received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the other Creditors' claims against the Owner or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the other Creditors or any of them by the Owner or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Sub-chartering it will not without the prior written consent of the Mortgagee sub-let the Ship on demise charter for any period; 6.1.5 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 12.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.6 Sister ship arrest it will, in the event of the Ship at any time being arrested, seized, detained or subjected to distress or levied upon by reason of any process, claim or Encumbrance of whatsoever nature arising out of the use or operation of the Ship by the Charterer or any of its agents, employees or sub-charterers or any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers, at its own expense take prompt action to secure the release of the Ship and be responsible for discharging each and every liability in connection with any such process, claim or Encumbrance; 6.13 Sister ship indemnity it will indemnify the Owner and the Mortgagee and the other Creditors and hold each of them harmless against all liabilities of whatsoever nature (including penalties claims demands orders or judgments) which the Owner or the Mortgagee and/or the other Creditors or any of them may suffer or incur in respect of the Ship and which arise out of the use or operation of the Ship or of any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers; 6.1.8 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.9 Ship's name and registration (a) it will not change the name of the Ship; (b) it will not do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in the Ship not being eligible for registration under the laws and flag of the Flag State on and after Delivery or result in such registration being forfeited or imperilled or which could or might result in the Ship being required to be registered otherwise than under the laws and flag of the Flag State; 6.1.10 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.11 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.12 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.13 Notification of certain events it will notify the Mortgagee forthwith by telex confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 General Undertakings 7.1 The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 1.2.10) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that, for the first nine (9) months after the Drawdown Date, a minimum amount of twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account and that for the period commencing nine months after the Drawdown Date and ending on the final date of the Security Period, a minimum amount of twenty five million dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that at any time there are no Encumbrances whatsoever existing over or in relation to such minimum amounts; 7.2.2 ensure that an aggregate minimum amount of fifty million Dollars shall at all times during the Security Period be standing to the credit of accounts of the Charter Guarantor (including the Charter Guarantor's Account) and the Charter Guarantor shall evidence compliance with the terms of this clause at no later than three (3) monthly intervals throughout the Security Period or otherwise promptly upon the Mortgagee's first written request; 7.2.3 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.4 provide details to the Agent at three (3) monthly intervals evidencing the operating expenses and the Earnings of the Ship; 7.2.5 ensure that on the Drawdown Date, the minimum average length of time that Fleet Vessels are employed on time charter for is eighteen months; 7.2.6 ensure that its Net Asset Value at all times exceeds $125,000,000; and 7.2.7 ensure that its Book Equity shall at all times exceed $75,000,000. 7.2.8 For the purpose of this clause 7.2 and clause 7.3, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation not being, in any such case, a revaluation of all the Group's fixed assets in accordance with a valuation report from independent valuers approved by the Mortgagee so long as any such revaluation is carried out not more frequently than once every five years. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any Time Charters entered into in relation to the ship, or else any other charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus the aggregate of the Charter Earnings and the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Fleet Vessels" means any vessels owned, or chartered on long-term demise charter to any member of the Group; "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.9 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.10 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.2 and 7.2.7 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.11 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner and the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan and Guarantee Facility Agreement); and (B) such amount as will be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Guarantee Amount; (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 5.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause (a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause (a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the - relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause (i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by telex thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any Time Charter, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager or the Technical Manager, or terminate or amend the terms of the Management Agreements; 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first preferred mortgage in favour of [here insert name of Mortgagee] of [here insert address of Mortgagee]. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs Service and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; and 8.1.20 Compliance with ISM Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC in respect of such Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (c) procure that the Ship will comply at all times with the ISPS Code; and 8.1.24 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8 the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan and Guarantee Facility Agreement, or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall be applied in the manner specified in clause 13.1 of the Loan and Guarantee Facility Agreement and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 and 5.2 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee and/or any of the other Creditors (as security agent and trustee for and on behalf of the Creditors) on demand on a full indemnity basis all reasonable expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the other Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the other Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the other Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Sale of Ship 16.1 Termination of Charter Notwithstanding anything contained in the Charter, if and when the Mortgagee becomes entitled to put into force and exercise all the powers possessed by it as mortgagee of the Ship or otherwise pursuant to the Mortgage or at any time thereafter, the Mortgagee shall be entitled (but not bound) to determine the Charter at any time by notice in writing to the Owner and the Charterer which notice shall operate to determine the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo if any) upon which the Ship was engaged at the time when the said notice to determine was given. Upon determination of the Charter pursuant to this clause 16.1 hereof all liabilities whatsoever of the Owner thereunder shall be absolutely discharged and extinguished. 16.2 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clause 16.1 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.3 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.3.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.3.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.3.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.3.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.4 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.5 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.6 Sale free of Charter Without prejudice to clause 16.1, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan and Guarantee Facility Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan and Guarantee Facility Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or telex or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a telex or facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o Korea Marine Fund Corporation 22F, Kyobo Bidg., 1, Jongno 1-ga Jongno-gu, Seoul, Korea Fax no. : +(822) 3210-0100 Attention: Kyung-Hwan Cho (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: 00 3110 401 5323 Attention: Cees Kamphof (d) to the Charter Guarantor at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: +30 210 69 78107-8 Attention: Stamatis Tsantanis or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner the Charterer and the Charter Guarantor irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charterer and the Charter Guarantor irrevocably designate, appoint and empower DLA Piper Rudnick Gray Cary UK LLP at present of 3 Noble Street, London EC2V 7EE (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ London (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated ____________ 2006, KOMARF HOPE 29 Shipping Company Limited (the "Owner") and by a Quadripartite Deed dated __________ 2006, PYLIO SHIPPING CO. LTD. of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Flawless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which KOMARF HOPE 29 Shipping Company Limited of 80 Broad Street, Monrovia, Liberia (the "Owner") or PYLIO SHIPPING CO. LTD. (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KOMARF HOPE 29 SHIPPING of 80 Broad Street, Monrovia, Liberia (the "Owner") and PYLIO SHIPPING CO. LTD. (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia the owners and demise charterers respectively of the m.v. "Flawless" HEREBY GIVE NOTICE that by a General Assignment dated 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) and by a Quadripartite Deed dated 2006 and entered into by the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. Signed For and on behalf of KOMARF HOPE 29 Shipping Company Limited Dated 2006 Signed For and on behalf of PYLIO SHIPPING CO. LTD. Dated 2006 SIGNED, SEALED and DELIVERED as a DEED by Jun Hyung Jon /s/ Jun Hyung Jon for and on behalf of -------------------- KOMARF HOPE 29 SHIPPING COMPANY Authorised Signatory pursuant to a unanimous Written Consent of Board of Directors and Sole Shareholder dated 9 March 2006 in the presence of: Witness: /s/ Byung Young Yu Name: Byung Young Yu Address: 22F, Kyobo Bldg., 1, Jongno 1-ga, Jongno-gu, Seoul, 110-714 Korea Occupation: Deputy General Manager, KOMARF SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of PYLIO SHIPPING CO. LTD. pursuant to a power of attorney dated 2006 ------------------------- Attorney-in-Fact in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of KOMARF HOPE 29 SHIPPING COMPANY pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by Stamatis N. Tsantanis /s/ C. Kamphof for and on behalf of ------------------- PYLIO SHIPPING CO. LTD. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 15526, Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a DEED by Stamatis N. Tsantanis /s/ C. Kamphof for and on behalf of ------------------- TOP TANKERS INC. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 15526, Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of FORTIS BANK (NEDERLAND) N.V. pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of TOP TANKERS INC. pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by Cees Kamphof /s/ C. Kamphof for and on behalf of ------------------- FORTIS BANK (NEDERLAND) N.V. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 in the presence of: Witness: /s/ G. J. Meyee Name: G. J. Meyee Address: Coolsingel 93 3012 AE Rotterdam The Netherlands Occupation: Secretary EX-4.19 16 d759408_ex4-19.txt Exhibit 4.19 Guarantee 15 March 2006 To: KOMARF HOPE 29 Shipping Company (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. "Flawless" (the "Ship") to PYLIO SHIPPING CO. LTD (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 9 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, TOP TANKERS INC. (the "Guarantor) irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 11 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to such assignment. 12 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 13 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 14 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED By: Stamatis Tsantanis for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 8 March 2006 In the presence of: Witness: /s/ Andreas Louka Name: Andreas Louka Address: Top Tanker Management Inc. 109-111 Messogron Av. 15526 Greece Occupation: Advocate EX-4.20 17 d759408_ex4-20.txt Exhibit 4.20 MEMORANDUM OF AGREEMENT Dated: 09/3/2006 Visi Shipping Company Limited, Liberia hereinafter called the Sellers, have agreed to sell, and KOMARF HOPE 30 SHPPING COMPANY, Liberia hereinafter called the Buyers, have agreed to buy Name: M/T Stopless Classification Society/Class: Det Norske Veritas Built: 1991 By: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea Flag: Liberia Place of registration: Monrovia, Liberia Call Sign: A8GL7 Grt/Nrt: 79718/46569 Official Number: 12600 hereinafter called the Vessel, on the following terms and conditions: Definition "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase price (See also Clause 17) USD 48,000,000.- cash (United States Dollars Forty Eight Million only). 2. Deposit As security for the correct fulfillment of this Agreement the Buyers shall pay a deposit of 2,5% (two and a half per cent) of the Purchase Price within three (3) banking days from the date of this Agreement signed by both parties by fax. This deposit shall be placed with The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01,Swift:RBOSGB2L, Account Key: ViTSH1-USD1, lban:GB31 RBOS 1663 0000 3428 43 Beneficiary: Vitsi Shipping Company Ltd, Correspondent Bank: American Express Bank Limited, New York -- Swift AEIBUS33XXX in the name of the Sellers. 3. Payment (Subject to Clause 17) The said Purchase Price shall be paid in full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01,Swift:RBOSGB2L, Account Key: ViTSHI-USD1, lban:GB31 RBOS 1663 0000 3428 43 Beneficiary: Vitsi Shipping Company Ltd, Correspondent Bank: American Express Bank Limited, New York -- Swift AEIBUS33XXX on delivery of vessel in accordance with clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Ashkelon, Israel within February, 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* deleted * 4a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notice, time and place of delivery a) When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery on or before March 15, 2006. b) After the receipt of the notice of Readiness for Delivery, the Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage at/in or at high sea on March 15, 2006 or, if later, on such other date as agreed between the Sellers and the Buyers that reasonably takes into account the time needed for the BBC (as defined in Clause 17) and the related financing transactions to take into effect (the procedure of which shall be as provided for in Clause 5 of the BBC). c) Expected time of delivery: Between 15th March 2006 and 30th March, 2006 Date of canceling (see clauses 5 c),6 b) (iii)and 14): 30th April, 2006 If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the canceling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new canceling date. Upon receipt of such notification the Buyers shall have the option of either canceling this Agreement in accordance with Clause 14 within 2 running days of receipt of the notice or of accepting the new date as the new canceling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new canceling date and shall be substituted for the canceling date stipulated in line 61. If this Agreement is maintained with the canceling date all other terms and conditions force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original canceling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void. 6. No Drydocking/Divers Inspection Clause to apply. deleted 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Sellers account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Seller's flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s),shall be excluded without compensation. Captain's Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation. (See also Clause 19) The place of closing : Athens, Greece In exchange for payment of the Purchase Price the Sellers shall furnish the Buyers with delivery documents namely: a) Legal Bill of Sale in a form recordable in (the country in which the Buyers are to register the Vessel), warranting that the Vessel is free from all encumbrances, mortgages and maritime liens or any other debts or claims whatsoever, duly notarially attested and legalized by the consul of such country or other competent authority. b) Current Certificate of Ownership issued by the competent authorities of the flag state of the Vessel. c) Confirmation of Class issued within 72 hours prior to delivery. d) Current Certificate issued by the competent authorities stating that the Vessel is free from register encumbrances. e) Recordation of Bill of Sale evidencing the sale of the Vessel to the Buyers issued by the Liberia registry. f) Any such additional documents as may reasonably be required by the competent authorities for the purpose of registering the Vessel provided the Buyers notify the Sellers of any such documents as soon as possible after the date of this Agreement. In addition to the documents above Buyers will furnish Sellers with the following documents: a) Minutes of the Board of Directors resolving the Purchase of the Vessel and acceptance of delivery of the vessel b) Power of Attorney as per the minutes above c) Certificate of Incorporation dated not earlier than thirty (30) days from delivery. At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at Sellers' expense, if they so request. The Sellers may keep the Vessel' s log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charter, encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers account, where as similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear expected. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyer's inspection according to Clause 4 a) or 4 b), if applicable or the buyers inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this agreement shall be the relevant date. * Notes, if any, in the surveyor's reports which are accepted by the Classification Society without condition/recommendation are not to be taken account. 13. Buyers' default This clause shall apply only in the event that the default in this clause is attributable to the Buyers' gross negligence or wilful misconduct. Should the deposit not be paid in accordance with Clause 2, the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. Should the Purchase Price not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, in which case the deposit together with interest earned shall be released to the Sellers. If the deposit does not cover their loss , the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default This clause shall apply only in the event that the default in this clause is attributable to the Sellers' gross negligence or wilful misconduct. Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready. to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of canceling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement the deposit together with interest earned shall be released to them immediately. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives deleted 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party' s arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 17. Seller's Credit Notwithstanding anything herein to the contrary (including, Clause 3), Sellers's credit (in the amount of 10% of the Purchase Price, "Sellers's Credit") shall be made in accordance with, and as more fully described in, the bareboat charterparty entered into on the same date herewith by and between the Sellers as charterers and the Buyers as owners ("BBC"). 18. Bareboat Charterparty Under the BBC, the Vessel shall be chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery to and acceptance by the Sellers (as Charterers) under the BBC. 20. Remaining Stores, etc. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. The Sellers shall comply with the Buyers' requests which may be made for the Buyers' compliance with the loan and guarantee facility agreement entered into on. or to be entered into around, the even date herewith by and among, inter altos. the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein. For and on behalf of For and on behalf of Vitsi Shipping Company Ltd KOMARF HOPE 30 Shipping Company /s/ Stamatis Tsantanis /s/ K. H. Kwan ------------------------------------ ------------------------------- EX-4.21 18 d759408_ex4-21.txt Exhibit 4.21 1. Shipbroker 2. Place and date Seoul, 09/03/2006 3. Owners/Place of business (Cl. 1) KOMARF HOPE 30 Shipping Company, Liberia 4. Bareboat Charterers/Place of business Vitsi Shipping Company Limited, Liberia 5. Vessel's name, call sign and lag (Cl. 1 and 3) M/T Stopless A8GL7, Liberia 6. Type of Vessel Suez Max 7. GT/NT 79718/46569 8. When/Where built 1991 Hyundai Heavy Industries Co., Ltd., Ulsan, Korea 9. Total DWT (abt.) In metric tons on summer freeboard 10. Classification society (C1. 3) Det Norske Veritas 11. Date of last special survey by the Vessel's classification society 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) See Clause 4 15. Cancelling date (Cl. 5) April 30, 2006 16. Port or Place of redelivery (Cl. 15) Not applicable 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Six (6) months 18. Running days' notice if other than stated In Cl. 4 See Clause 5 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) 21. Charter period (Cl. 2) Five (5) years (however, subject to Cl. 32) 22. Charter hire (Cl. 11) US$750,000 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV 25. Currency and method of payment (Cl. 11) US Dollars, in same day funds 26. Place of payment; also slate beneficiary and bank account (Cl. 11) As to be notified by the Owners to the Charterers 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) 12(b) applies. 1st priority mortgage dated on or around the date herewith in favor of Fortis Bank ("Agent") as trustee for the benefit of itself, the relevant lenders ("Lenders') and swap providers. 2nd priority mortgage dated on or around the date herewith in favor of the Charterers securing the Seller's Credit (as defined in Clause 32(a)) 3rd priority mortgage dated on or around the date herewith in favor of the shareholder of the Owners securing the Shareholder's Funds (as defined in the Loan Agreement. defined in Clause 33) Financial Instrument to also include, without limitation, the intercreditor agreement and any other agreements in connection with financings related to this Charter. 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Each insurance to cover 130% of the Outstanding Project Cost. however, P&I Club insurance to cover the maximum cover available on the market. Clause 14 is not applicable. 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) Not applicable 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) No 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) No 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) No 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) No 45. Country of the Underlying Registry (only to be filled in if PART V applies) No 46. Number of additional clauses covering special provisions, if agreed) 32, 33, 34 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ K.H. Kwan /s/ Stamatis Tsantanis - ------------------------------ --------------------------------- K.H. Kwan Stamatis Tsantanis Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument and-stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel to be delivered under this Charter by the Owners to the Charterers shall be on an as is where is basis (and, at any rate, as delivered under the MOA (as defined in Clause 4) by the Charterers as sellers to the Owners as buyers) and without any warranty by the Owner. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the Memorandum of Agreement entered into on the same dale herewith by and between the Charterers as sellers and the Owners as buyers ("M0A"). 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) Should the Vessel not be delivered latest by the canceling date indicated in Box 15 or the cancellation date as otherwise agreed by and between the Owners and the Charterers hereunder, the Owners shall propose a new date of cancellation that reasonably takes into account the time needed for this Charter and the related financing transactions to take into effect and the Owners shall accept such proposal. (b) Notwithstanding Clause 5(a) above, if it appears with reasonable certainty the delivery of the Vessel under this Charter cannot be made due to the failure in the related financing transactions or otherwise, this Charter may be cancelled by a mutual agreement between the Owners and the Charterers. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Charterers shall bear all expenses of the On-hire Survey including loss of time, if any, and the Charterers shall also bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf: (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charters have not dry-docked her in accordance with Clause 10(g). The costs and fees for such inspection of survey shall be paid by the Charters; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charters' account and form part of the Charter Period. The Charters shall also permit the Owners to inspect the Vessel's log book whenever requested and shall whenever required by the Owners furnish them with full information regarding and casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare part, appliances and of all consumable stores on board the Vessel shall be made by the Charters in conjunction with the Owners on redelivery of the Vessel. The Charters and the Owners, respectively, shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of delivery, respectively. The Charters shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charters and under their complete control in every respect. The Charters shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charters' loss of time) more than the percentage stated in Box 23, or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29, then the Charterers at their own expense shall bear the cost of Compliance. (iii) Financial Security - The Charters shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state of municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charters shall make and maintain all arrangement by bond or otherwise as may be necessary to satisfy such requirements at the Charters' sole expense and the Charters shall indemnify the Owners against al] consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation for the Vessel - The Charters shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter; provided, however, that, all tonnage taxes and other ownership related expenses shall be paid by the Owners. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charters shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charters shall also have the liberty, with the Owners' consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charters' expense and time. (e) Changes to the Vessel - Subject to Clause l 0(a)(ii), the Charters shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charters shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charters shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provide the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contacts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charters shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management - Commercial, technical. and/or operational management of the Vessels to be executed by Top Tanker Management Inc. or any other company acceptable to the Agent and KOMARF for the Charier Period. (i) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation and applicable law. (j) Financial Statements - The Charterers shall submit to the Owners the audited annual accounts within 180 days of the year end and semi-annual management accounts within 90 days of the half- year end. (k) Survey Reports - The Charterers shall supply the Owners the class survey reports regularly including annual survey and the follow-up reports showing, the recommendation, if any, has been cleared at the Charterer's expense. The Charterers shall put its best efforts to keep the condition of the Vessels in compliance with all class certificates during the Charter Period. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall on a monthly basis pay to the Owners for the hire of the Vessel a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. Each hire shall be made free and clear of any right of set-off, reduction or delay whatsoever. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, the hire shall be paid by the Charterers to the Owners as provided for hereunder (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately, whether or not the Owners have given invoice therefor to the Charterers. 12. Mortgage (only to apply if Box 28 has been appropriately filled in) (a) deleted (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgage(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the motgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers which shall not be unreasonably withheld. (optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). l3. Insurance and Repairs (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Further. during the Charter Period. the Charterers shall at their expense take our effect MII MAP and COFR insuring the Vessel and other insurances as the Agent or the shareholder of the Owners may reasonably require. Insurance policies for each insurance above shall name the Owners, the Lenders and the Charterers as beneficiaries, and shall be assigned in favor of them. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account. (b) deleted (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become and actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 1 3(a), all insurance payments for such loss shall be paid to the Agent who shall distribute the moneys in accordance with the Financial Instrument. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and all other occurrence as required under the Financial Instrument. (e) Subject to the Financial Instrument, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverages of each insurance mentioned the provisions of sub-clause 13(a), the insured amount shall be the sum indicated in Box 29. 14. deleted 15. Redelivery At the expiration of the Charter Period or. if earlier, on the date of sale of the Vessel as provided for under Clause 32, the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port in such ready safe berth as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery (which shall include the port or place of delivery as directed by the Owners) and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery (which shall be the port or place of delivery as directed by the Owners). Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period or on the date of sale of the Vessel as provided for under Clause 32 at the place as directed by the Owners, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 percent, for the number of days by which the Charter Period or the date of sale is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered free of class conditions/recommendations, fair wear and tear not affecting class excepted. On re-delivery, The Vessel shall have been drydocked as per class req ui rement. The Vessel upon redelivery shall have her survey cycles up to date and the trading and the national and international class certificates valid for at least the number of months agreed in Box l7. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fasten during the Charter Period a notice reading to the effect of the following: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatever. Further, the Vessel is subject to the first priority mortgage dated [.]in favor of Fortis Bank as trustee acting for itself and the mortgagees thereunder, the second priority mortgage dated [.] in favor of [specify Ihe Charterers name], and the third priority mortgage dated [.] in favor of (specify the shareholder of the Owners name]" 17. Indemnity (a) The Charterers shall indemnify the Owners, Korea Marine Fund Corporation (a Korean corporation: "KOMARF"), the Owners, the Agent and the Lenders and their respective successors, assigns, agents, directors, shareholders and officers (collectively, "Indemnified Parties") from and against any loss, damage, claim, cost and er-expense incurred by them arising out of or in relation to the operation of the Vessel by the Charterers (including, without limitation, costs of operating and maintaining the Vessels (whether by the time-charterers or the subcharterers or by whomsoever leased, used or operated), environmental claim or those based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generally of the foregoing, the Charterers agree to indemnify the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter. 19. Salvage All Salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Indemnified Parties against any sums whatsoever which the Indemnified Parties shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction in navigation. 21. General Average The Owner shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except in accordance with the Financial Instrument. (b) The Owners shall not sell the Vessel during the currency of this Charter except as provided in Clause 32. 23. Contacts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules, The documents shall also contain the New Jason Clause and the Both-toBlame Collision Clause. (b) The Charterers are to procure that all passenger tickets issued during the Charter Period for the carriage of passengers and their luggage under this Charter shall contain a paramount clause incorporating any legislation relating to carrier's liability for passengers and their luggage compulsorily applicable in the trade; if no such legislation exists, the passenger tickets shall incorporate the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto. Delete as applicable 24. deleted 25. Requisition/Acquisition (a) In the event of the Requisition for Hire for the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charcters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Chateter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charcters shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported). Acts of piracy, acts of terrorists, acts of hostility of malicious damage, blockades (whether imposed against vessels of certain flags or ownership or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel, be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should requires payment of premiums and /or calls because, pursuant to the Charterers'orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty. (i) to comply with all orders, directions, recommendations or advise as to departures, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to five the same under the terms of the war risks insurance; . (iii) to comply with the terms of any resolution of the Security of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) In any and all events of war (whether there be a declaration of war or not), the hire shall continue to be paid in accordance with Clause 11. 27. Termination (a) Charterers' Default Subject to the Financial instrument, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognized at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charters fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Reparis) Provided that the Owners shall have the option, by written notice to the Charterers, to give the Chaerers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) The Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the 'Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel covered by Insurance Despite the Vessel becoming a total loss or is declared as a constructive or compromised or arranged total loss, so long, as it is fully covered by insurance, the Charterers shall continue to pay the hire at the time and in the manner as provided herein for a maximum period of forty (40) days or until the insurance proceeds shall be paid, whichever occurs first, and any money paid by the Charterers to the Owners as hire will be returned to the Charterers once the insurnce proceeds are paid. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss .or agreement has been reached with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Agent's prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossesion In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorized representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (b) deleted (c) deleted (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's cost and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing arbitration. (Note : The parties should be aware that the mediation process may not necessarily interrupt time limits) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions (a) Sellers' Credit: The sellers' credit (in the amount of 10% of the Purchase Price under the MOA, "Sellers' Credit") shall be paid to the Charterers in a lump sum payment upon the sale of the Vessels and receipt of the full amount of sales proceeds, but not later than three (3) months after the expiry of the Charter Period. For the avoidance of doubt, no interest shall accrue on the Sellers' Credit. In the event that the BBC is terminated before the scheduled expiry of the Charter Period due to reasons attributable to the Charterer. the Owner shall be entitled to forfeit an amount of the Seller's Credit up to a maximum of the aggregate remaining monthly payments under the BBC after the termination without prejudice to its claims for damages and other rights under applicable law or in equity. The Sellers' Credit shall be secured by a second priority mortgage over the Vessel ranking behind the first priority mortgages granted to the Agent and the Swap Parties. (b) Guarantee: Top Tankers Inc. shall unconditionally. and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety. Each of the Charterers and the charterers to KOMARF HOPE 27 Shipping Company. KOMARF HOPE 28 Shipping Company and KOMARF HOPE 29 Shipping Company (each a Liberian company; collectively. "Other Charterers") shall also jointly and severally guarantee the performance of the charters by the other Charterers. (c) Sale of Vessel during the Six-Month Sales Period: The "Six-Months Sales Period" shall mean the period from the date falling three months prior to the expiry of the Charter Period to the date falling three. months after the expiry of the Charter Period. The "Outstanding Project Cost" shall mean, collectively, (i) all sums outstanding under the Main Financing Documentation. (ii) the principal amount of the investment into the SIC by its investors, and (iii) the Seller's Credit. The following is applicable when the Vessel is sold during the Six-Month Sales Period: If the net sale proceeds of the Vessel ("Net Sales Proceeds") is lower than the Outstanding Project Cost, such shortfall shall be first covered by the Charterers up to the amount of USD two (2) million, and the Owners will deduct such amount from the Sellers' Credit payable to the Charterers in respect of that Vessel. If the Net Sales Proceeds are higher than the Outstanding Project Cost, as to such surplus, the first USD two (2) million shall belong to the Charterers and the Owners will pay such amount to the Charterers in respect of that Vessel upon sale of that Vessel, and any excess thereof shall belong to the Owners. (d) Sale of the Vessel after the Six Months Sales Period: The evaluation value ("Evaluation Value") of the Vessel shall be the average of the quote obtained from the Selected Evaluation Firms, with each quote referring to the Vessel price as of the expiry date of the Charter Period. The Selected Evaluation Firms shall be two of the following firms selected by a mutual agreement between the Charterers and the Owners: One from Clarksons or Simpson Spence & Young and the other from Platou or Fearnleys. The following is applicable when the Vessel is not sold prior to the expiry of Six-Month Sales Period: If in respect of any Vessel the Evaluation Value for that Vessel is lower than the Outstanding Project Cost relating to that Vessel as of the end of the Charter Period, the Owner will deduct such amount up to USD 2 million from the Sellers' Credit payable to the Charterers in respect of that Vessel. If in respect of any Vessel the Evaluation. Value for that Vessel is higher than the Outstanding Project Cost relating to that Vessel, the Owners will pay such amount up to USD 2 million to the Charterers in .respect of that Vessel on the date of expiration of the Six-Month Sales Period. The foregoing mechanism shall not be affected even where the actual sales price of the Vessel is different from the Evaluation Value. (f) Sale of the Vessel before the Six Months Sales Period: The Owners may sell the Vessels at any time after three (3) years from the commencement of the Charter Period, subject. however, to an approval thereof by the relevant subcharterer(s). if any. If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Seller's Credit in respect of that Vessel in full, and an additional amount up to: o USD 4 million if the sale is concluded during the 4th year of the Charter. o USD 3 million if the sale is concluded during the 5th year of the Charter (however, excluding the Six-Month Sales Period). Any excess thereof shall belong to the Owners. All of the above amounts shall be payable immediately upon the delivery of the Vessels to the new owners, and, simultaneously therewith, this Charter will be terminated. Further, at any time after three (3) years from the commencement of the Charter Period, the Vessel, subject to the Charterers' approval (which shall not be unreasonably withheld), may be sold by the Owners with this Charter maintained by the new owners. In such cases of sale, the following paragraph shall be applicable: If the Net Sales Proceeds is lower than the Outstanding Project Cost, the Sellers' Credit will be payable to the Charterers in respect of that Vessel in full. If the Net Sales Proceeds are higher than the Outstanding Project Cost, the Owners will pay the Charterers the Sellers' Credit in respect of that Vessel in full, and, as to any surplus, the first USD two (2) million shall belong to Top Tankers Inc. (each of such Sellers' Credit and such first USD two (2) million to be payable at the time of the sale of the Vessel )o and any excess thereof shall belong to the Owner. (g) Sales Mechanism: Whether the Vessel is sold during, after or before the Six-Month Sales Period, as to the Vessel, the Owners will give the Charterers the right of first refusal. Subject to the Charterers' right of first refusal specified above (i.e., such right of first refusal shall be deemed waived when a waiver by the Charterers is obtained or when the Charterers fail to exercise such right after a prior notice of one (1 ) week by the Owners), the Owners shall have no obligation to give the Charterers an opportunity to bid when it plans to sell the Vessels. The Owners shall have an absolute and free discretion in selecting the buyer of the Vessel and in determining the mechanisms for the sale of the Vessel. The Vessel and the other vessels owned by the Other Charterers (collectively, "Vessels") may be sold at one time or at different times through separate sales transactions and varying mechanisms. (h) Extension of Charter Period: For the effective sale of the Vessels after the Charter P(Tiod, the Charter Period may be extended by a period of not longer than three (3) months at the option of the Owners, in which case the hire shall be USD 5.000 per day during such extended three (3) month Charter Period. Further, the Owners shall have the right to require the Charteres to manage the Vessel for a period of up to one (1) year after expiration of the Charter Period pursuant to the ship management agreement between. the Owner and the Charterer (or any other company nominated by the Charterer), providing that (i) as 10 the costs incurred for the technical management of the Vessel shall be borne by the Owners on an net cost amount basis: and (ii) as to the income from commercial operation of the Vessel shall be distributed between. the Charterers and the Owners on a 40% to 60% basis. The Charterers shall make their best efforts to assist the Owners in the sale of the Vessels. (i) Time Charter Assignment: As to the time-charter or sub-charter by the Charterers of the Vessel during the Charter Period, such time-charter or sub-charter shall be assigned to the Owners and the Agent and other relevant parties under the main financing and investment documentation for security. (j) Compliance with the Financial Instrument: The Charterers shall comply with the Financial Instrument as required by the Agent (including, without limitation. its requirement to maintain a minimum consolidated cash balance of USD 50 million at all times with the Agent). 33. Compliance with the Owners' requests The Charterers shall, throughout the Charter Period_ comply with the Owners' requests which may be made from time to time for the Owners' compliance with the provisions of the loan and guarantee facility agreement entered into on. or to be entered into around, the even date herewith by and among, inter alios, the Buyers as borrower, Fortis Bank (Nederland) N.V. as agent and arranger and the lenders specified therein (the "Loan Agreement"). 34. Hell & High Water Clause This Charter is a "hell and high water" bareboat charter and, notwithstanding anything in this Charter to the contrary (however, excluding clause 28(c) of this Charter), the Charterer's obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character (including, for the avoidance of doubt, any loss of the Vessel as provided in clause 28(c) of this Charter or any other termination of this Charter pursuant to clause 28(b) of this Charter or for any other reason whatsoever (other than clause 23(a) and (d) of this Charter) whether provided for in this Charter or available to the Charterer by operation of law or otherwise). If for any reason whatsoever this Charter shall be terminated in whole or in part for any of the reasons specifically provided herein or by operation of law or otherwise, the Charterer nonetheless agrees to pay to the Owner or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become clue and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part: Each payment of hire made by the Charterer shall be final, and the Charterer will not seek to recover all or any part of such payment from the Owner for any reason whatsoever, except for manifest error. EX-4.22 19 d759408_ex4-22.txt Exhibit 4.22 Private & Confidential Dated 15 March 2006 KOMARF HOPE 30 SHIPPING COMPANY as Owner (1) VITSI SHIPPING CO. LTD. as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) QUADRIPARTITE DEED relating to m.v. "Stopless" NORTON ROSE Contents Clause Page 1 Definitions ......................................................2 2 Representations and warranties....................................9 3 Assignment.......................................................12 4 Owner's Assignment...............................................13 5 Continuing security and other matters............................14 6 Charterer's undertakings.........................................16 7 General Undertakings.............................................18 8 Covenants concerning insurance and operational matters ..........18 9 Powers of Mortgagee to protect security and remedy defaults .....30 10 Powers of Mortgagee on Event of Default..........................30 11 Application of moneys............................................31 12 Remedies cumulative and other provisions.........................32 13 Costs and indemnity..............................................32 14 Attorney.........................................................33 15 Further assurance................................................33 16 Sale of Ship.....................................................33 17 Continuation of Charter Period...................................35 18 Notices..........................................................35 19 Counterparts.....................................................36 20 Severability of provisions.......................................36 21 Law and jurisdiction ...........................................36 Schedule 1 Forms of Loss Payable Clauses.................................38 Schedule 2 Forms of Notices of Assignment of Insurances..................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) KOMARF HOPE 30 SHIPPING COMPANY a company incorporated under the laws of the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Owner"); (2) VITSI SHIPPING CO. LTD., a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan and guarantee facility agreement (the "Loan and Guarantee Facility Agreement") dated 9 March 2006 and made between (1) the Owner (therein referred to as the "Borrower"), (2) the banks and financial institutions whose names are set out at Schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, security agent and trustee (the "Agent"), (4) Fortis Bank (Nederland) N.V. as guarantee bank (the "Guarantee Bank "), (5) Fortis Bank (Nederland) N.V. as arranger (the "Arranger) and (6) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider" and together with the Agent, the Arranger and the Account Bank (as defined in the Loan and Guarantee Facility Agreement), the Guarantee Bank and the Banks, the "Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Owner, upon the terms and conditions therein, a maximum aggregate amount of up to thirty three million and six hundred thousand Dollars ($33,600,000) and the Guarantee Bank agreed to issue and/or maintain the Guarantee (as defined in the Loan and Guarantee Facility Agreement (the "Guarantee") in favour of the Beneficiary (as defined in the Loan and Guarantee Facility Agreement); (C) by a 1992 ISDA Master Agreement dated 9 March 2006 (the "Master Swap Agreement") made between (1) the Owner and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Owner in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.1 of the Loan and Guarantee Facility Agreement, each of the Creditors has appointed the Mortgagee as its agent, security agent and trustee and pursuant to a deed of trust dated 9 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Creditors; (E) pursuant to the Loan and Guarantee Facility Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Owner of the Outstanding Indebtedness (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 9 March 2006 made between the Owner and the Charterer, the Owner has agreed to let and the Charterer has agreed to take the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan and Guarantee Facility Agreement provided (inter alia) that as a condition precedent to the advance of the Loan the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Creditors under the Loan and Guarantee Facility Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan and Guarantee Facility Agreement and the Mortgage and to the security thereby created and is the Quadripartite Deed referred to in the Loan and Guarantee Facility Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner pursuant to the Charterer; "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as Account Bank) with account number 024075615017407192 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Classification" means the classification +1 Al tanker for oil ESP E0 PP3 with the Classification Society or such other classification as the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification in relation to the Ship for the purposes of the Security Documents; "Classification Society" means Det Norske Veritas or such other classification society which the Agent shall, at the request of the Owner, have agreed in writing shall be treated as the Classification Society in relation to the Ship for the purposes of the Security Documents; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Owner or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Commercial Management Agreement" means the agreement made or (as the context may require) to be made between the Charterer and the Commercial Manager in a form previously approved in writing by the Agent providing (inter alia) for the Commercial Manager to commercially manage the Ship; "Commercial Manager means Top Tanker Management Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MN 96960 or any other person appointed by the Charterer with the prior written consent of the Agent as commercial manager of the Ship and includes its successors in title; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan and Guarantee Facility Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan and Guarantee Facility Agreement (as conclusively certified by the Mortgagee); "Flag State" means the Republic of Liberia or such other state or territory acceptable to the Agent designated in writing by the Agent (acting on the instructions of the Majority Banks), at the request of the Owner, as being the "Flag State" of the Ship for the purposes of the Security Documents; "Guarantee" means the guarantee described in recital (B) above; "Guarantee Amount" means any amount owing by the Guarantee Bank to the Beneficiary under or pursuant to the Guarantee, which amount is indemnified by the Owner in accordance with the Loan and Guarantee Facility Agreement; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan and Guarantee Facility Agreement at any relevant time; "Loan and Guarantee Facility Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the General Assignment) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Management Agreements" means the Commercial Management Agreement and the Technical Management Agreement and "Management Agreement" means either of them; "Managers" means the Commercial Manager and the Technical Manager and "Manager means either of them; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Owner dated9 March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operating Account" means the interest bearing Dollar account of the Owner opened or (as the context may require) to be opened with the Account Bank and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Operating Account for the purposes of this Agreement; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set out in rule 1.1.2 of the Code; "Outstanding Indebtedness" means the aggregate of the Loan and the Guarantee Amount the Master Swap Agreement Liabilities, and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Owner to the Mortgagee and/or any of the other Creditors, whether actually or contingently, present or future, under or pursuant to the Loan and Guarantee Facility Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Jurisdiction" means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan and Guarantee Facility Agreement, this Deed, the Mortgage, the General Assignment, the Master Swap Agreement, the Share Pledge, the Charter Guarantee and any other such document as is defined in the Loan and Guarantee Facility Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, the Guarantee Amount, any interest thereon, and the moneys from time to time owing by the Owner pursuant to the Loan and Guarantee Facility Agreement and/or the Master Swap Agreement Liabilities (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Parties" means, collectively, the Owner, the Managers, the Charterer, or any other person who may at any time be a party to any of the Security Documents (other than the Creditors and the Charter Guarantor) and "Security Party" means any one of them; "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Shareholder" means Dongbuka No. 30 Ship Investment Company of Mora-dong 795-22 ,Sasang-gu,Pusan , Republic of Korea; "Share Pledge" means the pledge made or (as the context may require) to be made between the Shareholder and the Agent (as security agent and trustee on behalf of the Creditors) in substantially the form set out in Schedule 17, of its rights, title and interest in and to all the shares in the Owner; "Ship" means the vessel m.v. "Stopless" registered as a Liberian ship under Official Number 12600 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; and "SMC" means a safety management certificate issued in respect of a Ship in accordance with rule 13 of the ISM Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Technical Manager's Undertaking" means an undertaking and assignment in relation to the Ship executed or (as the context may require) to be executed by the Technical Manager in favour of the Agent (as security agent and trustee on behalf of the Creditors); "Technical Manager" means V. Ships Management Limited of Eaglehurst, Belmont Hill, Douglas, Isle of Man, IM1 4NY or any other person appointed by the Commercial Manager with the prior written consent of the Agent as technical manager of the Ship and includes its successors in title and assignees; "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan and Guarantee Facility Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan and Guarantee Facility Agreement but in case of any conflict between the two instruments, the provisions of the Loan and Guarantee Facility Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's Continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and has power to execute and deliver and perform its obligations under the Charter Guarantee and the Security Documents, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's Continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charterer's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its articles of incorporation, by-laws, statutes or other constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and each of the Charter Guarantee and this Deed are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by it of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's Initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's Initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and the Owner that: 2.5 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed; 2.6 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness, the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness, the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Operating Account until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings and the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the other Creditors in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee and/or the other Creditors) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the other Creditors or any of them any right or remedy of the Mortgagee and/or the other Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the other Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the other Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan and Guarantee Facility Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the other Creditors fully indemnified against any loss suffered by the Mortgagee and the other Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the other Creditors or any of them under the Loan and Guarantee Facility Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the other Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the other Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owners Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner or any other person liable in respect of any Outstanding Indebtedness and/or the Master Swap Agreement Liability; or 5.6.4 claim any set-off or counterclaim against the Owner or any other person liable or claim or prove in competition with the Mortgagee and/or the other Creditors or any of them in the liquidation of the Owner or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the other Creditors or any of them for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any money received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the other Creditors' claims against the Owner or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the other Creditors or any of them by the Owner or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterers Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Sub-chartering it will not without the prior written consent of the Mortgagee sub-let the Ship on demise charter for any period; 6.1.5 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 12.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.6 Sister ship arrest it will, in the event of the Ship at any time being arrested, seized, detained or subjected to distress or levied upon by reason of any process, claim or Encumbrance of whatsoever nature arising out of the use or operation of the Ship by the Charterer or any of its agents, employees or sub-charterers or any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers, at its own expense take prompt action to secure the release of the Ship and be responsible for discharging each and every liability in connection with any such process, claim or Encumbrance; 6.1.7 Sister ship indemnity it will indemnify the Owner and the Mortgagee and the other Creditors and hold each of them harmless against all liabilities of whatsoever nature (including penalties claims demands orders or judgments) which the Owner or the Mortgagee and/or the other Creditors or any of them may suffer or incur in respect of the Ship and which arise out of the use or operation of the Ship or of any other vessel owned or operated or managed by or chartered to the Charterer or any of its affiliates or its or their agents, employees or charterers or sub-charterers; 6.1.8 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.9 Ship's name and registration (a) it will not change the name of the Ship; (b) it will not do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in the Ship not being eligible for registration under the laws and flag of the Flag State on and after Delivery or result in such registration being forfeited or imperilled or which could or might result in the Ship being required to be registered otherwise than under the laws and flag of the Flag State; 6.1.10 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.11 Charterers Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.12 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.13 Notification of certain events it will notify the Mortgagee forthwith by telex confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 General Undertakings 7.1 The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 1.2.10) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that, for the first nine (9) months after the Drawdown Date, a minimum amount of twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account and that for the period commencing nine months after the Drawdown Date and ending on the final date of the Security Period, a minimum amount of twenty five million dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that at any time there are no Encumbrances whatsoever existing over or in relation to such minimum amounts; 7.2.2 ensure that an aggregate minimum amount of fifty million Dollars shall at all times during the Security Period be standing to the credit of accounts of the Charter Guarantor (including the Charter Guarantor's Account) and the Charter Guarantor shall evidence compliance with the terms of this clause at no later than three (3) monthly intervals throughout the Security Period or otherwise promptly upon the Mortgagee's first written request; 7.2.3 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.4 provide details to the Agent at three (3) monthly intervals evidencing the operating expenses and the Earnings of the Ship; 7.2.5 ensure that on the Drawdown Date, the minimum average length of time that Fleet Vessels are employed on time charter for is eighteen months; 7.2.6 ensure that its Net Asset Value at all times exceeds $125,000,000; and 7.2.7 ensure that its Book Equity shall at all times exceed $75,000,000. 7.2.8 For the purpose of this clause 7.2 and clause 7.3, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation not being, in any such case, a revaluation of all the Group's fixed assets in accordance with a valuation report from independent valuers approved by the Mortgagee so long as any such revaluation is carried out not more frequently than once every five years. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any Time Charters entered into in relation to the ship, or else any other charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus the aggregate of the Charter Earnings and the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Fleet Vessels" means any vessels owned, or chartered on long-term demise charter to any member of the Group; "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets' means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.9 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.10 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.2, 7.2.6 and 7.2.7 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.2 and 7.2.7 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.11 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner and the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan and Guarantee Facility Agreement); and (B) such amount as will be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Guarantee Amount; (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 5.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause (a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause (a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (i) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause (i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by telex thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any Time Charter, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager or the Technical Manager, or terminate or amend the terms of the Management Agreements; 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first preferred mortgage in favour of [here insert name of Mortgagee] of [here insert address of Mortgagee]. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs Service and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; and 8.1.20 Compliance with ISM Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC in respect of such Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (c) procure that the Ship will comply at all times with the ISPS Code; and 8.1.24 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8 the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan and Guarantee Facility Agreement, or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in respect of: recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall be applied in the manner specified in clause 13.1 of the Loan and Guarantee Facility Agreement and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 and 5.2 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee and/or any of the other Creditors (as security agent and trustee for and on behalf of the Creditors) on demand on a full indemnity basis all reasonable expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the other Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed . 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the other Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the other Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Sale of Ship 16.1 Termination of Charter Notwithstanding anything contained in the Charter, if and when the Mortgagee becomes entitled to put into force and exercise all the powers possessed by it as mortgagee of the Ship or otherwise pursuant to the Mortgage or at any time thereafter, the Mortgagee shall be entitled (but not bound) to determine the Charter at any time by notice in writing to the Owner and the Charterer which notice shall operate to determine the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo if any) upon which the Ship was engaged at the time when the said notice to determine was given. Upon determination of the Charter pursuant to this clause 16.1 hereof all liabilities whatsoever of the Owner thereunder shall be absolutely discharged and extinguished. 16.2 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clause 16.1 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.3 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.3.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.3.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.3.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.3.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.4 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.5 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.6 Sale free of Charter Without prejudice to clause 16.1, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan and Guarantee Facility Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan and Guarantee Facility Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or telex or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a telex or facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o Korea Marine Fund Corporation 22F, Kyobo Bldg., 1, Jongno 1-ga Jongno-gu, Seoul, Korea Fax No.: +(822) 3210-0100 Attention: Kyung-Hwan Cho (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +3110 401 5323 Attention: Cees Kamphof (d) to the Charter Guarantor at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Greece Fax no: + 30 210 69 78107-8 Attention: Stamatis Tsantanis or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner the Charterer and the Charter Guarantor irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charterer and the Charter Guarantor irrevocably designate, appoint and empower DLA Piper Rudnick Gray Cary UK LLP at present of 3 Noble Street, London EC2V 7EE (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ London (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated ______________________ 2006, KOMARF HOPE 30 Shipping Company Limited (the "Owner") and by a Quadripartite Deed dated 2006, VITSI SHIPPING CO. LTD. of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Stopless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which KOMARF HOPE 30 Shipping Company Limited of 80 Broad Street, Monrovia, Liberia (the "Owner") or VITSI SHIPPING CO. LTD. (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KOMARF HOPE 30 SHIPPING of 80 Broad Street, Monrovia, Liberia (the "Owner") and VITSI SHIPPING CO. LTD. (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia the owners and demise charterers respectively of the m.v. "Stopless" HEREBY GIVE NOTICE that by a General Assignment dated _______________ 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Creditors as herein defined (the "Creditors")) and by a Quadripartite Deed dated ___________ 2006 and entered into by the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. Signed For and on behalf of KOMARF HOPE 30 Shipping Company Limited Dated 2006 Signed For and on behalf of VITSI SHIPPING CO. LTD. Dated 2006 SIGNED, SEALED and DELIVERED as a DEED by Jun Hyung Jon /s/ Jun Hyung Jon for and on behalf of -------------------- KOMARF HOPE 30 SHIPPING COMPANY Authorised Signatory pursuant to a unanimous Written Consent of Board of Directors and Sole Shareholder dated 9 March 2006 in the presence of: Witness: /s/ Byung Young Yu Name: Byung Young Yu Address: 22F, Kyobo Bldg., 1, Jongno 1-ga Jongno-gu, Seoul, Korea Occupation: Deputy General Manager, KOMARF SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of VITSI SHIPPING CO. LTD. pursuant to a power of attorney dated 2006 ------------------------- Attorney-in-Fact in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of KOMARF HOPE 30 SHIPPING COMPANY pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by Stamatis N. Tsantanis /s/ C. Kamphof for and on behalf of ------------------- VITSI SHIPPING CO. LTD. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 15526, Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a DEED by Stamatis N. Tsantanis /s/ C. Kamphof for and on behalf of ------------------- TOP TANKERS INC. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 in the presence of: Witness: /s/ Andreas Louca Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogion Av, 15526, Greece Occupation: Advocate SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of FORTIS BANK (NEDERLAND) N.V. pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by for and on behalf of TOP TANKERS INC. pursuant to a power of attorney dated 2006 in the presence of: Witness: Name: Address: Occupation: SIGNED, SEALED and DELIVERED as a DEED by Cees Kamphof /s/ C. Kamphof for and on behalf of ------------------- FORTIS BANK (NEDERLAND) N.V. Attorney-in-Fact pursuant to a power of attorney dated 8 March 2006 in the presence of: Witness: /s/ G. J. Meyee Name: G. J. Meyee Address: Coolsingel 93 3012 AE Rotterdam The Netherlands Occupation: Secretary EX-4.23 20 d759408_ex4-23.txt Exhibit 4.23 Guarantee 15 March 2006 To: KOMARF HOPE 30 Shipping Company (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. "Stopless" (the "Ship") to VITSI SHIPPING CO. LTD the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 9 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, TOP TANKERS INC. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantors liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantors Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 11 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to such assignment. 12 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 13 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 14 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED by Stamatis Tsantanis for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney Dated 8 March 2006 in the presence of: Witness: Name: Andreas Louca Address: Top Tanker Management Inc. 109-111 Messogian Av, 15526 Greece Occupation: Advocate EX-4.24 21 d759408_ex4-24.txt Exhibit 4.24 MEMORANDUM OF AGREEMENT Dated: 4 April 2006 Parnasos Shipping Company Limited, c/o Top Tanker Management Inc, 109-111 Messogion Avenue, Athens, 26Greece hereinafter called the Sellers, have agreed to sell, and Partankers III AS, Dronning Mauds gate 3, 0114 Oslo, Norway hereinafter called the Buyers, have agreed to buy Name: "Faultless" Classification Society/Class: Det norske Veritas Built: 1992 By. Hyundai Heavy Industries, Korea Flag: Liberia Place of Registration: Monrovia, Liberia Call Sign: A8GL8 Grt: 79,718, dwt 154,970 IMO Number: 9000572 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 51,600,000 (US dollars Fifty One Million Six Hundred Thousand). (subject as stated in Clause 21) 2. Deposit 3. Payment The said Purchase Price shall be paid as more particularly described in Clause 21 and in full free of bank charges to the Sellers' bank, The Royal Bank of Scotland, Shipping Business Centre, 0-10 Great Tower Street, London EC3P 3HX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. (See also Clause 21) 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Khor Fakkan, the United Arab Emirates, on about 9 February 2006 and have accepted the Vessel following this inspection and therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement. 4.a) and .4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 7, and 3 days approximate notice of the estimated time of arrival the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or Anchorage, or at high sea by mutual agreement between the Buyers and the Sellers. Latest with the 3 days approximate notice of delivery Sellers to nominate exact delivery place. Expected time of delivery: Between 27th March, 2006 and 1st May, 2006 Date of cancelling (see Clauses 5c) 6b)(iii) and 14): 2nd May 2006 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. -------- If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery, whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail - end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out- of spare - -and used as replacement prior to delivery; but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation (See also Clause 19) The place of closing: Piraeus/New York At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their Buyers expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings 13. Buyers' default Should the Purchase Price not be paid in accordance with Clause 3 and Clause 21, the Sellers have the right to cancel the Agreement, and the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all costs and expenses together (including, without limitation, any break funding costs) with interest if their failure is due to proven negligence and they shall make due compensation for the Buyers' loss whether or not the Buyers cancel this Agreement. 15. Buyers' representatives 16. Arbitration This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 17. The Buyers (as owners) have entered into a bareboat charterparty (the "Charter") of even date herewith with the Sellers (as charterers), whereunder the Vessel is chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery and acceptance by the Buyer (as charterers) under the Charter. 18. Delivery of the Vessel at sea (if applicable) shall be subject to any necessary consents from the Vessel's register and insurers. 19. In addition to the documents listed in Clause 8, the Sellers and the Buyers shall agree and provide such additional and normal documentation for closing as is reasonably required by the Sellers and the Buyers, a list of which shall be separately agreed between the parties latest within 3 Banking Days from the execution of the MoA, and incorporated into the MoA by way of an Addendum hereto, and which shall include, without limitation, (i) a multipartite agreement between the Sellers, the Buyers and the current time-charterer of the Vessel, confirming, inter alia, the time-charterer's consent to the sale of the Vessel to the Buyer, and the assignment and step-in rights to the Buyers and Buyers' bank in the event of a breach by the Sellers (in their capacity as charterers) under this Charter, and (ii) a co-ordination agreement between the Sellers, the Buyers and Buyers' bank regarding the subordination and coordination of rights between the first priority interest of the banks and the second priority interest of the Sellers in relation to the Sellers' credit referred to in Clause 21 (iii). 20. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. Of the total purchase price of USD 51,600,000 (US Dollars Fifty One Million Six Hundred Thousand) .(the "Purchase Price") the. Buyers shall pay USD [45,375,300] (US Dollar forty five million three hundred and seventy five thousand three hundred to the Royal Bank of Scotland, Shipping Business Centre, 5-10 Tower Street London EC3P 3HX, SORTCODE: 16-0101, SWIFT: RBOSGB2L, IBAN:GB49 RBOS1663 0000311964, IBANBIC: RBOSGB2L, ACCOUNT KEY: TOPTAN-USD1, BENEFICIARY: TOPTANKERS INC (correspondent bank: American Express Bank Limited, New York - SWIFT: AEIBUS33XXX) as and when provided in Clause 3 immediately after the Sellers have taken delivery of the Vessel as charterers under the Charter, provided that: (i) The Buyers shall be entitled to deduct USD 703,500 (US Dollar seven hundred and three thousand five hundred) from the Purchase Price, being an amount equal to the first hire payment due to the Buyers by the Sellers as charterers under the Charter. If Buyers elect to make such deduction, the cash element to the Purchase Price as set out in (a) above shall be reduced accordingly and the Buyers shall provide to the Sellers as charterers a commercial invoice crediting amount to them under the Charter. (ii) Commission in the amount of USD 361,200 (US Dollar three hundred and sixty one thousand two hundred) shall be payable to Pareto Private Equity ASA upon delivery of the Vessel under this Agreement and the Charter and the Buyers shall be entitled to deduct such amount from the cash element of the Purchase Price and make such payment on behalf of the Sellers. (iii) The amount of USD 5,160,000 (US Dollars five million one hundred and sixty thousand) shall be deducted and deferred to be paid by the Buyers on such terms and conditions set out in more detail in a certain Seller's Credit Agreement of even date herewith entered into between the Sellers and the Buyers. 22. All costs and expences arising in connection with the initial registration of the Vessel in the name of the Buyers and in connection with the maintenance of such registration shall be borne by the Buyers and, if and to the extent from time to time paid by Sellers shall be reimbursed by the Buyers to the Sellers upon written demand. For and on behalf of For and on behalf of Paramsos Shipping Company Limited Partankers III As /s/ Andreas Louka /s/ Peter W. Wallace - ----------------- -------------------- Andreas Louka Peter W. Wallace Attorney-in-fact Attorney-in-fact EX-4.25 22 d759408_ex4-25.txt Exhibit 4.25 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker 2. Place and date Piraeus/New York, 4 April 2006 3. Owners/Place of business (Cl. 1) Partankers III AS Dronning Mauds gate 3 Norway 4. Bareboat Charterers/Place of business Parnasos Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Avenue Athens, 115 26 Greece 5. Vessel's name, call sign and lag (Cl. 1 and 3) MV "Faultless", call sign A8GL8, Liberian flag 6. Type of Vessel Suezmax Tanker 7. GT 79,718 8. When/Where built 1992, Hyundai Heavy Industries, Korea 9. Total DWT (abt.) In metric tons on summer freeboard 154,970 10. Classification society (C1. 3) Det norske Veritas 11. Date of last special survey by the Vessel's classification society 30 July 2001 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) As at the time of delivery 13. Port or Place of delivery (Cl. 3) At sea or any safe berth in safe port or safe anchorage 14. Time for delivery (Cl. 4) Same as MOA date, see also Clause 33 15. Cancelling date (Cl. 5) Same as MOA date, see also Clause 34 16. Port or Place of redelivery (Cl. 15) Safe berth in safe port worldwide, but subject clauses 20 and 50 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) 6 months 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) World wide, always within Institute Warranty Limits 21. Charter period (Cl. 2) See Clause 37 22. Charter hire (Cl. 11) See Clause 38 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) See Clause 45 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV See Clause 38.6 25. Currency and method of payment (Cl. 11) See Clause 38 26. Place of payment; also slate beneficiary and bank account (Cl. 11) See Clause 38 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 36.7 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(Place of business) (Cl. 12) Clause 12 (b) applies. USD 196,600,000 first priority mortgage to Nordea Bank Norge ASA, and Second Priority Mortgage in favour of immediately previous owners of the Vessel, see Clause 40 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) See Clause 45 MII and MAPI to be taken out by the Mortgagee, and premium to be paid 50/50 by Owners and Charterers 30. Additional insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g) 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Charterers Interest Insurance and Charterers Loss of Hire 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) 34. Grace period (state number of clear banking days)(Cl. 28) See Clause 46.1.1 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) See Clause 30 (a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) NO 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) NO 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) NO 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) NO 45. Country of the Underlying Registry (only to be filled in if PART V applies) 46. Number of additional clauses covering special provisions, if agreed) 32-52 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4 "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery See Clause 32 (not applicable when Part dl applies, as indicated in Box 37) The Vessel shall be delivered by the Owners and taken over by the Charterers et the port of place indicated in Box 13 in such ready safe berth as the Charterers may direct. (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag State indicated in Box 5 and the requirements of the classification society stated in Box 10. The Vessel upon delivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 12. (c) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3 and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on account of any conditions, representations or warranties expressed or implied with respect to the Vessel but the Owners shall be liable for the cost of but not the time for repairs or renewals occasioned by latent defects in the Vessel. her machinery or appurtenances, existing at the time of delivery under this Charter, provided such defects have manifested themselves within twelve (12) months after delivery unless otherwise provided in Box 32. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel shall not be delivered before the date indicated in Box 14 without the Charterers' consent. The Owners shall keep the Charterers closely advised of possible changes in the Vessel's position. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part Ill applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Owners and the Charterers shall share equally all expenses of the On-hire Survey including loss of time, if any, and of the Off-hire-Survey. 8. Inspection The Owners and/or the Mortgagee shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked Her in accordance with Clause 10(q). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners (or their appointed representatives) to inspect the Vessel's log books whenever requested and shall whenever required by the Owners and/or as required under Clause 44 8 furnish them with full information regarding any casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed-in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, except as provided for in Clause 14(l), if applicable, at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other . necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance shall be for the sole cost and account of the Charterers. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or state taxes. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners' and Mortgagee's consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Chancres to the Vessel - Subject to Clause 10(a)(111 the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charterers shah have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and dean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State, see also Clause 51.7. 11. Hire See Clause 38 12. Mortgage (only to apply if Box 28 has been appropriately filled in) *) (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgagee(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the mortgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers, which shall not be unreasonably withheld. *) (Optional, Clause 12(a) and 12(b) are alternatives; indicated alternative agreed in Box 28). 13. Insurance and Repairs See Clause 45 (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers and the mortgagee(s) (if any), and The Charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. Insurance policies shall cover the Owners and the Charterers according to their respective interests. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the Insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account (b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 30 and Box 31 respectively. The Owners or the Charterers as the case may be shall immediately furnish the other party with particulars of any additional insurance effected, including copies of any cover notes or policies and the written consent of the insurers of any such required insurance in any case where the consent of such insurers is necessary. (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a) all insurance payments for such loss shall be paid to the Owners who shall distribute the moneys between the Owners and the Charterers according to their respective interests. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause. (e) The Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverage against hull and machinery and war risks under the provisions of sub-clause 13(a), the value of the Vessel is the sum indicated in Box 29. 14. Insurance, Repairs and Classification 15. Redelivery See also Clause 50 At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place as indicated in Box 16, in such ready safe berth as the Owners may direct The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel-within the Charter Period. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within The Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. The Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel." The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." 17. Indemnity See Clause 39 (a) The Charterers shall indemnify the Owners against any loss, damage or expense incurred by the Owners arising out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction t011avigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment Sub-Charter and Sale See Clause 41 (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld, and subject to such terms and conditions as the Owners shall approve. 23. Contracts of Carriage *) (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. 24. Bank Guarantee (Optional, only to apply if Box 27 filled in) 25. Requisition/Acquisition (a) In the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain In force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof always provided however that in the event of "Requisition for Hire" any Requisition Hire or compensation received or receivable by the Owners shall be payable to the Charterers during the remainder of the Charter Period or the period of the "Requisition for Hire" whichever be the shorter. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall be deemed terminated as of the date of such "Compulsory Acquisition'. In such event Charter Hire to be considered as earned and to be paid up to the date and time of such "Compulsory Acquisition". 26. War (a) For the purpose of this Clause, the words 'War Risks' shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. 27. Commission 28. Termination See also Clauses 46 and 47 (a) Charterers' Default The Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a). (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice: (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel This Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to- - arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as If he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the 'Mediation Notice') calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices See Clause 51 (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. EXECUTION COPY ADDITIONAL CLAUSES to the Bareboat Charter dated 4 April 2006 between Parnasos Shipping Company Limited (as Charterers) and PARTANKERS III AS (as Owners) in respect of M/V "Faultless" 32. DEFINITIONS 32.1 In this Charter, unless the context otherwise requires, the following expressions shall have the following meanings: 32.1.1 "Banking Day" means days on which banks are open for transaction of business of the nature required by this Charter in London, New York and Oslo; 32.1.2 "Charter Hire" has the meaning given to it in Clause 38 of this Charter; 32.1.3 "Charter Period" has the meaning given to it in Clause 37.1 of this Charter; 32.1.4 "Co-Ordination Agreement" means the agreement of even date herewith between the Mortgagee, the Charterers and the other Collateral Charterers acknowledged by the Owners whereby e.g. the Sellers rights and obligations under the Sellers' Credit Agreement will be subordinated and subject to the rights of the Mortgagee under the Loan Agreement; 32.1.5 "Collateral Charters" means the bareboat charters of even date herewith between the Collateral Charterers and the Owners in respect of each of the Collateral Vessels; 32.1.6 "Collateral Charterers" means the charterers of the Collateral Vessels (in each case as set out against the name of the relevant Collateral Vessel in the definition of Collateral Vessels herein); 32.1.7 "Collateral Vessels" means the vessels set out below, each owned by the Owners and chartered to the Collateral Charterer set out below opposite the vessel's name: 1. MN "Faultless" - Parnasos Shipping Company Limited 2. MN "Stainless" - Parnis Shipping Company Limited 3. MN "Noiseless" - Imitos Shipping Company Limited 4. MN "Limitless" - Mytikas Shipping Company Limited 5. MN "Endless" - Litochoro Shipping Company Limited 32.1.8 "Compulsory Acquisition" has the meaning giving to it in Clause 25(b); 32.1.9 "Delivery Date" has the meaning given to it in Clause 33.2; 32.1.10 "Event of Default" has the meaning given to it in Clause 46.1 of this Charter; 32.1.11 "Guarantee" means the guarantee issued by Guarantor in favour of the Owners in the form enclosed as Exhibit 1 as security for the due performance of this Charter and all other Collateral Charters by the Collateral Charterers; 32.1.12 "Guarantor" means Top Tankers Inc., a Marshall Islands corporation with registered office at Trust Company Complex, Ajeltake Island, P.O. Box 1405 Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.13 "Loan Agreement" means the loan agreement between the Owner and the Mortgagee in respect of the USD 180,600,000 loan provided for the purpose of financing, in part, the Owners' purchase of the Vessel and the "Collateral Vessels", together with the security documents executed or to be executed in connection therewith; 32.1.14 "Managers" means Top Tanker Management Inc,, a Marshall Islands corporation with registered address at Trust Company Complex, Ajeltake Road,, Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.15 "MOA" means the memorandum of agreement of even date herewith made between the Charterers as sellers and the Owners as buyers in respect of the Vessel (as same may be amended from time to time); 32.1.16 "Mortgage" means the first priority mortgage against the Vessel executed or to be executed by the Owners in favour of the Mortgagee as security for the Owners' obligations under the Loan Agreement and the Swap Agreement; 32.1.17 "Mortgagee" means Nordea Bank Norge ASA, as agent on behalf of the banks having financed the Owners' purchase of the Vessel and the "other Collateral Vessels" and Nordea Bank Finland Plc as swap bank; 32.1.18 "Multipartite Agreement" means the agreement between the Owners, the Sellers and other Collateral Charterers, and the Sub-Charterer providing for, inter alia, confirmation by the Sub-Charterer that it accepts (1) the Owners as new owners of the Vessel, (2) the Mortgagee and its security interest in the Vessel and (3) the step-in rights and other arrangements set out therein; 32.1.19 "Seller" means the Charterers as seller under the MOA; 32.1.20 "Sellers" means the Charterers and the other Collateral Charterers as sellers under the relevant MOA relating to the relevant Collateral Vessels; 32.1.21 "Sellers' Credit" means a retention in the amount of US$ 25,800,000 provided by the Sellers to the Owners as security for the Charterers' due and correct performance of all of its obligations under this Charter and for the other Collateral Charterers' obligations under the other Collateral Charters, or such amount thereof as may be outstanding from time to time, to be applied and reduced as more particularly set out in the Sellers' Credit Agreement; 32.1.22 "Sellers' Credit Agreement" means the agreement entered into on the date hereof among the Sellers, the Charterers and all other Collateral Charterers and the Owners in respect of the Sellers' Credit; 32.1.23 "Ship Management Agreement" means the ship management agreement to be entered between the Charterers and the Managers in respect of the Vessel; 32.1.24 "Sub-Charterer" means Hyundai Merchant Marine; 32.1.25 "Swap Agreement" means an ISDA Master Agreement entered or to be entered into between the Owners and Nordea Bank Finland PLC, as amended from time to time, and confirmations of the transactions relating to hedging of interest exposure under the Loan Agreement made or to be made thereunder; 32.1.26 "Total Loss" means (i) actual or constructive or compromised or arranged total loss of the Vessel or (ii) any Compulsory Acquisition. 32.2 The headings in this Agreement do not affect its interpretation. 33. MOA AND DELIVERY 33.1 Subject to the Vessel being delivered to, and taken over by, the Owners pursuant to the MOA, the Charterers shall forthwith be deemed to have taken delivery of the Vessel under this Charter simultaneously with delivery by the Seller to the Owners pursuant to the MOA. 33.2 The date of delivery for the purpose of this Charter shall be the date (the "Delivery Date") when the Vessel is in fact delivered by the Seller to the Owners pursuant to the MOA, whether that be before or after the scheduled date under the MOA, and the Owners shall be under no responsibility for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter. 33.3 The Charterers undertake that in the event the Vessel is not delivered and accepted under the MOA for any reason which is not attributable to any act or omission on part of the Owners, the Charterers will promptly upon the Owners' written demand reimburse the Owners in full (without set-off or counterclaim of any nature) for any cost or disbursement reasonably incurred by the Owners in respect of the contemplated transaction, including any costs incurred in respect of financing arrangements made in connection therewith. 33.4 Without prejudice to the provisions of Clause 33.2 above, the Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance evidencing delivery of the Vessel hereunder. The On-hire Survey referred to in Clause 7 hereof shall be for the purposes of ascertaining the condition of the Vessel at the time of delivery hereunder and shall not give rise to any right of the Owners to refuse to deliver, or the Charterers to refuse to accept, the Vessel hereunder, except that such On-hire Survey shall be of immediate relevance in determining the condition of the Vessel upon commencement of the Charter Period and, accordingly, in relation to the required condition of the Vessel upon redelivery pursuant to Clauses 15 and 50. The On-hire Survey shall include a list of mutually agreed spares and inventory pertaining to the Vessel on board and on shore. In connection with and as part of the On-hire Survey, the Owners shall be entitled to conduct an underwater inspection and the provisions of NSF'93 Clause 6 (b) and (c) shall apply correspondingly. 34. CANCELLING 34.1 Should the MOA be cancelled or should the Vessel become a Total Loss prior to its delivery under the MOA, this Charter shall be cancelled forthwith without liability on the part of either party under this Charter except as expressly stated in the MoA or this Charter. 35. TERMS OF DELIVERY 35.1 Subject to Clause 35.4 below, the Charterers - having owned and operated the Vessel for a considerable time, and therefore possessing first-hand knowledge about the Vessel and her specifications, performance and conditions in all respects - acknowledge and agree that the Owners make no condition, term, representation or warranty, express or implied (and whether statutory or otherwise) as to the title passed to Owners from the Seller, seaworthiness, merchantability, condition, design, operation, performance, capacity or fitness for use of the Vessel or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Delivery to the Charterers or (as the case may be) deemed delivery of the Vessel under this Charter shall be conclusive proof that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, and in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers. 35.2 Subject to Clause 35.4 hereof, the Charterers hereby waive all their claims against the Owners howsoever and whensoever the same may arise at any time in respect of the Vessel or the Owners' title thereto as passed to the Owners from the Seller or rights therein or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness or otherwise of the Vessel). 35.3 The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable (unless such unusability is due to the Owners' fault). 35.4 Nothing contained in this Clause 35 shall be construed as a waiver of any rights or remedies of the Charterers at law or in equity against the Owners in respect of (a) any fraudulent or wilful misconduct of the Owners or (b) any failure on the part of the Owners to comply with any of the terms of this Charter or the MoA. 36. CONDITIONS PRECEDENT Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject to and conditional upon at the Delivery Date:- 36.1 delivery of the Vessel to the Owners by the Seller pursuant to the MOA; and 36.2 no Event of Default having occurred and continuing unremedied or unwaived, and no other event having occurred and continuing unremedied, which with the giving of notice and/or lapse of time would, if not remedied, constitute an Event of Default; and 36.3 each of the representations and warranties contained in Clause 43 of this Charter being true and correct in all material respects on the Delivery Date by a reference to the facts and circumstances then existing; and 36.4 the Owners having received evidence that the appointment of the Managers under the Ship Management Agreement has commenced; and 36.5 the Owners having received evidence that the Vessel is insured in accordance with the provisions of this Charter and that all requirements of Clauses 13 and 45 of this Charter in respect of such insurances have been complied with; and 36.6 the Owner's having received evidence that the first instalment of the Charter Hire (as defined in Clause 38.1) has been or will be paid as required in Clause 38.2; and 36.7 the Owners having received, all in such form and substance reasonably acceptable to the Owners and the Mortgagee: 36.7.1 the Multipartite Agreement duly signed by the parties thereto; 36.7.2 the Co-Ordination Agreement, duly signed by the parties thereto; 36.7.3 the Seller's Credit Agreement, duly signed by the parties thereto; 36.7.4 the Ship Management Agreement, duly signed by the parties thereto; 36.7.5 the Guarantee, duly executed by the Guarantor; 36.7.6 the Sub-Charter, duly executed by the parties thereto; 36.7.7 legal opinions from counsel in respect of the laws of England, the Marshall Islands and Liberia in form and substance satisfactory to the Owners and the Mortgagee; 36.7.8 a copy of the Document of Compliance of the Ship Manager, the Safety Management Certificate of the Vessel and the ISPS Code Ship Security Certificate for the Vessel; and 36.7.9 such further documentation as may be agreed between the parties. 37. CHARTER PERIOD 37.1 Subject to the terms of this Charter, the period of chartering of the Vessel hereunder (the "Charter Period") shall commence on the Delivery Date and shall terminate on the date which falls 84 months after the Delivery Date. 38. CHARTER HIRE AND SECURITY 38.1 The Charterers shall, throughout the Charter Period, pay charter hire (the "Charter Hire") to the Owners at a rate of USD 23,450 net per day, 365 days per year. 38.2 The Charterers shall pay Charter Hire due to the Owners punctually in accordance with the terms of this Charter. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date. 38.3 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.3.1 On the relevant Payment Date, or, if the Payment Date shall not be a Banking Day, on the next following Banking Day unless, in the case the Payment Date falls in the following calendar month, the immediately preceding Banking Day; and 38.3.2 In USD in funds with the same day value to the Owners' account no. 6012.04.43855 with the Mortgagee, under reference "Faultless Charter Hire", or such other bank account as may be advised to the Charterers by the Owners by not less than 10 Banking Days' prior written notice. 38.3.3 Final payment of Charter Hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the numbers of days and hours remaining before redelivery and advance payment to be effected accordingly. 38.4 All payments under this Charter shall be made without any discount, set-off or counterclaim whatsoever, and free and clear of any bank charges and/or any withholding or deduction for, or on account of, any present or future income, freight, stamp and other taxes, levies, imposts, duties, fees, charges, restrictions or conditions of any nature. All payments shall be made free and clear of, and without deduction for or on account of any present or future taxes or duties of any nature now or hereafter imposed. It the Charterers are required by any authority in any country to make any withholding or deduction from any such payment, the sum due from the Charterers in respect of such payment will be increased to the extent necessary to ensure that, after the making of such withholding or deduction the Owners receive a net sum equal to the amount which it would have received had no such deduction or withholding been required to be made. 38.5 The Charterers' obligation to pay Charter Hire in accordance with the requirements of this Clause 38 shall, subject to Clauses 28 (d) and 45.3, be absolute, irrespective of any contingency or cause whatsoever, which would or might, but for this provision, have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter, including (but not limited to): 38.5.1 any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners or any other person; or 38.5.2 any unavailability of the Vessel for any reason, including (but not limited to) any lack of or invalidity of title or any other defect in the title passed on to them from the Sellers, the condition, design, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for documentation under the laws of any country (except if a defect in any such documentation is due to the fault of the Owners and the Charterers have notified the Owners of the defect in documentation which has remained unremedied for a period of 15 days after notice was given) or any damage to the Vessel; or 38.5.3 any failure or delay on the part of the Owners whether with or without fault on their part, in performing or complying with any of the terms or covenants hereunder. 38.6 In the event of failure by the Charterers to pay on the due date for payment thereof, or in the case of the sum payable on demand, the date of demand therefore, any Charter Hire or other amount payable by them under this Charter, the Charterers will pay to the Owners interest on such Charter Hire or such other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) three per centum (3%) and (ii) the London Interbank Offered Rate for USD deposits of not more than one (1) month's duration (as such rate is from time to time quoted by leading banks in the London Interbank Market to the Mortgagee). The interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. Payment of interest due under this sub-clause shall be made within seven (7) running days of the date of the Owners' invoice specifying the amount payable or, in the absence of an invoice, at the time of the next hire payment date. Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. 38.7 As security for the Charterers' performance of their obligations under this Charter, the Charterers shall procure that the Guarantee be issued by the Guarantor in favour of the Owners. 39. INDEMNITY 39.1 Subject to the terms of this Charter and in particular Clause 39.2 hereof, the Charterers agree at all times to indemnify and keep indemnified the Owners against:- 39.1.1 any costs, charges, or expenses which the Charterers have agreed to pay under this Charter and which shall be claimed or assessed against or paid by the Owners; and 39.1.2 all losses, costs, charges, expenses, fees, payments, liabilities, penalties, fines, damages or other sanctions of a monetary nature (collectively, "Losses") suffered or incurred by the Owners and arising during the tenure of the Charter or in relation to the Charter in any manner out of the design, manufacture, delivery, non delivery, purchase, importation, registration, ownership, chartering, sub-chartering, possession, control, use, operation, condition, maintenance, repair, replacement, refurbishment, modification, overhaul, insurance, sale or other disposal, return or storage of or loss of or damage to the Vessel or otherwise in connection with the Vessel (whether or not in the control or possession of the Charterers) including but not limited to those Losses described in Clause 39 and including any and all claims in tort or in contract by any sub-charterer of the-Vessel from the Charterers or by the holders of any Bills of Lading issued by the Charterers, except and to the extent directly caused by the default of the Owners; and 39.1.3 all Losses suffered or incurred by the Owners which result from claims which may be made during the tenure of the Charter or in relation to the Charter on the ground that any design, article or material of or in the Vessel or the operation or use thereof constitutes or is alleged to constitute an infringement of patent or copyright or registered design or other intellectual property right or any other right whatsoever; and 39.1.4 all Losses suffered or incurred by the Owners and/or the Mortgagee during the tenure of this Charter in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Vessel, or in securing the release of the Vessel therefrom provided that such events are not caused by Owners' default, and 39.1.5 all Losses suffered or incurred by the Owners with respect to or as a result of the presence, escape, seepage, spillage, leaking, discharge or migration from the Vessel of oil or any other hazardous substance during the tenure of this Charter, including without limitation, any claims asserted or arising under the US Oil Pollution Act of 1990 (as same may be amended and/or re-enacted from time to time hereafter) or similar legislation, regardless of whether or not caused by or within the control of the Charterer; and 39.1.6 all Losses suffered or incurred by the Owners and/or their PHIC OMITTED] respective officers or members of management board and/or the Mortgagee or any of the other financial institutions which are party to the Loan Agreement, as a consequence of any violation by the Charterers or any sub-charterer of U.S. law or any other laws pursuant to which the Vessel and/or her trading or operations shall be subject from time to time; and 39.1.7 any reasonable Losses incurred or suffered by the Owners in liquidating employing or prepaying funds acquired or borrowed to purchase or finance or [GRAPHIC OMITTED][GRAPHIC OMITTED]refinance the Vessel following any default in payment hereunder or the occurrence of any Event of Default. 39.2 If, under any applicable law, whether as a result of judgment against the Charterers or the liquidation of the Charterers or for any other reason, any payment to be made by the Charterers under or in connection with this Charter is made or is recovered in a currency other than the currency (the "currency of obligation") in which it is payable pursuant to this Charter then, to the extent that the payment (when converted into the currency of obligation at the rate of exchange on the date for the determination of liabilities permitted by the applicable law) falls short of the amount unpaid under this Charter, the Charterers shall as a separate and independent obligation, fully indemnify the Owners against the amount of the shortfall; and for the purposes of this sub-clause "rate of exchange" means the best rate at which the Owners are able on the relevant date to purchase the currency of obligation with the other currency. 39.3 The indemnities contained in this Clause 39, and each other indemnity contained in this Charter, shall survive any termination or other ending of this Charter and any breach of, or repudiation or alleged repudiation by, the Charterers or the Owners of this Charter but the indemnity contained in this Clause 39 hereof shall not apply if and to the extent that the relevant cost, charge, expense or Loss arises as a result of (i) any act, neglect or default of or by any person (other than the Charterers) subsequent to the redelivery of the Vessel to the Owners pursuant to Clause 15 hereof or any other provision of this Charter or (ii) any fraudulent or wilful misconduct or recklessness of the Owners, or any failure on the part of the Owners to comply with any of the terms of this Charter or the MOA which can reasonably be deemed to be of a material nature in the context of the transaction and which the Owners have failed to remedy within 14 days following the Charterers' written notice thereof, or (iii) any encumbrance, mortgage, charge, lien or other security interest whatsoever over the Vessel in respect of a debt, liability or other obligation of the Owners (other than any such arising from or in connection with the use or operation of the Vessel by the Charterers). 39.4 All moneys payable by the Charterers under this Clause 39 shall be paid on demand within five Banking Days from receiving the Owner's written demand in relation thereto. 40. MORTGAGES 40.1 The Owners warrant that they have not effected any mortgage(s) other than to the Mortgagee and to the Seller stated in Box 28 and that they shall not effect any other mortgages(s) without the Charterers' prior consent, which shall not be unreasonably withheld or delayed. 40.2 The Charterers agree with the Owners that the Owners may assign this Charter to the Mortgagee, and shall procure that the Charter Guarantors agree that the Owners may assign its rights under the Charter Guarantees to the Mortgagee. 41. OWNERS' TRANSFER OF VESSEL - CHARTERERS' SUB-CHARTERING 41.1 The Owner or the Mortgagee may change the registered ownership of the Vessel by way of a sale or otherwise subject to the Charterers' prior approval, which shall be granted provided that (i) this Charter is continued on identical terms, and (ii) the change is not [GRAPHIC OMITTED][GRAPHIC OMITTED]reasonably likely to cause negative consequences for the Charterers as to economic or competitive relationships. 41.2 The Charterers agree and undertake to enter into any such usual documents as the Owners or the Mortgagee shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to Clause 41.1 above, any costs or expenses whatsoever arising in relation thereto to be borne by the Owners. 41.3 The Charterers shall, subject to (i) no Event of Default having occurred and being continuing or (ii) any other restriction set out herein, be entitled to let the Vessel by way of time or voyage charter to any person other than the Sub-Charterer upon the expiry of the Sub-Charter provided that; (i) any such sub-charter shall not relieve or discharge the Charterers from any of their obligations contained in this Charter; and (ii) any such-sub-charter shall make reference to the fact that the Charterers have chartered the Vessel from the Owners, and no such charter shall be of a duration which expires, or which by virtue of any optional extensions therein contained could expire after the last day of the Charter Period; (iii) the Owners and its financiers shall have afforded step-in rights to any sub-charter with a duration (including options) of more than 12 months, which right shall be documented by way of an agreement based on the format of the Multipartite Agreement; and (iv) the Charterers will promptly notify the Owners of any such sub-chartering. In no event may the Charterers demise charter (sub-bareboat charter) the Vessel to any party without the Owners' prior written consent, which consent shall not be unreasonably withheld. 41.4 Any registration of this Charter in any Ship Register shall require the prior mutual agreement between the Owners and the Charterers and the prior written consent of the Mortgagee. 42. FLAG 42.1 The Vessel shall upon the Delivery Date be registered in the name of the Owners under Liberian flag provided always that the Owners shall, at any time following the Delivery Date, be entitled to transfer the flag of the Vessel to such other registry as the Owners may select (subject always to the Charterers' prior written consent, which consent shall not be unreasonably withheld considering consequences for the Charterers as to economic or competitive relationships). The Charterers may request the Owners to change flag at the Charterers' cost, which consent shall not be unreasonably withheld by the Owners, subject to acceptance thereto having been obtained from the Mortgagee. 42.2 All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Owners under the Liberian flag or in connection with the maintenance of such registration shall be borne by the Owners and, if and to the extent from time to time paid by the Charterers, shall be reimbursed by the Owners to the Charterers upon demand. 43. REPRESENTATIONS AND WARRANTIES 43.1 The Charterers acknowledge that the Owners have entered into this Charter in full reliance on representations by (i) the Guarantor as set out in the Guarantee and (ii) the Charterers in the following terms; and the Charterers now warrant to the Owners that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.1.1 the Charterers are duly incorporated and validly existing under the laws of Liberia; and 43.1.2 the Charterers are the wholly-owned subsidiary of the Guarantor; 43.1.3 this Charter constitute the legal, valid and binding obligations, of the Charterers, enforceable in accordance with its terms; and 43.1.4 the Charterers have the power to enter into and perform its obligations under this Charter; and 43.1.5 all consents, licences, approvals and authorisations required in connection with the Charterers' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.1.6 no litigation, arbitration or administrative proceeding is taking place against the Charterers or against any of the assets of, the Charterers which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Charterers' ability to perform their obligations under this Charter; and 43.1.7 no Event of Default (as defined in Clause 46.1 hereof) of which they are aware, and no event of which they are aware which with the giving of notice and/or lapse of time and/or relevant determination would constitute an Event of Default, has occurred and is continuing. 43.2 The Owners acknowledge that the Charterers have entered into this Charter in full reliance on representations by the Owners in the following terms; and the Owners now warrant to the Charterers that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.2.1 the Owners are duly incorporated and validly existing under the laws of Norway as a limited liability company; and 43.2.2 this Charter constitute the legal, valid and binding obligations of the Owners, enforceable in accordance with its terms; and 43.2.3 the Owners have the power to enter into and perform its obligations under this Charter; and 43.2.4 all consents, licences, approvals and authorisations required in connection with the Owners' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.2.5 no litigation, arbitration or administrative proceeding is taking place against the Owners or against any of the assets of, the Owners which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Owners' ability to perform their obligations under this Charter. 44. UNDERTAKINGS The Charterers undertake and agree that throughout the Charter Period they will:- 44.1 Provide to the Owners; 44.1.1 their audited annual financial statements as soon as available and in no event later than 120 days after the end of their financial year; and 44.1.2 copies of all class records, class certificates and survey reports prepared by the classification society pertaining to the Vessel as soon as practicable after their issue and in any event updated copies every six months; and 44.1.3 at any relevant time, copies of any inspection and/or management reports obtained or prepared by the Charterers or the Managers in respect of the Vessel, which reports shall be prepared and submitted at least twice per calendar year. 44.2 Not repudiate or terminate, nor permit the repudiation or termination of, the Ship Management Agreement or the Sub-Charter nor, without the prior written consent of the Owners (such consent not to be unreasonably withheld), amend or vary the terms of, or permit or suffer any material amendment or variation of the terms of, the Ship Management Agreement or the Sub-Charter without the Owners' consent. 44.3 Procure that the Vessel is classified and maintained free of recommendations or conditions of class with the classification society indicated in Box 10, or with such other classification society as shall be acceptable to the Owners and the Mortgagee, and at all times comply with the rules and regulations of the classification society. 44.4 At all times ensure compliance in all material respects with all applicable environmental laws and all other laws and regulations, in each case as relating to the Vessel wherever the Vessel might be trading and the operation and management thereof, and take all reasonable precautions to ensure that the crews, employees, agents or representatives of the Charterers at all times comply with such environmental laws and other applicable laws. Also, the Charterers will ensure that US Voyage Declarations, where applicable, are submitted in a timely fashion in accordance with the P&I terms of cover and that a Certificate of Financial Responsibility (COFR) is obtained before trading in the Unite States. 44.5 At all times ensure compliance in all material respects with all international conventions, codes and regulations, including the International Convention for Safety of Life at Sea (SOLAS) 1974 (as adopted, amended or replaced from time to time), the STCW 95, the ISM Code and the ISPS Code (as each such term is defined in the relevant amendments to SOLAS), in each case as relating to the Vessel and the operation and management thereof, and ensure such compliance by the Manager and any other company (with the prior consent of the Owners) performing ship management services in respect of the Vessel on behalf of the Charterers. 44.6 Obtain and promptly renew from time to time, and, whenever so reasonably required, promptly furnish certified copies to the Owners of, all such authorisations, approvals, consents and licences as may be required under any applicable law or regulation to enable the Charterers to perform their obligations under this Charter or required for the validity or enforceability of this Charter, and the Charterers shall in all material respects comply with the terms of the same. 44.7 Ensure that any new charter arrangement entered into following the expiry or termination of the Sub-Charter provides for step-in rights for the currently envisaged in the Multipartite Agreement; 44.8 Notify the Owners forthwith by letter, or in case of urgency, by telefax or e-mail of: 44.8.1 any accident to the Vessel involving repairs, the cost of which is likely to exceed USD 250,000 (or the equivalent in any other currency); or 44.8.2 any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss; or 44.8.3 any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel; or 44.8.4 details of any action, suit, proceeding, litigation or dispute for an amount of USD 250,000 or more against itself before any court, board of arbitration or other body, which, in either case, could or might result in any material adverse change in the business or condition (financial or otherwise) of the Charterer, when the same is instituted or threatened; or 44.8.5 any breach of any applicable laws or regulations relevant to the maintenance and operation of the Vessel. 44.9 Notify the Owners in writing of any Event of Default of which they are aware (or an event of which they are aware which, with the giving of notice and/or lapse of time, would constitute an Event of Default and which is not likely to be remedied before becoming an Event of Default). 44.10 Upon the Owners' request provide information regarding the Vessel's trading patterns and employment. 45. INSURANCES, TOTAL LOSS AND COMPULSORY ACQUISITION 45.1 The Charterers undertake to the Owners that throughout the Charter Period:- 45.1.1 all insurances to be effected by the Charterers pursuant to this Charter shall be effected and maintained by the Charterers; (i) in the joint names of the Owners and the Charterers, or otherwise as they may agree; (ii) in an amount of hull and machinery and war risks cover set out in Clause 45.2 (or such other amount as may be agreed from time to time between the Charterers and the Owners, or the Mortgagee; as their assignee); (iii) so that the protection and indemnity risks include, in the case of oil pollution liability risks, cover for an aggregate amount equal to the highest level of cover available from time to time under the basic P&I Club entry policy (currently one billion United States Dollars); (iv) upon standard UK or Norwegian terms and by policies and/or entries in such forms as shall from time to time be approved in writing by the Owners and the Mortgagee; and (v) through first class/Lloyd's brokers and with such reliable and first class security companies/underwriters, war risks and I.G.A P&I Associations as shall, in each case, from time to time be approved in writing by the Owners and the Mortgagee, such approval not to be unreasonably withheld; 45.1.2 all such insurances shall be renewed by the Charterers at least fourteen (14) days before the relevant policies or contracts expire and the approved brokers and/or the approved insurers shall promptly confirm in writing to the Owners and the Mortgagee as and when each such renewal is effected and, in the event of any renewal not being effected by the Charterers as aforesaid, shall notify the Owners forthwith; 45.1.3 the Charterers shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so reasonably required by the Owners or the Mortgagee provided there is no genuine dispute and subject always to the Charterers' obligation to maintain the Vessel insured at all times as required by this Charter and/or the Multipartite Agreement; 45.1.4 the Charterers shall arrange for the execution of such guarantees by any protection and indemnity or war risks association as may from time to time be required; 45.1.5 the Charterers shall procure that the policies and/or entries in respect of the insurances against marine and war risks are, in each case, endorsed with the interest of the Owners and the Mortgagee to the effect that: (i) payment of a claim for a Total Loss of the Vessel will be made to the Mortgagee as mortgagee and as the Owners' assignee (until such Mortgage has been discharged, after which to the Owners) and, if applicable, to the Charterers in respect of any additional coverage taken out by him in accordance with box 31 above,; and (ii) payment in respect of a claim which is not a Total Loss of the Vessel shall, subject to the proviso hereto and subject to the prior written consent of the Mortgagee, be made to the Owners who shall apply the same by making payment to the Charterers as reimbursement of costs and expenses incurred to make good the loss and fully repair all damage and otherwise maintaining the Vessel in accordance with their obligations hereunder as evidenced by invoices or other evidence reasonably acceptable to the Owner and the Mortgagee provided however (a) that such claims as are payable in respect of a hull & machinery minor casualty (that is to say a claim or the aggregate of the claims does not exceed five hundred thousand dollars (US$ 500,000) inclusive of any deductible (or the equivalent in any other currency)) shall be paid to the Charterers without the prior written consent of the Mortgagee and (b) that' all such' sums shall' be payable as aforesaid only until such time as the Owners may otherwise direct to the contrary following notice of termination having been given under the Charter whereupon all such sums shall be paid to the Owners or to the Mortgagee as the Owners' assignee and loss payee; 45.1.6 the Charterers shall procure that the entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid either: (i) to the person to whom was incurred the liability in respect of which the relevant money was paid or, unless and until the Owners or the Mortgagee shall direct (following the occurrence of any Event of Default which continues unremedied and/or unwaived) that they shall be paid to the Owners or to the Mortgagee; or (ii) to the Charterers in reimbursement for any payment properly made by the Charterers to a third party; 45.1.7 the Charterers shall procure that copies of all cover notes, conditions and certificates of entry are furnished to the Owners and the Mortgagee for their custody; 45.1.8 the Charterers shall procure that the interest of the Owners as owner of the Vessel and of the Mortgagee as mortgagee of the Vessel and as assignee of the Owners' interest in the insurances and loss payee of all insurance proceeds (other than under any insurances taken out pursuant to box 31 above, if applicable) shall be recorded on all policies and shall be confirmed to the Owners and the Mortgagee in conformity with applicable market practice and with the reasonable requirements of the Owners and the Mortgagee; 45.1.9 the Charterers shall not do any act or permit or suffer any act to be D] done whereby any insurance required as aforesaid shall or may be suspended, invalidated, cancelled or become defective; 45.1.10 without prejudice to the Charterers' obligation to keep the Vessel in repair regardless of whether insurance proceeds shall have first been received, the Charterers shall apply all such sums receivable in respect of the insurances as are paid to the Charterers in accordance with the terms of Clause 45.1.5 for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; 45.1.11 the Charterers shall not make any alteration to any of the insurances referred to in this Clause without the prior written approval by the Owners and the Mortgagee, which shall not be unreasonably withheld, and shall not make, do, consent or agree to any act or omission which might render any such instrument of insurance invalid or unenforceable or render any sum payable thereunder repayable in whole or in part; and 45.1.12 if the Owners or the Mortgagees receive payment of insurance proceeds in respect of insured repairs that have already been carried out at the Charterers' expense or in respect of insured liabilities that the Charterers have duly paid to third parties in agreement with this Charter, they shall without undue delay pay the same to the Charterers, whether or not notice of termination has been given under this Charter but subject always to any right of set-off the Owners may have. 45.2 Notwithstanding anything to the contrary contained in this Charter, the Vessel shall be kept insured throughout the Charter Period in respect of hull and machinery and war risks for an amount not less than the greater of (A) 100% of the market value of the Vessel determined as the average of valuations obtained from two of any of the following ship brokers Clarksons, Fearnleys, Barry Rogliano Salles, Howe Robinson, and R.S. Platou, one to be appointed by the Owners and the other to be appointed by the Charterers, on the basis of the Vessel being charter-free, ready for prompt delivery (the "Market Value") which Market Value shall be determined annually and (B) the amounts specified in column (b) in the table set out below in respect of the yearly period during the Charter Period specified in columns (a) against such amount (which insurance amount is hereinafter referred to as the "Minimum Insured Value"). The hull and machinery basis of the insurance (as opposed to the hull interest /increased value or total loss only basis for the insurance) shall be not less than 80% of the Market Value or the Minimum Insured Value as the case may be. a) (b) Twelve-monthly Period Minimum Insured Value (USD) --------------------- --------------------------- 0-12 51,600,000 12-24 48,051,500 24-36 41,923,000 36-48 35,794,500 48-60 29,666,000 60-72 23,537,500 72-84 17,409,000 45.3 Notwithstanding anything to the contrary contained in this Charter, if the Vessel shall become a Total Loss, or is missing (and a notice of abandonment has been sent to insurers), Charter Hire shall cease from the date when she was lost or, in the case where the Vessel is missing, from the date when a notice of abandonment is sent to insurers provided however that: 45.3.1 in circumstances where any moneys are due to the Owners under this Charter, the Charterers' said obligation to pay Charter Hire shall continue until the Owners (or the Mortgagee as their assignee) shall have received a net amount equal to the aggregate of (i) all accrued and due Charter Hire which is then unpaid; and (ii) other moneys (including, without limitation, any interest) owing by the Charterers to the Owners under this Charter as at the date of such receipt; and 45.3.2 in circumstances where Charter Hire has been paid in advance, such Charter Hire shall be adjusted accordingly. 45.3.3 if, in the event that, upon the occurrence of a Total Loss, or circumstance giving rise to a notice of abandonment being sent to insurers, the Owners (or the Mortgagee in its capacity as loss payee) shall, for any reason, not have received out of the insurance proceeds or compensation amounts (if any) the Minimum Insured Value within one hundred and twenty (120) days (or such longer period as the Mortgagee may agree) following the occurrence of such Total Loss or the giving of such notice of abandonment, the Charterers shall thereupon forthwith pay to the Mortgagee (in its capacity as loss payee) such amount as the Mortgagee shall specify in writing to the Charterers to be equal to the amount whereby the Minimum Insured Value (calculated as at the date for payment by the Charterers) exceeds the amount of insurance proceeds or compensation moneys (if any) actually received by the Owners (or the Mortgagee as their assignee or loss payee) prior to such payment by the Charterers. 45.4 For the purposes of this Charter: 45.4.1 an actual total loss of the Vessel shall be deemed to have occurred at the actual date and time the Vessel was lost but, in the event of the date of the loss being unknown, then the actual total loss shall be deemed to have occurred on the date on which the Vessel was last reported; 45.4.2 a constructive total loss shall be deemed to have occurred at the date and time notice of abandonment of the Vessel is given to the insurers of the Vessel for the time being (hereinafter called the "Insurers") (provided a claim for such constructive total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, at the date and time at which a constructive total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and either the Owners or the Charterers shall have the right to determine whether or not a case has arisen for the giving of notice of abandonment and the Charterers are hereby irrevocably authorised by the Owners to give the same if it so determines. Each of the Owners and the Charterers, upon the request of the other, shall promptly execute such documents as may be required to enable the other to abandon the Vessel to the Insurers and/or claim a constructive total loss and shall give all possible assistance in pursuing the said claim; 45.4.3 a compromised, agreed or arranged total loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement; and 45.4.4 a Total Loss (a) as the result of capture, taking, seizure, restraint, detention, confiscation or expropriation occurring under the conditions of the "War Risks" policy of the Vessel or (b) Compulsory Acquisition shall be deemed to have occurred at the time admitted by the Insurers. 46 EVENTS OF DEFAULT 46.1 Each of (i) the following events, (ii) the events referred to in Clause 28 as they may pertain to the Charterers, shall be a "Event of Default" for the purposes of this Charter:- 46.1.1 if any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date or (in the case only of sums expressed to be payable by the Charterers on demand within five (5) Banking Days following the date of demand therefore) and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.1.2 if either (a) the Charterers fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question), or (b) any of the said insurances shall cease for any reason whatsoever to be in full force and effect for any reason not attributable to or beyond the control of the Charterers (or their representatives); or 46.1.3 if there is a breach of the Charterers' representations and warranties in Clause 43; or 46.1.4 if the Charterers shall at any time fail to perform or observe any of their obligations under (i) this Charter (including, without limitation, the undertakings set out in Clause 44), and such failure to perform or observe any such obligation is not (if capable of being remedied) remedied within fourteen (14) days of the occurrence of the relevant breach, or (ii) the Multipartite Agreement, (iii) the Sellers Credit Agreement or (iv) the Co-Ordination Agreement; or 46.1.5 if (i) the Guarantee shall cease to be valid and/or in full force and effect, (ii) the Guarantor shall breach any of its obligations, undertakings, covenants, representations and/or warranties set out in the Guarantee or (iii) the Guarantor shall be in breach of or in default under any other financing agreement by which it is bound (provided that any payment default shall be in respect of an amount greater than USD 5,000,000); or 46.1.6 if the Manager ceases to be the manager of the Vessel or the Ship Management Agreement is repudiated, terminated or substantially amended without the prior consent of the Owners; or 46.1.7 if a petition shall be presented (and not withdrawn or stayed within fourteen (14) days or not contested in good faith by instigating appropriate legal action on a bona fide basis) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction of amalgamation during and after which the Charterers remain solvent, the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrance shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers, or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within fourteen (14) days) or if the Charterers shall otherwise have to abandon independent control of any part of its business or operations; or 46.1.8 if the Charterers shall stop payments generally or shall be unable to pay the debts, or shall admit in writing the inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or 46.1.9 if the Charterers shall declare or apply to any court or other tribunal for a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities and which, in the Owners' reasonable opinion, makes it likely that the Charterers will not be able to fulfil its obligations hereunder in full; or 46.1.10 if any consent, authorization, licence or approval necessary for this Charter to be or remain the valid and legally binding obligation of the Charterers, or to enable the Charterers to perform their obligations hereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to an Event of Default if the same are remedied within thirty (30) days of the date of their occurrence); or 46.1.11 if the Charterers shall (in a single or a series of transactions) dispose of a material part of its business or assets or cease to be engaged in the chartering of the Vessel and /or cease to conduct such business as is required in order for the Charterers to fulfil their obligations under this Charter or as otherwise contemplated herein; or 46.1.12 if any of the circumstances referred to in any of Clauses 46.1.7 -- 46.1.11 shall occur with respect to the Guarantor or Guarantee (as the case may be) or in the respect to any of the Collateral Charters or the Collateral Charterers (as the case may be); or 46.1.13 if the Sellers' Credit ceases for any reason to be available to the Owners (other than because the Seller's Credit has been fully consumed) or the Seller's Credit Agreement ceases to be valid and in full force. 47 OWNERS' RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing, the Owners may, by notice oto(.) the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clause 15. 47.2 On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clauses 46 and/or 47 hereof the Owners shall be entitled (without prejudice to the Charterers obligations under Clauses 15, 29 or 50 hereof) to retake possession of the Vessel. 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify: 47.3.1 all Charter Hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.6 hereof from the due date for payment thereof to the Termination Date; and 47.3.2 any sums, other than Charter Hire, due and payable, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 38.6 to the Termination Date. 47.3.3 all costs, expenses, damages and losses incurred by the Owners and recoverable by law as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of charter hire income, all expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15, 29 and 50 hereof and all financing break funding costs incurred in relation to any early termination of any interest rate swap transaction entered i by the Owners in connection with the financing of the Vessel). 47.4 Without prejudice to any other rights, claims or remedies of the Owners whatsoever, in respect of any amount due to the Owners under Clause 47 hereof interest pursuant to Clause 38.6 hereof shall accrue before and after any relevant judgment or any winding-up of the Charterers from the Termination Date to the date of the Owners' actual receipt thereof. 47.5 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15 and 50 hereof and (ii) shall pay, or reimburse, to the Owners on demand all Losses suffered by the Owners in connection with such termination together with interest thereon pursuant to Clause 38.6 hereof from the date on which the relevant Loss was suffered by the Owners until the date of payment or reimbursement thereof (both before and after any relevant judgment or winding up of the Charterers) pursuant to this Clause 47. 48 REFERENCE TO EXPERT 48.1 In the event that the parties cannot agree on the scope or timing or implementation of any repairs, maintenance to or of the Vessel necessary to meet the requirements of this Charter, the matter shall be referred to a mutually acceptable and independent ship operator with experience from the product carrier operations and segments or, failing agreement within a period of fourteen (14) days, such person as shall be nominated from time to time by the President of Nordisk Skibsrederforening who, acting as an expert, shall be asked to determine the scope or timing of implementation of the works in question in accordance with the standards herein defined. The decision shall be final and binding upon the parties. The costs incurred to obtain the expert's decision, shall be borne equally by the parties. 49 OWNERS' COVENANT 49.1 The Owners hereby covenant and undertake that so long as they shall not have commenced exercising any of their rights under or pursuant to Clause 47 hereof neither the Charterers nor any permitted sub-charterers shall be disturbed or interfered with in their quiet and peaceful use, possession and enjoyment of the Vessel (except as expressly provided for herein). 50 REDELIVERY 50.1 The Off-hire Survey referred to in Clause 7 hereof shall take place at the port of redelivery hereunder at or about the time of redelivery (the "Redelivery Date"). Without prejudice to the provisions of Clause 15 hereof, the Vessel shall be redelivered by the Charterers:- 50.1.1 With her class with Det norske Veritas maintained without any GRAPHIC OMITTED] conditions or recommendations, free of average damage affecting the Vessel's class, and with her classification, trading, national and international certificates the Vessel had when she was delivered under the Charter, valid and un-extended without conditions or recommendation falling due for a minimum of six - 6 - months beyond the time of redelivery, and with minimum CAP 2 requirements, Hull Machinery and Equipment. The CAP certificates issued are to be less than 18 months old at the time of redelivery. 50.1.2 In the same or as good structure, state, condition and class as that in which she was deemed delivered under Clause 6 above, fair wear and tear not affecting class excepted. 50.1.3 With clean swept, washed down dried up holds free from residues of previous cargoes. 50.1.4 With all such spare parts and other equipment (including, without limitation, cargo handling equipment, fork lift truck, if any, lashing equipment, etc.) she had at the time of delivery under this Charter as per the mutually agreed list, fair wear and tear excepted. 50.1.5 Immediately prior to redelivery a class surveyor shall have surveyed the Vessel's hull and decide which damages and indents that are not acceptable according to class regulation. If a condition of class is given, this shall be remedied immediately while the Vessel is still on hire or the parties shall agree to a lump sum (to include applicable Charter Hire due to such repair) to be paid by the Charterers to the Owners whereby the responsibility is taken over by the Owners to repair the damage unless the parties mutually agree to another solution. 50.1.6 Without prejudice to the foregoing, the Charterers shall, if requested to do so by the Owners, assign to the Owners at the redelivery all and any such rights as they may have under the Charterers' insurances for the Vessel in respect of damage to the Vessel, whether or not then known other than any rights to be reimbursed by any insurers for costs previously incurred by the Charterers. 50.1.7 The Charterers shall provide the Owners with reasonable, written notice in advance so that the Owner may dispatch one or more representatives to attend all dry dockings of the Vessel throughout the Charter Period and upon request furnish the Owners with relevant plans and programs for the ensuing dry docking. In relation to the last dry docking prior to redelivery the Owners shall be entitled to suggest remedies or actions in respect of the dry docking and be consulted during the preparatory stages. The under water hull shall be smooth, well painted and have sufficient anti-fouling for the remainder of a normal docking period (ref. box 18) from the date of such docking. 50.1.8 The Owners shall, during a period of up to thirty (30) days prior to the Redelivery Date, be entitled at their own risk and expense, to place representatives on board the Vessel for familiarisation purposes, subject to signing of standard indemnity letter. 50.1.9 Without prejudice to the generality of the provisions of Clause 7, any inspection of the Vessel carried out pursuant thereto, may include an under-water inspection of the Vessel provided that the same shall be carried out during such time as she is in port (such inspection not to interfere with or interrupt the trading of the Vessel). Such under-water inspection shall be carried out by a class-approved diver in liaison with a class surveyor and the principles set out in Standard NSF 93 clause in relation thereto. 50.1.10 Prior to redelivery of the Vessel to the Owners the Charterers shall, upon the request of the Owners, and free of charge deliver print-outs and data surveys of inventory, equipment and consumables on board the Vessel. Upon the Owners' request the Charterers shall deliver to the Owners all drawings and/or specifications in their possession relating to the Vessel. 50.1.11 Upon redelivery the Charterers may, upon the request of the Owners' or in the Charterers' option, take ashore equipment with the Charterers' logo or name on it subject to substituting such equipment with corresponding equipment of at least equal numbers and quality, unless, in the Owners' option, a lump sum compensation is agreed. 50.1.12 Prior to redelivery a Protocol of Redelivery shall be prepared jointly by the parties addressing relevant issues of the Off-hire Survey in comparison with the On-Hire Survey and listing specifically any leased or hired equipments. 50.1.13 The Owners shall purchase unused fuel oils, lubricating oils and unbroached chemicals as per the Charterers net contracts prices evidenced by invoices. 50.1.14 As soon as practically possible after redelivery of the Vessel hereunder, the Owners at its cost shall remove the Vessel's name and the Charterers' funnel markings and logos on the hull (if any). 51 COMMUNICATIONS Except as otherwise expressly provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, telex number or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):- 51.1.1 In the case of the Owners: Partankers III AS Pareto Management AS Dronning Maudsgate 3 P.O. Box 1396 Vika N-0114 Oslo, Norway Att: Mr. Peter Wallace Telephone No.: + 47 22 87 87 00 Telefax No.: + 47 22 87 88 00 51.1.2 In the case of the Charterers Parnasos Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Ave. Athens, 115 26 Greece Att: Mr Andreas Louka Telephone No.: + 30 210 69 78000 Telefax No.: + 30 210 69 15668 A written notice includes a notice by facsimile and shall be deemed given upon appropriate acknowledgement by the addressee's receiving equipment, or by e-mail if actually replied to. A notice received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place. 51.1 All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation. 52 MISCELLEANOUS 52.1 In case of any conflict or discrepancy between the printed part and the rider clauses of this Charter, the latter shall prevail. For and on behalf of the Owners For and on behalf of the Charterers /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact EX-4.26 23 d759408_ex4-26.txt Exhibit 4.26 MEMORANDUM OF AGREEMENT Dated: 4 April 2006 Imitos Shipping Company Limited, do Top Tanker Management Inc, 109-111 Messogion Avenue, Athens, 115 26 Greece4fereinafter called the Sellers, have agreed to sell, and Partankers III AS, Dronning Mauds gate 3, 0114 Oslo, Norway hereinafter called the Buyers, have agreed to buy Name: "Noiseless" Classification Society/Class: ABS Built: 1992 By: Samsung Heavy Industries, South Korea Flag: Marshall Islands Place of Registration: Majuro, Marshall Islands Call Sign: V7HI8 Grt: 80,569, dwt 149,599 IMO Number: 9014834 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. 0 "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 51,600,000 (US dollars Fifty One Million Six Hundred Thousand). (subject as stated in Clause 21) 2. Deposit 3. Payment The said Purchase Price shall be paid as more particularly described in Clause 21 and in full free of bank charges to the Sellers' bank, The Royal Bank of Scotland, Shipping Business Centre, 0-10 Great Tower Street, London EC3P 3HX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. (See also Clause 21) 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel Khor Fakkan, the United Arab Emirates, on about 9 February 2006 and have accepted the Vessel following this inspection and therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 7, and 3 days approximate notice of the estimated time of arrival at the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or Anchorage, or at high sea by mutual agreement between the Buyers and the Sellers. Latest with the 3 days approximate notice of delivery Sellers to nominate exact delivery place. Expected time of delivery: Between 27th March, 2006 and 1st May, 2006 Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14) 2nd May 2006 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 7-running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 7- running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5s) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery, whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation (See also Clause 19) The place of dosing: Piraeus/New York At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their Buyers expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all 4;a-0er-sr-encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation' by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings 13. Buyers' default Should the Purchase Price not be paid in accordance with Clause 3 and Clause 21, the Sellers have the right to cancel the Agreement and the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause B. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all costs and expenses together (including, without limitation, any break funding costs) with interest if their failure is due to proven negligence and they shall make due compensation for the Buyers' loss whether or not the Buyers cancel this Agreement. 15. Buyers' representatives 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 17. The Buyers (as owners) have entered into a bareboat charterparty (the "Charter") of even date, herewith with the Sellers (as charterers), whereunder the Vessel is chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery and acceptance by the Buyer (as charterers) under the Charter. 18. Delivery of the Vessel at sea (if applicable) shall be subject to any necessary consents from the Vessel's register and insurers. 19. In addition to the documents listed in Clause 8, the Sellers and the Buyers shall agree and provide such additional and normal documentation for closing as is reasonably required by the Sellers and the Buyers, a list of which shall be separately agreed between the parties latest within 3 Banking Days from the execution of the MoA, and incorporated into the MoA by way of an Addendum hereto, and which shall include, without limitation, (i) a multipartite agreement between the Sellers, the Buyers and the current time-charterer of the Vessel, confirming, inter alia, the time-charterer's consent to the sale of the Vessel to the Buyer, and the assignment and step-in rights to the Buyers and Buyers' bank in the event of a breach by the Sellers (in their capacity as charterers) under this Charter, and (ii) a co-ordination agreement between the Sellers, the Buyers and Buyers' bank regarding the subordination and coordination of rights between the first priority interest of the banks and the second priority interest of the Sellers in relation to the Sellers' credit referred to in Clause 21 (iii). 20. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. Of the total purchase price of USD 51,600,000 (US Dollars Fifty One Million Six Hundred Thousand) (the "Purchase Price") the Buyers shall pay USD [45,375,300--] .(US Dollar forty five million three hundred and seventy five thousand three hundred to the Royal Bank of Scotland, Shipping Business Centre, 5-10 Tower Street London EC3P 3HX, SORTCODE: 16-0101, SWIFT: RBOSGB2L, IBAN:GB49 RBOS1663 0000311964, IBANBIC: RBOSGB2L, ACCOUNT KEY: TOPTAN-USD1, BENEFICIARY: TOPTANKERS INC (correspondent bank: American Express Bank Limited, New York -- SWIFT: AEIBUS33XXX) as and when provided in Clause 3 immediately after the Sellers have taken delivery of the Vessel as charterers under the Charter, provided that: (i) The Buyers shall be entitled to deduct USD [703,500--1 (US Dollar Esevenhundredandthreethousandfivehundred-4) from the Purchase Price, being an amount equal to the first hire payment due to the Buyers by the Sellers as charterers under the Charter. If Buyers elect to make such deduction, the cash element to the Purchase Price as set out in (a) above shall be reduced accordingly and the Buyers shall provide to the Sellers as charterers a commercial invoice crediting amount to them under the Charter. (ii) Commission in the amount of USD 361,200 (US Dollar three hundred and sixty one thousand two hundred) shall be payable to Pareto Private Equity ASA upon delivery of the Vessel under this Agreement and the Charter and the Buyers shall be entitled to deduct such amount from the cash element of the Purchase Price and make such payment on behalf of the Sellers. (iii) The amount of USD 5,160,000 (US Dollars five million one hundred and sixty thousand) shall be deducted and deferred to be paid by the Buyers on such terms and conditions set out in more detail in a certain Seller's Credit Agreement of even date herewith entered into between the Sellers and the Buyers. 22. All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Buyers and in connection with the maintenance of such registration shall be borne by the Buyers and, if and to the extent from time to time paid by Sellers shall be reimbursed by the Buyers to the Sellers upon written demand. For and on behalf of For and on behalf of Imitos Shipping Company Limited Partankers III AS /s/ Andreas Louka /s/ Peter W. Wallace - ----------------- -------------------- Andreas Louka Peter W. Wallace Attorney-in-fact Attorney-in-fact EX-4.27 24 d759408_ex4-27.txt Exhibit 4.27 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker 2. Place and date Piraeus/New York, 4 April 2006 3. Owners/Place of business (Cl. 1) Partankers III AS Dronning Mauds gate 3 Norway 4. Bareboat Charterers/Place of business Imitos Shipping Company Limited c/o Top Tanker Management Inc 109-111 Messogion Avenue Athens, 115 26 Greece 5. Vessel's name, call sign and lag (Cl. 1 and 3) MV "Noiseless", call sign V7HI8, The Marshall Islands flag 6. Type of Vessel Suezmax Tanker 7. GT/NT 80,569 8. When/Where built 1992, Samsung Heavy Industries, South on summer freeboard Korea 9. Total DWT (abt.) In metric tons on summer freeboard 149,599 10. Classification society (C1. 3) ABS 11. Date of last special survey by the Vessel's classification society 8 November 2002 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) As at the time of delivery 13. Port or Place of delivery (Cl. 3) At sea or any safe berth in safe port or safe anchorage 14. Time for delivery (Cl. 4) Same as MOA date, see also Clause 33 15. Cancelling date (Cl. 5) Same as MOA date, see also Clause 34 16. Port or Place of redelivery (Cl. 15) Safe berth in safe port worldwide, but subject clauses 20 and 50 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) 6 months 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) World wide, always within Institute Warranty Limits 21. Charter period (Cl. 2) See Clause 37 22. Charter hire (Cl. 11) See Clause 38 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) See Clause 45 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV See Clause 38.6 25. Currency and method of payment (Cl. 11) See Clause 38 26. Place of payment; also slate beneficiary and bank account (Cl. 11) See Clause 38 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 36.7 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) Clause 12(b) applies. state date of Financial Instrument and name of Mortgagee(s)(Place of business) (Cl. 12) Clause 12 (b) applies. USD 196,600,000 first priority mortgage to Nordea Bank Norge ASA, and Second Priority Mortgage in favour of the immediately previous owners of the Vessel, see Clause 40 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) See Clause 45 MII and MAPI to be taken out by the Mortgagee, and premium to be paid 50/50 by Owners and Charterers 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Charterers Interest Insurance and Charterers Loss of Hire 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) 34. Grace period (state number of clear banking days)(Cl. 28) See Clause 46.1.1 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) See Clause 30 (a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) NO 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) NO 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) NO 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) NO 45. Country of the Underlying Registry (only to be filled in if PART V applies) 46. Number of additional clauses covering special provisions, if agreed) 32.52 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery See Clause 32 (not applicable when Part III applies, as indicated in Box 37) The Vessel shall be delivered by the Owners and taken aver by. he Charterers at the port or place indicated in Box 13 in such ready safe berth as the Charterers may direct. (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag State indicated in Box 5 and the requirements of the classification society stated in Box 10. The Vessel upon delivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 12. (c) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3 and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on account of any conditions, representations or warranties expressed or implied with respect to the Vessel but the Owners shall be liable for the cost of but not the time for repairs or renewals occasioned by latent defects in the Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter, provided such defects have manifested themselves within twelve (12) months after delivery unless otherwise provided in Box 32. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel shall not be delivered before the date indicated in Box 14 without the Charterers' consent. The Owners shall keep the Charterers closely advised of possible changes in the Vessel's position. 5. Cancelling (not applicable when Part Ill applies, as indicated in Box 37) 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carnage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Pad Ill applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Owners and the Charterers shall share equally all expenses of the On-hire Survey including loss of time, If any, and of the Off-hire-Survey. 8. Inspection The Owners and/or the Mortgagee shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked Her in accordance with Clause 10(q). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners (or their appointed representatives) to inspect the Vessel's log books whenever requested and shall whenever required by the Owners and/or as required under Clause 44 8 furnish them with full information regarding any casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the -inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, except as provided for in Clause 14(1) if applicable, at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any Improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance shall be for the sole cost and account of the Charterers. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or state taxes. The Master, officers and crew (degree), the Vessel shat be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, Planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners' and Mortgagee's consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii), the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State, see also Clause 51.7. 11. Hire See Clause 38 12. Mortgage (only to apply if Box 28 has been appropriately filled in) *) (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgagee(s) in conformity with the Financial Instrument The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the mortgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers, which shall not be unreasonably withheld. *) (Optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs See Clause 45 (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers and the mortgagee(s) (if any), and The Charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. Insurance policies shall cover the Owners and the Charterers according to their respective interests. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(0 above, including any deviation, shall be for the Charterers' account (b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively. The Owners or the Charterers as the case may be shall immediately furnish the other party with particulars of any additional insurance effected, including copies of any cover notes or policies and the written consent of the insurers of any such required insurance in any case where the consent of such insurers is necessary. (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a) all insurance payments for such loss shall be paid to the Owners who shall distribute the moneys between the Owners and the Charterers according to their respective interests. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause. (e) The Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverage against hull and machinery and war risks under the provisions of sub-clause 13(a), the value of the Vessel is the sum indicated in Box 29. 14. Insurance, Repairs and Classification 15. Redelivery See also Clause 50 At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place as indicated in Box 16, in such ready safe berth as the Owners may direct The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within The Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. The Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." 17. Indemnity See Clause 39 (a) The Charterers shall indemnify the Owners against any loss, damage or expense incurred by the Owners arising out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale See Clause 41 (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld, and subject to such terms and conditions as the Owners shall approve. 23. Contracts of Carriage *) (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. 24. Bank Guarantee (Optional, only to apply if o21. filled in) 25. Requisition/Acquisition (a) In the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof always provided however that in the event of 'Requisition for Hire' any Requisition Hire or compensation received or receivable by the Owners shall be payable to the Charterers during the remainder of the Charter Period or the period of the "Requisition for Hire" whichever be the shorter. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition' may occur, this Charter shall be deemed terminated as of the date of such "Compulsory Acquisition'. In such event Charter Hire to be considered as earned and to be paid up to the date and time of such "Compulsory Acquisition". 26. War (a) For the purpose of this Clause, the words 'War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. 27. Commission 28. Termination See also Clauses 46 and 47 (a) Charterers' Default The Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of dear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel This Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28 the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to--arbitration may. without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal (-the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a) 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices See Clause 51 (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. EXECUTION COPY ADDITIONAL CLAUSES to the Bareboat Charter-dated 4 April 2006 between Imitos Shipping Company Limited (as Charterers) and PARTANKERS III AS (a Owners) in respect of M/V "Noiseless" 32. DEFINITIONS 32.1 In this Charter, unless the' context otherwise requires, the following expressions shall have the following meanings: 32.1.1 "Banking Day" means days on which banks are open for transaction of business of the nature required by this Charter in London, New York and Oslo; 32.1.2 "Charter Hire" has the meaning given to it in Clause 38 of this Charter; 32.1.3 "Charter Period" has the meaning given to it in Clause 37.1 of this Charter; 32.1.4 "Co-Ordination Agreement" means the agreement of even date herewith between the Mortgagee, the Charterers and the other Collateral Charterers acknowledged by the Owners whereby e.g. the Sellers rights and obligations under the Sellers' Credit Agreement will be subordinated and subject to the rights of the Mortgagee under the Loan Agreement; 32.1.5 "Collateral Charters" means the bareboat charters of even date herewith between the Collateral Charterers and the Owners in respect of each of the Collateral Vessels; 32.1.6 "Collateral Charterers" means the charterers of the Collateral Vessels (in each case as set out against the name of the relevant Collateral Vessel in the definition of Collateral Vessels herein); 32.1.7 "Collateral Vessels" means the vessels set out below, each owned by the Owners and chartered to the Collateral Charterer set out below opposite the vessel's name: 1. MN "Faultless" - Parnasos Shipping Company Limited 2. MN "Stainless" - Parnis Shipping Company Limited 3. MN "Noiseless" - Imitos Shipping Company Limited 4. MN "Limitless" - Mytikas Shipping Company Limited 5. MN "Endless" -- Litochoro Shipping Company Limited 32.1.8 "Compulsory Acquisition" has the meaning giving to it in Clause 25(b); 32.1.9 "Delivery Date" has the meaning given to it in Clause 33.2; 32.1.10 "Event of Default" has the meaning given to it in Clause 46.1 of this Charter; 32.1.11 "Guarantee" means the guarantee issued by Guarantor in favour of the Owners in the form enclosed as Exhibit 1 as security for the due performance of this Charter and all other Collateral Charters by the Collateral Charterers; 32.1.12 "Guarantor" means Top Tankers Inc., a Marshall Islands corporation with registered office at Trust Company Complex, Ajeltake Island, P.O. Box 1405 Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.13 "Loan Agreement" means the loan agreement between the Owner and the Mortgagee in respect of the USD 180,600,000 loan provided for the purpose of financing, in part, the Owners' purchase of the Vessel and the "Collateral Vessels", together with the security documents executed or to be executed in connection therewith; 32.1.14 "Managers" means Top Tanker Management Inc,, a Marshall Islands corporation with registered address at Trust Company Complex, Ajeltake Road,, Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.15 "MOA" means the memorandum of agreement of even date herewith made between the Charterers as sellers and the Owners as buyers in respect of the Vessel (as same may be amended from time to time); 32.1.16 "Mortgage" means the first priority mortgage against the Vessel executed or to be executed by the Owners in favour of the Mortgagee as security for the Owners' obligations under the Loan Agreement and the Swap Agreement; 32.1.17 "Mortgagee" means Nordea Bank Norge ASA, as agent on behalf of the banks having financed the Owners' purchase of the Vessel and the "other Collateral Vessels" and Nordea Bank Finland Plc as swap bank; 32.1.18 "Multipartite Agreement" means the agreement between the Owners, the Sellers and other Collateral Charterers, and the Sub-Charterer providing for, inter alia, confirmation by the Sub-Charterer that it accepts (1) the Owners as new owners of the Vessel, (2) the Mortgagee and its security interest in the Vessel and (3) the step-in rights and other arrangements set out therein; 32.1.19 "Seller" means the Charterers as seller under the MOA; 32.1.20 "Sellers" means the Charterers and the other Collateral Charterers as sellers under the relevant MOA relating to the relevant Collateral Vessels; 32.1.21 "Sellers' Credit" means a retention in the amount of US$ 25,800,000 provided by the Sellers to the Owners as security for the Charterers' due and correct performance of all of its obligations under this Charter and for the other Collateral Charterers' obligations under the other Collateral Charters, or such amount thereof as may be outstanding from time to time, to be applied and reduced as more particularly set out in the Sellers' Credit Agreement 32.1.22 "Sellers' Credit Agreement" means the agreement entered into on the date hereof among the Sellers, the Charterers and all other Collateral Charterers and the Owners in respect of the Sellers' Credit; 32.1.23 "Ship Management Agreement" means the ship management agreement to be entered between the Charterers and the Managers in respect of the Vessel; 32.1.24 "Sub-Charterer" means none; 32.1.25 "Swap Agreement" means an ISDA Master Agreement entered or to be entered into between the Owners and Nordea Bank Finland PLC, as amended from time to time, and confirmations of the transactions relating to hedging of interest exposure under the Loan Agreement made or to be made thereunder; 32.1.26 "Total Loss" means (i) actual or constructive or compromised or arranged total loss of the Vessel or (ii) any Compulsory Acquisition. 32.2 The headings in this Agreement do not affect its interpretation. 33. MOA AND DELIVERY 33.1 Subject to the Vessel being delivered to, and taken over by, the Owners pursuant to the MOA, the Charterers shall forthwith be deemed to have taken delivery of the Vessel under this Charter simultaneously with delivery by the Seller to the Owners pursuant to the MOA. 33.2 The date of delivery for the purpose of this Charter shall be the date (the "Delivery Date") when the Vessel is in fact delivered by the Seller to the Owners pursuant to the MOA, whether that be before or after the scheduled date under the MOA, and the Owners shall be under no responsibility for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter. 33.3 The Charterers undertake that in the event the Vessel is not delivered and accepted under the MOA for any reason which is not attributable to any act or omission on part of the Owners, the Charterers will promptly upon the Owners' written demand reimburse the Owners in full (without set-off or counterclaim of any nature) for any cost or disbursement reasonably incurred by the Owners in respect of the contemplated transaction, including any costs incurred in respect of financing arrangements made in connection therewith. 33.4 Without prejudice to the provisions of Clause 33.2 above, the Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance evidencing delivery of the Vessel hereunder. The On-hire Survey referred to in Clause 7 hereof shall be for the purposes of ascertaining the condition of the Vessel at the time of delivery hereunder and shall not give rise to any right of the Owners to refuse to deliver, or the Charterers to refuse to accept, the Vessel hereunder, except that such On-hire Survey shall be of immediate relevance in determining the condition of the Vessel upon commencement of the Charter Period and, accordingly, in relation to the required condition of the Vessel upon redelivery pursuant to Clauses 15 and 50. The On-hire Survey shall include a list of mutually agreed spares and inventory pertaining to the Vessel on board and on shore. In connection with and as part of the On-hire Survey, the -Owners shall be entitled to conduct an underwater inspection and the provisions of NSF'93 Clause 6 (b) and (c) shall apply correspondingly. 34. CANCELLING 34.1 Should the MOA be cancelled or should the Vessel become a Total Loss prior to its delivery under the MOA, this Charter shall be cancelled forthwith without liability on the part of either party under this Charter except as expressly stated in the MoA or this Charter. 35. TERMS OF DELIVERY 35.1 Subject to Clause 35.4 below, the Charterers - having owned and operated the Vessel for a considerable time, and therefore possessing first-hand knowledge about the Vessel and her specifications, performance and conditions in all respects - acknowledge and agree that the Owners make no condition, term, representation or warranty, express or implied (and whether statutory or otherwise) as to the title passed to Owners from the Seller, seaworthiness, merchantability, condition, design, operation, performance, capacity or fitness for use of the Vessel or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Delivery to the Charterers or (as the case may be) deemed delivery of the Vessel under this Charter shall be conclusive proof that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, and in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers. 35.2 Subject to Clause 35.4 hereof, the Charterers hereby waive all their claims against the Owners howsoever and whensoever the same may arise at any time in respect of the Vessel or the Owners' title thereto as passed to the Owners from the Seller or rights therein or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness or otherwise of the Vessel). 35.3 The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable (unless such unusability is due to the Owners' fault). 35.4 Nothing contained in this Clause 35 shall be construed as a waiver of any rights or remedies of the Charterers at law or in equity against the Owners in respect of (a) any fraudulent or wilful misconduct of the Owners or (b) any failure on the part of the Owners to comply with any of the terms of this Charter or the MoA. 36. CONDITIONS PRECEDENT Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject to and conditional upon at the Delivery Date:- 36.1 delivery of the Vessel to the Owners by the Seller pursuant to the MOA; and 36.2 no Event of Default having occurred and continuing unremedied or unwaived, and no other event having occurred and continuing unremedied, which with the giving of notice and/or lapse of time would, if not remedied, constitute an Event of Default; and 36.3 each of the representations and warranties contained in Clause 43 of this Charter being true and correct in all material respects on the Delivery Date by a reference to the facts and circumstances then existing; and 36.4 the Owners having received evidence that the appointment of the Managers under the Ship Management Agreement has commenced; and 36.5 the Owners having received evidence that the Vessel is insured in accordance with the provisions of this Charter and that all requirements of Clauses 13 and 45 of this Charter in respect of such insurances have been complied with; and 36.6 the Owner's having received evidence that the first instalment of the Charter Hire (as defined in Clause 38.1) has been or will be paid as required in Clause 38.2; and 36.7 the Owners having received, all in such form and substance reasonably acceptable to the Owners and the Mortgagee: 36.7.1 the Multipartite Agreement duly signed by the parties thereto; 36.7.2 the Co-Ordination Agreement, duly signed by the parties thereto; 36.7.3 the Seller's Credit Agreement, duly signed by the parties thereto; 36.7.4 the Ship Management Agreement, duly signed by the parties thereto; 36.7.5 the Guarantee, duly executed by the Guarantor; 36.7.6 the Sub-Charter, duly executed by the parties thereto; 36.7.7 legal opinions from counsel in respect of the laws of England, the Marshall Islands and Liberia in form and substance satisfactory to the Owners and the Mortgagee; 36.7.8 a copy of the Document of Compliance of the Ship Manager, the Safety Management Certificate of the Vessel and the 1SPS Code Ship Security Certificate for the Vessel; and 36.7.9 such further documentation as may be agreed between the parties. 37. CHARTER PERIOD 37.1 Subject to the terms of this Charter, the period of chartering of the Vessel hereunder (the "Charter Period") shall commence on the Delivery Date and shall terminate on the date which falls 84 months after the Delivery Date. 38. CHARTER HIRE AND SECURITY 38.1 The Charterers shall, throughout the Charter Period, pay charter hire (the "Charter Hire") to the Owners at a rate of USD 23,450 net per day, 365 days per year. 38.2 The Charterers shall pay Charter Hire due to the Owners punctually in accordance with the terms of this Charter. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date. 38.3 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.3.1 On the relevant Payment Date, or, if the Payment Date shall not be a Banking Day, on the next following Banking Day unless, in the case the Payment Date falls in the following calendar month, the immediately preceding Banking Day; and 38.3.2 In USD in funds with the same day value to the Owners' account no. 6012.04.43855 with the Mortgagee, under reference "Faultless Charter Hire", or such other bank account as may be advised to the Charterers by the Owners by not less than 10 Banking Days' prior written notice. 38.3.3 Final payment of Charter Hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the numbers of days and hours remaining before redelivery and advance payment to be effected accordingly. 38.4 All payments under this Charter shall be made without any discount, set-off or counterclaim whatsoever, and free and clear of any bank charges and/or any withholding or deduction for, or on account of, any present or future income, freight, stamp and other taxes, levies, imposts, duties, fees, charges, restrictions or conditions of any nature. All payments shall be made free and clear of, and without deduction for or on account of any present or future taxes or duties of any nature now or hereafter imposed. It the Charterers are required by any authority in any country to make any withholding or deduction from any such payment, the sum due from the Charterers in respect of such payment will be increased to the extent necessary to ensure that, after the making of such withholding or deduction the Owners receive a net sum equal to the amount which it would have received had no such deduction or withholding been required to be made. 38.5 The Charterers' obligation to pay Charter Hire in accordance with the PHIC OMITTED][GRAPHIC OMITTED] requirements of this Clause 38 shall, subject to Clauses 28 (d) and 453, be absolute, irrespective of any contingency or cause whatsoever, which would or might, but for this provision, have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter, including (but not limited to): 38.5.1 any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners or any other person; or 38.5.2 any unavailability of the Vessel for any reason, including (but not limited to) any lack of or invalidity of title or any other defect in the title passed on to them from the Sellers, the condition, design, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for documentation under the laws of any country (except if a defect in any such documentation is due to the fault of the Owners and the Charterers have notified the Owners of the defect in documentation which has remained unremedied for a period of 15 days after notice was given) or any damage to the Vessel; or 38.5.3 any failure or delay on the part of the Owners whether with or without fault on their part, in performing or complying with any of the terms or covenants hereunder. 38.6 In the event of failure by the Charterers to pay on the due date for payment thereof, or in the case of the sum payable on demand, the date of demand therefore, any Charter Hire or other amount payable by them under this Charter, the Charterers will pay to the Owners interest on such Charter Hire or such other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) three per centum (3%) and (ii) the London Interbank Offered Rate for USD deposits of not more than one (1) month's duration (as such rate is from time to time quoted by leading banks in the London Interbank Market to the Mortgagee). The interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. Payment of interest due under this sub-clause shall be made within seven (7) running days of the date of the Owners' invoice specifying the amount payable or, in the absence of an invoice, at the time of the next hire payment date. Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. 38.7 As security for the Charterers' performance of their obligations under this Charter, the Charterers shall procure that the Guarantee be issued by the Guarantor in favour of the Owners. 39. INDEMNITY 39.1 Subject to the terms of this Charter and in particular Clause 39.2 hereof, the Charterers agree at all times to indemnify and keep indemnified the Owners against:- 39.1.1 any costs, charges, or expenses which the Charterers have agreed to pay under this Charter and which shall be claimed or assessed against or paid by the Owners; and 39.1.2 all losses, costs, charges, expenses, fees, payments, liabilities, penalties, fines, damages or other sanctions of a monetary nature (collectively, "Losses") suffered or incurred by the Owners and arising during the tenure of the Charter or in relation to the Charter in any manner out of the design, manufacture, delivery, non delivery, purchase, importation, registration, ownership, chartering, sub-chartering, possession, control, use, operation, condition, maintenance, repair, replacement, refurbishment, modification, overhaul, insurance, sale or other disposal, return or storage of or loss of or damage to the Vessel or otherwise in connection with the Vessel (whether or not in the control or possession of the Charterers) including but not limited to those Losses described in Clause 39 and including any and all claims in tort or in contract by any subcharterer-of the Vessel from the Charterers or by the holders of any Bills of Lading issued by the Charterers, except and to the extent directly caused by the default of the Owners; and 39.1.3 all Losses suffered or incurred by the Owners which result from claims which may be made during the tenure of the Charter or in relation to the Charter on the ground that any design, article or material of or in the Vessel or the operation or use thereof constitutes or is alleged to constitute an infringement of patent or copyright or registered design or other intellectual property right or any other right whatsoever; and 39.1.4 all Losses suffered or incurred by the Owners and/or the Mortgagee during the tenure of this Charter in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Vessel, or in securing the release of the Vessel therefrom provided that such events are not caused by Owners' default, and 39.1.5 all Losses suffered or incurred by the Owners with respect to or as a result of the presence, escape, seepage, spillage, leaking, discharge or migration from the Vessel of oil or any other hazardous substance during the tenure of this Charter, including without limitation, any claims asserted or arising under the US Oil Pollution Act of 1990 (as same may be amended and/or re-enacted from time to time hereafter) or similar legislation, regardless of whether or not caused by or within the control of the Charterer; and 39.1.6 all Losses suffered or incurred by the Owners and/or their respective officers or members of management board and/or the Mortgagee or any of the other financial institutions which are party to the Loan Agreement, as a consequence of any violation by the Charterers or any sub-charterer of U.S. law or any other laws pursuant to which the Vessel and/or her trading or operations shall be subject from time to time; and 39.1.7 any reasonable Losses incurred or suffered by the Owners in liquidating, employing or prepaying funds acquired or borrowed to purchase or finance or [GRAPHIC OMITTED][GRAPHIC OMITTED]refinance the Vessel following any default in payment hereunder or the occurrence of any Event of Default. 39.2 If, under any applicable law, whether as a result of judgment against the Charterers or the liquidation of the Charterers or for any other reason, any payment to be made by the Charterers under or in connection with this Charter is made or is recovered in a currency other than the currency (the "currency of obligation") in which it is payable pursuant to this Charter then, to the extent that the payment (when converted into the currency of obligation at the rate of exchange on the date for the determination of liabilities permitted by the applicable law) falls short of the amount unpaid under this Charter, the Charterers shall as a separate and independent obligation, fully indemnify the Owners against the amount of the shortfall; and for the purposes of this sub-clause "rate of exchange" means the best rate at which the Owners are able on the relevant date to purchase the currency of obligation with the other currency. 39.3 The indemnities contained in this Clause 39, and each other indemnity contained in this Charter, shall survive any termination or other ending of this Charter and any breach of, or repudiation or alleged repudiation by, the Charterers or the Owners of this Charter but the indemnity contained in this Clause 39 hereof shall not apply if and to the extent that the relevant cost, charge, expense or Loss arises as a result of (i) any act, neglect or default of or by any person (other than the Charterers) subsequent to the redelivery of the Vessel to the Owners pursuant to Clause 15 hereof or any other provision of this Charter or (ii) any fraudulent or wilful misconduct or recklessness of the Owners, or any failure on the part of the Owners to comply with any of the terms of this Charter or the MOA which can reasonably be deemed to be of a material nature in the context of the transaction and which the Owners have failed to remedy within 14 days following the Charterers' written notice thereof, or (iii) any encumbrance, mortgage, charge, lien or other security interest whatsoever over the Vessel in respect of a debt, liability or other obligation of the Owners (other than any such arising from or in connection with the use or operation of the Vessel by the Charterers). 39.4 All moneys payable by the Charterers under this Clause 39 shall be paid on demand within five Banking Days from receiving the Owner's written demand in relation thereto. 40. MORTGAGES 40.1 The Owners warrant that they have not effected any mortgage(s) other than to the Mortgagee and to the Seller stated in Box 28 and that they shall not effect any other mortgages(s) without the Charterers' prior consent, which shall not be unreasonably withheld or delayed. 40.2 The Charterers agree with the Owners that the Owners may assign this Charter to the Mortgagee, and shall procure that the Charter Guarantors agree that the Owners may assign its rights under the Charter Guarantees to the Mortgagee. 41. OWNERS' TRANSFER OF VESSEL - CHARTERERS' SUS-CHARTERING 41.1 The Owner or the Mortgagee may change the registered ownership of the Vessel by way of a sale or otherwise subject to the Charterers' prior approval, which shall be granted provided that (i) this Charter is continued on identical terms, and (ii) the change is reasonably likely to cause negative consequences for the Charterers as to economic or competitive relationships. 41.2 The Charterers agree and undertake to enter into any such usual documents as the Owners or the Mortgagee shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to Clause 41.1 above, any costs or expenses whatsoever arising in relation thereto to be borne by the Owners. 41.3 The Charterers shall, subject to (i) no Event of Default having occurred and being continuing or (ii) any other restriction set out herein, be entitled to let the Vessel by way of time or voyage charter to any person other than the Sub-Charterer upon the expiry of the Sub-Charter provided that; (i) any such sub-charter shall not relieve or discharge the Charterers from any of their obligations contained in this Charter; and (ii) any such sub-charter shall make reference to the fact that the Charterers have chartered the Vessel from the Owners, and no such charter shall be of a duration which expires, or which by virtue of any optional extensions therein contained could expire after the last day of the Charter Period; (iii) the Owners and its financiers shall have afforded step-in rights to any sub-charter with a duration (including options) of more than 12 months, which right shall be documented by way of an agreement based on the format of the Multipartite Agreement; and (iv) the Charterers will promptly notify the Owners of any such sub-chartering. In no event may the Charterers demise charter (sub-bareboat charter) the Vessel to any party without the Owners' prior written consent, which consent shall not be unreasonably withheld. 41.4 Any registration of this Charter in any Ship Register shall require the prior mutual agreement between the Owners and the Charterers and the prior written consent of the Mortgagee. 42. FLAG 42.1 The Vessel shall upon the Delivery Date be registered in the name of the Owners under Marshall Islands flag provided always that the Owners shall, at any time following the Delivery Date, be entitled to transfer the flag of the Vessel to such other registry as the Owners may select (subject always to the Charterers' prior written consent, which consent shall not be unreasonably withheld considering consequences for the Charterers as to economic or competitive relationships). The Charterers may request the Owners to change flag at the Charterers' cost, which consent shall not be unreasonably withheld by the Owners, subject to acceptance thereto having been obtained from the Mortgagee. 42.2 All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Owners under the Marshall Islands flag or in connection with the maintenance of such registration shall be borne by the Owners and, if and to the extent from time to time paid by the Charterers, shall be reimbursed by the Owners to the Charterers upon demand. 43. REPRESENTATIONS AND WARRANTIES 43.1 The Charterers acknowledge that the Owners have entered into this Charter in full reliance on representations by (i) the Guarantor as set out in the Guarantee and (ii) the Charterers in the following terms; and the Charterers now warrant to the Owners that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.1.1 the Charterers are duly incorporated and validly existing under the laws of Marshall Islands; and 43.1.2 the Charterers are the wholly-owned subsidiary of the Guarantor; 43.1.3 this Charter constitute the legal, valid and binding obligations of the Charterers, enforceable in accordance with its terms; and 43.1.4 the Charterers have the power to enter into and perform its obligations under this Charter; and 43.1.5 all consents, licences, approvals and authorisations required in connection with the Charterers' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.1.6 no litigation, arbitration or administrative proceeding is taking place against the Charterers or against any of the assets of, the Charterers which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Charterers' ability to perform their obligations under this Charter; and 43.1.7 no Event of Default (as defined in Clause 46.1 hereof) of which they are aware, and no event of which they are aware which with the giving of notice and/or lapse of time and/or relevant determination would constitute an Event of Default, has occurred and is continuing. 43.2 The Owners acknowledge that the Charterers have entered into this Charter in full reliance on representations by the Owners in the following terms; and the Owners now warrant to the Charterers that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.2.1 the Owners are duly incorporated and validly existing under the laws of Norway as a limited liability company; and 43.2.2 this Charter constitute the legal, valid and binding obligations of the Owners, enforceable in accordance with its terms; and 43.2.3 the Owners have the power to enter into and perform its obligations under this Charter; and 43.2.4 all consents, licences, approvals and authorisations required in connection with the Owners' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.2.5 no litigation, arbitration or administrative proceeding is taking place against the Owners or against any of the assets of, the Owners which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Owners' ability to perform their obligations under this Charter. 44. UNDERTAKINGS The Charterers undertake and agree that throughout the Charter Period they will:- 44.1 Provide to the Owners; 44.1.1 their audited annual financial statements as soon as available and in no event later than 120 days after the end of their financial year; and 44.1.2 copies of all class records, class certificates and survey reports prepared by the classification society pertaining to the Vessel as soon as practicable after their issue and in any event updated copies every six months; and 44.1.3 at any relevant time, copies of any inspection and/or management reports obtained or prepared by the Charterers or the Managers in respect of the Vessel, which reports shall be prepared and submitted at least twice per calendar year. 44.2 Not repudiate or terminate, nor permit the repudiation or termination of, the Ship Management Agreement or the Sub-Charter nor, without the prior written consent of the Owners (such consent not to be unreasonably withheld), amend or vary the terms of, or permit or suffer any material amendment or variation of the terms of, the Ship Management Agreement or the Sub-Charter without the Owners' consent. 44.3 Procure that the Vessel is classified and maintained free of recommendations or conditions of class with the classification society indicated in Box 10, or with such other classification society as shall be acceptable to the Owners and the Mortgagee, and at all times comply with the rules and regulations of the classification society. 44.4 At all times ensure compliance in all material respects with all applicable environmental laws and all other laws and regulations, in each case as relating to the Vessel wherever the Vessel might be trading and the operation and management thereof, and take all reasonable precautions to ensure that the crews, employees, agents or representatives of the Charterers at all times comply with such environmental laws and other applicable laws. Also, the Charterers will ensure that US Voyage Declarations, where applicable, are submitted in a timely fashion in accordance with the P&I terms of cover and that a Certificate of Financial Responsibility (COFR) is obtained before trading in the Unshed States. 44.5 At all times ensure compliance in all material respects with all international conventions, codes and regulations, including the International Convention for Safety of Life at Sea (SOLAS) 1974 (as adopted, amended or replaced from time to time), the STCW 95, the ISM Code and the ISPS Code (as each such term is defined in the relevant amendments to SOLAS), in each case as relating to the Vessel and the operation and management thereof, and ensure such compliance by the Manager and any other company (with the prior consent of the Owners) performing ship management services in respect of the Vessel on behalf of the Charterers. 44.6 Obtain and promptly renew from time to time, and, whenever so reasonably required, promptly furnish certified copies to the Owners of, all such authorisations, approvals, consents and licences as may be required under any applicable law or regulation to enable the Charterers to perform their obligations under this Charter or required for the validity or enforceability of this Charter, and the Charterers shall in all material respects comply with the terms of the same. 44.7 Ensure that any new charter arrangement entered into following the expiry or termination of the Sub-Charter provides for step-in rights for the currently envisaged in the Multipartite Agreement; 44.8 Notify the Owners forthwith by letter, or in case of urgency, by telefax or e-mail of: 44.8.1 any accident to the Vessel involving repairs, the cost of which is likely to exceed USD 250,000 (or the equivalent in any other currency); or 44.8.2 any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss; or 44.8.3 any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel; or 44.8.4 details of any action, suit, proceeding, litigation or dispute for an amount of USD 250,000 or more against itself before any court, board of arbitration or other body, which, in either case, could or might result in any material adverse change in the business or condition (financial or otherwise) of the Charterer, when the same is instituted or threatened; or 44.8.5 any breach of any applicable laws or regulations relevant to the maintenance and operation of the Vessel. 44.9 Notify the Owners in writing of any Event of Default of which they are aware (or an event of which they are aware which, with the giving of notice and/or lapse of time, would constitute an Event of Default and which is not likely to be remedied before becoming an Event of Default). 44.10 Upon the Owners' request provide information regarding the Vessel's trading patterns and employment. 45. INSURANCES, TOTAL LOSS AND COMPULSORY ACQUISITION 45.1 The Charterers undertake to the Owners that throughout the Charter Period:- 45.1.1 all insurances to be effected by the Charterers pursuant to this Charter shall be effected and maintained by the Charterers; (i) in the joint names of the Owners and the Charterers, or otherwise as they may agree; (ii) in an amount of hull and machinery and war risks cover set out in Clause 45.2 (or such other amount as may be agreed from time to time between the Charterers and the Owners, or the Mortgagee; as their assignee); (iii) so that the protection and indemnity risks include, in the case of oil pollution liability risks, cover for an aggregate amount equal to the highest level of cover available from time to time under the basic P&I Club entry policy (currently one billion United States Dollars); (iv) upon standard UK or Norwegian terms and by policies and/or entries in - such forms as shall from time to time be approved in writing by the Owners and the Mortgagee; and (v) through first class/Lloyd's brokers and with such reliable and first class security companies/underwriters, war risks and I.G.A P&I Associations as shall, in each case, from time to time be approved in writing by the Owners and the Mortgagee, such approval not to be unreasonably withheld; 45.1.2 all such insurances shall be renewed by the Charterers at least fourteen (14) days before the relevant policies or contracts expire and the approved brokers and/or the approved insurers shall promptly confirm in writing to the Owners and the Mortgagee as and when each such renewal is effected and, in the event of any renewal not being effected by the Charterers as aforesaid, shall notify the Owners forthwith; 45.1.3 the Charterers shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so reasonably required by the Owners or the Mortgagee provided there is no genuine dispute and subject always to the Charterers' obligation to maintain the Vessel insured at all times as required by this Charter and/or the Multipartite Agreement; 45.1.4 the Charterers shall arrange for the execution of such guarantees by any protection and indemnity or war risks association as may from time to time be required; 45.1.5 the Charterers shall procure that the policies and/or entries in respect of the insurances against marine and war risks are, in each case, endorsed with the interest of the Owners and the Mortgagee to the effect that: (i) payment of a claim for a Total Loss of the Vessel will be made to the Mortgagee as mortgagee and as the Owners' assignee (until such Mortgage has been discharged, after which to the Owners) and, if applicable, to the Charterers in respect of any additional coverage taken out by him in accordance with box 31 above,; and (ii) payment in respect of a claim which is not a Total Loss of the Vessel shall, subject to the proviso hereto and subject to the prior written consent of the Mortgagee, be made to the Owners who shall apply the same by making payment to the Charterers as reimbursement of costs and expenses incurred to make good the loss and fully repair all damage and otherwise maintaining the Vessel in accordance with their obligations hereunder as evidenced by invoices or other evidence reasonably acceptable to the Owner and the Mortgagee provided however (a) that such claims as are payable in respect of a hull & machinery minor casualty (that is to say a claim or the aggregate of the claims does not exceed five hundred thousand dollars (US$ 500,000) inclusive of any deductible (or the equivalent in any other currency)) shall be paid to the Charterers without the prior written- consent of the Mortgagee and (b) that all such sums shall be payable as aforesaid only until such time as the Owners may otherwise direct to the contrary following notice of termination having been given under the Charter whereupon all such sums shall be paid to the Owners or to the Mortgagee as the Owners' assignee and loss payee; 45.1.6 the Charterers shall procure that the entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid either: (i) to the person to whom was incurred the liability in respect of which the relevant money was paid or, unless and until the Owners or the Mortgagee shall direct (following the occurrence of any Event of Default which continues unremedied and/or unwaived) that they shall be paid to the Owners or to the Mortgagee; or (ii) to the Charterers in reimbursement for any payment properly made by the Charterers to a third party; 45.1.7 the Charterers shall procure that copies of all cover notes, conditions and certificates of entry are furnished to the Owners and the Mortgagee for their custody; 45.1.8 the Charterers shall procure that the interest of the Owners as owner of the Vessel and of the Mortgagee as mortgagee of the Vessel and as assignee of the Owners' interest in the insurances and loss payee of all insurance proceeds (other than under any insurances taken out pursuant to box 31 above, if applicable) shall be recorded on all policies and shall be confirmed to the Owners and the Mortgagee in conformity with applicable market practice and with the reasonable requirements of the Owners and the Mortgagee; 45.1.9 the Charterers shall not do any act or permit or suffer any act to be done whereby any insurance required as aforesaid shall or may be suspended, invalidated, cancelled or become defective; 45.1.10 without prejudice to the Charterers' obligation to keep the Vessel in repair regardless of whether insurance proceeds shall have first been received, the Charterers shall apply all such sums receivable in respect of the insurances as are paid to the Charterers in accordance with the terms of Clause 45.1.5 for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; 45.1.11 the Charterers shall not make any alteration to any of the insurances referred to in this Clause without the prior written approval by the Owners and the Mortgagee, which shall not be unreasonably withheld, and shall not make, do, consent or agree to any act or omission which might render any such instrument of insurance invalid or unenforceable or render any sum payable thereunder repayable in whole or in part; and 45.1.12 if the Owners or the Mortgagees receive payment of insurance proceeds in respect of insured repairs that have already been carried out at the Charterers' expense or in respect of insured liabilities that the Charterers have duly paid to third parties in agreement with this Charter, they shall without undue delay pay the same to the Charterers, whether or not notice of termination has been given under this Charter but subject always to any right of set-off the Owners may have. 45.2 Notwithstanding anything to the contrary contained in this Charter, the Vessel shall be kept insured throughout the Charter Period in respect of hull and machinery and war risks for an amount not less than the greater of (A) 100% of the market value of the Vessel determined as the average of valuations obtained from two of any of the following ship brokers Clarksons, Fearnleys, Barry Rogliano Salles, Howe Robinson, and R.S. Platou, one to be appointed by the Owners and the other to be appointed by the Charterers, on the basis of the Vessel being charter-free, ready for prompt delivery (the "Market Value") which Market Value shall be determined annually and (B) the amounts specified in column (b) in the table set out below in respect of the yearly period during the Charter Period specified in columns (a) against such amount (which insurance amount is hereinafter referred to as the "Minimum Insured Value"). The hull and machinery basis of the insurance (as opposed to the hull interest /increased value or total loss only basis for the insurance) shall be not less than 80% of the Market Value or the Minimum Insured Value as the case may be. a) (b) Twelve-monthly Period Minimum Insured Value (USD) 0-12 51,600,000 12-24 48,051,500 24-36 41,923,000 36-48 35,794,500 48-60 29,666,000 60-72 23,537,500 72-84 17,409,000 45.3 Notwithstanding anything to the contrary contained in this Charter, if the Vessel shall become a Total Loss, or is missing (and a notice of abandonment has been sent to insurers), Charter Hire shall cease from the date when she was lost or, in the case where the Vessel is missing, from the date when a notice of abandonment is sent to insurers provided however that: 45.3.1 in circumstances where any moneys are due to the Owners under this Charter, the Charterers' said obligation to pay Charter Hire shall continue until the Owners (or the Mortgagee as their assignee) shall have received a net amount equal to the aggregate of (i) all accrued and due Charter Hire which is then unpaid; and (ii) other moneys (including, without limitation, any interest) owing by the Charterers to the Owners under this Charter as at the date of such receipt; and 45.3.2 in circumstances where Charter Hire has been paid in advance, such Charter Hire shall be adjusted accordingly. 45.3.3 if, in the event that, upon the occurrence of a Total Loss, or circumstance giving rise to a notice of abandonment being sent to insurers, the Owners (or the Mortgagee in its capacity as loss payee) shall, for any reason, not have received out of the insurance proceeds or compensation amounts (if any) the Minimum Insured Value within one hundred and twenty (120) days (or such longer period as the Mortgagee may agree) following the occurrence of such Total Loss or the giving of such notice of abandonment, the Charterers shall thereupon forthwith pay to the Mortgagee (in its capacity as loss payee) such amount as the Mortgagee shall specify in writing to the Charterers to be equal to the amount whereby the Minimum Insured Value (calculated as at the date for payment by the Charterers) exceeds the amount of insurance proceeds or compensation moneys (if any) actually received by the Owners (or the Mortgagee as their assignee or loss payee) prior to such payment by the Charterers. 45.4 For the purposes of this Charter: 45.4.1 an actual total loss of the Vessel shall be deemed to have occurred at the actual date and time the Vessel was lost but, in the event of the date of the loss being unknown, then the actual total loss shall be deemed to have occurred on the date on which the Vessel was last reported; 45.4.2 a constructive total loss shall be deemed to have occurred at the date and time notice of abandonment of the Vessel is given to the insurers of the Vessel for the time being (hereinafter called the "Insurers") (provided a claim for such constructive total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, at the date and time at which a constructive total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and either the Owners or the Charterers shall have the right to determine whether or not a case has arisen for the giving of notice of abandonment and the Charterers are hereby irrevocably authorised by the Owners to give the same if it so determines. Each of the Owners and the Charterers, upon the request of the other, shall promptly execute such documents as may be required to enable the other to abandon the Vessel to the Insurers and/or claim a constructive total loss and shall give all possible assistance in pursuing the said claim; 45.4.3 a compromised, agreed or arranged total loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement; and 45.4.4 a Total Loss (a) as the result of capture, taking, seizure, restraint, detention, confiscation or expropriation occurring under the conditions of the "War Risks" policy of the Vessel or (b) Compulsory Acquisition shall be deemed to have occurred at the time admitted by the Insurers. 46 EVENTS OF DEFAULT 46.1 Each of (i) the following events, (ii) the events referred to in Clause 28 as they may pertain to the Charterers, shall be a "Event of Default" for the purposes of this Charter:- 46.1.1 if any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date or (in the case only of sums expressed to be payable by the Charterers on demand within five (5) Banking Days following the date of demand therefore) and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.1.2 if either (a) the Charterers fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question), or (b) any of the said insurances shall cease for any reason whatsoever to be in full force and effect for any reason not attributable to or beyond the control of the Charterers (or their representatives); or 46.1.3 if there is a breach of the Charterers' representations and warranties in Clause 43; or 46.1.4 if the Charterers shall at any time fail to perform or observe any of their obligations under (i) this Charter (including, without limitation, the undertakings set out in Clause 44), and such failure to perform or observe any such obligation is not (if capable of being remedied) remedied within fourteen (14) days of the occurrence of the relevant breach, or (ii) the Multipartite Agreement, (iii) the Sellers Credit Agreement or (iv) the Co-Ordination Agreement; or 46.1.5 if (i) the Guarantee shall cease to be valid and/or in full force and effect, (ii) the Guarantor shall breach any of its obligations, undertakings, covenants, representations and/or warranties set out in the Guarantee or (iii) the Guarantor shall be in breach of or in default under any other financing agreement by which it is bound (provided that any payment default shall be in respect of an amount greater than USD 5,000,000); or 46.1.6 if the Manager ceases to be the manager of the Vessel or the Ship Management Agreement is repudiated, terminated or substantially amended without the prior consent of the Owners; or 46.1.7 if a petition shall be presented (and not withdrawn or stayed within fourteen (14) days or not contested in good faith by instigating appropriate legal action on a bona fide basis) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction of amalgamation during and after which the Charterers remain solvent, the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrance shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers, or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within fourteen (14) days) or if the Charterers shall otherwise have to abandon independent control of any part of its business or operations; or 46.1.8 if the Charterers shall stop payments generally or shall be unable to pay the debts, or shall admit in writing the inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or 46.1.9 if the Charterers shall declare or apply to any court or other tribunal for a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities and which, in the Owners' reasonable opinion, makes it likely that the Charterers will not be able to fulfil its obligations hereunder in full; or 46.1.10 if any consent, authorization, licence or approval necessary for this Charter to be or remain the valid and legally binding obligation of the Charterers, or to enable the Charterers to perform their obligations hereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to an Event of Default if the same are remedied within thirty (30) days of the date of their occurrence); or 46.1.11 if the Charterers shall (in a single or a series of transactions) dispose of a material part of its business or assets or cease to be engaged in the chartering of the Vessel and /or cease to conduct such business as is required in order for the Charterers to fulfil their obligations under this Charter or as otherwise contemplated herein; or 46.1.12 if any of the circumstances referred to in any of Clauses 46.1.7 - 46.1.11 shall occur with respect to the Guarantor or Guarantee (as the case may be) or in the respect to any of the Collateral Charters or the Collateral Charterers (as the case may be); or 46.1.13 if the Sellers' Credit ceases for any reason to be available to the Owners (other than because the Seller's Credit has been fully consumed) or the Seller's Credit Agreement ceases to be valid and in full force. 47 OWNERS' RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clause 15. 47.2 On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clauses 46 and/or 47 hereof the Owners shall be entitled (without prejudice to the Charterers obligations under Clauses 15, 29 or 50 hereof) to retake possession of the Vessel. 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify: 47.3.1 all Charter Hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.6 hereof from the due date for payment thereof to the Termination Date; and 47.3.2 any sums, other than Charter Hire, due and payable, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 38.6 to the Termination Date. 47.3.3 all costs, expenses, damages and losses incurred by the Owners and recoverable by law as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of charter hire income, all expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15, 29 and 50 hereof and all financing break funding costs incurred in relation to any early termination of any interest rate swap transaction entered into by the Owners in connection with the financing of the Vessel). 47.4 Without prejudice to any other rights, claims or remedies of the Owners whatsoever, in respect of any amount due to the Owners under Clause 47 hereof interest pursuant to Clause 38.6 hereof shall accrue before and after any relevant judgment or any winding-up of the Charterers from the Termination Date to the date of the Owners' actual receipt thereof.. 47.5 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15 and 50 hereof and (ii) shall pay, or reimburse, to the Owners on demand all Losses suffered by the Owners in connection with such termination together with interest thereon pursuant to Clause 38.6 hereof from the date on which the relevant Loss was suffered by the Owners until the date of payment or reimbursement thereof (both before and after any relevant judgment or winding up of the Charterers) pursuant to this Clause 47. 48 REFERENCE TO EXPERT 48.1 In the event that the parties cannot agree on the scope or timing or implementation of any repairs, maintenance to or of the Vessel necessary to meet the requirements of this Charter, the matter shall be referred to a mutually acceptable and independent ship operator with experience from the product carrier operations and segments or, failing agreement within a period of fourteen (14) days, such person as shall be nominated from time to time by the President of Nordisk Skibsrederforening who, acting as an expert, shall be asked to determine the scope or timing of implementation of the works in question in accordance with the standards herein defined. The decision shall be final and binding upon the parties. The costs incurred to obtain the expert's decision, shall be borne equally by the parties. 49 OWNERS' COVENANT 49.1 The Owners hereby covenant and undertake that so long as they shall not have commenced exercising any of their rights under or pursuant to Clause 47 hereof neither the Charterers nor any permitted sub-charterers shall be disturbed or interfered with in their quiet and peaceful use, possession and enjoyment of the Vessel (except as expressly provided for herein). 50 REDELIVERY 50.1 The Off-hire Survey referred to in Clause 7 hereof shall take place at the port of redelivery hereunder at or about the time of redelivery (the "Redelivery Date"). Without prejudice to the provisions of Clause 15 hereof, the Vessel shall be redelivered by the Charterers:- 50.1.1 With her class with Det norske Veritas maintained without any MITTED][GRAPHIC OMITTED] conditions or recommendations, free of average damage affecting the Vessel's class, and with her classification, trading, national and international certificates the Vessel had when she was delivered under the Charter, valid and un-extended without conditions or recommendation falling due for a minimum of six - 6 - months beyond the time of redelivery, and with minimum CAP 2 requirements, Hull, [GRAPHIC OMITTED][GRAPHIC OMITTED]Machinery and Equipment. The CAP certificates issued are to be less than 18 months old at the time of redelivery. 50.1.2 In the same or as good structure, state, condition and class as that in which she was deemed delivered under Clause 6 above, fair wear and tear not affecting class excepted. 50.1.3 With clean swept, washed down dried up holds free from residues of previous cargoes. 50.1.4 With all such spare parts and other equipment (including, without limitation, cargo handling equipment, fork lift truck, if any, lashing equipment, etc.) she had at the time of delivery under this Charter as per the mutually agreed list, fair wear and tear excepted. 50.1.5 Immediately prior to redelivery a class surveyor shall have surveyed the Vessel's hull and decide which damages and indents that are not acceptable according to class regulation. If a condition of class is given, this shall be remedied immediately while the Vessel is still on hire or the parties shall agree to a lump sum (to include applicable Charter Hire due to such repair) to be paid by the Charterers to the Owners whereby the responsibility is taken over by the Owners to repair the damage unless the parties mutually agree to another solution. 50.1.6 Without prejudice to the foregoing, the Charterers shall, if requested to do so by the Owners, assign to the Owners at the redelivery all and any such rights as they may have under the Charterers' insurances for the Vessel in respect of damage to the Vessel, whether or not then known other than any rights to be reimbursed by any insurers for costs previously incurred by the Charterers. 50.1.7 The Charterers shall provide the Owners with reasonable, written notice in advance so that the Owner may dispatch one or more representatives to attend all dry dockings of the Vessel throughout the Charter Period and upon request furnish the Owners with relevant plans and programs for the ensuing dry docking. In relation to the last dry docking prior to redelivery the Owners shall be entitled to suggest remedies or actions in respect of the dry docking and be consulted during the preparatory stages. The under water hull shall be smooth, well painted and have sufficient anti-fouling for the remainder of a normal docking period (ref. box 18) from the date of such docking. 50.1.8 The Owners shall, during a period of up to thirty (30) days prior to the Redelivery Date, be entitled at their own risk and expense, to place representatives on board the Vessel for familiarisation purposes, subject to signing of standard indemnity letter. 50.1.9 Without prejudice to the generality of the provisions of Clause 7, any inspection of the Vessel carried out pursuant thereto, may include an under-water inspection of the Vessel provided that the same shall be carried out during such time as she is in port (such inspection not to interfere with or interrupt the trading of the Vessel). Such under-water inspection shall be carried out by a class-approved diver in liaison with a class surveyor and the principles set out in Standard NSF 93 clause in relation thereto. 50.1.10 Prior to redelivery of the Vessel to the Owners the Charterers shall, upon the request of the Owners, and free of charge deliver print-outs and data surveys of inventory, equipment and consumables on board the Vessel. Upon the Owners' request the Charterers shall deliver to the Owners all drawings and/or specifications in their possession relating to the Vessel. 50.1.11 Upon redelivery the Charterers may, upon the request of the Owners' or in the Charterers' option, take ashore equipment with the Charterers' logo or name on it subject to substituting such equipment with corresponding equipment of at least equal numbers and quality, unless, in the Owners' option, a lump sum compensation is agreed. 50.1.12 Prior to redelivery a Protocol of Redelivery shall be prepared jointly by the parties addressing relevant issues of the Off-hire Survey in comparison with the On-Hire Survey and listing specifically any leased or hired equipments. 50.1.13 The Owners shall purchase unused fuel oils, lubricating oils and unbroached chemicals as per the Charterers net contracts prices evidenced by invoices. 50.1.14 As soon as practically possible after redelivery of the Vessel hereunder, the Owners at its cost shall remove the Vessel's name and the Charterers' funnel markings and logos on the hull (if any). 51 COMMUNICATIONS Except as otherwise expressly provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, telex number or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):- 51.1.1 In the case of the Owners: Partankers III AS c/o Pareto Management AS Dronning Maudsgate 3 P.O. Box 1396 Vika N-0114 Oslo, Norway Att: Mr. Peter Wallace Telephone No.: + 47 22 87 87 00 Telefax No.: + 47 22 87 88 00 51.1.2 In the case of the Charterers Imitos Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Ave. Athens, 115 26 Greece Att: Mr Andreas Louka Telephone No.: + 30 210 69 78000 Telefax No.: + 30 210 69 15668 A written notice includes a notice by facsimile and shall be deemed given upon appropriate acknowledgement by the addressee's receiving equipment, or by e-mail if actually replied to. A notice received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place. 51.1 All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation. 52 MISCELLEANOUS 52.1 In case of any conflict or discrepancy between the printed part and the rider clauses of this Charter, the latter shall prevail. For and on behalf of the Owners For and on behalf of the Charterers /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact EX-4.28 25 d759408_ex4-28.txt Exhibit 4.28 MEMORANDUM OF AGREEMENT Dated: 4 April 2006 Parnis Shipping Company Limited, do Top Tanker Management Inc, 109-1l1 Messogion Avenue, Athens, 115 26 Greece hereinafter called the Sellers, have agreed to sell, and Partankersill AS, Dronning Mauds gate 3, 0114 Oslo, Norway hereinafter called the Buyers, have agreed to buy Name: "Stainless" Classification Society/Class: ABS Built: 1992 By: Samsung Heavy Industries, South Korea Flag: Marshall Islands Place of Registration: Majuro, Marshall Islands Call Sign: V7HI7 Grt: 80,569, dwt 149,599 IMO Number: 9014822 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 51,600,000 (US dollars Fifty One Million Six Hundred Thousand). (subject as stated in Clause 21) 2. Deposit deleted 3. Payment The said Purchase Price shall be paid as more particularly described in Clause 21 and in full free of bank charges to the Sellers' bank, The Royal Bank of Scotland, Shipping Business Centre, 0-10 Great Tower Street, London EC3P 3HX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. (See also Clause 21) 4 Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel atlia Khor Fakkan, the United Arab Emirates, on about 9 February 2006 and have accepted the Vessel following this inspection and therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement. * 4 a) and. 4b) , are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 7, and 3 days approximate notice of the estimated time of arrival at the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or Anchorage, or at high sea by mutual agreement between the Buyers and the Sellers. Latest with the 3 days approximate notice of delivery Sellers to nominate exact delivery place. Expected time of delivery Between 27th March, 2006 and 1st May, 2006 Date of cancelling (see Clauses 5 c) 6 b) (iii) and 14): 2nd May 2006 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 7-running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 7- running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery, whereafter-this Agreement shall be null and void. 6. Drydocking/Divers Inspection deleted 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail - end shaft(s) and spare propeller(s)/propeller blade(s) which -are taken lout (.)of-spare-and used as replacement prior to delivery,-but the replaced items-shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation (See also Clause 19) The place of dosing: Piraeus/New York At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their Buyers expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation' by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings deleted 13. Buyers' default Should the Purchase Price not be paid in accordance with Clause 3 and Clause 21, the Sellers have the right to cancel the Agreement, and the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all costs and expenses together (including, without limitation, any break funding costs) with interest if their failure is due to proven negligence and they shall make due compensation for the Buyers' loss whether or not the Buyers cancel this Agreement. 15. Buyers' representatives deleted 16. Arbitration This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 17. The Buyers (as owners) have entered into a bareboat charterparty (the "Charter") of even da herewith with the Sellers (as charterers), whereunder the Vessel is chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery to and acceptance by the Buyer (as charterers) under the Charter. 18. Delivery of the Vessel at sea (if applicable) shall be subject to any necessary consents from to Vessel's register and insurers. 19. In addition to the documents listed in Clause 8, the Sellers and the Buyers shall agree and provide such additional and normal documentation for closing as is reasonably required by the Sellers and the Buyers, a list of which shall be separately agreed between the parties latest within 3 Banking Days from the execution of the MoA, and incorporated into the MoA by way of an Addendum hereto, and which shall include, without limitation, (i) a multipartite agreement between the Sellers, the BuyersT4he-Buyerel-bank and the current time-charterer of the Vessel, confirming, inter alia, the time-charterer's consent to the sale of the Vessel to the Buyer, and the assignment and step-in rights to the Buyers and Buyers' bank in the event of a breach by the Sellers (in their capacity as charterers) under this Charter, and (ii) a co-ordination agreement between the Sellers, the Buyers and Buyers' bank regarding the subordination and coordination of rights between the first priority interest of the banks and the second priority interest of the Sellers in relation to the Sellers' credit referred to in Clause 21 (iii). 20. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. Of the total purchase price of USD 51,600,000 (US Dollars Fifty One Million Six Hundred Thousand) (the "Purchase Price") the Buyers shall pay USD [45,375,300] (US Dollar forty five million three hundred and seventy five thousand three hundred) to the Royal Bank of Scotland, Shipping Business Centre, 5-10 Tower Street London EC3P 3HX, SORTCODE: 16-0101, SWIFT: RBOSGB2L, IBAN:GB49 RBOS1663 0000311964, IBANBIC: RBOSGB2L, ACCOUNT KEY: TOPTAN-USD1, BENEFICIARY:TOPTANKERS INC (correspondent bank: American Express Bank Limited, New York - SWIFT: AEIBUS33XXX) as and when provided in Clause 3 immediately after the Sellers have taken delivery of the Vessel as charterers under the Charter, provided that: (i) The Buyers shall be entitled to deduct USD {703,500-3 (US Dollar seven hundred and three thousand five hundred) from the Purchase Price, being an amount equal to the first hire payment due to the Buyers by the Sellers as charterers under the Charter. If Buyers elect to make such deduction, the cash element to the Purchase Price as set out in (a) above shall be reduced accordingly and the Buyers shall provide to the Sellers as charterers a commercial invoice crediting amount to them under the Charter. (ii) Commission in the amount of USD 361,200 (US Dollar three hundred and sixty one thousand two hundred) shall be payable to Pareto Private Equity ASA upon delivery of the Vessel under this Agreement and the Charter and the Buyers shall be entitled to deduct such amount from the cash element of the Purchase Price and make such payment on behalf of the Sellers. (iii) The amount of USD 5,160,000 (US Dollars five million one hundred and sixty thousand) shall be deducted and deferred to be paid by the Buyers on such terms and conditions set out in more detail in a certain Seller's Credit Agreement of even date herewith entered into between the Sellers and the Buyers. 22. All costs and expenses arising in connection with the Initial registration of the Vessel in the name of the Buyers and in connection with the maintenance of such registration shall be borne by the Buyers and, if and to the extent from time to time paid by Sellers shall be reimbursed by the Buyers to the Sellers upon written demand. For and on behalf of For and on behalf of Imitos Shipping Company Limited Partankers III AS - ---------------------------- ----------------------- X:\20-F filings 2007\Exhibits\Memorandum - Stainless.doc EX-4.29 26 d759408_ex4-29.txt Exhibit 4.29 1. Shipbroker 2. Place and date Piraeus/New York, 4 April 2006 3. Owners/Place of business (Cl. 1) Partankers III AS Dronning Mauds gate 3 Norway 4. Bareboat Charterers/Place of business Parnis Shipping Company Limited c/o Top Tanker Management Inc 109-111 Messogion Avenue Athens, 115 26 Greece 5. Vessel's name, call sign and lag (Cl. 1 and 3) MV "Stainless", call sign V7HI7, The Marshall Islands flag 6. Type of Vessel Suezmax Tanker 7. GT/NT 80,569 8. When/Where built 1992, Samsung Heavy Industries, South Korea 9. Total DWT (abt.) In metric tons on summer freeboard 149,599 10. Classification society (C1. 3) ABS 11. Date of last special survey by the Vessel's classification society 1 November 2002 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) As at the time of delivery 13. Port or Place of delivery (Cl. 3) At sea or any safe berth in safe port or safe anchorage 14. Time for delivery (Cl. 4) Same as MOA date, see also Clause 33 15. Cancelling date (Cl. 5) Same as MOA, see also Clause 34 16. Port or Place of redelivery (Cl. 15) Safe berth in safe port worldwide, but subject clauses 20 and 50 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) 6 months 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) World wide, always within Institute Warranty Limits 21. Charter period (Cl. 2) See Clause 37 22. Charter hire (Cl. 11) See Clause 38 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) See Clause 45 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV See Clause 38.6 25. Currency and method of payment (Cl. 11) See Clause 38 26. Place of payment; also slate beneficiary and bank account (Cl. 11) See Clause 38 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 36.7 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) Clause 12(b) applies. USD 196,000,000 first priority mortgage to Nordea Bank Norge ASA, and Second Priority Mortgage in favour of the immediately previous owners of the Vessel, see Clause 40 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) See Clause 45 MII and MAPI to be taken out by the Mortgagee, and premium to be paid 50/50 by Owners and Charterers 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Charterers Interest Insurance and Charterers Loss of Hire 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) 34. Grace period (state number of clear banking days)(Cl. 28) See Clause 46.1.1 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) See Clause 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) NO 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) NO 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) NO 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) NO 45. Country of the Underlying Registry (only to be filled in if PART V applies) 46. Number of additional clauses covering special provisions, if agreed) 32 - 52 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) - -------------------------------- -------------------------------- PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: The Owners' shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; " The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22 the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery See Clause 32 (not applicable when Part III applies, as indicated in Box 37) The Vessel shall be delivered by the Owners and taken over by the.Charterers.at the port or place indicated in Box 13 in such ready safe berth as the Charterers may direct. (a) Paragraph deleted. (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag State indicated in Box 5 and the requirements of the classification society stated in Box 10. The Vessel upon delivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 12. (c) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3 and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on account of any conditions, representations or warranties expressed or implied with respect to the Vessel but the Owners shall be liable for the cost of but not the time for repairs or renewals occasioned by latent defects in the Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter, provided such defects have manifested themselves within twelve (12) months after delivery unless otherwise provided in Box 32. 4. Time for Delivery (not applicable when Part Ill applies, as indicated in Box 37) The Vessel shall not be delivered before the date indicated in Box 14 without the Charterers' consent. The Owners shall keep the Charterers closely advised of possible changes in the Vessel's position. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained In this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part Ill applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Owners and the Charterers shall share equally all expenses of the On-hire Survey including loss of time, if any, and of the Off-hire-Survey. 8. Inspection The Owners and/or the Mortgagee shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked Her in accordance with Clause 10(a). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners (or their appointed representatives) to inspect the Vessel's log books whenever requested and shall whenever required by the Owners and/or as required under Clause 44 & furnish them with full information regarding any casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall-ensurdthat all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, except as provided for in Clause 14(l) if applicable, at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance shall be for the sole cost and account of the Charterers. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or state taxes. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners' and Mortgagee's consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii) the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State:, see also Clause 51.7. 11. Hire See Clause 38 (a) - (g) Paragraphs deleted 12. Mortgage (only to apply if Box 28 has been appropriately filled in) (a)* paragraph deleted (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgagee(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the mortgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers, which shall not be unreasonably withheld. *) (Optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs See Clause 45 (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers and the mortgagee(s) (if any), and The Charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. Insurance policies shall cover the Owners and the Charterers according to their respective interests. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. "The Charterers also to'remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account (b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively. The Owners or the Charterers as the case may be shall immediately furnish the other party with particulars of any additional insurance effected, including copies of any cover notes or policies and the written consent of the insurers of any such required insurance in any case where the consent of such insurers is necessary. (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become an actual, constructive, compromised or agreed total loss under the Insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Owners who shall distribute the moneys between the Owners and the Charterers according to their respective interests. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause. (e) The Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverage against hull and machinery and war risks under the provisions of sub-clause 13(a) the value of the Vessel is the sum indicated in Box 29. 14. Insurance, Repairs and Classification Paragraphs deleted 15. Redelivery See also Clause 50 At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place as indicated in Box 16 in such ready safe berth as the Owners may direct The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within The Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. The Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." 17. Indemnity See Clause 39 (a) The Charterers shall indemnify the Owners against any loss, damage or expense incurred by the Owners arising out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale See Clause 41 (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld, and subject to such terms and conditions as the Owners shall approve. (b) paragraph deleted 23. Contracts of Carriage *) (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carnage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. *) (b) paragraph deleted *) paragraph deleted 24. Bank Guarantee (Optional, only to apply if Box 27 filled in) Paragraph deleted 25. Requisition/Acquisition (a) In the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof always provided however that in the event of "Requisition for Hire" any Requisition Hire or compensation received or receivable by the Owners shall be payable to the Charterers during the remainder of the Charter Period or the period of the "Requisition for Hire" whichever be the shorter. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall be deemed terminated as of the date of such "Compulsory Acquisition". In such event Charter Hire to be considered as earned and to be paid up to the date and time of such "Compulsory Acquisition". 26. War (a) For the purpose of this Clause, the words 'War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) paragraph deleted 27. Commission Paragraph deleted 28. Termination See also Clauses 46 and 47 (a) Charterers' Default The Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34, (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(al (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in wilting so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel This Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28 the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the .14 days-specified,-the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. *) (b) paragraph omitted *) (c) paragraph omitted (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ('the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the Conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediators costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; Indicate alternative agreed in Box 35. 31. Notices See Clause 51 (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. EXECUTION COPY ADDITIONAL CLAUSES to the Bareboat Charter dated 4 April 2006 between Parnis Shipping Company Limited (as Charterers) and PARTANKERS HI AS (as Owners) in respect of M/V "Stainless" 32. DEFINITIONS 32.1 In this Charter, unless the context otherwise requires, the following expressions shall have the following meanings: 32.1.1 "Banking Day" means days on which banks are open for transaction of business of the nature required by this Charter in London, New York and Oslo; 32.1.2 "Charter Hire" has the meaning given to it in Clause 38 of this Charter; 32.1.3 "Charter Period" has the meaning given to it in Clause 37.1 of this Charter; 32.1.4 "Co-Ordination Agreement" means the agreement of even date herewith between the Mortgagee, the Charterers and the other Collateral Charterers acknowledged by the Owners whereby e.g. the Sellers rights and obligations under the Sellers' Credit Agreement will be subordinated and subject to the rights of the Mortgagee under the Loan Agreement; 32.1.5 "Collateral Charters" means the bareboat charters of even date herewith between the Collateral Charterers and the Owners in respect of each of the Collateral Vessels; 32.1.6 "Collateral Charterers" means the charterers of the Collateral Vessels (in each case as set out against the name of the relevant Collateral Vessel in the definition of Collateral Vessels herein); 32.1.7 "Collateral Vessels" means the vessels set out below, each owned by the Owners and chartered to the Collateral Charterer set out below opposite the vessel's name: 1. MN "Faultless" - Parnasos Shipping Company Limited 2. MN "Stainless" - Parnis Shipping Company Limited 3. MN "Noiseless" - Imitos Shipping Company Limited 4. MN "Limitless" - Mytikas Shipping Company Limited 5. M/V "Endless" - Litochoro Shipping Company Limited 32.1.8 "Compulsory Acquisition" has the meaning giving to it in Clause 25(b); 32.1.9 "Delivery Date" has the meaning given to it in Clause 33.2; 32.1.10 "Event of Default" has the meaning given to it in Clause 46.1 of this Charter; 32.1.11 "Guarantee" means the guarantee issued by Guarantor in favour of the Owners in the form enclosed as Exhibit 1 as security for the due performance of this Charter and all other Collateral Charters by the Collateral Charterers; 32.1.12 "Guarantor" means Top Tankers Inc., a Marshall Islands corporation with registered office at Trust Company Complex, Ajeltake Island, P.O.Box 1405 Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.13 "Loan Agreement" means the loan agreement between the Owner and the Mortgagee in respect of the USD 180,600,000 loan provided for the purpose of financing, in part, the Owners' purchase of the Vessel and the "Collateral Vessels", together with the security documents executed or to be executed in connection therewith; 32.1.14 "Managers" means Top Tanker Management Inc,, a Marshall Islands corporation with registered address at Trust Company Complex, Ajeltake Road,, Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.15 "MOA" means the memorandum of agreement of even date herewith made between the Charterers as sellers and the Owners as buyers in respect of the Vessel (as same may be amended from time to time); 32.1.16 "Mortgage" means the first priority mortgage against the Vessel executed or to be executed by the Owners in favour of the Mortgagee as security for the Owners' obligations under the Loan Agreement and the Swap Agreement; 32.1.17 "Mortgagee" means Nordea Bank Norge ASA, as agent on behalf of the banks having financed the Owners' purchase of the Vessel and the "other Collateral Vessels" and Nordea Bank Finland Plc as swap bank; 32.1.18 "Multipartite Agreement" means the agreement between the Owners, the Sellers and other Collateral Charterers, and the Sub-Charterer providing for, inter alia, confirmation by the Sub-Charterer that it accepts (1) the Owners as new owners of the Vessel, (2) the Mortgagee and its security interest in the Vessel and (3) the step-in rights and other arrangements set out therein; 32.1.19 "Seller" means the Charterers as seller under the MOA; 32.1.20 "Sellers" means the Charterers and the other Collateral Charterers as sellers under the relevant MOA relating to the relevant Collateral Vessels; 32.1.21 "Sellers' Credit" means a retention in the amount of US$ 25,800,000 provided by the Sellers to the Owners as security for the Charterers' due and correct performance of all of its obligations under this Charter and for the other Collateral Charterers' obligations under the other Collateral Charters, or such amount thereof as may be outstanding from time to time, to be applied and reduced as more particularly set out in the Sellers' Credit Agreement; 32.1.22 "Sellers' Credit Agreement" means the agreement entered into on the date hereof among the Sellers, the Charterers and all other Collateral Charterers and the Owners in respect of the Sellers' Credit; 32.1.23 "Ship Management Agreement" means the ship management agreement to be entered between the Charterers and the Managers in respect of the Vessel; 32.1.24 "Sub-Charterer" means none; 32.1.25 "Swap Agreement" means an ISDA Master Agreement entered or to be entered into between the Owners and Nordea Bank Finland PLC, as amended from time to time, and confirmations of the transactions relating to hedging of interest exposure under the Loan Agreement made or to be made thereunder; 32.1.26 "Total Loss" means (i) actual or constructive or compromised or arranged total loss of the Vessel or (ii) any Compulsory Acquisition. 32.2 The headings in this Agreement do not affect its interpretation. 33. MOA AND DELIVERY 33.1 Subject to the Vessel being delivered to, and taken over by, the Owners pursuant to the MOA, the Charterers shall forthwith be deemed to have taken delivery of the Vessel under this Charter simultaneously with delivery by the Seller to the Owners pursuant to the MOA. 33.2 The date of delivery for the purpose of this Charter shall be the date (the "Delivery Date") when the Vessel is in fact delivered by the Seller to the Owners pursuant to the MOA, whether that be before or after the scheduled date under the MOA, and the Owners shall be under no responsibility for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter. 33.3 The Charterers undertake that in the event the Vessel is not delivered and accepted under the MOA for any reason which is not attributable to any act or omission on part of the Owners, the Charterers will promptly upon the Owners' written demand reimburse the Owners in full (without set-off or counterclaim of any nature) for any cost or disbursement reasonably incurred by the Owners in respect of the contemplated transaction, including any costs incurred in respect of financing arrangements made in connection therewith. 33.4 Without prejudice to the provisions of Clause 33.2 above, the Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance evidencing delivery of the Vessel hereunder. The On-hire Survey referred to in Clause 7 hereof shall be for the purposes of ascertaining the condition of the Vessel at the time of delivery hereunder and shall not give rise to any right of the Owners to refuse to deliver, or the Charterers to refuse to accept, the Vessel hereunder, except that such On-hire Survey shall be of immediate relevance in determining the condition of the Vessel upon commencement of the Charter Period and, accordingly, in relation to the required condition of the Vessel upon redelivery pursuant to Clauses 15 and 50. The On-hire Survey shall include a list of mutually agreed spares and inventory pertaining to the Vessel on board and on shore. In connection with and as part of the On-hire Survey, the Owners shall be entitled to conduct an underwater inspection and the provisions of NSF'93 Clause 6 (b) and (c) shall apply correspondingly. 34. CANCELLING 34.1 Should the MOA be cancelled or should the Vessel become a Total Loss prior to its delivery under the MOA, this Charter shall be cancelled forthwith without liability on the part of either party under this Charter except as expressly stated in the MoA or this Charter. 35. TERMS OF DELIVERY 35.1 Subject to Clause 35.4 below, the Charterers - having owned and operated the Vessel for a considerable time, and therefore possessing first-hand knowledge about the Vessel and her specifications, performance and conditions in all respects - acknowledge and agree that the Owners make no condition, term, representation or warranty, express or implied (and whether statutory or otherwise) as to the title passed to Owners from the Seller, seaworthiness, merchantability, condition, design, operation, performance, capacity or fitness for use of the Vessel or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Delivery to the Charterers or (as the case may be) deemed delivery of the Vessel under this Charter shall be conclusive proof that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, and in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers. 35.2 Subject to Clause 35.4 hereof, the Charterers hereby waive all their claims against the Owners howsoever and whensoever the same may arise at any time in respect of the Vessel or the Owners' title thereto as passed to the Owners from the Seller or rights therein or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness or otherwise of the Vessel). 35.3 The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable (unless such unusability is due to the Owners' fault). 35.4 Nothing contained in this Clause 35 shall be construed as a waiver of any rights or remedies of the Charterers at law or in equity against the Owners in respect of (a) any fraudulent or wilful misconduct of the Owners or (b) any failure on the part of the Owners to comply with any of the terms of this Charter or the MoA. 36. CONDITIONS PRECEDENT Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject to and conditional upon at the Delivery Date:- 36.1 delivery of the Vessel to the Owners by the Seller pursuant to the MOA; and 36.2 no Event of Default having occurred and continuing unremedied or unwaived, and no other event having occurred and continuing unremedied, which with the giving of notice and/or lapse of time would, if not remedied, constitute an Event of Default; and 36.3 each of the representations and warranties contained in Clause 43 of this Charter being true and correct in all material respects on the Delivery Date by a reference to the facts and circumstances then existing; and 36.4 the Owners having received evidence that the appointment of the Managers under the Ship Management Agreement has commenced; and 36.5 the Owners having received evidence that the Vessel is insured in accordance with the provisions of this Charter and that all requirements of Clauses 13 and 45 of this Charter in respect of such insurances have been complied with; and 36.6 the Owner's having received evidence that the first instalment of the Charter Hire (as defined in Clause 38.1) has been or will be paid as required in Clause 38.2; and 36.7 the Owners having received, all in such form and substance reasonably acceptable to the Owners and the Mortgagee: 36.7.1 the Multipartite Agreement duly signed by the parties thereto; 36.7.2 the Co-Ordination Agreement, duly signed by the parties thereto; 36.7.3 the Seller's Credit Agreement, duly signed by the parties thereto; 36.7.4 the Ship Management Agreement, duly signed by the parties thereto; 36.7.5 the Guarantee, duly executed by the Guarantor, 36.7.6 the Sub-Charter, duly executed by the parties thereto; 36.7.7 legal opinions from counsel in respect of the laws of England, the Marshall Islands and Liberia in form and substance satisfactory to the Owners and the Mortgagee; 36.7.8 a copy of the Document of Compliance of the Ship Manager, the Safety Management Certificate of the Vessel and the ISPS Code Ship Security Certificate for the Vessel; and 36.7.9 such further documentation as may be agreed between the parties. 37. CHARTER PERIOD 37.1 Subject to the terms of this Charter, the period of chartering of the Vessel hereunder (the "Charter Period") shall commence on the Delivery Date and shall terminate on the date which falls 84 months after the Delivery Date. 38. CHARTER HIRE AND SECURITY 38.1 The Charterers shall, throughout the Charter Period, pay charter hire (the "Charter Hire") to the Owners at a rate of USD 23,450 net per day, 365 days per year. 38.2 The Charterers shall pay Charter Hire due to the Owners punctually in accordance with the terms of this Charter. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date. 38.3 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.3.1 On the relevant Payment Date, or, if the Payment Date shall not be a Banking Day, on the next following Banking Day unless, in the case the Payment Date falls in the following calendar month, the immediately preceding Banking Day; and 38.3.2 In USD in funds with the same day value to the Owners' account no. 6012.04.43855 with the Mortgagee, under reference "Faultless Charter Hire", or such other bank account as may be advised to the Charterers by the Owners by not less than 10 Banking Days' prior written notice. 38.3.3 Final payment of Charter Hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the numbers of days and hours remaining before redelivery and advance payment to be effected accordingly. 38.4 All payments under this Charter shall be made without any discount, set-off or counterclaim whatsoever, and free and clear of any bank charges and/or any withholding or deduction for, or on account of, any present or future income, freight, stamp and other taxes, levies, imposts, duties, fees, charges, restrictions or conditions of any nature. All payments shall be made free and clear of, and without deduction for or on account of any present or future taxes or duties of any nature now or hereafter imposed. It the Charterers are required by any authority in any country to make any withholding or deduction from any such payment, the sum due from the Charterers in respect of such payment will be increased to the extent necessary to ensure that, after the making of such withholding or deduction the Owners receive a net sum equal to the amount which it would have received had no such deduction or withholding been required to be made. 38.5 The Charterers' obligation to pay Charter Hire in accordance with the requirements of this Clause 38 shall, subject to Clauses 28 (d) and 45.3, be absolute, irrespective of any contingency or cause whatsoever, which would or might, but for this provision, have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter, including (but not limited to): 38.5.1 any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners or any other person; or 38.5.2 any unavailability of the Vessel for any reason, including (but not limited to) any lack of or invalidity of title or any other defect in the title passed on to them from the Sellers, the condition, design, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for documentation under the laws of any country (except if a defect in any such documentation is due to the fault of the Owners and the Charterers have notified the Owners of the defect in documentation which has remained unremedied for a period of 15 days after notice was given) or any damage to the Vessel; or 38.5.3 any failure or delay on the part of the Owners whether with or without fault on their part, in performing or complying with any of the terms or covenants hereunder. 38.6 In the event of failure by the Charterers to pay on the due date for payment thereof, or in the case of the sum payable on demand, the date of demand therefore, any Charter Hire or other amount payable by them under this Charter, the Charterers will pay to the Owners interest on such Charter Hire or such other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) three per centum (3%) and (ii) the London Interbank Offered Rate for USD deposits of not more than one (1) month's duration (as such rate is from time to time quoted by leading banks in the London Interbank Market to the Mortgagee). The interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. Payment of interest due under this sub-clause shall be made within seven (7) running days of the date of the Owners' invoice specifying the amount payable or, in the absence of an invoice, at the time of the next hire payment date. Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. 38.7 As security for the Charterers' performance of their obligations under this Charter, the Charterers shall procure that the Guarantee be issued by the Guarantor in favour of the Owners. 39. INDEMNITY 39.1 Subject to the terms of this Charter and in particular Clause 39.2 hereof, the Charterers agree at all times to indemnify and keep indemnified the Owners against: 39.1.1 any costs, charges, or expenses which the Charterers have agreed to pay under this Charter and which shall be claimed or assessed against or paid by the Owners; and 39.1.2 all losses, costs, charges, expenses, fees, payments, liabilities, penalties, fines, damages or other sanctions of a monetary nature (collectively, "Losses") suffered or incurred by the Owners and arising during the tenure of the Charter or in relation to the Charter in any manner out of the design, manufacture, delivery, non delivery, purchase, importation, registration, ownership, chartering, sub-chartering, possession, control, use, operation, condition, maintenance, repair, replacement, refurbishment, modification, overhaul, insurance, sale or other disposal, return or storage of or loss of or damage to the Vessel or otherwise in connection with the Vessel (whether or not in the control or possession of the Charterers) including but not limited to those Losses described in Clause 39 and including any and all claims in tort or in contract by any sub-charterer of the Vessel from the Charterers or by the holders of any Bills of Lading issued by the Charterers, except and to the extent directly caused by the default of the Owners; and 39.1.3 all Losses suffered or incurred by the Owners which result from claims which may be made during the tenure of the Charter or in relation to the Charter on the ground that any design, article or material of or in the Vessel or the operation or use thereof constitutes or is alleged to constitute an infringement of patent or copyright or registered design or other intellectual property right or any other right whatsoever; and 39.1.4 all Losses suffered or incurred by the Owners and/or the Mortgagee during the tenure of this Charter in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Vessel, or in securing the release of the Vessel there from provided that such events are not caused by Owners' default, and 39.1.5 all Losses suffered or incurred by the Owners with respect to or as a result of the presence, escape, seepage, spillage, leaking, discharge or migration from the Vessel of oil or any other hazardous substance during the tenure of this Charter, including without limitation, any claims asserted or arising under the US Oil Pollution Act of 1990 (as same may be amended and/or re-enacted from time to time hereafter) or similar legislation, regardless of whether or not caused by or within the control of the Charterer; and 39.1.6 all Losses suffered or incurred by the Owners and/or their respective officers or members of management board and/or the Mortgagee or any of the other financial institutions which are party to the Loan Agreement, as a consequence of any violation by the Charterers or any sub-charterer of U.S. law or any other laws pursuant to which the Vessel and/or her trading or operations shall be subject from time to time; and 39.1.7 any reasonable Losses incurred or suffered by the Owners in liquidating, employing or prepaying funds acquired or borrowed to purchase or finance or refinance the Vessel following any default in payment hereunder or the occurrence of any Event of Default. 39.2 If, under any applicable law, whether as a result of judgment against the Charterers or the liquidation of the Charterers or for any other reason, any payment to be made by the Charterers under or in connection with this Charter is made or is recovered in a currency other than the currency (the "currency of obligation") in which it is payable pursuant to this Charter then, to the extent that the payment (when converted into the currency of obligation at the rate of exchange on the date for the determination of liabilities permitted by the applicable law) falls short of the amount unpaid under this Charter, the Charterers shall as a separate and independent obligation, fully indemnify the Owners against the amount of the shortfall; and for the purposes of this sub-clause "rate of exchange" means the best rate at which the Owners are able on the relevant date to purchase the currency of obligation with the other currency. 39.3 The indemnities contained in this Clause 39, and each other indemnity contained in this Charter, shall survive any termination or other ending of this Charter and any breach of, or repudiation or alleged repudiation by, the Charterers or the Owners of this Charter but the indemnity contained in this Clause 39 hereof shall not apply if and to the extent that the relevant cost, charge, expense or Loss arises as a result of (i) any act, neglect or default of or by any person (other than the Charterers) subsequent to the redelivery of the Vessel to the Owners pursuant to Clause 15 hereof or any other provision of this Charter or (ii) any fraudulent or wilful misconduct or recklessness of the Owners, or any failure on the part of the Owners to comply with any of the terms of this Charter or the MOA which can reasonably be deemed to be of a material nature in the context of the transaction and which the Owners have failed to remedy within 14 days following the Charterers' written notice thereof, or (iii) any encumbrance, mortgage, charge, lien or other security interest whatsoever over the Vessel in respect of a debt, liability or other obligation of the Owners (other than any such arising from or in connection with the use or operation of the Vessel by the Charterers). 39.4 All moneys payable by the Charterers under this Clause 39 shall be paid on demand within five Banking Days from receiving the Owner's written demand in relation thereto. 40. MORTGAGES 40.1 The Owners warrant that they have not effected any mortgage(s) other than to the Mortgagee and to the Seller stated in Box 28 and that they shall not effect any other mortgages(s) without the Charterers' prior consent, which shall not be unreasonably withheld or delayed. 40.2 The Charterers agree with the Owners that the Owners may assign this Charter to the Mortgagee, and shall procure that the Charter Guarantors agree that the Owners may assign its rights under the Charter Guarantees to the Mortgagee. 41. OWNERS' TRANSFER OF VESSEL - CHARTERERS' SUB-CHARTERING 41.1 The Owner or the Mortgagee may change the registered ownership of the Vessel by way of a sale or otherwise subject to the Charterers' prior approval, which shall be granted provided that (i) this Charter is continued on identical terms, and (ii) the change is not reasonably likely to cause negative consequences for the Charterers as to economic or competitive relationships. 41.2 The Charterers agree and undertake to enter into any such usual documents as the Owners or the Mortgagee shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to Clause 41.1 above, any costs or expenses whatsoever arising in relation thereto to be borne by the Owners. 41.3 The Charterers shall, subject to (i) no Event of Default having occurred and being continuing or (ii) any other restriction set out herein, be entitled to let the Vessel by way of time or voyage charter to any person other than the Sub-Charterer upon the expiry of the Sub-Charter provided that; (i) any such sub-charter shall not relieve or discharge the Charterers from any of their obligations contained in this Charter; and (ii) any such sub-charter shall make reference to the fact that the Charterers have chartered the Vessel from the Owners, and no such charter shall be of a duration which expires, or which by virtue of any optional extensions therein contained could expire after the last day of the Charter Period; (iii) the Owners and its financiers shall have afforded step-in rights to any sub-charter with a duration (including options) of more than 12 months, which right shall be documented by way of an agreement based on the format of the Multipartite Agreement; and (iv) the Charterers will promptly notify the Owners of any such sub-chartering. In no event may the Charterers demise charter (sub-bareboat charter) the Vessel to any party without the Owners' prior written consent, which consent shall not be unreasonably withheld. 41.4 Any registration of this Charter in any Ship Register shall require the prior mutual agreement between the Owners and the Charterers and the prior written consent of the Mortgagee. 42. FLAG 42.1 The Vessel shall upon the Delivery Date be registered in the name of the Owners under Marshall Islands flag provided always that the Owners shall, at any time following the Delivery Date, be entitled to transfer the flag of the Vessel to such other registry as the Owners may select (subject always to the Charterers' prior written consent, which consent shall not be unreasonably withheld considering consequences for the Charterers as to economic or competitive relationships). The Charterers may request the Owners to change flag at the Charterers' cost, which consent shall not be unreasonably withheld by the Owners, subject to acceptance thereto having been obtained from the Mortgagee. 42.2 All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Owners under the Marshall Islands flag or in connection with the maintenance of such registration shall be borne by the Owners and, if and to the extent from time to time paid by the Charterers, shall be reimbursed by the Owners to the Charterers upon demand. 43. REPRESENTATIONS AND WARRANTIES 43.1 The Charterers acknowledge that the Owners have entered into this Charter in full reliance on representations by (i) the Guarantor as set out in the Guarantee and (ii) the Charterers in the following terms; and the Charterers now warrant to the Owners that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.1.1 the Charterers are duly incorporated and validly existing under the laws of Marshall Islands; and 43.1.2 the Charterers are the wholly-owned subsidiary of the Guarantor; 43.1.3 this Charter constitute the legal, valid and binding obligations of the Charterers, enforceable in accordance with its terms; and 43.1.4 the Charterers have the power to enter into and perform its obligations under this Charter; and 43.1.5 all consents, licences, approvals and authorisations required in connection with the Charterers' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.1.6 no litigation, arbitration or administrative proceeding is taking place against the Charterers or against any of the assets of, the Charterers which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Charterers' ability to perform their obligations under this Charter; and 43.1.7 no Event of Default (as defined in Clause 46.1 hereof) of which they are aware, and no event of which they are aware which with the giving of notice and/or lapse of time and/or relevant determination would constitute an Event of Default, has occurred and is continuing. 43.2 The Owners acknowledge that the Charterers have entered into this Charter in full reliance on representations by the Owners in the following terms; and the Owners now warrant to the Charterers that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.2.1 the Owners are duly incorporated and validly existing under the laws of Norway as a limited liability company; and 43.2.2 this Charter constitute the legal, valid and binding obligations of the Owners, enforceable in accordance with its terms; and 43.2.3 the Owners have the power to enter into and perform its obligations under this Charter; and 43.2.4 all consents, licences, approvals and authorisations required in connection with the Owners' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.2.5 no litigation, arbitration or administrative proceeding is taking place against the Owners or against any of the assets of, the Owners which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Owners' ability to perform their obligations under this Charter. 44. UNDERTAKINGS The Charterers undertake and agree that throughout the Charter Period they will:- 44.1 Provide to the Owners; 44.1.1 their audited annual financial statements as soon as available and in no event later than 120 days after the end of their financial year; and 44.1.2 copies of all class records, class certificates and survey reports prepared by the classification society pertaining to the Vessel as soon as practicable after their issue and in any event updated copies every six months; and 44.1.3 at any relevant time, copies of any inspection and/or management reports obtained or prepared by the Charterers or the Managers in respect of the Vessel, which reports shall be prepared and submitted at least twice per calendar year. 44.2 Not repudiate or terminate, nor permit the repudiation or termination of, the Ship Management Agreement or the Sub-Charter nor, without the prior written consent of the Owners (such consent not to be unreasonably withheld), amend or vary the terms of, or permit or suffer any material amendment or variation of the terms of, the Ship Management Agreement or the Sub-Charter without the Owners' consent. 44.3 Procure that the Vessel is classified and maintained free of recommendations or conditions of class with the classification society indicated in Box 10, or with such other classification society as shall be acceptable to the Owners and the Mortgagee, and at all times comply with the rules and regulations of the classification society. 44.4 At all times ensure compliance in all material respects with all applicable environmental laws and all other laws and regulations, in each case as relating to the Vessel wherever the Vessel might be trading and the operation and management thereof, and take all reasonable precautions to ensure that the crews, employees, agents or representatives of the Charterers at all times comply with such environmental laws and other applicable laws. Also, the Charterers will ensure that US Voyage Declarations, where applicable, are submitted in a timely fashion in accordance with the P&1 terms of cover and that a Certificate of Financial Responsibility (COFR) is obtained before trading in the United States. 44.5 At all times ensure compliance in all material respects with all international conventions, codes and regulations, including the International Convention for Safety of Life at Sea (SOLAS) 1974 (as adopted, amended or replaced from time to time), the STCW 95, the ISM Code and the ISPS Code (as each such term is defined in the relevant amendments to SOLAS), in each case as relating to the Vessel and the operation and management thereof, and ensure such compliance by the Manager and any other company (with the prior consent of the Owners) performing ship management services in respect of the Vessel on behalf of the Charterers. 44.6 Obtain and promptly renew from time to time, and, whenever so reasonably required, promptly furnish certified copies to the Owners of, all such authorisations, approvals, consents and licences as may be required under any applicable law or regulation to enable the Charterers to perform their obligations under this Charter or required for the validity or enforceability of this Charter, and the Charterers shall in all material respects comply with the terms of the same. 44.7 Ensure that any new charter arrangement entered into following the expiry or termination of the Sub-Charter provides for step-in rights for the currently envisaged in the Multipartite Agreement; 44.8 Notify the Owners forthwith by letter, or in case of urgency, by telefax or e-mail of: 44.8.1 any accident to the Vessel involving repairs, the cost of which is likely to exceed USD 250,000 (or the equivalent in any other currency); or 44.8.2 any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss; or 44.8.3 any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel; or 44.8.4 details of any action, suit, proceeding, litigation or dispute for an amount of USD 250,000 or more against itself before any court, board of arbitration or other body, which, in either case, could or might result in any material adverse change in the business or condition (financial or otherwise) of the Charterer, when the same is instituted or threatened; or 44.8.5 any breach of any applicable laws or regulations relevant to the maintenance and operation of the Vessel. 44.9 Notify the Owners in writing of any Event of Default of which they are aware (or an event of which they are aware which, with the giving of notice and/or lapse of time, would constitute an Event of Default and which is not likely to be remedied before becoming an Event of Default). 44.10 Upon the Owners' request provide information regarding the Vessel's trading patterns and employment. 45. INSURANCES, TOTAL LOSS AND COMPULSORY ACQUISITION 45.1 The Charterers undertake to the Owners that throughout the Charter Period:- 45.1.1 all insurances to be effected by the Charterers pursuant to this Charter shall be effected and maintained by the Charterers; (i) in the joint names of the Owners and the Charterers, or otherwise as they may agree; (ii) in an amount of hull and machinery and war risks cover set out in Clause 45.2 (or such other amount as may be agreed from time to time between the Charterers and the Owners, or the Mortgagee; as their assignee); (iii) so that the protection and indemnity risks include, in the case of oil pollution liability risks, cover for an aggregate amount equal to the highest level of cover available from time to time under the basic P&I Club entry policy (currently one billion United States Dollars); (iv) upon standard UK or Norwegian terms and by policies and/or entries in such forms as shall from time to time be approved in writing by the Owners and the Mortgagee; and (v) through first class/Lloyd's brokers and with such reliable and first class security companies/underwriters, war risks and I.G.A P&I Associations as shall, in each case, from time to time be approved in writing by the Owners and the Mortgagee, such approval not to be unreasonably withheld; 45.1.2 all such insurances shall be renewed by the Charterers at least fourteen (14) days before the relevant policies or contracts expire and the approved brokers and/or the approved insurers shall promptly confirm in writing to the Owners and the Mortgagee as and when each such renewal is effected and, in the event of any renewal not being effected by the Charterers as aforesaid, shall notify the Owners forthwith; 45.1.3 the Charterers shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so reasonably required by the Owners or the Mortgagee provided there is no genuine dispute and subject always to the Charterers' obligation to maintain the Vessel insured at all times as required by this Charter and/or the Multipartite Agreement; 45.1.4 the Charterers shall arrange for the execution of such guarantees by any protection and indemnity or war risks association as may from time to time be required; 45.1.5 the Charterers shall procure that the policies and/or entries in respect of the insurances against marine and war risks are, in each case, endorsed with the interest of the Owners and the Mortgagee to the effect that: (i) payment of a claim for a Total Loss of the Vessel will be made to the Mortgagee as mortgagee and as the Owners' assignee (until such Mortgage has been discharged, after which to the Owners) and, if applicable, to the Charterers in respect of any additional coverage taken out by him in accordance with box 31 above,; and (ii) payment in respect of a claim which is not a Total Loss of the Vessel shall, subject to the proviso hereto and subject to the prior written consent of the Mortgagee, be made to the Owners who shall apply the same by making payment to the Charterers as reimbursement of costs and expenses incurred to make good the loss and fully repair all damage and otherwise maintaining the Vessel in accordance with their obligations hereunder as evidenced by invoices or other evidence reasonably acceptable to the Owner and the Mortgagee provided however (a) that such claims as are payable in respect of a hull & machinery minor casualty (that is to say a claim or the aggregate of the claims does not exceed fivehundredthousand dollars (US$ 500,000) inclusive of any deductible (or the equivalent in any other currency)) shall be paid to the Charterers without the prior written consent of the Mortgagee and (b) that all such sums shall be payable as aforesaid only until such time as the Owners may otherwise direct to the contrary following notice of termination having been given under the Charter whereupon all such sums shall be paid to the Owners or to the Mortgagee as the Owners' assignee and loss payee; 45.1.6 the Charterers shall procure that the entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid either: (i) to the person to whom was incurred the liability in respect of which the relevant money was paid or, unless and until the Owners or the Mortgagee shall direct (following the occurrence of any Event of Default which continues unremedied and/or unwaived) that they shall be paid to the Owners or to the Mortgagee; or (ii) to the Charterers in reimbursement for any payment properly made by the Charterers to a third party; 45.1.7 the Charterers shall procure that copies of all cover notes, conditions and certificates of entry are furnished to the Owners and the Mortgagee for their custody; 45.1.8 the Charterers shall procure that the interest of the Owners as owner of the Vessel and of the Mortgagee as mortgagee of the Vessel and as assignee of the Owners' interest in the insurances and loss payee of all insurance proceeds (other than under any insurances taken out pursuant to box 31 above, if applicable) shall be recorded on all policies and shall be confirmed to the Owners and the Mortgagee in conformity with applicable market practice and with the reasonable requirements of the Owners and the Mortgagee; 45.1.9 the Charterers shall not do any act or permit or suffer any act to be done whereby any insurance required as aforesaid shall or may be suspended, invalidated, cancelled or become defective; 45.1.10 without prejudice to the Charterers' obligation to keep the Vessel in repair regardless of whether insurance proceeds shall have first been received, the Charterers shall apply all such sums receivable in respect of the insurances as are paid to the Charterers in accordance with the terms of Clause 45.1.5 for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; 45.1.11 the Charterers shall not make any alteration to any of the insurances referred to in this Clause without the prior written approval by the Owners and the Mortgagee, which shall not be unreasonably withheld, and shall not make, do, consent or agree to any act or omission which might render any such instrument of insurance invalid or unenforceable or render any sum payable thereunder repayable in whole or in part; and 45.1.12 if the Owners or the Mortgagees receive payment of insurance proceeds in respect of insured repairs that have already been carried out at the Charterers' expense or in respect of insured liabilities that the Charterers have duly paid to third parties in agreement with this Charter, they shall without undue delay pay the same to the Charterers, whether or not notice of termination has been given under this Charter but subject always to any right of set-off the Owners may have. 45.2 Notwithstanding anything to the contrary contained in this Charter, the Vessel shall be kept insured throughout the Charter Period in respect of hull and machinery and war risks for an amount not less than the greater of (A) 100% of the market value of the Vessel determined as the average of valuations obtained from two of any of the following ship brokers Clarksons, Fearnleys, Barry Rogliano Salles, Howe Robinson, and R.S. Platou, one to be appointed by the Owners and the other to be appointed by the Charterers, on the basis of the Vessel being charter-free, ready for prompt delivery (the "Market Value") which Market Value shall be determined annually and (B) the amounts specified in column (b) in the table set out below in respect of the yearly period during the Charter Period specified in columns (a) against such amount (which insurance amount is hereinafter referred to as the "Minimum Insured Value"). The hull and machinery basis of the insurance (as opposed to the hull interest /increased value or total loss only basis for the insurance) shall be not less than 80% of the Market Value or the Minimum Insured Value as the case may be. (a) (b) Twelve-monthly Period Minimum Insured Value (USD) --------------------- --------------------------- 0-12 51,600,000 12-24 48,051,500 24-36 41,923,000 36-48 35,794,500 48-60 29,666,000 60-72 23,537,500 72-84 17,409,000 45.3 Notwithstanding anything to the contrary contained in this Charter, if the Vessel shall become a Total Loss, or is missing (and a notice of abandonment has been sent to insurers), Charter Hire shall cease from the date when she was lost or, in the case where the Vessel is missing, from the date when a notice of abandonment is sent to insurers provided however that: 45.3.1 in circumstances where any moneys are due to the Owners under this Charter, the Charterers' said obligation to pay Charter Hire shall continue until the Owners (or the Mortgagee as their assignee) shall have received a net amount equal to the aggregate of (i) all accrued and due Charter Hire which is then unpaid; and (ii) other moneys (including, without limitation, any interest) owing by the Charterers to the Owners under this Charter as at the date of such receipt; and 45.3.2 in circumstances where Charter Hire has been paid in advance, such Charter Hire shall be adjusted accordingly. 45.3.3 if, in the event that, upon the occurrence of a Total Loss, or circumstance giving rise to a notice of abandonment being sent to insurers, the Owners (or the Mortgagee in its capacity as loss payee) shall, for any reason, not have received out of the insurance proceeds or compensation amounts (if any) the Minimum Insured Value within one hundred and twenty (120) days (or such longer period as the Mortgagee may agree) following the occurrence of such Total Loss or the giving of such notice of abandonment, the Charterers shall thereupon forthwith pay to the Mortgagee (in its capacity as loss payee) such amount as the Mortgagee shall specify in writing to the Charterers to be equal to the amount whereby the Minimum Insured Value (calculated as at the date for payment by the Charterers) exceeds the amount of insurance proceeds or compensation moneys (if any) actually received by the Owners (or the Mortgagee as their assignee or loss payee) prior to such payment by the Charterers. 45.4 For the purposes of this Charter: 45.4.1 an actual total loss of the Vessel shall be deemed to have occurred at the actual date and time the Vessel was lost but, in the event of the date of the loss being unknown, then the actual total loss shall be deemed to have occurred on the date on which the Vessel was last reported; 45.4.2 a constructive total loss shall be deemed to have occurred at the date and time notice of abandonment of the Vessel is given to the insurers of the Vessel for the time being (hereinafter called the "Insurers") (provided a claim for such constructive total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, at the date and time at which a constructive total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and either the Owners or the Charterers shall have the right to determine whether or not a case has arisen for the giving of notice of abandonment and the Charterers are hereby irrevocably authorised by the Owners to give the same if it so determines. Each of the Owners and the Charterers, upon the request of the other, shall promptly execute such documents as may be required to enable the other to abandon the Vessel to the Insurers and/or claim a constructive total loss and shall give all possible assistance in pursuing the said claim; 45.4.3 a compromised, agreed or arranged total loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement; and 45.4.4 a Total Loss (a) as the result of capture, taking, seizure, restraint, detention, confiscation or expropriation occurring under the conditions of the "War Risks" policy of the Vessel or (b) Compulsory Acquisition shall be deemed to have occurred at the time admitted by the Insurers. 46 EVENTS OF DEFAULT 46.1 Each of (i) the following events, (ii) the events referred to in Clause 28 as they may pertain to the Charterers, shall be a "Event of Default" for the purposes of this Charter:- 46.1.1 if any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date or (in the case only of sums expressed to be payable by the Charterers on demand within five (5) Banking Days following the date of demand therefore) and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.1.2 if either (a) the Charterers fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question), or (b) any of the said insurances shall cease for any reason whatsoever to be in full force and effect for any reason not attributable to or beyond the control of the Charterers (or their representatives); or 46.1.3 if there is a breach of the Charterers' representations and warranties in Clause 43; or 46.1.4 if the Charterers shall at any time fail to perform or observe any of their obligations under (i) this Charter (including, without limitation, the undertakings set out in Clause 44), and such failure to perform or observe any such obligation is not (if capable of being remedied) remedied within fourteen (14) days of the occurrence of the relevant breach, or (ii) the Multipartite Agreement, (iii) the Sellers Credit Agreement or (iv) the Co-Ordination Agreement; or 46.1.5 if (i) the Guarantee shall cease to be valid and/or in full force and effect, (ii) the Guarantor shall breach any of its obligations, undertakings, covenants, representations and/or warranties set out in the Guarantee or (iii) the Guarantor shall be in breach of or in default under any other financing agreement by which it is bound (provided that any payment default shall be in respect of an amount greater than USD 5,000,000); or 46.1.6 if the Manager ceases to be the manager of the Vessel or the Ship Management Agreement is repudiated, terminated or substantially amended without the prior consent of the Owners; or 46.1.7 if a petition shall be presented (and not withdrawn or stayed within fourteen (14) days or not contested in good faith by instigating appropriate legal action on a bona fide basis) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction of amalgamation during and after which the Charterers remain solvent, the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrance shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers, or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within fourteen (14) days) or if the Charterers shall otherwise have to abandon independent control of any part of its business or operations; or 46.1.8 if the Charterers shall stop payments generally or shall be unable to pay the debts, or shall admit in writing the inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or 46.1.9 if the Charterers shall declare or apply to any court or other tribunal for a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities and which, in the Owners' reasonable opinion, makes it likely that the Charterers will not be able to fulfil its obligations hereunder in full; or 46.1.10 if any consent, authorization, licence or approval necessary for this Charter to be or remain the valid and legally binding obligation of the Charterers, or to enable the Charterers to perform their obligations hereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to an Event of Default if the same are remedied within thirty (30) days of the date of their occurrence); or 46.1.11 if the Charterers shall (in a single or a series of transactions) dispose of a material part of its business or assets or cease to be engaged in the chartering of the Vessel and /or cease to conduct such business as is required in order for the Charterers to fulfil their obligations under this Charter or as otherwise contemplated herein; or 46.1.12 if any of the circumstances referred to in any of Clauses 46.1.7 -- 46.1.11 shall occur with respect to the Guarantor or Guarantee (as the case may be) or in the respect to any of the Collateral Charters or the Collateral Charterers (as the case may be); or 46.1.13 if the Sellers' Credit ceases for any reason to be available to the Owners (other than because the Seller's Credit has been fully consumed) or the Seller's Credit Agreement ceases to be valid and in full force. 47 OWNERS' RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clause 15. 47.2 On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clauses 46 and/or 47 hereof the Owners shall be entitled (without prejudice to the Charterers obligations under Clauses 15, 29 or 50 hereof) to retake possession of the Vessel. 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify: 47.3.1 all Charter Hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.6 hereof from the due date for payment thereof to the Termination Date; and 47.3.2 any sums, other than Charter Hire, due and payable, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 38.6 to the Termination Date. 47.3.3 all costs, expenses, damages and losses incurred by the Owners and recoverable by law as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of charter hire income, all expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15, 29 and 50 hereof and all financing break funding costs incurred in relation to any early termination of any interest rate swap transaction entered into by the Owners in connection with the financing of the Vessel). 47.4 Without prejudice to any other rights, claims or remedies of the Owners whatsoever, in respect of any amount due to the Owners under Clause 47 hereof interest pursuant to Clause 38.6 hereof shall accrue before and after any relevant judgment or any wind ingup of the Charterers from the Termination Date to the date of the Owners' actual receipt thereof. 47.5 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15 and 50 hereof and (ii) shall pay, or reimburse, to the Owners on demand all Losses suffered by the Owners in connection with such termination together with interest thereon pursuant to Clause 38.6 hereof from the date on which the relevant Loss was suffered by the Owners until the date of payment or reimbursement thereof (both before and after any relevant judgment or winding up of the Charterers) pursuant to this Clause 47. 48 REFERENCE TO EXPERT 48.1 In the event that the parties cannot agree on the scope or timing or implementation of any repairs, maintenance to or of the Vessel necessary to meet the requirements of this Charter, the matter shall be referred to a mutually acceptable and independent ship operator with experience from the product carrier operations and segments or, failing agreement within a period of fourteen (14) days, such person as shall be nominated from time to time by the President of Nordisk Skibsrederforening who, acting as an expert, shall be asked to determine the scope or timing of implementation of the works in question in accordance with the standards herein defined. The decision shall be final and binding upon the parties. The costs incurred to obtain the expert's decision, shall be borne equally by the parties. 49 OWNERS' COVENANT 49.1 The Owners hereby covenant and undertake that so long as they shall not have commenced exercising any of their rights under or pursuant to Clause 47 hereof neither the Charterers nor any permitted sub-charterers shall be disturbed or interfered with in their quiet and peaceful use, possession and enjoyment of the Vessel (except as expressly provided for herein). 50 REDELIVERY 50.1 The Off-hire Survey referred to in Clause 7 hereof shall take place at the port of redelivery hereunder at or about the time of redelivery (the "Redelivery Date"). Without prejudice to the provisions of Clause 15 hereof, the Vessel shall be redelivered by the Charterers: 50.1.1 With her class with Det norske Veritas maintained without any conditions or recommendations, free of average damage affecting the Vessel's class, and with her classification, trading, national and international certificates the Vessel had when she was delivered under the Charter, valid and un-extended without conditions or recommendation falling due for a minimum of six - 6 - months beyond the time of redelivery, and with minimum CAP 2 requirements, Hull, Machinery and Equipment. The CAP certificates issued are to be less than 18 months old at the time of redelivery. 50.1.2 In the same or as good structure, state, condition and class as that in which she was deemed delivered under Clause 6 above, fair wear and tear not affecting class excepted. 50.1.3 With clean swept, washed down dried up holds free from residues of previous cargoes. 50.1.4 With all such spare parts and other equipment (including, without limitation, cargo handling equipment, fork lift truck, if any, lashing equipment, etc.) she had at the time of delivery under this Charter as per the mutually agreed list, fair wear and tear excepted. 50.1.5 Immediately prior to redelivery a class surveyor shall have surveyed the Vessel's hull and decide which damages and indents that are not acceptable according to class regulation. If a condition of class is given, this shall be remedied immediately while the Vessel is still on hire or the parties shall agree to a lump sum (to include applicable Charter Hire due to such repair) to be paid by the Charterers to the Owners whereby the responsibility is taken over by the Owners to repair the damage unless the parties mutually agree to another solution. 50.1.6 Without prejudice to the foregoing, the Charterers shall, if requested to do so by the Owners, assign to the Owners at the redelivery all and any such rights as they may have under the Charterers' insurances for the Vessel in respect of damage to the Vessel, whether or not then known other than any rights to be reimbursed by any insurers for costs previously incurred by the Charterers. 50.1.7 The Charterers shall provide the Owners with reasonable, written notice in advance so that the Owner may dispatch one or more representatives to attend all dry dockings of the Vessel throughout the Charter Period and upon request furnish the Owners with relevant plans and programs for the ensuing dry docking. In relation to the last dry docking prior to redelivery the Owners shall be entitled to suggest remedies or actions in respect of the dry docking and be consulted during the preparatory stages. The under water hull shall be smooth, well painted and have sufficient anti-fouling for the remainder of a normal docking period (ref. box 18) from the date of such docking. 50.1.8 The Owners shall, during a period of up to thirty (30) days prior to the Redelivery Date, be entitled at their own risk and expense, to place representatives on board the Vessel for familiarisation purposes, subject to signing of standard indemnity letter. 50.1.9 Without prejudice to the generality of the provisions of Clause 7, any inspection of the Vessel carried out pursuant thereto, may include an under-water inspection of the Vessel provided that the same shall be carried out during such time as she is in port (such inspection not to interfere with or interrupt the trading of the Vessel). Such under-water inspection shall be carried out by a class-approved diver in liaison with a class surveyor and the principles set out in Standard NSF 93 clause in relation thereto. 50.1.10 Prior to redelivery of the Vessel to the Owners the Charterers shall, upon the request of the Owners, and free of charge deliver print-outs and data surveys of inventory, equipment and consumables on board the Vessel. Upon the Owners' request the Charterers shall deliver to the Owners all drawings and/or specifications in their possession relating to the Vessel. 50.1.11 Upon redelivery the Charterers may, upon the request of the Owners' or in the Charterers' option, take ashore equipment with the Charterers' logo or name on it subject to substituting such equipment with corresponding equipment of at least equal numbers and quality, unless, in the Owners' option, a lump sum compensation is agreed. 50.1.12 Prior to redelivery a Protocol of Redelivery shall be prepared jointly by the parties addressing relevant issues of the Off-hire Survey in comparison with the On-Hire Survey and listing specifically any leased or hired equipments. 50.1.13 The Owners shall purchase unused fuel oils, lubricating oils and unbroached chemicals as per the Charterers net contracts prices evidenced by invoices. 50.1.14 As soon as practically possible after redelivery of the Vessel hereunder, the Owners at its cost shall remove the Vessel's name and the Charterers' funnel markings and logos on the hull (if any). 51 COMMUNICATIONS Except as otherwise expressly provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, telex number or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):- 51.1.1 In the case of the Owners: Partankers III AS c/o Pareto Management AS Dronning Maudsgate 3 P.O. Box 1396 Vika N-0114 Oslo, Norway Att: Mr. Peter Wallace Telephone No.: +47 22 87 87 00 Telefax No.: .: +47 22 87 87 00 51.1.2 In the case of the Charterers Parnis Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Ave. Athens, 115 26 Greece Att: Mr Andreas Louka Telephone No.: +30 210 69 78000 Telefax No.: +30 210 69 15668 A written notice includes a notice by facsimile and shall be deemed given upon appropriate acknowledgement by the addressee's receiving equipment, or by e-mail if actually replied to. A notice received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place. 51.1 All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation. 52 MISCELLEANOUS 52.1 In case of any conflict or discrepancy between the printed part and the rider clauses of this Charter, the latter shall prevail. For and on behalf of the Owners For and on behalf of the Charterers /s/ Peter W. Wallace /s/ Andreas Louka - -------------------------------- ----------------------------------- Peter W. Wallance Andreas Louka Attorney-in-fact Attorney-in-fact EX-4.30 27 d759408_ex4-30.txt Exhibit 4.30 MEMORANDUM OF AGREEMENT Dated: 4 April 2006 Mytikas-Shipping Company Limited, c/o Top Tanker Management Inc, 109-111 Messogion Avenue, Athens;11 26 Greece hereinafter called the Sellers, have agreed to sell, and Partankers III AS, Drohtft_Nlauds,gate 3, 0114% Oslo, Norway hereinafter called the Buyers, have agreed to buy Name: "Limitless" Classification Society/Class: ABS Built 1993 By: Ishika Wajima Do Brasil Estaleiros, Brazil Flag: Marshall Islands Place of Registration: Majuro, Marshall Islands Call Sign: V7FV8 Grt1N44: 80,914, dwt 136,055 Register IMO Number: 9012616 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 51,600,000 (US dollars Fifty One Million Six Hundred Thousand). (subject as stated in Clause 21) 2. Deposit 3. Payment The said Purchase Price shall be paid as more particularly described in Clause 21 and in-full-free of bank charges to the Sellers' bank, The Royal Bank of Scotland, Shipping Business Centre, 0-10 Great Tower Street, London EC3P 3HX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. (See also Clause 21) 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at/in Khor Fakkan, the United Arab Emirates, on about 9 February 2006 and have accepted the Vessel following this inspection and therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement. 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 7, and 3 days approximate notice of the estimated time of arrival the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or Anchorage, or at high sea by mutual agreement between the Buyers and the Sellers. Latest with the 3 days approximate notice of delivery Sellers to nominate exact delivery place. Expected time of delivery: Between 27th March, 2006 and 1" May, 2006 Date of cancelling (see Clauses 5 c) 6 b) (iii) and 14): 2nd May 2006 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 7-running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 7- running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery, this Agreement shall be null and void. 6. Drydocking/Divers Inspection 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts- including 'spare tail - end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation (See also Clause 19) The place of dosing: Piraeus/New York At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their Buyers expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyors report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings 13. Buyers' default Should the Purchase Price not be paid in accordance with Clause 3 and Clause 21, the Sellers have the right to cancel the Agreement, and the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all costs and expenses together (including, without limitation, any break funding costs) with interest if their failure is due to proven negligence and they shall make due compensation for the Buyers' loss whether or not the Buyers cancel this Agreement. 15. Buyers' representatives This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 16. Arbitration 17. The Buyers (as owners) have entered into a bareboat charterparty (the "Charter") of even dab herewith with the Sellers (as charterers), whereunder the Vessel is chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous deliver and acceptance by the Buyer (as charterers) under the Charter. 18. Delivery of the Vessel at sea (if applicable) shall be subject to any necessary consents from the Vessel's register and insurers. 19. In addition to the documents listed in Clause 8, the Sellers and the Buyers shall agree and provide such additional and normal documentation for closing as is reasonably required by the Sellers and the Buyers, a list of which shall be separately agreed between the parties latest within 3 Banking Days from the execution of the MoA, and incorporated into the MoA by way of an Addendum hereto, and which shall include, without limitation, (i) a multipartite agreement between the Sellers, the Buyers and the current time-charterer of the Vessel, confirming, inter alia, the time-charterer's consent to the sale of the Vessel to the Buyer, and the assignment and step-in rights to the Buyers and Buyers' bank in the event of a breach by the Sellers (in their capacity as charterers) under this Charter, and (ii) a co-ordination agreement between the Sellers, the Buyers and Buyers' bank regarding the subordination and coordination of rights between the first priority interest of the banks and the second priority interest of the Sellers in relation to the Sellers' credit referred to in Clause 21 (iii). 20. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. Of the total purchase price of USD 51,600,000 (US Dollars Fifty One Million Six Hundred Thousand) (the "Purchase Price") the Buyers shall pay USD [45,375,300 MS Dollar fourty five million three hundred and seventy five thous and three hundred to the Royal Bank of Scotland, Shipping Business Centre, 5-10 Tower Street London EC3P 3HX, SORTCODE: 16-0101, SWIFT: RBOSGB2L, IBAN:GB49 RBOS1663 0000311964, IBANBIC: RBOSGB2L, ACCOUNT KEY: TOPTAN-USD1, BENEFICIARY: TOPTANKERS INC (correspondent bank: American Express Bank Limited, New York -- SWIFT: AEIBUS33XXX) as and when provided in Clause 3 immediately after the Sellers have taken delivery of the Vessel as charterers under the Charter, provided that: (i) The Buyers shall be entitled to deduct USD 703,500 (US Dollar seven hundred and three thousand five hundred from the Purchase Price, being an amount equal to the first hire payment due to the Buyers by the Sellers as charterers under the Charter. If Buyers elect to make such deduction, the cash element to the Purchase Price as set out in (a) above shall be reduced accordingly and the Buyers shall provide to the Sellers as charterers a commercial invoice crediting amount to them under the Charter. (ii) Commission in the amount of USD 361,200 (US Dollar three hundred and sixty one thousand two hundred) shall be payable to Pareto Private Equity ASA upon delivery of the Vessel under this Agreement and the Charter and the Buyers shall be entitled to deduct such amount from the cash element of the Purchase Price and make such payment on behalf of the Sellers. (iii) The amount of USD 5,160,000 (US Dollars five million one hundred and sixty thousand) shall be deducted and deferred to be paid by the Buyers on such terms and conditions set out in more detail in a certain Seller's Credit Agreement of even date herewith entered into between the Sellers and the Buyers. 22. All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Buyers and in connection with the maintenance of such registration shall be borne by the Buyers and, if and to the extent from time to time paid by Sellers shall be reimbursed by the Buyers to the Sellers upon written demand. For a and on behalf of For and on behalf of Mytikas Shipping Company Limited Partankers III AS /s/ Andreas Loka /s/ Peter W. Wallace ---------------------------- ------------------------- Andreas Loka Peter W. Wallace Attorney-in-fact Attorney-in-fact EX-4.31 28 d759408_ex4-31.txt Exhibit 4.31 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker 2. Place and date PiraeusiNew York, 4 April 2006 3. Owners/Place of business (Cl. 1) Partankers III AS - Dronning Mauds gate 3 Norway 4. Bareboat Charterers/Place of business Mytikas Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Avenue Athens, 115 26 Greece 5. Vessel's name, call sign and lag (Cl. 1 and 3) MV "Limitless", call sign V7FV8, The Marshall Islands flag 6. Type of Vessel Suezmax Tanker 7. GT/NT 80,914 8. When/Where built 1993, Ishika Wajima Do Brasil Estaleiros, Brazil 9. Total DWT (abt.) In metric tons on summer freeboard 136,055 10. Classification society (C1. 3) ABS 11. Date of last special survey by the Vessel's classification society 15 January 2003 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) As at the time of delivery 13. Port or Place of delivery (Cl. 3) At sea or any safe berth in safe port or safe anchorage 14. Time for delivery (Cl. 4) Same as MOA date, see also Clause 33 15. Cancelling date (Cl. 5) Same as MOA date, see also Clause 34 16. Port or Place of redelivery (Cl. 15) Safe berth in safe port worldwide, but subject dauses 20 and 50 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) 6 months 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) World wide, always within Institute Warranty Limits 21. Charter period (Cl. 2) See Clause 37 22. Charter hire (Cl. 11) See Clause 38 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) See Clause 45 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV See Clause 38.6 25. Currency and method of payment (Cl. 11) See Clause 38 26. Place of payment; also slate beneficiary and bank account (Cl. 11) See Clause 38 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 36.7 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) Clause 12 (b) applies. USD 196,600,000 first priority mortgage to Nordea Bank Norge ASA, and Second Priority Mortgage in favour of the immediately previous owners of the Vessel, see Clause 40 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) See Clause 45 MR and MAPI to be taken out by the Mortgageereril premium to be paid 50/50 by Owners and Charikrs 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Charterers Interest Insurance and Charterers Loss of Hire 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 14(g)) 34. Grace period (state number of clear banking days)(Cl. 28) See Clause 46.1.1 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) See Clause 30 (a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) NO 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) NO 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) NO 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) NO 45. Country of the Underlying Registry (only to be filled in if PART V applies) 46. Number of additional clauses covering special provisions, if agreed) 32-52 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22 the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ('The Charter Period'). 3. Delivery See Clause 32 (not applicable when Part III applies, as indicated in Box 37) The Vessel shall be delivered by the Owners and taken over by the, Charterers at the port or place indicated in Box 13 in such ready safe berth as the Charterers may direct. (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag State indicated in Box 5 and the requirements of the classification society stated in Box 10. The Vessel upon delivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 12. (c) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3 and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on account of any conditions, representations or warranties expressed or implied with respect to the Vessel but the Owners shall be liable for the cost of but not the time for repairs or renewals occasioned by latent defects in the Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter, provided such defects have manifested themselves within twelve (12) months after delivery unless otherwise provided in Box 32. 4. Time for Delivery (not applicable when Part Ill applies, as indicated in Box 37) The Vessel shall not be delivered before the date indicated in Box 14 without the Charterers' consent. The Owners shall keep the Charterers closely advised of possible changes in the Vessel's position. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part M applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Owners and the Charterers shall share equally bear-all expenses of the On-hire Survey including loss of time, if any, and of the Off-hire-Survey. 8. Inspection The Owners and/or the Mortgagee shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf: (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked Her in accordance with Clause 10(o). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners (or their appointed representatives) to inspect the Vessel's log books whenever requested and shall whenever required by the Owners and/or as required under Clause 44 8 furnish them with full information regarding any casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, except as provided for in Clause 14(1) if applicable, at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance shall be for the sole cost and account of the Charterers. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever 3 required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or state taxes. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners' and Mortgagee's consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10fa1(iil, the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit. Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if i3ox 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State, see also Clause 51.7. 11. Hire See Clause 38 Deleted 12. Mortgage (only to apply if Box 28 has been appropriately filled in) Deleted *) (b) The Vessel chartered under this Charter is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgagee(s) in conformity with the Financial Instrument. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the mortgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers, which shall not be unreasonably withheld. *) (Optional, Clauses 12(a) and 12161 am alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs See Clause 45 (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers and the mortgagee(s) (if any), and The Charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. Insurance policies shall cover the Owners and the Charterers according to their respective interests. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account (b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 30 and Box 31 respectively. The Owners or the Charterers as the case may be shall immediately furnish the other party with particulars of any additional insurance effected, including copies of any cover notes or policies and the written consent of the insurers of any such required insurance in any case where the consent of such Insurers is necessary. (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a) all insurance payments for such loss shall be paid to the Owners who shall distribute the moneys between the Owners and the Charterers according to their respective interests. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause. (e) The Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverage against hull and machinery and war risks under the provisions of sub-clause 13(a) the value of the Vessel is the sum indicated in Box 29. 14. Insurance, Repairs and Classification Deleted 15. Redelivery See also Clause 50 At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place as indicated in Box 16 in such ready safe berth as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within The Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. The Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows: 'This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever. 17. Indemnity See Clause 39 (a) The Charterers shall indemnify the Owners against any loss, damage or expense incurred by the Owners arising out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale See Clause 41 (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld, and subject to such terms and conditions as the Owners shall approve. 23. Contracts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carnage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. 24. Bank Guarantee (Optional, only to apply if Box 27 filled in) 25. Requisition/Acquisition (a) In the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof always provided however that in the event of "Requisition for Hire" any Requisition Hire or compensation received or receivable by the Owners shall be payable to the Charterers during the remainder of the Charter Period or the period of the "Requisition for Hire" whichever be the shorter. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may-occur, this Charter shall be deemed terminated as of the date of such "Compulsory Acquisition". In such event Charter Hire to be considered as earned and to be paid up to the date and time of such 'Compulsory Acquisition". 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. 27. Commission Deleted 28. Termination See also Clauses 46 and 47 (a) Charterers' Default The Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box14 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of. (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10fa (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breath of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues-for a-period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel This Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28 the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted In accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. Deleted (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice') calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ('the Tribunal') or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue-during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediators costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a) 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices See Clause 51 (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. EXECUTION COPY ADDITIONAL CLAUSES to the Bareboat Charter dated 4 April 2006 between Mytikas Shipping Company Limited-(as Charters) and-PARTANKERS III AS (as Owners) in respect of M/V "Limitless" 32. DEFINITIONS 32.1 In this Charter, unless the context otherwise requires, the following expressions shall have the following meanings: 32.1.1 "Banking Day" means days on which banks are open for transaction of business of the nature required by this Charter in London, New York and Oslo; 32.1.2 "Charter Hire" has the meaning given to it in Clause 38 of this Charter; 32.1.3 "Charter Period" has the meaning given to it in Clause 37.1 of this Charter; 32.1.4 "Co-Ordination Agreement" means the agreement of even date herewith between the Mortgagee, the Charterers and the other Collateral Charterers acknowledged by the Owners whereby e.g. the Sellers rights and obligations under the Sellers' Credit Agreement will be subordinated and subject to the rights of the Mortgagee under the Loan Agreement; 32.1.5 "Collateral Charters" means the bareboat charters of even date herewith between the Collateral Charterers and the Owners in respect of each of the Collateral Vessels; 32.1.6 "Collateral Charterers" means the charterers of the Collateral Vessels (in each case as set out against the name of the relevant Collateral Vessel in the definition of Collateral Vessels herein); 32.1.7 "Collateral Vessels" means the vessels set out below, each owned by the Owners and chartered to the Collateral Charterer set out below opposite the vessel's name: 1. MN "Faultless" - Parnasos Shipping Company Limited 2. MN "Stainless" -- Parnis Shipping Company Limited 3. MN "Noiseless" -- Imitos Shipping Company Limited 4. MN "Limitless" -- Mytikas Shipping Company Limited 5. MN "Endless" -- Litochoro Shipping Company Limited 32.1.8 "Compulsory Acquisition" has the meaning giving to it in Clause 25(b); 32.1.9 "Delivery Date" has the meaning given to it in Clause 33.2; 32.1.10 "Event of Default" has the meaning given to it in Clause 46.1 of this Charter; 32.1.11 "Guarantee" means the guarantee issued by Guarantor in favour of the Owners in the form enclosed as Exhibit 1 as security for the due performance of this Charter and all other Collateral Charters by the Collateral Charterers; 32.1.12 "Guarantor" means Top Tankers Inc., a Marshall Islands corporation with registered office at Trust Company Complex, Ajeltake Island, P.O.Box 1405 Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg Cl, Athens 115 26, Greece; 32.1.13 "Loan Agreement" means the loan agreement between the Owner and the Mortgagee in respect of the USD 180,600,000 loan provided for the purpose of financing, in part, the Owners' purchase of the Vessel and the "Collateral Vessels", together with the security documents executed or to be executed in connection therewith; 32.1.14 "Managers" means Top Tanker Management Inc,, a Marshall Islands corporation with registered address at Trust Company Complex, Ajeltake Road,, Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg CI, Athens 115 26, Greece; 32.1.15 "MOA" means the memorandum of agreement of even date herewith made between the Charterers as sellers and the Owners as buyers in respect of the Vessel (as same may be amended from time to time); 32.1.16 "Mortgage" means the first priority mortgage against the Vessel executed or to be executed by the Owners in favour of the Mortgagee as security for the Owners' obligations under the Loan Agreement and the Swap Agreement; 32.1.17 "Mortgagee" means Nordea Bank Norge ASA, as agent on behalf of the banks having financed the Owners' purchase of the Vessel and the "other Collateral Vessels" and Nordea Bank Finland Plc as swap bank; 32.1.18 "Multipartite Agreement" means the agreement between the Owners, the Sellers and other Collateral Charterers, and the Sub-Charterer providing for, inter alia, confirmation by the Sub-Charterer that it accepts ( I ) the Owners as new owners of the Vessel, (2) the Mortgagee and its security interest in the Vessel and (3) the step-in rights and other arrangements set out therein; 32.1.19 "Seller" means the Charterers as seller under the MOA; 32.1.20 "Sellers" means the Charterers and the other Collateral Charterers as sell s under the relevant MOA relating to the relevant Collateral Vessels; 32.1.21 "Sellers' Credit" means a retention in the amount of US$ 25,800,000 provided by the Sellers to the Owners as security for the Charterers' due and correct performance of all of its obligations under this Charter and for the other Collateral Charterers' obligations under the other Collateral Charters, or such amount thereof as may be outstanding from time to time, to be applied and reduced as more particularly set out in the Sellers' Credit Agreement; 32.1.22 "Sellers' Credit Agreement" means the agreement entered into on the date hereof among the Sellers, the Charterers and all other Collateral Charterers and the Owners in respect of the Sellers' Credit; 32.1.23 "Ship Management Agreement" means the ship management agreement to be entered between the Charterers and the Managers in respect of the Vessel; 32.1.24 "Sub-Charterer" means none; 32.1.25 "Swap Agreement" means an ISDA Master Agreement entered or to be entered into between the Owners and Nordea Bank Finland PLC, as amended from time to time, and confirmations of the transactions relating to hedging of interest exposure under the Loan Agreement made or to be made thereunder; 32.1.26 "Total Loss" means (i) actual or constructive or compromised or arranged total loss of the Vessel or (ii) any Compulsory Acquisition. 32.2 The headings in this Agreement do not affect its interpretation. 33. MOA AND DELIVERY 33.1 Subject to the Vessel being delivered to, and taken over by, the Owners pursuant to the MOA, the Charterers shall forthwith be deemed to have taken delivery of the Vessel under this Charter simultaneously with delivery by the Seller to the Owners pursuant to the MOA. 33.2 The date of delivery for the purpose of this Charter shall be the date (the "Delivery Date") when the Vessel is in fact delivered by the Seller to the Owners pursuant to the MOA, whether that be before or after the scheduled date under the MOA, and the Owners shall be under no responsibility for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter. 33.3 The Charterers undertake that in the event the Vessel is not delivered and accepted under the MOA for any reason which is not attributable to any act or omission on part of the Owners, the Charterers will promptly upon the Owners' written demand reimburse the Owners in full (without set-off or counterclaim of any nature) for any cost or disbursement reasonably incurred by the Owners in respect of the contemplated transaction, including any costs incurred in respect of financing arrangements made in connection therewith. 33.4 Without prejudice to the provisions of Clause 33.2 above, the Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance evidencing delivery of the Vessel hereunder. The On-hire Survey referred to in Clause 7 hereof shall be for the purposes of ascertaining the condition of the Vessel at the time of delivery hereunder and shall not give rise to any right of the Owners to refuse to deliver, or the Charterers to refuse to accept, the Vessel hereunder, except that such On-hire Survey shall be of immediate relevance in determining the condition of the Vessel upon commencement of the Charter Period and, accordingly, in relation to the required condition of the Vessel upon redelivery pursuant to Clauses 15 and 50. The On-hire Survey shall include a list of mutually agreed spares and inventory pertaining to the Vessel on board and on shore. In connection with and as part of the On-hire Survey, the Owners shall be entitled to conduct an underwater inspection and the provisions of NSF'93 Clause 6 (b) and (c) shall apply correspondingly. 34. CANCELLING 34.1 Should the MOA be cancelled or should the Vessel become a Total Loss prior to its delivery under the.M0A, this Charter shall be cancelled forthwith without liability on the part of either party under this Charter except as expressly stated in the MoA or this Charter. 35. TERMS OF DELIVERY 35.1 Subject to Clause 35.4 below, the Charterers - having owned and operated the Vessel for a considerable time, and therefore possessing first-hand knowledge about the Vessel and her specifications, performance and conditions in all respects - acknowledge and agree that the Owners make no condition, term, representation or warranty, express or implied (and whether statutory or otherwise) as to the title passed to Owners from the Seller, seaworthiness, merchantability, condition, design, operation, performance, capacity or fitness for use of the Vessel or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Delivery to the Charterers or (as the case may be) deemed delivery of the Vessel under this Charter shall be conclusive proof that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, and in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers. 35.2 Subject to Clause 35.4 hereof, the Charterers hereby waive all their claims against the Owners howsoever and whensoever the same may arise at any time in respect of the Vessel or the Owners' title thereto as passed to the Owners from the Seller or rights therein or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness or otherwise of the Vessel). 35.3 The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable (unless such unusability is due to the Owners' fault). 35.4 Nothing contained in this Clause 35 shall be construed as a waiver of any rights or remedies of the Charterers at law or in equity against the Owners in respect of (a) any fraudulent or wilful misconduct of the Owners or (b) any failure on the part of the Owners to comply with any of the terms of this Charter or the MoA. 36. CONDITIONS PRECEDENT Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject to and conditional upon at the Delivery Date:- 36.1 delivery of the Vessel to the Owners by the Seller pursuant to the MOA; and 36.2 no Event of Default having occurred and continuing unremedied or unwaived, and no other event having occurred and continuing unremedied, which with the giving of notice and/or lapse of time would, if not remedied, constitute an Event of Default; and 36.3 each of the representations and warranties contained in Clause 43 of this Charter being true and correct in all material respects on the Delivery Date by a reference to the facts and circumstances then existing; and 36.4 the Owners having received evidence that the appointment of the Managers under the Ship Management Agreement has commenced; and 36.5 the Owners having received evidence that the Vessel is insured in accordance with the provisions of this Charter and that all requirements of Clauses 13 and 45 of this Charter in respect of such insurances have been complied with; and 36.6 the Owner's having received evidence that the first instalment of the Charter Hire (as defined in Clause 38.1) has been or will be paid as required in Clause 38.2; and 36.7 the Owners having received, all in such form and substance reasonably acceptable to the Owners and the Mortgagee: 36.7.1 the Multipartite Agreement duly signed by the parties thereto; 36.7.2 the Co-Ordination Agreement, duly signed by the parties thereto; 36.7.3 the Seller's Credit Agreement, duly signed by the parties thereto; 36.7.4 the Ship Management Agreement, duly signed by the parties thereto; 36.7.5 the Guarantee, duly executed by the Guarantor; 36.7.6 the Sub-Charter, duly executed by the parties thereto; 36.7.7 legal opinions from counsel in respect of the laws of England, the Marshall Islands and Liberia in form and substance satisfactory to the Owners and the Mortgagee; 36.7.8 a copy of the Document of Compliance of the Ship Manager, the Safety Management Certificate of the Vessel and the ISPS Code Ship Security Certificate for the Vessel; and 36.7.9 such further documentation as may be agreed between the parties. 37. CHARTER PERIOD 37.1 Subject to the terms of this Charter, the period of chartering of the Vessel hereunder (the "Charter Period") shall commence on the Delivery Date and shall terminate on the date which falls 84 months after the Delivery Date. 38. CHARTER HIRE AND SECURITY 38.1 The Charterers shall, throughout the Charter Period, pay charter hire (the "Charter Hire") to the Owners at a rate of USD 23,450 net per day, 365 days per year. 38.2 The Charterers shall pay Charter Hire due to the Owners punctually in accordance with the terms of this Charter. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date. 38.3 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.3.1 On the relevant Payment Date, or, if the Payment Date shall not be a Banking Day, on the next following Banking Day unless, in the case the Payment Date falls in the following calendar month, the immediately preceding Banking Day; and 38.3.2 In USD in funds with the same day value to the Owners' account no. 6012.04.43855 with the Mortgagee, under reference "Faultless Charter Hire", or such other bank account as may be advised to the Charterers by the Owners by not less than 10 Banking Days' prior written notice. 38.3.3 Final payment of Charter Hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the numbers of days and hours remaining before redelivery and advance payment to be effected accordingly. 38.4 All payments under this Charter shall be made without any discount, set-off or counterclaim whatsoever, and free and clear of any bank charges and/or any withholding or deduction for, or on account of, any present or future income, freight, stamp and other taxes, levies, imposts, duties, fees, charges, restrictions or conditions of any nature. All payments shall be made free and clear of, and without deduction for or on account of any present or future taxes or duties of any nature now or hereafter imposed. It the Charterers are required by any authority in any country to make any withholding or deduction from any such payment, the sum due from the Charterers in respect of such payment will be increased to the extent necessary to ensure that, after the making of such withholding or deduction the Owners receive a net sum equal to the amount which it would have received had no such deduction or withholding been required to be made. 38.5 The Charterers' obligation to pay Charter Hire in accordance with the requirements of this Clause 38 shall, subject to Clauses 28 (d) and 45.3, be absolute, irrespective of any contingency or cause whatsoever, which would or might, but for this provision, have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter, including (but not limited to): 38.5.1 any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners or any other person; or 38.5.2 any unavailability of the Vessel for any reason, including (but not limited to) any lack of or invalidity of title or any other defect in the title passed on to them from the Sellers, the condition, design, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for documentation under the laws of any country (except if a defect in any such documentation is due to the fault of the Owners and the Charterers have notified the Owners of the defect in documentation which has remained unremedied for a period of 15 days after notice was given) or any damage to the Vessel; or 38.5.3 any failure or delay on the part of the Owners whether with or without fault on their part, in performing or complying with any of the terms or covenants hereunder. 38.6 In the event of failure by the Charterers to pay on the due date for payment thereof, or in the case of the sum payable on demand, the date of demand therefore, any Charter Hire or other amount payable by them under this Charter, the Charterers will pay to the Owners interest on such Charter Hire or such other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) three per centum (3%) and (ii) the London Interbank Offered Rate for USD deposits of not more than one (1) month's duration (as such rate is from time to time quoted by leading banks in the London Interbank Market to the Mortgagee). The interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. Payment of interest due under this sub-clause shall be made within seven (7) running days of the date of the Owners' invoice specifying the amount payable or, in the absence of an invoice, at the time of the next hire payment date. Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. 38.7 As security for the Charterers' performance of their obligations under this Charter, the Charterers shall procure that the Guarantee be issued by the Guarantor in favour of the Owners. 39. INDEMNITY 39.1 Subject to the terms of this Charter and in particular Clause 39.2 hereof, the Charterers agree at all times to indemnify and keep indemnified the Owners against:- 39.1.1 any costs, charges, or expenses which the Charterers have agreed to pay under this Charter and which shall be claimed or assessed against or paid by the Owners; and 39.1.2 all losses, costs, charges, expenses, fees, payments, liabilities, penalties, fines, damages or other sanctions of a monetary nature (collectively, "Losses") suffered or incurred by the Owners and arising during the tenure of the Charter or in relation to the Charter in any manner out of the design, manufacture, delivery, non delivery, purchase, importation, registration, ownership, chartering, sub-chartering, possession, control, use, operation, condition, maintenance, repair, replacement, refurbishment, modification, overhaul, insurance, sale or other disposal, return or storage of or loss of or damage to the Vessel or otherwise in connection with the Vessel (whether or not in the control or possession of the Charterers) including but not limited to those Losses described in Clause 39 and including any and all claims in tort or in contract by any sub-charterer of 'the Vessel from the Charterers or by the holders of any Bills of Lading issued by the Charterers, except and to the extent directly caused by the default of the Owners; and 39.1.3 all Losses suffered or incurred by the Owners which result from claims which may be made during the tenure of the Charter or in relation to the Charter on the ground that any design, article or material of or in the Vessel or the operation or use thereof constitutes or is alleged to constitute an infringement of patent or copyright or registered design or other intellectual property right or any other right whatsoever; and 39.1.4 all Losses suffered or incurred by the Owners and/or the Mortgagee during the tenure of this Charter in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Vessel, or in securing the release of the Vessel therefrom provided that such events are not caused by Owners' default, and 39.1.5 all Losses suffered or incurred by the Owners with respect to or as a result of the presence, escape, seepage, spillage, leaking, discharge or migration from the Vessel of oil or any other hazardous substance during the tenure of this Charter, including without limitation, any claims asserted or arising under the US Oil Pollution Act of 1990 (as same may be amended and/or re-enacted from time to time hereafter) or similar legislation, regardless of whether or not caused by or within the control of the Charterer; and 39.1.6 all Losses suffered or incurred by the Owners and/or their respective officers or members of management board and/or the Mortgagee or any of the other financial institutions which are party to the Loan Agreement, as a consequence of any violation by the Charterers or any sub-charterer of U.S. law or any other laws pursuant to which the Vessel and/or her trading or operations shall be subject from time to time; and 39.1.7 any reasonable Losses incurred or suffered by the Owners in liquidating employing or prepaying funds acquired or borrowed to purchase or finance or refinance the Vessel following any default in payment hereunder or the occurrence of any Event of Default. 39.2 If, under any applicable law, whether as a result of judgment against the Charterers or the liquidation of the Charterers or for any other reason, any payment to be made by the Charterers under or in connection with this Charter is made or is recovered in a currency other than the currency (the "currency of obligation") in which it is payable pursuant to this Charter then, to the extent that the payment (when converted into the currency of obligation at the rate of exchange on the date for the determination of liabilities permitted by the applicable law) falls short of the amount unpaid under this Charter, the Charterers shall as a separate and independent obligation, fully indemnify the Owners against the amount of the shortfall; and for the purposes of this sub-clause "rate of exchange" means the best rate at which the Owners are able on the relevant date to purchase the currency of obligation with the other currency. 39.3 The indemnities ocontained in this Clause 39, and each other indemnity contained in this Charter, shall survive any termination or other ending of this Charter and any breach of, or repudiation or alleged repudiation by, the Charterers or the Owners of this Charter but the indemnity contained in this Clause 39 hereof shall not apply if and to the extent that the relevant cost, charge, expense or Loss arises as a result of (i) any act, neglect or default of or by any person (other than the Charterers) subsequent to the redelivery of the Vessel to the Owners pursuant to Clause 15 hereof or any other provision of this Charter or (ii) any fraudulent or wilful misconduct or recklessness of the Owners, or any failure on the part of the Owners to comply with any of the terms of this Charter or the MOA which can reasonably be deemed to be of a material nature in the context of the transaction and which the Owners have failed to remedy within 14 days following the Charterers' written notice thereof, or (iii) any encumbrance, mortgage, charge, lien or other security interest whatsoever over the Vessel in respect of a debt, liability or other obligation of the Owners (other than any such arising from or in connection with the use or operation of the Vessel by the Charterers). 39.4 All moneys payable by the Charterers under this Clause 39 shall be paid on demand within five Banking Days from receiving the Owner's written demand in relation thereto. 40. MORTGAGES 40.1 The Owners warrant that they have not effected any mortgage(s) other than to the Mortgagee and to the Seller stated in Box 28 and that they shall not effect any other mortgages(s) without the Charterers' prior consent, which shall not be unreasonably withheld or delayed. 40.2 The Charterers agree with the Owners that the Owners may assign this Charter to the Mortgagee, and shall procure that the Charter Guarantors agree that the Owners may assign its rights under the Charter Guarantees to the Mortgagee. 41. OWNERS' TRANSFER OF VESSEL - CHARTERERS' SUB-CHARTERING 41.1 The Owner or the Mortgagee may change the registered ownership of the Vessel by way of a sale or otherwise subject to the Charterers' prior approval, which shall be granted provided that (i) this Charter is continued on identical terms, and (ii) the change is not reasonably likely to cause negative consequences for the Charterers as to economic or competitive relationships. 41.2 The Charterers agree and undertake to enter into any such usual documents as the Owners or the Mortgagee shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to Clause 41.1 above, any costs or expenses whatsoever arising in relation thereto to be borne by the Owners. 41.3 The Charterers shall, subject to (i) no Event of Default having occurred and being continuing or (ii) any other restriction set out herein, be entitled to let the Vessel by way of time or voyage charter to any person other than the Sub-Charterer upon the expiry of the Sub-Charter provided that; (i) any such sub-charter shall not relieve or discharge the Charterers from any of their obligations contained in this Charter; and (ii) any such -sub-charter shall make reference to the -fact that the Charterers have chartered the Vessel from the Owners, and no such charter shall be of a duration which expires, or which by virtue of any optional extensions therein contained could expire after the last day of the Charter Period; (iii) the Owners and its financiers shall have afforded step-in rights to any sub-charter with a duration (including options) of more than 12 months, which right shall be documented by way of an agreement based on the format of the Multipartite Agreement; and (iv) the Charterers will promptly notify the Owners of any such sub-chartering. In no event may the Charterers demise charter (sub-bareboat charter) the Vessel to any party without the Owners' prior written consent, which consent shall not be unreasonably withheld. 41.4 Any registration of this Charter in any Ship Register shall require the prior mutual agreement between the Owners and the Charterers and the prior written consent of the Mortgagee. 42. FLAG 42.1 The Vessel shall upon the Delivery Date be registered in the name of the Owners under Marshall Islands flag provided always that the Owners shall, at any time following the Delivery Date, be entitled to transfer the flag of the Vessel to such other registry as the Owners may select (subject always to the Charterers' prior written consent, which consent shall not be unreasonably withheld considering consequences for the Charterers as to economic or competitive relationships). The Charterers may request the Owners to change flag at the Charterers' cost, which consent shall not be unreasonably withheld by the Owners, subject to acceptance thereto having been obtained from the Mortgagee. 42.2 All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Owners under the Marshall Islands flag or in connection with the maintenance of such registration shall be borne by the Owners and, if and to the extent from time to time paid by the Charterers, shall be reimbursed by the Owners to the Charterers upon demand. 43. REPRESENTATIONS AND WARRANTIES 43.1 The Charterers acknowledge that the Owners have entered into this Charter in full reliance on representations by (i) the Guarantor as set out in the Guarantee and (ii) the Charterers in the following terms; and the Charterers now warrant to the Owners that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.1.1 the Charterers are duly incorporated and validly existing under the laws of Marshall Islands; and 43.1.2 the Charterers are the wholly-owned subsidiary of the Guarantor; 43.1.3 this Charter constitute the legal, valid and binding obligations of the Charterers, enforceable in accordance with its terms; and 43.1.4 the Charterers have the power to enter into and perform its obligations under this Charter; and 43.1.5 all consents, licences, approvals and authorisations required in connection with the Charterers' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.1.6 no litigation, arbitration or administrative proceeding is taking place against the Charterers or against any of the assets of, the Charterers which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Charterers' ability to perform their obligations under this Charter; and 43.1.7 no Event of Default (as defined in Clause 46.1 hereof) of which they are aware, and no event of which they are aware which with the giving of notice and/or lapse of time and/or relevant determination would constitute an Event of Default, has occurred and is continuing. 43.2 The Owners acknowledge that the Charterers have entered into this Charter in full reliance on representations by the Owners in the following terms; and the Owners now warrant to the Charterers that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.2.1 the Owners are duly incorporated and validly existing under the laws of Norway as a limited liability company; and 43.2.2 this Charter constitute the legal, valid and binding obligations of the Owners, enforceable in accordance with its terms; and 43.2.3 the Owners have the power to enter into and perform its obligations under this Charter; and 43.2.4 all consents, licences, approvals and authorisations required in connection with the Owners' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.2.5 no litigation, arbitration or administrative proceeding is taking place against the Owners or against any of the assets of, the Owners which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Owners' ability to perform their obligations under this Charter. 44. UNDERTAKINGS The Charterers undertake and agree that throughout the Charter Period they will: 44.1 Provide to the Owners; 44.1.1 their audited annual financial statements as soon as available and in no event later than 120 days after the end of their financial year; and 44.1.2 copies of all class records, class certificates and survey reports prepared by the classification society pertaining to the Vessel as soon as practicable after their issue and in any event updated copies every six months; and 44.1.3 at any relevant time, copies of any inspection and/or management reports obtained or prepared by the Charterers or the Managers in respect of the Vessel, which reports shall be prepared and submitted at least twice per calendar year. 44.2 Not repudiate or terminate, nor permit the repudiation or termination of, the Ship Management Agreement or the Sub-Charter nor, without the prior written consent of the Owners (such consent not to be unreasonably withheld), amend or vary the terms of, or permit or suffer any material amendment or variation of the terms of, the Ship Management Agreement or the Sub-Charter without the Owners' consent. 44.3 Procure that the Vessel is classified and maintained free of recommendations or conditions of class with the classification society indicated in Box 10, or with such other classification society as shall be acceptable to the Owners and the Mortgagee, and at all times comply with the rules and regulations of the classification society. 44.4 At all times ensure compliance in all material respects with all applicable environmental laws and all other laws and regulations, in each case as relating to the Vessel wherever the Vessel might be trading and the operation and management thereof, and take all reasonable precautions to ensure that the crews, employees, agents or representatives of the Charterers at all times comply with such environmental laws and other applicable laws. Also, the Charterers will ensure that US Voyage Declarations, where applicable, are submitted in a timely fashion in accordance with the P&I terms of cover and that a Certificate of Financial Responsibility (COFR) is obtained before trading in the United States. 44.5 At all times ensure compliance in all material respects with all international conventions, codes and regulations, including the International Convention for Safety of Life at Sea (SOLAS) 1974 (as adopted, amended or replaced from time to time), the STCW 95, the ISM Code and the ISPS Code (as each such term is defined in the relevant amendments to SOLAS), in each case as relating to the Vessel and the operation and management thereof, and ensure such compliance by the Manager and any other company (with the prior consent of the Owners) performing ship management services in respect of the Vessel on behalf of the Charterers. 44.6 Obtain and promptly renew from time to time, and, whenever so reasonably required, promptly furnish certified copies to the Owners of, all such authorisations, approvals, consents and licences as may be required under any applicable law or regulation to enable the Charterers to perform their obligations under this Charter or required for the validity or enforceability of this Charter, and the Charterers shall in all material respects comply with the terms of the same. 44.7 Ensure that any new charter arrangement entered into following the expiry or termination of the Sub-Charter provides for step-in rights for the currently envisaged in the Multipartite Agreement; 44.8 Notify the Owners forthwith by letter, or in case of urgency, by telefax or e-mail of: 44.8.1 any accident to the Vessel involving repairs, the cost of which is likely to exceed USD 250,000 (or the equivalent in any other currency); or 44.8.2 any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss; or 44.8.3 any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel; or 44.8.4 details of any action, suit, proceeding, litigation or dispute for an amount of USD 250,000 or more against itself before any court, board of arbitration or other body, which, in either case, could or might result in any material adverse change in the business or condition (financial or otherwise) of the Charterer, when the same is instituted or threatened; or 44.8.5 any breach of any applicable laws or regulations relevant to the maintenance and operation of the Vessel. 44.9 Notify the Owners in writing of any Event of Default of which they are aware (or an event of which they are aware which, with the giving of notice and/or lapse of time, would constitute an Event of Default and which is not likely to be remedied before becoming an Event of Default). 44.10 Upon the Owners' request provide information regarding the Vessel's trading patterns and employment. 45. INSURANCES, TOTAL LOSS AND COMPULSORY ACQUISITION 45.1 The Charterers undertake to the Owners that throughout the Charter Period:- 45.1.1 all insurances to be effected by the Charterers pursuant to this Charter shall be effected and maintained by the Charterers; (i) in the joint names of the Owners and the Charterers, or otherwise as they may agree; (ii) in an amount of hull and machinery and war risks cover set out in Clause 45.2 (or such other amount as may be agreed from time to time between the Charterers and the Owners, or the Mortgagee; as their assignee); (iii) so that the protection and indemnity risks include, in the case of oil pollution liability risks, cover for an aggregate amount equal to the highest level of cover available from time to time under the basic P&1 Club entry policy (currently one billion United States Dollars); (iv) upon standard UK or Norwegian terms and by policies and/or entries in such forms as shall from time to time be approved in writing by the Owners and the Mortgagee; and (v) through first class/Lloyd's brokers and with such reliable and first class security companies/underwriters, war risks and I.G.A P&I Associations as shall, in each case, from time to time be approved in writing by the Owners and the Mortgagee, such approval not to be unreasonably withheld; 45.1.2 all such insurances shall be renewed by the Charterers at least fourteen (14) days before the relevant policies or contracts expire and the approved brokers and/or the approved insurers shall promptly confirm in writing to the Owners and the Mortgagee as and when each such renewal is effected and, in the event of any renewal not being effected by the Charterers as aforesaid, shall notify the Owners forthwith; 45.1.3 the Charterers shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so reasonably required by the Owners or the Mortgagee provided there is no genuine dispute and subject always to the Charterers' obligation to maintain the Vessel insured at all times as required by this Charter and/or the Multipartite Agreement; 45.1.4 the Charterers shall arrange for the execution of such guarantees by any protection and indemnity or war risks association as may from time to time be required; 45.1.5 the Charterers shall procure that the policies and/or entries in respect of the insurances against marine and war risks are, in each case, endorsed with the interest of the Owners and the Mortgagee to the effect that: (i) payment of a claim for a Total Loss of the Vessel will be made to the Mortgagee as mortgagee and as the Owners' assignee (until such Mortgage has been discharged, after which to the Owners) and, if applicable, to the Charterers in respect of any additional coverage taken out by him in accordance with box 31 above,; and (ii) payment in respect of a claim which is not a Total Loss of the Vessel shall, subject to the proviso hereto and subject to the prior written consent of the Mortgagee, be made to the Owners who shall apply the same by making payment to the Charterers as reimbursement of costs and expenses incurred to make good the loss and fully repair all damage and otherwise maintaining the Vessel in accordance with their obligations hereunder as evidenced by invoices or other evidence reasonably acceptable to the Owner and the Mortgagee provided however (a) that such claims as are payable in respect of a hull & machinery minor casualty (that is to say a claim or the aggregate of the claims does not exceed five hundred thousand dollars (US$ 500,000) inclusive of any deductible (or the equivalent in any other currency)) shall be paid to the Charterers without the prior written consent of the Mortgagee and (b) that -all such sums shall be payable as aforesaid only until such time as the Owners may otherwise direct to the contrary following notice of termination having been given under the Charter whereupon all such sums shall be paid to the Owners or to the Mortgagee as the Owners' assignee and loss payee; 45.1.6 the Charterers shall procure that the entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid either: 45.1.7 to the person to whom was incurred the liability in respect of which the relevant money was paid or, unless and until the Owners or the Mortgagee shall direct (following the occurrence of any Event of Default which continues unremedied and/or unwaived) that they shall be paid to the Owners or to the Mortgagee; or 45.1.8 to the Charterers in reimbursement for any payment properly made by the Charterers to a third party; 45.1.9 the Charterers shall procure that copies of all cover notes, conditions and certificates of entry are furnished to the Owners and the Mortgagee for their custody; 45.1.10 the Charterers shall procure that the interest of the Owners as owner of the Vessel and of the Mortgagee as mortgagee of the Vessel and as assignee of the Owners' interest in the insurances and loss payee of all insurance proceeds (other than under any insurances taken out pursuant to box 31 above, if applicable) shall be recorded on all policies and shall be confirmed to the Owners and the Mortgagee in conformity with applicable market practice and with the reasonable requirements of the Owners and the Mortgagee; 45.1.11 the Charterers shall not do any act or permit or suffer any act to be done whereby any insurance required as aforesaid shall or may be suspended, invalidated, cancelled or become defective; 45.1.12 without prejudice to the Charterers' obligation to keep the Vessel in repair regardless of whether insurance proceeds shall have first been received, the Charterers shall apply all such sums receivable in respect of the insurances as are paid to the Charterers in accordance with the terms of Clause 45.1.5 for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; 45.1.13 the Charterers shall not make any alteration to any of the insurances referred to in this Clause without the prior written approval by the Owners and the Mortgagee, which shall not be unreasonably withheld, and shall not make, do, consent or agree to any act or omission which might render any such instrument of insurance invalid or unenforceable or render any sum payable thereunder repayable in whole or in part; and 45.1.14 if the Owners or the Mortgagees receive payment of insurance proceeds in respect of insured repairs that have already been carried out at the Charterers' expense or in respect of insured liabilities that the Charterers have duly paid to third parties in agreement with this Charter, they shall without undue delay pay the same to the Charterers, whether or not notice of termination has been given under this Charter but subject always to any right of set-off the Owners may have. 45.2 Notwithstanding anything to the contrary contained in this Charter, the Vessel shall be kept insured throughout the Charter Period in respect of hull and machinery and war risks for an amount not less than the greater of (A) 100% of the market value of the Vessel determined as the average of valuations obtained from two of any of the following ship brokers Clarksons, Fearnleys, Barry Rogliano Salles, Howe Robinson, and R.S. Platou, one to be appointed by the Owners and the other to be appointed by the Charterers, on the basis of the Vessel being charter-free, ready for prompt delivery (the "Market Value") which Market Value shall be determined annually and (B) the amounts specified in column (b) in the table set out below in respect of the yearly period during the Charter Period specified in columns (a) against such amount (which insurance amount is hereinafter referred to as the "Minimum Insured Value"). The hull and machinery basis of the insurance (as opposed to the hull interest /increased value or total loss only basis for the insurance) shall be not less than 80% of the Market Value or the Minimum Insured Value as the case may be. a) (b) Twelve-monthly Period Minimum Insured Value (USD) --------------------- --------------------------- 0-12 51,600,000 12-24 48,051,500 24-36 41,923,000 36-48 35,794,500 48-60 29,666,000 60-72 23,537,500 72-84 17,409,000 45.3 Notwithstanding anything to the contrary contained in this Charter, if the Vessel shall become a Total Loss, or is missing (and a notice of abandonment has been sent to insurers), Charter Hire shall cease from the date when she was lost or, in the case where the Vessel is missing, from the date when a notice of abandonment is sent to insurers provided however that: 45.3.1 in circumstances where any moneys are due to the Owners under this Charter, the Charterers' said obligation to pay Charter Hire shall continue until the Owners (or the Mortgagee as their assignee) shall have received a net amount equal to the aggregate of (i) all accrued and due Charter Hire which is then unpaid; and (ii) other moneys (including, without limitation, any interest) owing by the Charterers to the Owners under this Charter as -at the date of such receipt; and 45.3.2 in circumstances where Charter Hire has been paid in advance, such Charter Hire shall be adjusted accordingly. 45.3.3 if, in the event that, upon the occurrence of a Total Loss, or circumstance giving rise to a notice of abandonment being sent to insurers, the Owners (or the Mortgagee in its capacity as loss payee) shall, for any reason, not have received out of the insurance proceeds or compensation amounts (if any) the Minimum Insured Value within one hundred and twenty (120) days (or such longer period as the Mortgagee may agree) following the occurrence of such Total Loss or the giving of such notice of abandonment, the Charterers shall thereupon forthwith pay to the Mortgagee (in its capacity as loss payee) such amount as the Mortgagee shall specify in writing to the Charterers to be equal to the amount whereby the Minimum Insured Value (calculated as at the date for payment by the Charterers) exceeds the amount of insurance proceeds or compensation moneys (if any) actually received by the Owners (or the Mortgagee as their assignee or loss payee) prior to such payment by the Charterers. 45.4 For the purposes of this Charter: 45.4.1 an actual total loss of the Vessel shall be deemed to have occurred at the actual date and time the Vessel was lost but, in the event of the date of the loss being unknown, then the actual total loss shall be deemed to have occurred on the date on which the Vessel was last reported; 45.4.2 a constructive total loss shall be deemed to have occurred at the date and time notice of abandonment of the Vessel is given to the insurers of the Vessel for the time being (hereinafter called the "Insurers") (provided a claim for such constructive total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, at the date and time at which a constructive total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and either the Owners or the Charterers shall have the right determine whether or not a case has arisen for the giving of notice of abandonment and the Charterers are hereby irrevocably authorised by the Owners to give the same if it so determines. Each of the Owners and the Charterers, upon the request of the other, shall promptly execute such documents as may be required to enable the other to abandon the Vessel to the Insurers and/or claim a constructive total loss and shall give all possible assistance in pursuing the said claim; 45.4.3 a compromised, agreed or arranged total loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement; and 45.4.4 a Total Loss (a) as the result of capture, taking, seizure, restraint, detention, confiscation or expropriation occurring under the conditions of the "War Risks" policy of the Vessel or (b) Compulsory Acquisition shall be deemed to have occurred at the time admitted by the Insurers. 46. EVENTS OF DEFAULT 46.1 Each of (i) the following events, (ii) the events referred to in Clause 28 as they may pertain to the Charterers, shall be a "Event of Default" for the purposes of this Charter:- 46.1.1 if any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date or (in the case only of sums expressed to be payable by the Charterers on demand within five (5) Banking Days following the date of demand therefore) and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.1.2 if either (a) the Charterers fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question), or (b) any of the said insurances shall cease for any reason whatsoever to be in full force and effect for any reason not attributable to or beyond the control of the Charterers (or their representatives); or 46.1.3 if there is a breach of the Charterers' representations and warranties in Clause 43; or 46.1.4 if the Charterers shall at any time fail to perform or observe any of their obligations under (i) this Charter (including, without limitation, the undertakings set out in Clause 44), and such failure to perform or observe any such obligation is not (if capable of being remedied) remedied within fourteen (14) days of the occurrence of the relevant breach, or (ii) the Multipartite Agreement, (iii) the Sellers Credit Agreement or (iv) the Co-Ordination Agreement; or 46.1.5 if (i) the Guarantee shall cease to be valid and/or in full force and effect, (ii) the Guarantor shall breach any of its obligations, undertakings, covenants, representations and/or warranties set out in the Guarantee or (iii) the Guarantor shall be in breach of or in default under any other financing agreement by which it is bound (provided that any payment default shall be in-respect of an amount greater than USD 5,000,000); or 46.1.6 if the Manager ceases to be the manager of the Vessel or the Ship Management Agreement is repudiated, terminated or substantially amended without the prior consent of the Owners; or 46.1.7 if a petition shall be presented (and not withdrawn or stayed within fourteen (14) days or not contested in good faith by instigating appropriate legal action on a bona fide basis) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction of amalgamation during and after which the Charterers remain solvent, the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrance shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers, or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within fourteen (14) days) or if the Charterers shall otherwise have to abandon independent control of any part of its business or operations; or 46.1.8 if the Charterers shall stop payments generally or shall be unable to pay the debts, or shall admit in writing the inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or 46.1.9 if the Charterers shall declare or apply to any court or other tribunal for a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities and which, in the Owners' reasonable opinion, makes it likely that the Charterers will not be able to fulfil its obligations hereunder in full; or 46.1.10 if any consent, authorization, licence or approval necessary for this Charter to be or remain the valid and legally binding obligation of the Charterers, or to enable the Charterers to perform their obligations hereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to an Event of Default if the same are remedied within thirty (30) days of the date of their occurrence); or 46.1.11 if the Charterers shall (in a single or a series of transactions) dispose of a material part of its business or assets or cease to be engaged in the chartering the Vessel and /or cease to conduct such business as is required in order for the Charterers to fulfil their obligations under this Charter or as otherwise contemplated herein; or 46.1.12 if any of the circumstances referred to in any of Clauses 46.1.7 - 46.1.11 shall occur with respect to the Guarantor or Guarantee (as the case may be) or in the respect to any of the Collateral Charters or the Collateral Charterers (as the case may be); or 46.1.13 if the Sellers' Credit ceases for any reason to be available to the Owners (other than because the Seller's Credit has been fully consumed) or the Seller's Credit Agreement ceases to be valid and in full force. 47. OWNERS' RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing, the Owners may; by- notice to the -Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clause 15. 47.2 On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clauses 46 and/or 47 hereof the Owners shall be entitled (without prejudice to the Charterers obligations under Clauses 15, 29 or 50 hereof) to retake possession of the Vessel. 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify: 47.3.1 all Charter Hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.6 hereof from the due date for payment thereof to the Termination Date; and 47.3.2 any sums, other than Charter Hire, due and payable, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 38.6 to the Termination Date. 47.3.3 all costs, expenses, damages and losses incurred by the Owners and recoverable by law as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of charter hire income, all expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15, 29 and 50 hereof and all financing break funding costs incurred in relation to any early termination of any interest rate swap transaction entered into by the Owners in connection with the financing of the Vessel). 47.4 Without prejudice to any other rights, claims or remedies of the Owners whatsoever, in respect of any amount due to the Owners under Clause 47 hereof interest pursuant to Clause 38.6 hereof shall accrue before and after any relevant judgment or any winding-up of the Charterers from the Termination Date to the date of the Owners' actual receipt thereof. 47.5 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15 and 50 hereof and (ii) shall pay, or reimburse, to the Owners on demand all Losses suffered by the Owners in connection with such termination together with interest thereon pursuant to Clause 38.6 hereof from the date on which the relevant Loss was suffered by the Owners until the date of payment or reimbursement thereof (both before and after any relevant judgment or winding up of the Charterers) pursuant to this Clause 47. 48. REFERENCE-TO EXPERT 48.1 In the event that the parties cannot agree on the scope or timing or implementation of any repairs, maintenance to or of the Vessel necessary to meet the requirements of this Charter, the matter shall be referred to a mutually acceptable and independent ship operator with experience from the product carrier operations and segments or, failing agreement within a period of fourteen (14) days, such person as shall be nominated from time to time by the President of Nordisk Skibsrederforening who, acting as an expert, shall be asked to determine the scope or timing of implementation of the works in question in accordance with the standards herein defined. The decision shall be final and binding upon the parties. The costs incurred to obtain the expert's decision, shall be borne equally by the parties. 49. OWNERS' COVENANT 49.1 The Owners hereby covenant and undertake that so long as they shall not have commenced exercising any of their rights under or pursuant to Clause 47 hereof neither the Charterers nor any permitted sub-charterers shall be disturbed or interfered with in their quiet and peaceful use, possession and enjoyment of the Vessel (except as expressly provided for herein). 50. REDELIVERY 50.1 The Off-hire Survey referred to in Clause 7 hereof shall take place at the port of redelivery hereunder at or about the time of redelivery (the "Redelivery Date"). Without prejudice to the provisions of Clause 15 hereof, the Vessel shall be redelivered by the Charterers:- 50.1.1 With her class with Det norske Veritas maintained without any conditions or recommendations, free of average damage affecting the Vessel's class, and with her classification, trading, national and international certificates the Vessel had when she was delivered under the Charter, valid and un-extended without conditions or recommendation falling due for a minimum of six - 6 - months beyond the time of redelivery, and with minimum CAP 2 requirements, Hull, Machinery and Equipment. The CAP certificates issued are to be less than 18 months old at the time of redelivery. 50.1.2 In the same or as good structure, state, condition and class as that in which she was deemed delivered under Clause 6 above, fair wear and tear not affecting class excepted. 50.1.3 With clean swept, washed down dried up holds free from residues of previous cargoes. 50.1.4 With all such spare parts and other equipment (including, without limitation, cargo handling equipment, fork lift truck, if any, lashing equipment, etc.) she had at the time of delivery under this Charter as per the mutually agreed list, fair wear and tear excepted. 50.1.5 Immediately prior to redelivery a class surveyor shall have surveyed the Vessel's hull and decide which damages and indents that are not acceptable according to class regulation. If a condition of class is given, this shall be remedied immediately while the Vessel is still on hire or the parties shall agree to a lump sum (to include applicable Charter Hire due to such repair) to be paid by the Charterers to the Owners whereby the responsibility is taken over by the Owners to repair the damage unless the parties mutually agree to another solution. 50.1.6 Without prejudice to the foregoing, the Charterers shall, if requested to do so by the Owners, assign to the Owners at the redelivery all and any such rights as they may have under the Charterers' insurances for the Vessel in respect of damage to the Vessel, whether or not then known other than any rights to be reimbursed by any insurers for costs previously incurred by the Charterers. 50.1.7 The Charterers shall provide the Owners with reasonable, written notice in advance so that the Owner may dispatch one or more representatives to attend all dry dockings of the Vessel throughout the Charter Period and upon request furnish the Owners with relevant plans and programs for the ensuing dry docking. In relation to the last dry docking prior to redelivery the Owners shall be entitled to suggest remedies or actions in respect of the dry docking and be consulted during the preparatory stages. The under water hull shall be smooth, well painted and have sufficient anti-fouling for the remainder of a normal docking period (ref. box 18) from the date of such docking. 50.1.8 The Owners shall, during a period of up to thirty (30) days prior to the Redelivery Date, be entitled at their own risk and expense, to place representatives on board the Vessel for familiarisation purposes, subject to signing of standard indemnity letter. 50.1.9 Without prejudice to the generality of the provisions of Clause 7, any inspection of the Vessel carried out pursuant thereto, may include an under-water inspection of the Vessel provided that the same shall be carried out during such time as she is in port (such inspection not to interfere with or interrupt the trading of the Vessel). Such under-water inspection shall be carried out by a class-approved diver in liaison with a class surveyor and the principles set out in Standard NSF 93 clause in relation thereto. 50.1.10 Prior to redelivery of the Vessel to the Owners the Charterers shall, upon the request of the Owners, and free of charge deliver print-outs and data surveys of inventory, equipment and consumables on board the Vessel. Upon the Owners' request the Charterers shall deliver to the Owners all drawings and/or specifications in their possession relating to the Vessel. 50.1.11 Upon redelivery the Charterers may, upon the request of the Owners' or in the Charterers' option, take ashore equipment with the Charterers' logo or name on it subject to substituting such equipment with corresponding equipment of at least equal numbers and quality, unless, in the Owners' option, a lump sum compensation is agreed. 50.1.12 Prior to redelivery a Protocol of Redelivery shall be prepared jointly by the parties addressing relevant issues of the Off-hire Survey in comparison with the On-Hire Survey and listing specifically any leased or hired equipments. 50.1.13 The Owners shall purchase unused fuel oils, lubricating oils and unbroached chemicals as per the Charterers net contracts prices evidenced by invoices. 50.1.14 As soon as practically possible after redelivery of the Vessel hereunder, the Owners at its cost shall remove the Vessel's name and the Charterers' funnel markings and logos on the hull (if any). 51. COMMUNICATIONS Except as otherwise expressly provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, telex number or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):- 51.1.1 In the case of the Owners: Partankers III AS c/o Pareto Management AS Dronning Maudsgate 3 P.O. Box 1396 Vika N-0114 Oslo, Norway Att: Mr. Peter Wallace Telephone No.: + 47 22 87 87 00 Telefax No.: + 47 22 87 88 00 51.1.2 In the case of the Charterers Mytikas Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Ave. Athens, 115 26 Greece Att: Mr. Andreas Louka Telephone No.: + 30 210 69 78000 Telefax No.: + 30 210 69 15668 A written notice includes a notice by facsimile and shall be deemed given upon appropriate acknowledgement by the addressee's receiving equipment, or by e-mail if actually replied to. A notice received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place. 51.1 All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation. 52. MISCELLEANOUS 52.1 In case of any conflict or discrepancy between the printed part and the rider clauses of this Charter, the latter shall prevail. For and on behalf of the Owner For and on behalf of the Charterer /s/ Peter W. Wallace /s/ Andreas Louka - -------------------- ----------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact EX-4.32 29 d759408_ex4-32.txt Exhibit 4.32 MEMORANDUM OF AGREEMENT Dated: 4 April 2006 Litochoro Shipping Company Limited, c/o Top Tanker Management Inc, 109-111 Messogion Avenue, Athens, 115 26 Greece hereinafter called the Sellers, have agreed to sell, and Partankers III AS, Dronning Mauds gate 3, 0114 Oslo, Norway hereinafter called the Buyers, have agreed to buy Name: "Endless" Classification Society/Class: ABS Built 1992 By: Ishika Wajima Do Brasil Estaleiros, Brazil Flag: Marshall Islands Place of Registration: Majuro, Marshall Islands Call Sign: V7FX6 Grt: 80,914, dwt 135,915 IMO Number: 9009358 hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 51,600,000 (US dollars Fifty One Million Six Hundred Thousand). (subject as stated in Clause 21) 2. Deposit 3. Payment The said Purchase Price shall be paid as more particularly described in Clause 21 and free of bank charges to the Sellers' bank, The Royal Bank of Scotland, Shipping Business Centre, 0-10 Great Tower Street, London EC3P 3HX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. (See also Clause 21) 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel Khor Fakkan, the United Arab Emirates, on about 9 February 2006 and have accepted the Vessel following this inspection and therefore the sale is outright and definite, subject only to the terms and conditions of this Agreement. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 7, and 3 days approximate notice of the estimated time of arrival at the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or Anchorage, or at high sea by mutual agreement between the Buyers and the Sellers. Latest with the 3 days approximate notice of delivery Sellers to nominate exact delivery place. Expected time of delivery: Between 27th March, 2006 and 1st May, 2006 Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14) 2nd May 2006 c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 2 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 running days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 (a) and 5 (c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery, this Agreement shall be null and void. 6. Drydocking/Divers Inspection 7. Spares/bunkers, etc. The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare-propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment if they are the property of the Sellers. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): (See Clause 20) 8. Documentation (See also Clause 19) The place of closing: Piraeus/New York At the time of delivery the Buyers and Sellers shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers. At the time of delivery the Sellers shall hand to the Buyers the classification certificate(s) as well as all plans etc., which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers to have the right to take copies. Other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at Buyers expense, if they so request. The Sellers may keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all encumbrances, mortgages and maritime liens or, any other debts whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under the Buyers' flag shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained without condition/recommendation*, free of average damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by Class or the relevant authorities at the time of delivery. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings 13. Buyers' default Should the Purchase Price not be paid in accordance with Clause 3 and Clause 21, the Sellers have the right to cancel the Agreement, and the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement provided always that the Sellers shall be granted a maximum of 3 banking days after Notice of Readiness has been given to make arrangements for the documentation set out in Clause 8. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all costs and expenses together (including, without limitation, any break funding costs) with interest if their failure is due to proven negligence and they shall make due compensation for the Buyers' loss whether or not the Buyers cancel this Agreement. 15. Buyers' representatives 16. Arbitration This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. 17. The Buyers (as owners) have entered into a bareboat charterparty (the "Charter") of even date herewith with the Sellers (as charterers), whereunder the Vessel is chartered to the Sellers for such period and on such terms and conditions as more particularly described therein. Delivery of the Vessel to the Buyers under this Agreement shall be subject to the simultaneous delivery and acceptance by the Buyer (as charterers) under the Charter. 18. Delivery of the Vessel at sea (if applicable) shall be subject to any necessary consents from the Vessel's register and insurers. 19. In addition to the documents listed in Clause 8, the Sellers and the Buyers shall agree and provide such additional and normal documentation for closing as is reasonably required by the Sellers and the Buyers, a list of which shall be separately agreed between the parties latest within 3 Banking Days from the execution of the MoA, and incorporated into the MoA by way of an Addendum hereto, and which shall include, without limitation, (i) a multipartite agreement between the Sellers, the Buyers, and the current time-charterer of the Vessel, confirming, inter alia, the time-charterer's consent to the sale of the Vessel to the Buyer, and the assignment and step-in rights to the Buyers and Buyers' bank in the event of a breach by the Sellers (in their capacity as charterers) under this Charter, and (ii) a co-ordination agreement between the Sellers, the Buyers and Buyers' bank regarding the subordination and coordination of rights between the first priority interest of the banks and the second priority interest of the Sellers in relation to the Sellers' credit referred to in Clause 21 (iii). 20. Remaining stores, provisions, bunkers and lubricating oils onboard the Vessel at the time of delivery hereunder shall remain the property of the Sellers. 21. Of the total purchase price of USD 51,600,000 (US Dollars Fifty One Million Six Hundred Thousand) (the "Purchase Price") the Buyers shall pay USD [45,375,300)] (US Dollar fourty five million three hundred and seventy five thousand three hundred) to the Royal Bank of Scotland, Shipping Business Centre, 5-10 Tower Street London EC3P 3HX, SORTCODE: 16-0101, SWIFT: RBOSGB2L, IBAN:GB49 RBOS1663 0000311964, IBANBIC: RBOSGB2L, ACCOUNT KEY: TOPTAN-USD1, BENEFICIARY:TOPTANKERS INC (correspondent bank: American Express Bank Limited, New York -- SWIFT: AEIBUS33XXX) as and when provided in Clause 3 immediately after the Sellers have taken delivery of the Vessel as charterers under the Charter, provided that: (i) The Buyers shall be entitled to deduct USD 703,500 (US Dollar seven hundred and three thousand five hundred) from the Purchase Price, being an amount equal to the first hire payment due to the Buyers by the Sellers as charterers under the Charter. If Buyers elect to make such deduction, the cash element to the Purchase Price as set out in (a) above shall be reduced accordingly and the Buyers shall provide to the Sellers as charterers a commercial invoice crediting amount to them under the Charter. (ii) Commission in the amount of USD 361,200 (US Dollar three hundred and sixty one thousand two hundred) shall be payable to Pareto Private Equity ASA upon delivery of the Vessel under this Agreement and the Charter and the Buyers shall be entitled to deduct such amount from the cash element of the Purchase Price and make such payment on behalf of the Sellers. (iii)The amount of USD 5,160,000 (US Dollars five million one hundred and sixty thousand) shall be deducted and deferred to be paid by the Buyers on such terms and conditions set out in more detail in a certain Seller's Credit Agreement of even date herewith entered into between the Sellers and the Buyers. 22. All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Buyers and in connection with the maintenance of such registration shall be borne by the Buyers and, if and to the extent from time to time paid by Sellers shall be reimbursed by the Buyers to the Sellers upon written demand. For and on behalf of For and on behalf of Litochoro Shipping Company Limited Partankers III AS /s/ Andreas Louka /s/ Peter W. Wallace - ---------------------------- ----------------------- Andreas Louka Peter W. Wallace Attorney-in-fact Attorney-in-fact EX-4.33 30 d759408_ex4-33.txt Exhibit 4.33 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker Not applicable. 2. Place and date Piraeus/New York, 4 April 2006 3. Owners/Place of business (Cl. 1) Partankers III AS, Dronning Mauds gate 3, Norway 4. Bareboat Charterers/Place of business (Cl. 1) Litochoro Shipping Company Limited, c/o Top Tanker Management Inc., 109-111 Messogion Avenue, Athens, 115 26 Greece 5. Vessel's name, call sign and flag (Cl. 1 and 3) MV "Endless", call sign V7FX6, The Marshall Islands flag 6. Type of Vessel Suezmax Tanker 7. GT 80,914 8. When/Where built 1992, Ishika Wajima Do Brasil Estaleiros, Brazil 9. Total DWT (abt.) in metric tons on summer freeboard 135,915 10. Classification society (C1. 3) ABS 11. Date of last special survey by the Vessel's classification society 26 November 2002 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. to Cl. 3) As at the time of delivery 13. Port or Place of delivery (Cl. 3) At sea or any safe berth in safe port or safe anchorage 14. Time for delivery (Cl. 4) Same as MOA date, see also Clause 33 15. Cancelling date (Cl. 5) Same as MOA date, see also Clause 34 16. Port or Place of redelivery (Cl. 15) Safe berth in safe port worldwide, but subject clauses 20 and 50 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15 and Clause 50) 6 months 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) Not applicable. 20. Trading limits (Cl. 6) World wide, always within Institute Warranty Limits 21. Charter period (Cl. 2) See Clause 37 22. Charter hire (Cl. 11) See Clause 38 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. to Box 29)(Cl. 10(a)(ii)) See Clause 45 24. Rate of interest payable acc. to Cl. 11(f) and, if applicable, acc. to PART IV See Clause 38.6 25. Currency and method of payment (Cl. 11) See Clause 38 26. Place of payment; also slate beneficiary and bank account (Cl. 11) See Clause 38 27. Bank guarantee/bond (sum and place)(Cl. 24)(optional) See Clause 36.7 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) Clause 12(b) applies. USD 196,600,000 first priority mortgage to Nordea Bank Norge ASA, and Second Priority Mortgage in favour of the immediately previous owners of the Vessel, see Clause 40 29. Insurance (hull and machinery and war risks)(state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k))(also state if Cl. 14 applies) See Clause 45 MII and MAPI to be taken out by the Mortgagee, and premium to be paid 50/50 by Owners and Charterers 30. Additional insurance cover, if any, for Owners' account limited to (Cl, 13(b) or, if applicable, Cl. 14(g)) 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Charterers Interest Insurance and Charterers Loss of Hire 32. Latent defects (only to be filled in if period other than stated in CI. 3) 33. Brokerage commission and to whom payable (Cl. 27) 34. Grace period (state number of clear banking days)(Cl. 28) See Clause 46.1.1 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) See Clause 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) NO 38. Name and place of Builders (only to be filled in if PART III applies) 39. Vessel's Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) NO 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) NO 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) NO 45. Country of the Underlying Registry (only to be filled in if PART V applies) 46. Number of additional clauses covering special provisions, if agreed 32-52 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) - ------------------- ------------------------ Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. "Financial Instrument" means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter and stated in Box 28. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery See Clause 32 (not applicable when Part III applies, as indicated in Box 37) (a) The Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place indicated in Box 13 in such ready safe berth as the Charterers may direct. (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag State indicated in Box 5 and the requirements of the classification society stated in Box 10. The Vessel upon delivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 12. (c) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3 and thereafter the Charterers shall not be entitled to make or assert any claim against the Owners on account of any conditions, representations or warranties expressed or implied with respect to the Vessel but the Owners shall be liable for the cost of but not the time for repairs or renewals occasioned by latent defects in the Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter, provided such defects have manifested themselves within twelve (12) months after delivery unless otherwise provided in Box 32. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The Vessel shall not be delivered before the date indicated in Box 14 without the Charterers' consent. The Owners shall keep the Charterers closely advised of possible changes in the Vessel's position. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery and redelivery hereunder. The Owners and the Charterers shall share equally all expenses of the On-hire Survey including loss of time, if any, and of the Off-hire-Survey. 8. Inspection The Owners and/or the Mortgagee shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked Her in accordance with Clause 10(q). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or state taxes. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, with the Owners' and Mortgagee's consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii), the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period lf requested by the Owners. Any equipment including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners (or their appointed representatives) to inspect the Vessel's log books whenever requested and shall whenever required by the Owners and/or as required under Clause 44 8 furnish them with full information regarding any casualties or other accidents or damage to the Vessel. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay for all bunkers, lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. 10. Maintenance and Operation (a)(i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, except as provided for in Clause 14(i) if applicable, at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, the cost of compliance shall be for the sole cost and account of the Charterers. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such less than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty (60) calendar months after delivery or such other period as may be required by the Classification Society or flag State, see also Clause 51.7. 11. Hire See Clause 38 12. Mortgage (only to apply if Box 28 has been appropriately filled in) *) The Vessel chartered under this Charter Is financed by a mortgage according to the Financial Instrument. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instrument or as may be directed from time to time during the currency of the Charter by the mortgagee(s) in conformity with the Financial Instrument The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instrument and agree to acknowledge this in writing in any form that may be required by the mortgagee(s). The Owners warrant that they have not effected any mortgage(s) other than stated in Box 28 and that they shall not agree to any amendment of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior consent of the Charterers, which shall not be unreasonably withheld. *) 13. Insurance and Repairs See Clause 45 (a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. Such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers and the mortgagee(s) (if any), and The Charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. Insurance policies shall cover the Owners and the Charterers according to their respective interests. Subject to the provisions of the Financial Instrument, if any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for repairs under the provisions of sub-clause 13(a) and for repairs of latent defects according to Clause 3(c) above, including any deviation, shall be for the Charterers' account (b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 30 and Box 31 respectively. The Owners or the Charterers as the case may be shall immediately furnish the other party with particulars of any additional insurance effected, including copies of any cover notes or policies and the written consent of the insurers of any such required insurance in any case where the consent of such insurers is necessary. (c) The Charterers shall upon the request of the Owners, provide Information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instrument. (d) Subject to the provisions of the Financial Instrument, if any, should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Owners who shall distribute the moneys between the Owners and the Charterers according to their respective interests. The Charterers undertake to notify the Owners and the mortgagee(s), if any, of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause. (e) The Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of insurance coverage against hull and machinery and war risks under the provisions of sub-clause 13(a), the value of the Vessel is the sum indicated in Box 29. 14. Insurance, Repairs and Classification 15. Redelivery See also Clause 50 At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place as indicated in Box 16, in such ready safe berth as the Owners may direct The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within The Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent, or to the market rate, whichever is the higher, for the number of days by which the Charter Period is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. The Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows: "This Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." 17. Indemnity See Clause 39 (a) The Charterers shall indemnify the Owners against any loss, damage or expense incurred by the Owners arising out of or in relation to the operation of the Vessel by the Charterers, and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever which the Owners shall become liable to pay and shall pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale See Clause 41 (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld, and subject to such terms and conditions as the Owners shall approve. 23. Contracts of Carriage *) (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carriers liability for cargo compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. 24. Bank Guarantee (Optional, only to apply if Box 27 filled in) 25. Requisition/Acquisition (a) In the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when 'Requisition for Hire' may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof always provided however that in the event of "Requisition for Hire" any Requisition Hire or compensation received or receivable by the Owners shall be payable to the Charterers during the remainder of the Charter Period or the period of the "Requisition for Hire" whichever be the shorter. (b) In the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall be deemed terminated as of the date of such "Compulsory Acquisition". In such event Charter Hire to be considered as earned and to be paid up to the date and time of such "Compulsory Acquisition". 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to leave such area. (c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, when Clause 14 is applicable, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government. body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. 27. Commission 28. Termination See also Clauses 46 and 47 (a) Charterers' Default The Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and-such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel This Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of an order being made or resolution passed for the winding up, dissolution. liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the 'Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal') or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a) 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices See Clause 51 (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. EXECUTION COPY ADDITIONAL CLAUSES to the Bareboat Charter dated 4 April 2006 between Litochoro Shipping Company Limited (as Charterers) and PARTANKERS III AS (as Owners) in respect of M/V "Endless" 32. DEFINITIONS 32.1 In this Charter, unless the context otherwise requires, the-following expressions shall have the following meanings: 32.1.1 "Banking Day" means days on which banks are open for transaction of business of the nature required by this Charter in London, New York and Oslo; 32.1.2 "Charter Hire" has the meaning given to it in Clause 38 of this Charter; 32.1.3 "Charter Period" has the meaning given to it in Clause 37.1 of this Charter; 32.1.4 "Co-Ordination Agreement" means the agreement of even date herewith between the Mortgagee, the Charterers and the other Collateral Charterers acknowledged by the Owners whereby e.g. the Sellers rights and obligations under the Sellers' Credit Agreement will be subordinated and subject to the rights of the Mortgagee under the Loan Agreement; 32.1.5 "Collateral Charters" means the bareboat charters of even date herewith between the Collateral Charterers and the Owners in respect of each of the Collateral Vessels; 32.1.6 "Collateral Charterers" means the charterers of the Collateral Vessels (in each case as set out against the name of the relevant Collateral Vessel in the definition of Collateral Vessels herein); 32.1.7 "Collateral Vessels" means the vessels set out below, each owned by the Owners and chartered to the Collateral Charterer set out below opposite the vessel's name: 1. M/V "Faultless" - Parnasos Shipping Company Limited 2. M/V "Stainless" -- Parnis Shipping Company Limited 3. M/V "Noiseless" -- Imitos Shipping Company Limited 4. M/V "Limitless" -- Mytikas Shipping Company Limited 5. M/V "Endless" -- Litochoro Shipping Company Limited 32.1.8 "Compulsory Acquisition" has the meaning giving to it in Clause 25(b); 32.1.9 "Delivery Date" has the meaning given to it in Clause 33.2; 32.1.10 "Event of Default" has the meaning given to it in Clause 46.1 of this Charter; 32.1.11 "Guarantee" means the guarantee issued by Guarantor in favour of the Owners in the form enclosed as Exhibit 1 as security for the due performance of this Charter and all other Collateral Charters by the Collateral Charterers; 32.1.12 "Guarantor" means Top Tankers Inc., a Marshall Islands corporation with registered office at Trust Company Complex, Ajeltake Island, P.O.Box 1405 Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg CI, Athens 115 26, Greece; 32.1.13 "Loan Agreement" means the loan agreement between the Owner and the Mortgagee in respect of the USD 180,600,000 loan provided for the purpose of financing, in part, the Owners' purchase of the Vessel and the "Collateral Vessels", together with the security documents executed or to be executed in connection therewith; 32.1.14 "Managers" means Top Tanker Management Inc,, a Marshall Islands corporation with registered address at Trust Company Complex, Ajeltake Road,, Majuro, Marshall Islands 96960, having a branch office at 109-111 Messogion Av., Politia Centre, Bldg CI, Athens 115 26, Greece; 32.1.15 "MOA" means the memorandum of agreement of even date herewith made between the Charterers as sellers and the Owners as buyers in respect of the Vessel (as same may be amended from time to time); 32.1.16 "Mortgage" means the first priority mortgage against the Vessel executed or to be executed by the Owners in favour of the Mortgagee as security for the Owners' obligations under the Loan Agreement and the Swap Agreement; 32.1.17 "Mortgagee" means Nordea Bank Norge ASA, as agent on behalf of the banks having financed the Owners' purchase of the Vessel and the "other Collateral Vessels" and Nordea Bank Finland Plc as swap bank; 32.1.18 "Multipartite Agreement" means the agreement between the Owners, the Sellers and other Collateral Charterers, and the Sub-Charterer providing for, inter alia, confirmation by the Sub-Charterer that it accepts (1) the Owners as new owners of the Vessel, (2) the Mortgagee and its security interest in the Vessel and (3) the step-in rights and other arrangements set out therein; 32.1.19 "Seller" means the Charterers as seller under the MOA; 32.1.20 "Sellers" means the Charterers and the other Collateral Charterers as sellers under the relevant MOA relating to the relevant Collateral Vessels; 32.1.21 "Sellers' Credit" means a retention in the amount of US$ 25,800,000 provided by the Sellers to the Owners as security for the Charterers' due and correct performance of all of its obligations under this Charter and for the other Collateral Charterers' obligations under the other Collateral Charters, or such amount thereof as may be outstanding from time to time, to be applied and reduced as more particularly set out in the Sellers' Credit Agreement; 32.1.22 "Sellers' Credit Agreement" means the agreement entered into on the date hereof among the Sellers, the Charterers and all other Collateral Charterers and the Owners in respect of the Sellers' Credit; 32.1.23 "Ship Management Agreement" means the ship management agreement to be entered between the Charterers and the Managers in respect of the Vessel; 32.1.24 "Sub-Charterer" means Petroleos De Venezuela S.A.; 32.1.25 "Swap Agreement" means an ISDA Master Agreement entered or to be entered into between the Owners and Nordea Bank Finland PLC, as amended from time to time, and confirmations of the transactions relating to hedging of interest exposure under the Loan Agreement made or to be made thereunder; 32.1.26 "Total Loss" means (i) actual or constructive or compromised or arranged total loss of the Vessel or (ii) any Compulsory Acquisition. 32.2 The headings in this Agreement do not affect its interpretation. 33. MOA AND DELIVERY 33.1 Subject to the Vessel being delivered to, and taken over by, the Owners pursuant to the MOA, the Charterers shall forthwith be deemed to have taken delivery of the Vessel under this Charter simultaneously with delivery by the Seller to the Owners pursuant to the MOA. 33.2 The date of delivery for the purpose of this Charter shall be the date (the "Delivery Date") when the Vessel is in fact delivered by the Seller to the Owners pursuant to the MOA, whether that be before or after the scheduled date under the MOA, and the Owners shall be under no responsibility for any delay whatsoever in delivery of the Vessel to the Charterers under this Charter. 33.3 The Charterers undertake that in the event the Vessel is not delivered and accepted under the MOA for any reason which is not attributable to any act or omission on part of the Owners, the Charterers will promptly upon the Owners' written demand reimburse the Owners in full (without set-off or counterclaim of any nature) for any cost or disbursement reasonably incurred by the Owners in respect of the contemplated transaction, including any costs incurred in respect of financing arrangements made in connection therewith. 33.4 Without prejudice to the provisions of Clause 33.2 above, the Owners and the Charterers shall on the Delivery Date sign a Protocol of Delivery and Acceptance evidencing delivery of the Vessel hereunder. The On-hire Survey referred to in Clause 7 hereof shall be for the purposes of ascertaining the condition of the Vessel at the time of delivery hereunder and shall not give rise to any right of the Owners to refuse to deliver, or the Charterers to refuse to accept, the Vessel hereunder, except that such On-hire Survey shall be of immediate relevance in determining the condition of the Vessel upon commencement of the Charter Period and, accordingly, in relation to the required condition of the Vessel upon redelivery pursuant to Clauses 15 and 50. The On-hire Survey shall include a list of mutually agreed spares and inventory pertaining to the Vessel on board and on shore. In connection with and as part of the On-hire Survey, the Owners shall be entitled to conduct an underwater inspection and the provisions of NSF'93 Clause 6 (b) and (c) shall apply correspondingly. 34. CANCELLING 34.1 Should the MOA be cancelled or should the Vessel become a Total Loss prior to its delivery under the MOA, this Charter shall be cancelled forthwith without liability on the part of either party under this Charter except as expressly stated in the MoA or this Charter. 35. TERMS OF DELIVERY 35.1 Subject to Clause 35.4 below, the Charterers - having owned and operated the Vessel for a considerable time, and therefore possessing first-hand knowledge about the Vessel and her specifications, performance and conditions in all respects - acknowledge and agree that the Owners make no condition, term, representation or warranty, express or implied (and whether statutory or otherwise) as to the title passed to Owners from the Seller, seaworthiness, merchantability, condition, design, operation, performance, capacity or fitness for use of the Vessel or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Delivery to the Charterers or (as the case may be) deemed delivery of the Vessel under this Charter shall be conclusive proof that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, and in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers. 35.2 Subject to Clause 35.4 hereof, the Charterers hereby waive all their claims against the Owners howsoever and whensoever the same may arise at any time in respect of the Vessel or the Owners' title thereto as passed to the Owners from the Seller or rights therein or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness or otherwise of the Vessel). 35.3 The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable (unless such unusability is due to the Owners' fault). 35.4 Nothing contained in this Clause 35 shall be construed as a waiver of any rights or remedies of the Charterers at law or in equity against the Owners in respect of (a) any fraudulent or wilful misconduct of the Owners or (b) any failure on the part of the Owners to comply with any of the terms of this Charter or the MoA. 36. CONDITIONS PRECEDENT Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject to and conditional upon at the Delivery Date:- 36.1 delivery of the Vessel to the Owners by the Seller pursuant to the MOA; and 36.2 no Event of Default having occurred and continuing unremedied or unwaived, and no other event having occurred and continuing unremedied, which with the giving of notice and/or lapse of time would, if not remedied, constitute an Event of Default; and 36.3 each of the representations and warranties contained in Clause 43 of this Charter being true and correct in all material respects on the Delivery Date by a reference to the facts and circumstances then existing; and 36.4 the Owners having received evidence that the appointment of the Managers under the Ship Management Agreement has commenced; and 36.5 the Owners having received evidence that the Vessel is insured in accordance with the provisions of this Charter and that all requirements of Clauses 13 and 45 of this Charter in respect of such insurances have been complied with; and 36.6 the Owner's having received evidence that the first instalment of the Charter Hire (as defined in Clause 38.1) has been or will be paid as required in Clause 38.2; and 36.7 the Owners having received, all in such form and substance reasonably acceptable to the Owners and the Mortgagee: 36.7.1 the Multipartite Agreement duly signed by the parties thereto; 36.7.2 the Co-Ordination Agreement, duly signed by the parties thereto; 36.7.3 the Seller's Credit Agreement, duly signed by the parties thereto; 36.7.4 the Ship Management Agreement, duly signed by the parties thereto; 36.7.5 the Guarantee, duly executed by the Guarantor; 36.7.6 the Sub-Charter, duly executed by the parties thereto; 36.7.7 legal opinions from counsel in respect of the laws of England, the Marshall Islands and Liberia in form and substance satisfactory to the Owners and the Mortgagee; 36.7.8 a copy of the Document of Compliance of the Ship Manager, the Safety Management Certificate of the Vessel and the ISPS Code Ship Security Certificate for the Vessel; and 36.7.9 such further documentation as may be agreed between the parties. 37. CHARTER PERIOD 37.1 Subject to the terms of this Charter, the period of chartering of the Vessel hereunder (the "Charter Period") shall commence on the Delivery Date and shall terminate on the date which falls 84 months after the Delivery Date. 38. CHARTER HIRE AND SECURITY 38.1 The Charterers shall, throughout the Charter Period, pay charter hire (the "Charter Hire") to the Owners at a rate of USD 23,450 net per day, 365 days per year. 38.2 The Charterers shall pay Charter Hire due to the Owners punctually in accordance with the terms of this Charter. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date. 38.3 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- 38.3.1 On the relevant Payment Date, or, if the Payment Date shall not be a Banking Day, on the next following Banking Day unless, in the case the Payment Date falls in the following calendar month, the immediately preceding Banking Day; and 38.3.2 In USD in funds with the same day value to the Owners' account no. 6012.04.43855 with the Mortgagee, under reference "Faultless Charter Hire", or such other bank account as may be advised to the Charterers by the Owners by not less than 10 Banking Days' prior written notice. 38.3.3 Final payment of Charter Hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the numbers of days and hours remaining before redelivery and advance payment to be effected accordingly. 38.4 All payments under this Charter shall be made without any discount, set-off or counterclaim whatsoever, and free and clear of any bank charges and/or any withholding or deduction for, or on account of, any present or future income, freight, stamp and other taxes, levies, imposts, duties, fees, charges, restrictions or conditions of any nature. All payments shall be made free and clear of, and without deduction for or on account of any present or future taxes or duties of any nature now or hereafter imposed. It the Charterers are required by any authority in any country to make any withholding or deduction from any such payment, the sum due from the Charterers in respect of such payment will be increased to the extent necessary to ensure that, after the making of such withholding or deduction the Owners receive a net sum equal to the amount which it would have received had no such deduction or withholding been required to be made. 38.5 The Charterers' obligation to pay Charter Hire in accordance with the requirements of this Clause 38 shall, subject to Clauses 28 (d) and 45.3, be absolute, irrespective of any contingency or cause whatsoever, which would or might, but for this provision, have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter, including (but not limited to): 38.5.1 any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners or any other person; or 38.5.2 any unavailability of the Vessel for any reason, including (but not limited to) any lack of or invalidity of title or any other defect in the title passed on to them from the Sellers, the condition, design, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade or for documentation under the laws of any country (except if a defect in any such documentation is due to the fault of the Owners and the Charterers have notified the Owners of the defect in documentation which has remained unremedied for a period of 15 days after notice was given) or any damage to the Vessel; or 38.5.3 any failure or delay on the part of the Owners whether with or without fault on their part, in performing or complying with any of the terms or covenants hereunder. 38.6 In the event of failure by the Charterers to pay on the due date for payment thereof, or in the case of the sum payable on demand, the date of demand therefore, any Charter Hire or other amount payable by them under this Charter, the Charterers will pay to the Owners interest on such Charter Hire or such other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) three per centum (3%) and (ii) the London Interbank Offered Rate for USD deposits of not more than one (1) month's duration (as such rate is from time to time quoted by leading banks in the London Interbank Market to the Mortgagee). The interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. Payment of interest due under this sub-clause shall be made within seven (7) running days of the date of the Owners' invoice specifying the amount payable or, in the absence of an invoice, at the time of the next hire payment date. Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. 38.7 As security for the Charterers' performance of their obligations under this Charter, the Charterers shall procure that the Guarantee be issued by the Guarantor in favour of the Owners. 39. INDEMNITY 39.1 Subject to the terms of this Charter and in particular Clause 39.2 hereof, the Charterers agree at all times to indemnify and keep indemnified the Owners against:- 39.1.1 any costs, charges, or expenses which the Charterers have agreed to pay under this Charter and which shall be claimed or assessed against or paid by the Owners; and 39.1.2 all losses, costs, charges, expenses, fees, payments, liabilities, penalties, fines, damages or other sanctions of a monetary nature (collectively, "Losses") suffered or incurred by the Owners and arising during the tenure of the Charter or in relation to the Charter in any manner out of the design, manufacture, delivery, non delivery, purchase, importation, registration, ownership, chartering, sub-chartering, possession, control, use, operation, condition, maintenance, repair, replacement, refurbishment, modification, overhaul, insurance, sale or other disposal, return or storage of or loss of or damage to the Vessel or otherwise in connection with the Vessel (whether or not in the control or possession of the Charterers) including but not limited to those Losses described in Clause 39 and including any and all claims in tort or in contract by any sub-charterer -of 'the Vessel from the Charterers or by the holders of any Bills of Lading issued by the Charterers, except and to the extent directly caused by the default of the Owners; and 39.1.3 all Losses suffered or incurred by the Owners which result from claims which may be made during the tenure of the Charter or in relation to the Charter on the ground that any design, article or material of or in the Vessel or the operation or use thereof constitutes or is alleged to constitute an infringement of patent or copyright or registered design or other intellectual property right or any other right whatsoever; and 39.1.4 all Losses suffered or incurred by the Owners and/or the Mortgagee during the tenure of this Charter in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Vessel, or in securing the release of the Vessel therefrom provided that such events are not caused by Owners' default, and 39.1.5 all Losses suffered or incurred by the Owners with respect to or as a result of the presence, escape, seepage, spillage, leaking, discharge or migration from the Vessel of oil or any other hazardous substance during the tenure of this Charter, including without limitation, any claims asserted or arising under the US Oil Pollution Act of 1990 (as same may be amended and/or re-enacted from time to time hereafter) or similar legislation, regardless of whether or not caused by or within the control of the Charterer; and 39.1.6 all Losses suffered or incurred by the Owners and/or their respective officers or members of management board and/or the Mortgagee or any of the other financial institutions which are party to the Loan Agreement, as a consequence of any violation by the Charterers or any sub-charterer of U.S. law or any other laws pursuant to which the Vessel and/or her trading or operations shall be subject from time to time; and 39.1.7 any reasonable Losses incurred or suffered by the Owners in liquidating, employing or prepaying funds acquired or borrowed to purchase or finance or refinance the Vessel following any default in payment hereunder or the occurrence of any Event of Default. 39.2 If, under any applicable law, whether as a result of judgment against the Charterers or the liquidation of the Charterers or for any other reason, any payment to be made by the Charterers under or in connection with this Charter is made or is recovered in a currency other than the currency (the "currency of obligation") in which it is payable pursuant to this Charter then, to the extent that the payment (when converted into the currency of obligation at the rate of exchange on the date for the determination of liabilities permitted by the applicable law) falls short of the amount unpaid under this Charter, the Charterers shall as a separate and independent obligation, fully indemnify the Owners against the amount of the shortfall; and for the purposes of this sub-clause "rate of exchange" means the best rate at which the Owners are able on the relevant date to purchase the currency of obligation with the other currency. 39.3 The indemnities contained in this Clause 39, and each other indemnity contained in this Charter, shall survive any termination or other ending of this Charter and any breach of, or repudiation or alleged repudiation by, the Charterers or the Owners of this Charter but the indemnity contained in this Clause 39 hereof shall not apply if and to the extent that the relevant cost, charge, expense or Loss arises as a result of (i) any act, neglect or default of or by any person (other than the Charterers) subsequent to the redelivery of the Vessel to the Owners pursuant to Clause 15 hereof or any other provision of this Charter or (ii) any fraudulent or wilful misconduct or recklessness of the Owners, or any failure on the part of the Owners to comply with any of the terms of this Charter or the MOA which can reasonably be deemed to be of a material nature in the context of the transaction and which the Owners have failed to remedy within 14 days following the Charterers' written notice thereof, or (iii) any encumbrance, mortgage, charge, lien or other security interest whatsoever over the Vessel in respect of a debt, liability or other obligation of the Owners (other than any such arising from or in connection with the use or operation of the Vessel by the Charterers). 39.4 All moneys payable by the Charterers under this Clause 39 shall be paid on demand within five Banking Days from receiving the Owner's written demand in relation thereto. 40. MORTGAGES 40.1 The Owners warrant that they have not effected any mortgage(s) other than to the Mortgagee and to the Seller stated in Box 28 and that they shall not effect any other mortgages(s) without the Charterers' prior consent, which shall not be unreasonably withheld or delayed. 40.2 The Charterers agree with the Owners that the Owners may assign this Charter to the Mortgagee, and shall procure that the Charter Guarantors agree that the Owners may assign its rights under the Charter Guarantees to the Mortgagee. 41. OWNERS' TRANSFER OF VESSEL - CHARTERERS' SUB-CHARTERING 41.1 The Owner or the Mortgagee may change the registered ownership of the Vessel by way of a sale or otherwise subject to the Charterers' prior approval, which shall be granted provided that (i) this Charter is continued on identical terms, and (ii) the change is not reasonably likely to cause negative consequences for the Charterers as to economic or competitive relationships. 41.2 The Charterers agree and undertake to enter into any such usual documents as the Owners or the Mortgagee shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to Clause 41.1 above, any costs or expenses whatsoever arising in relation thereto to be borne by the Owners. 41.3 The Charterers shall, subject to (i) no Event of Default having occurred and being continuing or (ii) any other restriction set out herein, be entitled to let the Vessel by way of time or voyage charter to any person other than the Sub-Charterer upon the expiry of the Sub-Charter provided that; (i) any such sub-charter shall not relieve or discharge the Charterers from any of their obligations contained in this Charter; and (ii) any such sub-charter shall make reference to the fact that the Charterers have chartered the Vessel from the Owners, and no such charter shall be of a duration which expires, or which by virtue of any optional extensions therein contained could expire after the last day of the Charter Period; (iii) the Owners and its financiers shall have afforded step-in rights to any sub-charter with a duration (including options) of more than 12 months, which right shall be documented by way of an agreement based on the format of the Multipartite Agreement; and (iv) the Charterers will promptly notify the Owners of any such sub-chartering. In no event may the Charterers demise charter (sub-bareboat charter) the Vessel to any party without the Owners' prior written consent, which consent shall not be unreasonably withheld. 41.4 Any registration of this Charter in any Ship Register shall require the prior mutual agreement between the Owners and the Charterers and the prior written consent of the Mortgagee. 42. FLAG 42.1 The Vessel shall upon the Delivery Date be registered in the name of the Owners under Marshall Islands flag provided always that the Owners shall, at any time following the Delivery Date, be entitled to transfer the flag of the Vessel to such other registry as the Owners may select (subject always to the Charterers' prior written consent, which consent shall not be unreasonably withheld considering consequences for the Charterers as to economic or competitive relationships). The Charterers may request the Owners to change flag at the Charterers' cost, which consent shall not be unreasonably withheld by the Owners, subject to acceptance thereto having been obtained from the Mortgagee. 42.2 All costs and expenses arising in connection with the initial registration of the Vessel in the name of the Owners under the Marshall Islands flag or in connection with the maintenance of such registration shall be borne by the Owners and, if and to the extent from time to time paid by the Charterers, shall be reimbursed by the Owners to the Charterers upon demand. 43. REPRESENTATIONS AND WARRANTIES 43.1 The Charterers acknowledge that the Owners have entered into this Charter in full reliance on representations by (i) the Guarantor as set out in the Guarantee and (ii) the Charterers in the following terms; and the Charterers now warrant to the Owners that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.1.1 the Charterers are duly incorporated and validly existing under the laws of Marshall Islands; and 43.1.2 the Charterers are the wholly-owned subsidiary of the Guarantor; 43.1.3 this. Charter constitute the legal, valid and _binding obligations of the Charterers, enforceable in accordance with its terms; and 43.1.4 the Charterers have the power to enter into and perform its obligations under this Charter; and 43.1.5 all consents, licences, approvals and authorisations required in connection with the Charterers' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.1.6 no litigation, arbitration or administrative proceeding is taking place against the Charterers or against any of the assets of, the Charterers which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Charterers' ability to perform their obligations under this Charter; and 43.1.7 no Event of Default (as defined in Clause 46.1 hereof) of which they are aware, and no event of which they are aware which with the giving of notice and/or lapse of time and/or relevant determination would constitute an Event of Default, has occurred and is continuing. 43.2 The Owners acknowledge that the Charterers have entered into this Charter in full reliance on representations by the Owners in the following terms; and the Owners now warrant to the Charterers that the following statements are, at the date hereof, and on the Delivery Date as if made with reference to the facts and circumstances existing on such date, will be, true and accurate:- 43.2.1 the Owners are duly incorporated and validly existing under the laws of Norway as a limited liability company; and 43.2.2 this Charter constitute the legal, valid and binding obligations of the Owner enforceable in accordance with its terms; and the Owners have the power to enter into and perform its obligations under this Charter; and 43.2.3 all consents, licences, approvals and authorisations required in connection with the Owners' entry into, performance, validity and enforceability of this Charter have been obtained and are, or will prior to the Delivery Date be, in full force and effect; and 43.2.4 no litigation, arbitration or administrative proceeding is taking place against the Owners or against any of the assets of, the Owners which is likely to be adversely determined and, if adversely determined, would have a material adverse effect on the Owners' ability to perform their obligations under this Charter. 44. UNDERTAKINGS 44.1 The Charterers undertake and agree that throughout the Charter Period they will:- Provide to the Owners; 44.1.1 their audited annual financial statements as soon as available and in no event later than 120 days after the end of their financial year; and 44.1.2 copies of all class records, class certificates and survey reports prepared by the classification society pertaining to the Vessel as soon as practicable after their issue and in any event updated copies every six months; and 44.1.3 at any relevant time, copies of any inspection and/or management reports obtained or prepared by the Charterers or the Managers in respect of the Vessel, which reports shall be prepared and submitted at least twice per calendar year. 44.2 Not repudiate or terminate, nor permit the repudiation or termination of, the Ship Management Agreement or the Sub-Charter nor, without the prior written consent of the Owners (such consent not to be unreasonably withheld), amend or vary the terms of, or permit or suffer any material amendment or variation of the terms of, the Ship Management Agreement or the Sub-Charter without the Owners' consent. 44.3 Procure that the Vessel is classified and maintained free of recommendations or conditions of class with the classification society indicated in Box 10, or with such other classification society as shall be acceptable to the Owners and the Mortgagee, and at all times comply with the rules and regulations of the classification society. 44.4 At all times ensure compliance in all material respects with all applicable environmental laws and all other laws and regulations, in each case as relating to the Vessel wherever the Vessel might be trading and the operation and management thereof, and take all reasonable precautions to ensure that the crews, employees, agents or representatives of the Charterers at all times comply with such environmental laws and other applicable laws. Also, the Charterers will ensure that US Voyage Declarations, where applicable, are submitted in a timely fashion in accordance with the P&I terms of cover and that a Certificate of Financial Responsibility (COFR) is obtained before trading in the United States. 44.5 At all times ensure compliance in all material respects with all international conventions, codes and regulations, including the International Convention for Safety of Life at Sea (SOLAS) 1974 (as adopted, amended or replaced from time to time), the STCW 95, the ISM Code and the ISPS Code (as each such term is defined in the relevant amendments to SOLAS), in each case as relating to the Vessel and the operation and management thereof, and ensure such compliance by the Manager and any other company (with the prior consent of the Owners) performing ship management services in respect of the Vessel on behalf of the Charterers. 44.6 Obtain and promptly renew from time to time, and, whenever so reasonably required, promptly furnish certified copies to the Owners of, all such authorisations, approvals, consents and licences as may be required under any applicable law or regulation to enable the Charterers to perform their obligations under this Charter or required for the validity or enforceability of this Charter, and the Charterers shall in all material respects comply with the terms of the same. 44.7 Ensure that any new charter arrangement entered into following the expiry or termination of the Sub-Charter provides for step-in rights for the currently envisaged in the Multipartite Agreement; 44.8 Notify the Owners forthwith by letter, or in case of urgency, by telefax or e-mail of: 44.8.1 any accident to the Vessel involving repairs, the cost of which is likely to exceed USD 250,000 (or the equivalent in any other currency); or 44.8.2 any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss; or 44.8.3 any arrest of the Vessel or the exercise or purported exercise of any lien on the Vessel; or 44.8.4 details of any action, suit, proceeding, litigation or dispute for an amount of USD 250,000 or more against itself before any court, board of arbitration or other body, which, in either case, could or might result in any material adverse change in the business or condition (financial or otherwise) of the Charterer, when the same is instituted or threatened; or 44.8.5 any breach of any applicable laws or regulations relevant to the maintenance and operation of the Vessel. 44.9 Notify the Owners in writing of any Event of Default of which they are aware (or an event of which they are aware which, with the giving of notice and/or lapse of time, would constitute an Event of Default and which is not likely to be remedied before becoming an Event of Default). 44.10 Upon the Owners' request provide information regarding the Vessel's trading patterns and employment. 45. INSURANCES, TOTAL LOSS AND COMPULSORY ACQUISITION 45.1 The Charterers undertake to the Owners that throughout the Charter Period:- 45.1.1 all insurances to be effected by the Charterers pursuant to this Charter shall be effected and maintained by the Charterers; (i) in the joint names of the Owners and the Charterers, or otherwise as they may agree; (ii) in an amount of hull and machinery and war risks cover set out in Clause 45.2 (or such other amount as may be agreed from time to time between the Charterers and the Owners, or the Mortgagee; as their assignee); (iii) so that the protection and indemnity risks include, in the case of oil pollution liability risks, cover for an aggregate amount equal to the highest level of cover available from time to time under the basic P&I Club entry policy (currently one billion United States Dollars); (iv) upon standard UK or Norwegian terms and by policies and/or entries in such forms as shall from time to time be approved in writing by the Owners and the Mortgagee; and (v) through first class/Lloyd's brokers and with such reliable and first class security companies/underwriters, war risks and I.G.A P&I Associations as shall, in each case, from time to time be approved in writing by the Owners and the Mortgagee, such approval not to be unreasonably withheld; 45.1.2 all such insurances shall be renewed by the Charterers at least fourteen (14) days before the relevant policies or contracts expire and the approved brokers and/or the approved insurers shall promptly confirm in writing to the Owners and the Mortgagee as and when each such renewal is effected and, in the event of any renewal not being effected by the Charterers as aforesaid, shall notify the Owners forthwith; 45.1.3 the Charterers shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so reasonably required by the Owners or the Mortgagee provided there is no genuine dispute and subject always to the Charterers' obligation to maintain the Vessel insured at all times as required by this Charter and/or the Multipartite Agreement; 45.1.4 the Charterers shall arrange for the execution of such guarantees by any protection and indemnity or war risks association as may from time to time be required; 45.1.5 the Charterers shall procure that the policies and/or entries in respect of the insurances against marine and war risks are, in each case, endorsed with the interest of the Owners and the Mortgagee to the effect that: (i) payment of a claim for a Total Loss of the Vessel will be made to the Mortgagee as mortgagee and as the Owners' assignee (until such Mortgage has been discharged, after which to the Owners) and, if applicable, to the Charterers in respect of any additional coverage taken out by him in accordance with box 31 above,; and (ii) payment in respect of a claim which is not a Total Loss of the Vessel shall, subject to the proviso hereto and subject to the prior written consent of the Mortgagee, be made to the Owners who shall apply the same by making payment to the Charterers as reimbursement of costs and expenses incurred to make good the loss and fully repair all damage and otherwise maintaining the Vessel in accordance with their obligations hereunder as evidenced by invoices or other evidence reasonably acceptable to the Owner and the Mortgagee provided however (a) that such claims as are payable in respect of a hull & machinery minor casualty (that is to say a claim or the aggregate of the claims does not exceed fivehundredthousand dollars (US$ 500,000) inclusive of any deductible (or the equivalent in any other currency)) shall be paid to the Charterers without the prior written con-sent of the Mortgagee and (b) that all such sums shall be payable as aforesaid only until such time as the Owners may otherwise direct to the contrary following notice of termination having been given under the Charter whereupon all such sums shall be paid to the Owners or to the Mortgagee as the Owners' assignee and loss payee; 45.1.6 the Charterers shall procure that the entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid either: (i) to the person to whom was incurred the liability in respect of which the relevant money was paid or, unless and until the Owners or the Mortgagee shall direct (following the occurrence of any Event of Default which continues unremedied and/or unwaived) that they shall be paid to the Owners or to the Mortgagee; or (ii) to the Charterers in reimbursement for any payment properly made by the Charterers to a third party; 45.1.7 the Charterers shall procure that copies of all cover notes, conditions and certificates of entry are furnished to the Owners and the Mortgagee for their custody; 45.1.8 the Charterers shall procure that the interest of the Owners as owner of the Vessel and of the Mortgagee as mortgagee of the Vessel and as assignee of the Owners' interest in the insurances and loss payee of all insurance proceeds (other than under any insurances taken out pursuant to box 31 above, if applicable) shall be recorded on all policies and shall be confirmed to the Owners and the Mortgagee in conformity with applicable market practice and with the reasonable requirements of the Owners and the Mortgagee; 45.1.9 the Charterers shall not do any act or permit or suffer any act to be done whereby any insurance required as aforesaid shall or may be suspended, invalidated, cancelled or become defective; 45.1.10 without prejudice to the Charterers' obligation to keep the Vessel in repair regardless of whether insurance proceeds shall have first been received, the Charterers shall apply all such sums receivable in respect of the insurances as are paid to the Charterers in accordance with the terms of Clause 45.1.5 for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; 45.1.11 the Charterers shall not make any alteration to any of the insurances referred to in this Clause without the prior written approval by the Owners and the Mortgagee, which shall not be unreasonably withheld, and shall not make, do, consent or agree to any act or omission which might render any such instrument of insurance invalid or unenforceable or render any sum payable thereunder repayable in whole or in part; and 45.1.12 if the Owners or the Mortgagees receive payment of insurance proceeds in respect of insured repairs that have already been carried out at the Charterers' expense or in respect of insured liabilities that the Charterers have duly paid to third parties in agreement with this Charter, they shall without undue delay pay the same to the Charterers, whether or not notice of termination has been given under this Charter but subject always to any right of set-off the Owners may have. 45.2 Notwithstanding anything to the contrary contained in this Charter, the Vessel shall be kept insured throughout the Charter Period in respect of hull and machinery and war risks for an amount not less than the greater of (A) 100% of the market value of the Vessel determined as the average of valuations obtained from two of any of the following ship brokers Clarksons, Fearnleys, Barry Rogliano Salles, Howe Robinson, and R.S. Platou, one to be appointed by the Owners and the other to be appointed by the Charterers, on the basis of the Vessel being charter-free, ready for prompt delivery (the "Market Value") which Market Value shall be determined annually and (B) the amounts specified in column (b) in the table set out below in respect of the yearly period during the Charter Period specified in columns (a) against such amount (which insurance amount is hereinafter referred to as the "Minimum Insured Value"). The hull and machinery basis of the insurance (as opposed to the hull interest /increased value or total loss only basis for the insurance) shall be not less than 80% of the Market Value or the Minimum Insured Value as the case may be. (a) (b) Twelve-monthly Period Minimum Insured Value (USD) --------------------- --------------------------- 0-12 51,600,000 12-24 48,051,500 24-36 41,923,000 36-48 35,794,500 48-60 29,666,000 60-72 23,537,500 72-84 17,409,000 45.3 Notwithstanding anything to the contrary contained in this Charter, if the Vessel shall become a Total Loss, or is missing (and a notice of abandonment has been sent to insurers), Charter Hire shall cease from the date when she was lost or, in the case where the Vessel is missing, from the date when a notice of abandonment is sent to insurers provided however that: 45.3.1 in circumstances where any moneys are due to the Owners under this Charter, the Charterers' said obligation to pay Charter Hire shall continue until the Owners (or the Mortgagee as their assignee) shall have received a net amount equal to the aggregate of (i) all accrued and due Charter Hire which is then unpaid; and (ii) other moneys (including, without limitation, any interest) owing by the - Charterers to the Owners under this Charter as at the date of-such-receipt, and 45.3.2 in circumstances where Charter Hire has been paid in advance, such Charter Hire shall be adjusted accordingly. 45.3.3 if, in the event that, upon the occurrence of a Total Loss, or circumstance giving rise to a notice of abandonment being sent to insurers, the Owners (or the Mortgagee in its capacity as loss payee) shall, for any reason, not have received out of the insurance proceeds or compensation amounts (if any) the Minimum Insured Value within one hundred and twenty (120) days (or such longer period as the Mortgagee may agree) following the occurrence of such Total Loss or the giving of such notice of abandonment, the Charterers shall thereupon forthwith pay to the Mortgagee (in its capacity as loss payee) such amount as the Mortgagee shall specify in writing to the Charterers to be equal to the amount whereby the Minimum Insured Value (calculated as at the date for payment by the Charterers) exceeds the amount of insurance proceeds or compensation moneys (if any) actually received by the Owners (or the Mortgagee as their assignee or loss payee) prior to such payment by the Charterers. 45.4 For the purposes of this Charter: 45.4.1 an actual total loss of the Vessel shall be deemed to have occurred at the actual date and time the Vessel was lost but, in the event of the date of the loss being unknown, then the actual total loss shall be deemed to have occurred on the date on which the Vessel was last reported; 45.4.2 a constructive total loss shall be deemed to have occurred at the date and time notice of abandonment of the Vessel is given to the insurers of the Vessel for the time being (hereinafter called the "Insurers") (provided a claim for such constructive total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, at the date and time at which a constructive total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and either the Owners or the Charterers shall have the right to determine whether or not a case has arisen for the giving of notice of abandonment and the Charterers are hereby irrevocably authorised by the Owners to give the same if it so determines. Each of the Owners and the Charterers, upon the request of the other, shall promptly execute such documents as may be required to enable the other to abandon the Vessel to the Insurers and/or claim a constructive total loss and shall give all possible assistance in pursuing the said claim; 45.4.3 a compromised, agreed or arranged total loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement; and 45.4.4 a Total Loss (a) as the result of capture, taking, seizure, restraint, detention, confiscation or expropriation occurring under the conditions of the "War Risks" policy of the Vessel or (b) Compulsory Acquisition shall be deemed to have occurred at the time admitted by the Insurers. 46. EVENTS OF DEFAULT 46.1 Each of (i) the following events, (ii) the events referred to in Clause 28 as they may pertain to the Charterers, shall be a "Event of Default" for the purposes of this Charter:- 46.1.1 if any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date or (in the case only of sums expressed to be payable by the Charterers on demand within five (5) Banking Days following the date of demand therefore) and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or 46.1.2 if either (a) the Charterers fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question), or (b) any of the said insurances shall cease for any reason whatsoever to be in full force and effect for any reason not attributable to or beyond the control of the Charterers (or their representatives); or 46.1.3 if there is a breach of the Charterers' representations and warranties in Clause 43; or 46.1.4 if the Charterers shall at any time fail to perform or observe any of their obligations under (i) this Charter (including, without limitation, the undertakings set out in Clause 44), and such failure to perform or observe any such obligation is not (if capable of being remedied) remedied within fourteen (14) days of the occurrence of the relevant breach, or (ii) the Multipartite Agreement, (iii) the Sellers Credit Agreement or (iv) the Co-Ordination Agreement; or 46.1.5 if (i) the Guarantee shall cease to be valid and/or in full force and effect, (ii) the Guarantor shall breach any of its obligations, undertakings, covenants, representations and/or warranties set out in the Guarantee or (iii) the Guarantor shall be in breach of or in default under any other financing agreement by which it is bound (provided that any payment default shall be in respect of an amount greater than USD 5,000,000); or 46.1.6 if the Manager ceases to be the manager of the Vessel or the Ship Management Agreement is repudiated, terminated or substantially amended without the prior consent of the Owners; or 46.1.7 if a petition shall be presented (and not withdrawn or stayed within fourteen (14) days or not contested in good faith by instigating appropriate legal action on a bona fide basis) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction of amalgamation during and after which the Charterers remain solvent, the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrance shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers, or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within fourteen (14) days) or if the Charterers shall otherwise have to abandon independent control of any part of its business or operations; or 46.1.8 if the Charterers shall stop payments generally or shall be unable to pay the debts, or shall admit in writing the inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or 46.1.9 if the Charterers shall declare or apply to any court or other tribunal for a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities and which, in the Owners' reasonable opinion, makes it likely that the Charterers will not be able to fulfil its obligations hereunder in full; or 46.1.10 if any consent, authorization, licence or approval necessary for this Charter to be or remain the valid and legally binding obligation of the Charterers, or to enable the Charterers to perform their obligations hereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to an Event of Default if the same are remedied within thirty (30) days of the date of their occurrence); or 46.1.11 if the Charterers shall (in a single or a series of transactions) dispose of a material part of its business or assets or cease to be engaged in the chartering of the Vessel and /or cease to conduct such business as is required in order for the Charterers to fulfil their obligations under this Charter or as otherwise contemplated herein; or 46.1.12 if any of the circumstances referred to in any of Clauses 46.1.7 -- 46.1.11 shall occur with respect to the Guarantor or Guarantee (as the case may be) or in the respect to any of the Collateral Charters or the Collateral Charterers (as the case may be); or 46.1.13 if the Sellers' Credit ceases for any reason to be available to the Owners (other than because the Seller's Credit has been fully consumed) or the Seller's Credit Agreement ceases to be valid and in full force. 47. OWNERS' RIGHTS ON TERMINATION 47.1 At any time after an Event of Default shall have occurred and be continuing, the Owners may, -by notice to-the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clause 15. 47.2 On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clauses 46 and/or 47 hereof the Owners shall be entitled (without prejudice to the Charterers obligations under Clauses 15, 29 or 50 hereof) to retake possession of the Vessel. 47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify: 47.3.1 all Charter Hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.6 hereof from the due date for payment thereof to the Termination Date; and 47.3.2 any sums, other than Charter Hire, due and payable, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 38.6 to the Termination Date. 47.3.3 all costs, expenses, damages and losses incurred by the Owners and recoverable by law as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of charter hire income, all expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15, 29 and 50 hereof and all financing break funding costs incurred in relation to any early termination of any interest rate swap transaction enteredoo by the Owners in connection with the financing of the Vessel). 47.4 Without prejudice to any other rights, claims or remedies of the Owners whatsoever, in respect of any amount due to the Owners under Clause 47 hereof interest pursuant to Clause 38.6 hereof shall accrue before and after any relevant judgment or any winding-up of the Charterers from the Termination Date to the date of the Owners' actual receipt thereof. 47.5 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15 and 50 hereof and (ii) shall pay, or reimburse, to the Owners on demand all Losses suffered by the Owners in connection with such termination together with interest thereon pursuant to Clause 38.6 hereof from the date on which the relevant Loss was suffered by the Owners until the date of payment or reimbursement thereof (both before and after any relevant judgment or winding up of the Charterers) pursuant to this Clause 47. 48. REFERENCE TO EXPERT 48.1 In the event that the parties cannot agree on the scope or timing or implementation of any repairs, maintenance to or of the Vessel necessary to meet the requirements of this Charter, the matter shall be referred to a mutually acceptable and independent ship operator with experience from the product carrier operations and segments or, failing agreement within a period of fourteen (14) days, such person as shall be nominated from time to time by the President of Nordisk Skibsrederforening who, acting as an expert, shall be asked to determine the scope or timing of implementation of the works in question in accordance with the standards herein defined. The decision shall be final and binding upon the parties. The costs incurred to obtain the expert's decision, shall be borne equally by the parties. 49. OWNERS' COVENANT 49.1 The Owners hereby covenant and undertake that so long as they shall not have commenced exercising any of their rights under or pursuant to Clause 47 hereof neither the Charterers nor any permitted sub-charterers shall be disturbed or interfered with in their quiet and peaceful use, possession and enjoyment of the Vessel (except as expressly provided for herein). 50. REDELIVERY 50.1 The Off-hire Survey referred to in Clause 7 hereof shall take place at the port of redelivery hereunder at or about the time of redelivery (the "Redelivery Date"). Without prejudice to the provisions of Clause 15 hereof, the Vessel shall be redelivered by the Charterers:- 50.1.1 With her class with Det norske Veritas maintained without any conditions or recommendations, free of average damage affecting the Vessel's class, and with her classification, trading, national and international certificates the Vessel had when she was delivered under the Charter, valid and un-extended without conditions or recommendation falling due for a minimum of six - 6 - months beyond the time of redelivery, and with minimum CAP 2 requirements, Hull Machinery and Equipment. The CAP certificates issued are to be less than 18 months old at the time of redelivery. 50.1.2 In the same or as good structure, state, condition and class as that in which she was deemed delivered under Clause 6 above, fair wear and tear not affecting class excepted. 50.1.3 With clean swept, washed down dried up holds free from residues of previous cargoes. 50.1.4 With all such spare parts and other equipment (including, without limitation, cargo handling equipment, fork lift truck, if any, lashing equipment, etc.) she had at the time of delivery under this Charter as per the mutually agreed list, fair wear and tear excepted. 50.1.5 Immediately prior to redelivery a class surveyor shall have surveyed the Vessel's bull and decide which damages and indents that are not acceptable according to class regulation. If a condition of class is given, this shall be remedied immediately while the Vessel is still on hire or the parties shall agree to a lump sum (to include applicable Charter Hire due to such repair) to be paid by the Charterers to the Owners whereby the responsibility is taken over by the Owners to repair the damage unless the parties mutually agree to another solution. 50.1.6 Without prejudice to the foregoing, the Charterers shall, if requested to do so by the Owners, assign to the Owners at the redelivery all and any such rights as they may have under the Charterers' insurances for the Vessel in respect of damage to the Vessel, whether or not then known other than any rights to be reimbursed by any insurers for costs previously incurred by the Charterers. 50.1.7 The Charterers shall provide the Owners with reasonable, written notice in advance so that the Owner may dispatch one or more representatives to attend all dry dockings of the Vessel throughout the Charter Period and upon request furnish the Owners with relevant plans and programs for the ensuing dry docking. In relation to the last dry docking prior to redelivery the Owners shall be entitled to suggest remedies or actions in respect of the dry docking and be consulted during the preparatory stages. The under water hull shall be smooth, well painted and have sufficient anti-fouling for the remainder of a normal docking period (ref. box 18) from the date of such docking. 50.1.8 The Owners shall, during a period of up to thirty (30) days prior to the Redelivery Date, be entitled at their own risk and expense, to place representatives on board the Vessel for familiarisation purposes, subject to signing of standard indemnity letter. 50.1.9 Without prejudice to the generality of the provisions of Clause 7, any inspection of the Vessel carried out pursuant thereto, may include an under-water inspection of the Vessel provided that the same shall be carried out during such time as she is in port (such inspection not to interfere with or interrupt the trading of the Vessel). Such under-water inspection shall be carried out by a class-approved diver in liaison with a class surveyor and the principles set out in Standard NSF 93 clause in relation thereto. 50.1.10 Prior to redelivery of the Vessel to the Owners the Charterers shall, upon the request of the Owners, and free of charge deliver print-outs and data surveys of inventory, equipment and consumables on board the Vessel. Upon the Owners' request the Charterers shall deliver to the Owners all drawings and/or specifications in their possession relating to the Vessel. 50.1.11 Upon redelivery the Charterers may, upon the request of the Owners' or in the Charterers' option, take ashore equipment with the Charterers' logo or name on it subject to substituting such equipment with corresponding equipment of at least equal numbers and quality, unless, in the Owners' option, a lump sum compensation is agreed. 50.1.12 Prior to redelivery a Protocol of Redelivery shall be prepared jointly by the parties addressing relevant issues of the Off-hire Survey in comparison with the On-Hire Survey and listing specifically any leased or hired equipments. 50.1.13 The Owners shall purchase unused fuel oils, lubricating oils and unbroached chemicals as per the Charterers net contracts prices evidenced by invoices. 50.1.14 As soon as practically possible after redelivery of the Vessel hereunder, the Owners at its cost shall remove the Vessel's name and the Charterers' funnel markings and logos on the hull (if any). 51. COMMUNICATIONS Except as otherwise expressly provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, telex number or facsimile number appearing below (or at such other address, telex number or facsimile number as such party may hereafter specify for such purposes to the other by notice in writing):- 51.1.1 In the case of the Owners: Partankers III AS c/o Pareto Management AS Dronning Maudsgate 3 P.O. Box 1396 Vika N-01 14 Oslo, Norway Att: Mr. Peter Wallace Telephone No.: + 47 22 87 87 00 Telefax No.: + 47 22 87 88 00 51.1.1 In the case of the Charterers Litochoro Shipping Company Limited c/o Top Tanker Management Inc. 109-111 Messogion Ave. Athens, 115 26 Greece Att: Mr Andreas Louka Telephone No.: + 30 210 69 78000 Telefax No.: + 30 210 69 15668 A written notice includes a notice by facsimile and shall be deemed given upon appropriate acknowledgement by the addressee's receiving equipment, or by e-mail if actually replied to. A notice received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place. 51.2 All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation. 52. MISCELLEANOUS 52.1 In case of any conflict or discrepancy between the printed part and the rider clauses of this Charter, the latter shall prevail. For and on behalf of the Owners For and on behalf of the Charterers /s/ Peter W. Wallace /s/ Andreas Louka - ------------------------------- ----------------------------------- Peter W. Wallace Andreas Louka Attorney-in-fact Attorney-in-fact EX-4.34 31 d759408_ex4-34.txt Exhibit 4.34 EXECUTION COPY Partankers III AS Dronning Mauds gate 3 P.O. Box 1396 Vika N-01 14 Oslo Norway Your ref: Our ref: Date #949091/4 4 April 2006 RE: BAREBOAT CHARTER FOR CERTAIN VESSELS DEED OF GUARANTEE This guarantee (the "Guarantee") is given on this 4 day of April, 2006 by the undersigned Top Tankers, Inc. a company incorporated under the laws of Marshall Islands, having its registered address at Trust Company Complex Ajeltake Island, P.O. Box 1405 Majuro, Marshall Islands 96960 (the "Guarantor") in favour of Partankers III AS a company incorporated under the laws of Norway, having its registered address at Dronning Maudsgt. 3, P.O. Box 1396 Vika, N-01 14 Oslo, Norway (the "Owner"). WHEREAS;- (A) By five separate bareboat charter agreements of even date herewith (each a "Charter" and collectively the "Charters") made between the Owner and the following companies (all of which are wholly owned subsidiaries of the Guarantor) as charterers (each a "Charterer" and collectively the "Charterers"), each of the Charterers has agreed to charter the vessel set out opposite its name below on the terms set out therein (each a "Vessel", collectively the "Vessels"). 1. Parnasos Shipping Company Limited a Liberian corporation - M/V "Faultless" 2. Parnis Shipping Company Limited a Marshall Islands corporation - M/V "Stainless" 3. Imitos Shipping Company Limited a Marshall Islands corporation - M/V "Noiseless" 4. Mytikas Shipping Company Limited a Marshall Islands corporation - M/V "Limitless" 5. Litochoro Shipping Company Limited a Marshall Islands corporation - M/V "Endless" (B) As required pursuant to Clauses 3 6.7.3 of the respective Charters, the undersigned shall provide the Owner with a performance guarantee, whereunder the Guarantor shall guarantee the due and punctual fulfilment of all the Charterer's obligations under the Charter; NOW, THEREFORE, the Guarantor hereby declares as follows; We, the undersigned, hereby unconditionally and irrevocably guarantee as for our own debt the due and punctual performance in full by each of the Charterers of all of their respective obligations under the Charters, including, without limitation, the due and punctual payment of all amounts due under the Charters. 1. The Guarantor accepts and agrees that: (i) This Guarantee shall remain in full force and effect until all of the Charterers' liabilities and obligations to the Owner under or in respect of the relevant Charters have been fully performed and discharged; (ii) The obligations of the Guarantor hereunder shall be unconditional, irrespective of the genuineness, validity, regularity or enforceability of the Charters (or any of them); (iii) Neither the granting of time or any other indulgence to the Guarantor and/or any one or more of the Charterers accorded by the Owner (or its assignee), nor any limitation or lapse of any other security given in connection with any one or more of the Charters, shall in any way affect or discharge the liability of the Guarantor under this Guarantee. 2. The Guarantor hereby waives: (i) Any requirement that the Owner, in case of a breach occurring under any one or more of the Charters, first make demand upon or seek to enforce remedy against any one or more of the Charterers, or any other security provider before demanding payment or seeking to enforce this Guarantee; (ii) Any right to limit the Guarantor's liability under this Guarantee resulting from any failure to give notice of any kind; (iii) Any right to exercise any claim for reimbursement from any one or more of the Charterers for payments made hereunder or to exercise any rights of subrogation into the rights of the Owner under any one or more of the Charters or any security issued or made in respect thereof without the prior written consent of the Owner until and unless the Owner shall have received all amounts due or to become due to them under the Charters, and the Vessel shall have been redelivered to the Owner in accordance with the terms of the Charters. 3. The Guarantor represents and warrants that: (i) It is a corporation duly established, validly existing and in good standing under the laws of the Marshall Islands; (ii) It has full power to issue this Guarantee, and the person(s) executing this Guarantee on behalf of the Guarantor has been duly authorised to do so; (iii) When signed, the obligations and duties undertaken hereunder constitute the legal and valid obligations of the Guarantor, ranking pari passu with all other unsecured obligations of the Guarantor, enforceable in accordance with its terms as set out herein; (iv) No action, suit, proceeding, litigation or dispute against the Guarantor is currently taking place or pending or threatened, nor is there subsisting any judgement or award given against the Guarantor before any court, board of arbitration or other body which, in either case, could or might result in any material adverse change in the condition (financial or otherwise) of the Guarantor; (v) The Guarantor is not in default under any agreement by which it is bound and no event of default relating to the Guarantor has occurred and is continuing, nor will such a default or event of default occur as a consequence of the entering into by the Guarantor of this Guarantee or the performance by the Guarantor of any of its obligations under this Guarantee. (vi) All consents, licences, approvals and authorisations required in connection with the Guarantor's entering into, performance, validity and enforceability of this Guarantee have been obtained and are in full force and effect. 4. The Guarantor confirms that it is fully aware of the terms of the Charters, and hereby undertakes and covenants that it will until the Vessels have been redelivered to the Owner in accordance with the terms of the respective Charters and all obligations and liabilities of the Charterers under the Charters have been discharged in full: (i) at no time take any step, or permit any circumstance to arise, which might render its obligations hereunder invalid or unenforceable; (ii) in the event that the Guarantor shall cease to be listed on the Nasdaq National Market, provide to the Owner its unaudited accounts per 31.3, 30.6, 30.9 and 31.12 each year within 60 days of the end of the relevant period, and its audited annual financial statement as soon as available and in no event later than 90 days after the end of its financial year; (iii) maintain its ownership of 100 % of the shares in each and all of the Charterers; (iv) maintain a Book Equity of minimum USD 75,000,000; (v) maintain a Net Asset Value of minimum USD 125,000,000; and (vi) maintain a minimum Cash of USD 50,000,000. For the purposes of this clause 4 (iv) - (vi): a) "Book Equity" means booked equity of the Guarantor on a consolidated basis. b) "GAAP" means the generally accepted accounting practice and principles of USA, but always provided they are in compliance with the International Financial Reporting Standards and Interpretations (IFRS) issued by the International Accounting Standards Board (or any predecessor or successor thereof) as in force from time to time. c) "Cash" means cash in hand or held with banks or other financial institutions of the Guarantor (on a consolidated basis) in Dollars or another currency freely convertible into Dollars, which is available as free cash to the Guarantor.. d) "Net Asset Value" means the net asset value of the Guarantor on a consolidated basis, i.e. market value of all of the vessels owned by the Guarantor and its subsidiaries (based on the vessels being ready for prompt delivery between working buyer and working seller, free of employment, and as valuated by either Platou, Bremar, Clarkson or Fearnleys to be appointed by the Owner) less consolidated net debt (excluding however intra-group transactions). The financial covenants in clause 4 (iv) - (vi) above shall apply to the Guarantor on a consolidated basis and shall be measured at the end of each fiscal quarter by the Owners based on the latest financial statements and/or the annual audited financial statements published (and otherwise delivered to the Owners as the case may be) by the Guarantor prepared in accordance with GAAP. The Guarantor shall as soon as possible and within 60 days of the relevant period supply and deliver to the Owner, together with the latest financial statements and/or the annual audited financial statements published, a Compliance Certificate in the form as set out in Schedule 1 hereto. The Guarantor specifically confirms that it is aware of clauses 46.1.5 and 46.1.12 of the Charters, and acknowledges the implications thereof in relation to the Charterers and the Charters. The Guarantor undertakes to notify the Owner promptly upon becoming aware of any fact or circumstance which may result in a situation as contemplated in either of said clauses in the Charters. The obligations of the Guarantor hereunder shall not be subject to any reduction, limitation or termination for any reason, and shall not be subject to any defence of setoff, counterclaim or termination whatsoever by reason of the invalidity or unenforceability of any one or more of the Charters or otherwise. Any claim hereunder shall be presented in writing at the following address: Top Tankers Inc. 109-111 Messogion Av., Politia Centre, Bldg C1 Athens 115 26 Greece The Owner may serve one or several demands under this Guarantee. If the Guarantor moves to other premises, the Guarantor shall immediately notify the Owner of relevant new contact details. The Guarantor acknowledges, that under the terms of the Charters, the Owner shall be entitled to assign their rights and benefits hereunder to any other person, including but not limited to their financiers, currently being Nordea Bank Norge ASA, and the Guarantor acknowledges that both the Owner and Nordea Bank Norge ASA have full step in rights to the Charters. The Guarantor undertakes to acknowledge, observe and be bound by any notice of assignment as aforesaid. This Guarantee shall be governed by and construed in accordance with English law, and the Guarantor submits to the jurisdictions of the English courts. The Guarantor hereby irrevocably appoints Top Tankers (UK) Limited, 50 Park Street W1K2JJ, London as its process agent in England. - ----------------------- TOP TANKERS INC. By: Title: Witnessed by: - ------------------------ ----------------------------- Name: Name: Title: Title: SCHEDULE 1 To: Partankers III AS Date [ ] RE: DEED OF GUARANTEE DATED [ ] 2006 - Compliance Certificate We refer to the Deed of Guarantee granted in favour of you dated [ ] 2006. Capitalised terms defined in the Deed of Guarantee shall have the same meaning when being used in this Compliance Certificate. With reference to the financial covenants in clause 4 (iv)-(vi) of the Deed of Guarantee we confirm that as at [ ] we maintain a Book Equity of minimum USD []; a Net Asset Value of minimum USD [ ]; and a minimum Cash of USD [ ]. Each of the finance covenants in clause 4 (iv)-(vi) of the Deed of Guarantee is thus [not] satisfied. Yours sincerely For and on behalf of Top Tankers Inc. - --------------------------- Name and title: EX-4.35 32 d759408_ex4-35.txt Exhibit 4.35 MEMORANDUM OF AGREEMENT Dated: 14/03/2006 IDI SHIPPING COMPANY LIMITED of Liberia Hereinafter called the Sellers, have agreed to sell, and KEMP MARITIME S.A. of Liberia Hereinafter called the Buyers, have agreed to buy Name: M.T. SPOTLESS Classification Society/Class: DET NORSKE VERITAS Built: 1991 By: Hyundai Heavy Industries Co. Ltd., Ulsan, Korea Flag: Liberia Place of Registration: Liberia Call Sign:ELNJ2 Grt/Nrt: 28223/13568 Register Official Number: 9361 Hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 24,200,000 (United States Dollars Twenty Four million Two hundred thousand only), subject to the provisions of Clause 17. 2. Deposit Paragraph deleted 3. Payment (See also Clause 17) The said Purchase Price less Sellers' Credit (as defined in Clause 17) shall be paid in full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift: RBOSGB2L, Account Key: TOPTAN-USD1, Iban: GB49 RBOS 1663 0000 3119 64, Beneficiary: Top Tankers Inc., Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Haifa, Israel on 10th February 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* Paragaph deleted. * 4 a) and 4 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4 a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 2 days approximate notice of the estimated time of readiness for and of the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea In the Seller's option. In case the Vessel be delivered with cargo on board the Sellers shall on delivery provide a confirmation from their P&I Club that the latter shall continue to cover the Vessel in every respect irrespective of the Vessel's transfer of ownership. Expected time of delivery: Between 15th March and 30th March 2006 Date of canceling (see Clauses 5 c), 6 b) (iii) and 14): 30th March 2006, in Buyers' option. c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option either cancelling this Agreement in accordance with Clause 14 within 2 Banking days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 Banking days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery this Agreement shall be null and void. 6. Drydocking/Divers Inspection a)** Paragraph deleted b)** Paragraph deleted c) Paragraph deleted 7. Spares/bunkers, etc. (See also Clause 19) The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): none. 8 Documentation (See also Clause 21) The place of closing: Piraeus, Greece At the the time of delivery the Sellers shall hand to the Buyers copies of the classification certificate(s) as well as all other trading/national/international certificates and plans etc., which are on board the Vessel. Copies of other certificates which are on board the Vessel shall also be handed over to the Buyers. Copies of other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may will keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters other than as provided in Clause 20 (which the Sellers warrant will not affect the smooth delivery of the Vessel hereunder and/or under the Bareboat Charter referred into Clause 18), encumbrances, mortgages and maritime liens or any other debts and claims whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel and/or the Buy which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration trader of the Buyers' title at the Vessel's Registry flag shall be for the Buyers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her present class fully maintained without condition/recommendation*, free of average and damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, clean, valid and unextended for a period of not less than 3 months from the time-of-delivery without condition/recommendation* by Class or the relevant authorities at-the time of delivery, save for the currently existing one (1) condition of Class, namely item 600 issued on 25/2/05, which the Sellers hereby undertake to at their own time and expense and not later than the 30th April 2006 rectify same to the full satisfaction of the Class. The Sellers shall on delivery provide a letter of undertaking to such effect. In addition to the above and without prejudice thereto the Sellers hereby undertake to, at their own time and expense and not later than the Vessel's next special survey, upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest classification standards and be described by the Class as being in "good" condition. The Sellers shall provide on delivery a letter of undertaking to such effect. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Buyers shall be allowed to keep the name of the Vessel and any marking on the Vessel's funnel or hull, in general. 13. Buyers' default Should the Cash Part of the Purchase Price (as defined in Clause 17) not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is duo to proven negligence and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives Paragraph deleted 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1996 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b)* paragraph deleted c)* paragraph deleted * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. 17. Sellers' Credit a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty One million Seven hundred Eighty thousand (US$21,780,000), (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million Four hundred Twenty thousand (US$2,420,000) shall be credited (the "Sellers' Credit") and shall be payable in accordance with the terms of this Clause 17. b) Subject to the provisions of sub-paragraph 17(c) hereinbelow, the Sellers' Credit shall be payable to the Sellers in a lumpsum, free of interest, immediately upon the expiration of the Bareboat Charter (as defined in Clause 18) by effluxion of time or the sale of the Vessel as described in Clause 22(b) of the Bareboat Charter. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as "the Purchase Price Reduction Amount") which is equal to the lesser of (i) the Sellers' Credit and (ii) the total amount of hire that would have been paid to the Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration of five years and such reduction shall have as a result the reduction of Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as provided hereinabove, the Buyers shall provide the Sellers with a third priority Preferred Mortgage over the Vessel, being subordinate to a first priority Preferred Mortgage over the Vessel in favour of FORTIS BANK (NEDERLAND) N.V. and a second priority Preferred Mortgage over the Vessel in favour of MAAS CAPITAL INVESTMENTS B.V., as more particularly described in the Bareboat Charter. 18. Bareboat Charter The Sellers (as charterers) and the Buyers (as owners) have agreed to enter into a Bareboat Charterparty (the "Bareboat Charter") in respect of the Vessel in the form of the draft attached hereto. The parties agree that payment for and acceptance of the Vessel by the Buyers under this Agreement is subject to the simultaneous delivery to and acceptance of the Vessel by the Sellers as charterers under the Bareboat Charter. 19. Bunkers and Lubricants Remaining bunkers and lubricating oils on board the Vessel at the time of delivery hereunder shall be and remain the property of the Sellers as bareboat charterers. 20. Sub-Charter The Vessel is currently chartered to Mansel Oil Ltd. of Bermuda under a "Shelltime 4" time charterparty dated 9 June 2004. 21. Documentation In exchange for payment of the Cash Part of the Purchase Price, the Sellers shall furnish the Buyers with the following original (unless otherwise stated) delivery documents: a. Six (6) legal Bills of Sale (four (4) original and two (2) certified copies) transferring title of ownership to the vessel from the Sellers to the Buyers, free of all encumbrances, mortgages, maritime liens, claims, taxes and any other debts whatsoever, legalised; b. Minutes of a Joint Meeting of the Board of Directors and of the Shareholders (represented by proxy) of the Sellers authorising/approving the Memorandum of Agreement and all the other terms of the sale of the vessel to the Buyers, as well as the Bareboat Charter and all documents to be executed thereunder and hereunder, authorising the issuance of the Power of Attorney per (d) herebelow and empowering a person or persons to sign/execute all documents necessary for the sale (including without limitation the Bill of Sale) and the chartering of the Vessel under the Bareboat Charter. Such Minutes to be signed by all the Directors of the Sellers and by the Shareholders' proxy and all their signatures to be legalised; c. Power of Attorney in favour of the signatory(ies) of the Bill of Sale and of all other documents required for the sale and delivery of the Vessel to the Buyers as well as of the Bareboat Charter and all documents to be executed thereunder and hereunder, legalised; d. Copies of the up-to-date Articles of Incorporation, By-Laws, Transfer of Subscription and all organisational Meetings evidencing the Sellers' current Directors per (b) above, certified as true by a Director of the Sellers or their lawyer; e. Certificate of Incumbency issued by the Sellers' Secretary, stating the Directors of the Sellers to match those per (b) above legalised; f. Certificate of Good Standing of the Sellers, issued by the competent Liberian authority, dated not more than 20 days prior to delivery; g. Should any Director or Shareholder of the Sellers be a corporate entity, duly executed proxy in favour of the person representing same duly certified as a true copy by the Seller's lawyers; h. Certificate of permission for transfer of ownership of the vessel to the Buyers confirming also that there are no outstanding fees, taxes and charges in respect of the Vessel towards Liberian authorities issued by Liberian Deputy Commissioner for Maritime Affairs and dated not more than 20 days prior to delivery; i. Certificate dated the date of delivery of the vessel to the Buyers and issued by a Liberian Deputy Commissioner for Maritime Affairs showing the vessel registered in the ownership of the Sellers free from any registered encumbrances and mortgages; j. Letter signed by a duly authorised attorney of the Sellers, confirming and warranting that, to the best of Sellers' knowledge, the Vessel is not blacklisted or boycotted by any state, country, trade or organization or the United Nations. k. Class Maintenance Certificate issued by the vessel's Classification Society confirming that the vessel maintains her Class without any condition/ recommendation, dated not more than 3 running days prior to the date of delivery of the vessel to the Buyers; l. Certified copy of the Certificate of Registry and original International Tonnage Measurement Certificate of the vessel; m. Without prejudice to paragraph (m) hereinabove, the Sellers shall arrange for the Vessel's Classification Society to forward to LISCR, Virginia, USA the following: i) Certificate of Confirmation of Class dated not more than ten (10) running days prior to the date of delivery; and ii) A Statement or Affidavit regarding status of class, statutory certification and seaworthiness of the vessel (which should reach the Liberian authorities at least ten (10) days prior to the date of delivery); n. The last Special Survey Report and copies of the existing statutory certificates; o. The Vessel's CSR together with notification to the Liberian Registry concerning the transfer of ownership; p. Copies of DOC, SMC, ISSC and SSP and any other documents which may be required by the Liberian Registry for the purpose of registering the Buyers' title thereto; q. The Bareboat Charter duly executed; r. The Management Agreements governing the technical and the commercial management of the Vessel upon delivery thereof to the Sellers under the Bareboat Charter, duly executed by the managers; s. A guarantee agreement (the "Charter Guarantee") by TOP TANKERS INC. of the Marshall Islands (the "Charter Guarantor"), guaranteeing as prime obligor and not as surety only, all the obligations of the Sellers as charterers under the Bareboat Charter and being otherwise in form and terms acceptable to the Buyers; t. Minutes of a Meeting of the Board of Directors of the Charter Guarantor authorising the execution of the Charter Guarantee and all documents to be executed thereunder, authorising the issuance of the Power of Attorney per (w) herebelow and empowering a person or persons to sign/execute all relevant documents. Such Minutes to be signed by all the Directory of the Charter Guarantor and all their signatures to be legalised; u. Power of Attorney in favour of the signatory(ies) of the Charter Guarantee and of all other documents to be executed thereunder, legalised; v. Copies of the up-to-date Articles of Incorporation and By-Laws of the Charter Guarantor, certified as true by a Director thereof or their lawyer; w. Certificate of Incumbency issued by the Charter Guarantor's Secretary, stating the Directors of the Charter Guarantor to match those per (v) above legalised; x. Certificate of Good Standing of the Charter Guarantor, issued by the competent Marshall Islands authority and dated not more than 20 days prior to delivery; y. The Collateral Guarantees, the assignment of sub-charters and all other security documents as provided in Clause 32 of the Bareboat Charter; z. A joint Protocol of Delivery and Acceptance under this Agreement as well as under the Bareboat Charter duly signed by the respective parties. aa. The inventory list referred into Clause 9 of the Bareboat Charter in form and substance acceptable to the Buyers. bb. The letters referred into Clause 11. All documents should be in original form unless otherwise stated hereinabove and should be in the English language or accompanied by an official translation into English. Sellers to provide Buyers with drafts of items a, b, c, e, g, j, t, u, w, z and bb for Buyers' approval prior to execution at least three (3) days prior to delivery and with copies of all documents duly executed and legalized (where appropriate) not later than the date of tendering the final Notice of Readiness, with the exception of items i, q, r, s, y and z which will be produced on the date of delivery. When a document is required to be legalized, the document may be legalized either by a Liberian Consul (when related to the Sellers) or by a Marshall Islands Consul or Special agent (when related to the Charter Guarantor) or by way of notarization/apostille. 22. Buyers' documents The Buyers shall furnish the Sellers with the following documents on the date of delivery: a. Minutes of a Meeting of the Board of Directors of the Buyers authorising/approving the Memorandum of Agreement and all the other terms of the purchase of the vessel from the Sellers, the Bareboat Charter and the Third priority preferred mortgage over the Vessel to be granted by the Buyers in favour of the Sellers as security for the Sellers' Credit, authorising the issuance of the Power of Attorney empowering a person or persons to sign/execute all necessary documents. Such Minutes to be legalised by a Cyprus Certifying Officer; b. Original Power of Attorney to Buyers' representatives in relation to the above mentioned transactions, legalized by a Cyprus Certifying Officer; c. Copy of the Buyers' Articles of Incorporation, certified as true by a Director of the Buyers or the Buyers' lawyer. d. Certificate of Incumbency issued by the Buyers' Secretary stating the Directors of the Buyers. 23. Confidentiality This Agreement shall be kept strictly private and confidential. THE SELLERS THE BUYERS - --------------------------- --------------------------- EX-4.36 33 d759408_ex4-36.txt Exhibit 4.36 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker Not applicable 2. Place and date Piraeus, 14th March 2006 3. Owners/Place of business (Cl. 1) KEMP MARITIME S.A. of Liberia 4. Bareboat Charterers/Place of business IDI SHIPPING COMPANY LIMITED of Liberia 5. Vessel's name, call sign and lag (Cl. 1 and 3) MT "SPOTLESS", ELNJ2, Liberia 6. Type of Vessel Motor Tanker 7. GT/NT 28223/13568 8. When/Where built 1991 - Halla Engineering & Heavy Industries Co., Ltd., Inchon, Korea 9. Total DWT (abt.) In metric tons on summer freeboard 47083 10. Classification society (C1. 3) Det Norske Veritas 11. Date of last special survey by the Vessel's classification society May 2001 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) Worldwide within IWL 14. Time for delivery (Cl. 4) See Clause 4 15. Cancelling date (Cl. 5) 30th March 2006 16. Port or Place of redelivery (Cl. 15) EuroMed, Gibraltar/Skaw range, Americas excluding USA, AG/Japan range, in Charterer's option but in any event within IWL 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Minimum six (6) months without extensions. 18. Running days' notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) Worldwide trading, but always within the Institute Warranty Limited (IWL) 21. Charter period (Cl. 2) Five (5) years with Owners' option to extend this period by three (3) months in accordance with Clause 32B 22. Charter hire (Cl. 11) USD 396,000 per month 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV 25. Currency and method of payment (Cl. 11) United States Dollars (USD) in same day funds by SWIFT or by other tested key electronic money transfer 26. Place of payment; also slate beneficiary and bank account (Cl. 11) Rotterdam, The Netherlands Owners' bank account nr. 24.07.56.193 with FORTIS BANK (NEDERLAND) N.V. 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 32A and 22(b) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) First Quadripartite Agreement and First Mortgage in favour of the First Mortgage. Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgage. Third priority mortgage in favour of Charterers as security for the Seller's Credit. 29. Insurance (hull and machinery and war risks)(state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k))(also state if Cl. 14 applies) Clause 14 does not apply. As regards the insured for the Clause 13(f) purposes, see Clause 34 30. Additional insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in Cl. 3) Not applicable 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) Three (3) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) Not applicable 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) Not applicable 38. Name and place of Builders (only to be filled in if PART III applies) Not applicable 39. Vessel's Yard Building No. (only to be filled in if PART III applies) Not applicable 40. Date of Building Contract (only to be filled in if PART III applies) 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) Not applicable b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) Not applicable 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) Not applicable 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) Not applicable 45. Country of the Underlying Registry (only to be filled in if PART V applies) Not applicable 46. Number of additional clauses covering special provisions, if agreed) Clauses number 32, 33 and 34. PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owner) Signature (Charterers) /s/ Alexandra Tan /s/ Andreas Lu - ------------------------------ -------------------------------- Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. See also Clause 33. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the MOA. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) This Charter shall be cancelled in the event the MOA is cancelled. Any extension of the cancelling date of the MOA shall, unless otherwise specifically agreed, constitute a similar extension of the cancelling date of this Charter. (c) Cancellation under this Clause 5 shall be without prejudice to any claim a party hereto may otherwise have on the other party. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the "Cargo permitted to' be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. Always provide that nothing permitted under this Clause shall in any way violate the terms of the Financial Instruments, as same are defined in Clause 33. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and the Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of delivery-and-redelivery hereunder. Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charters have not dry-docked her in accordance with Clause 10(g). The costs and fees for such inspection of survey shall be paid by the Charters; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charters' account and form part of the Charter Period. The Charters shall also permit the Owners to inspect the Vessel's log book whenever requested and shall whenever required by the Owners furnish them with full information regarding and casualties or other accidents or damage to the Vessel. All the above are without prejudice to the rights of inspection which the Mortgagees (as defined in Clause 33) have under the relevant terms of the Financial Instruments; the Charterers shall at all times allow the respective Mortgagee to exercise same. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay only for all bunkers and lubricating oils in the Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. No payment shall be made by the Owners on redelivery for provisions, paints, ropes, spare parts, etc.; they shall all become Owners' property on redelivery without any payment. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charters and under their complete control in every respect, always subject to the terms and conditions of this Charter. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and at their own expense they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charters' loss of time) more than the percentage stated in Box 23, or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29, then the extent, if any, to which the rate of hire shall be varied and the ratio in which the cost compliance shall be shared between the parties concerned in order to achieve a reasonable distribution thereof as between the Owners and Charterers having regard, inter alia, to the length of the period remaining under this Charter shall, in the absence of agreement, be referred to the dispute resolution method agreed in Clause 30. In any event the Charterers are obliged to redeliver the Vessel in full compliance with all the requirements and regulations of the SOLAS and/or IMO for worldwide trading applicable or provided for at the time of redelivery including also any U.S. Coast Guard requirements for the trading of the Vessel in U.S.A. territories. (iii) Financial Security - The Charters shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state of municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at or leave any port, place territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charters shall make and maintain all arrangement by bond or otherwise as may be necessary to satisfy such requirements at the Charters' sole expense and the Charters shall indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including any foreign general municipality and/or state taxes. However the Owners shall pay for the Vessel's annual tonnage taxes due to the flag State. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners, and shall in any event be promptly and fully paid by the Charterers. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, however always with the Owners' prior consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period, if this becomes necessary for the proper trading of the Vessel; however in any such case the Charterers shall fully cover all the expenses relevant to such change Including, but without limitation, the financial, legal and other costs relevant to the registration of such changes and the drafting, execution and/or registration of any documentation relevant to the Financial Instruments and/or to any other transactions required by the Mortgagees in view of any such change. Provided always that no such change of name or flag shall be allowed without the prior written consent of the Mortgagees. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii) the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit. Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at the time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, every thirty six (36) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management - The commercial, technical and/or operational management of the Vessel shall be carried out during the Charter Period by TOP TANKERS MANAGEMENT INC. or any other first class company acceptable to the Owners and the Mortgagees. Such management to be cost free for the Owners, who shall not be liable to any extent by reason of having approved such managers. In addition such approval by the Owners shall in no way constitute any limitation, discharge or waiver of any of Charterers' obligations or liabilities under and pursuant to this Charter. (j) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organization and any applicable law. (k) Financial Statements - The Charterers shall submit to the Owners and the Mortgagees their audited annual accounts as well as those of the Charter Guarantor (as the latter is defined in Clause 33), within 180 days of each year end and semiannual management accounts within 90 days of the half-year end. (l) Survey Reports - The Charterers shall regularly supply the Owners with the Classification survey reports, including but not limited the annual survey and follow up reports, all showing, among others, that any recommendation has been promptly and timely cleared at the Charterers' time and expense. The Charterers undertake to keep the condition of the Vessel and all her certificates in the best possible condition and standards for a vessel of the type and age of the Vessel and in any event to maintain the Vessel always in full compliance with the highest/strictest requirements of the Vessel's Classification Society, her flag State and all other applicable rules and/or requirements throughout the Charter Period. Without prejudice to the generality of the foregoing the coatings of the ballast tanks of the Vessel must be maintained by the Charterers in accordance with the Vessel's highest/strictest Classification standards throughout the duration of the Charter Period inclusive of the time of redelivery. Without prejudice to the above and notwithstanding anything to the contrary herein, the Charterers shall, not later than her next special survey, at their own time and expense upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest Classification standards and described by the latter as being in "good" condition. In addition and within the same time period the Charterers shall, also at their own time and expense, rectify the condition of Class which exists against the Vessel at the time of delivery, namely condition CA900, to the full satisfaction of the Class. (m) Reporting and Owners' Representative - Throughout the duration of this Charter the Charterers shall keep the Owners closely informed about the Vessel's position and itinerary as well as the cargo carried on board and the Vessel's schedule, by providing such information in writing every fifteen (15) running days. The Owners shall have the right to place one representative on board the Vessel who will travel with the Vessel and have free access to communicate with the Owners. The latter shall pay for the relevant communication expenses but will not be charged for the victualling of their representative which shall be provided without charge. The representative shall not have the right to interfere with the operation of the Vessel, but shall have free access to all parts thereof and to all Vessel's log books. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall pay to the Owners for the hire of the Vessel on a monthly basis a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. Hire shall always be punctually paid free and clear of any right of set-off, discount, reduction or delay whatsoever. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, hire shall be fully paid by the Charterers to the Owners as provided in Clause 32E hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months Interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25 as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately irrespective of whether the Owners submitted their relevant invoice to the Charterers. (h) If at any time the Charterers are required to make any deduction or withholding in respect of any kind of taxes from any payment due under this Charter for the account of the Owners, the sum due from the Charterers in respect of such payment shall be Increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Owners receive on the due date for such payment (and retain, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which they would have received had no such reduction or withholding been required to be made and the Charterers shall fully indemnify the Owners against any losses or costs Incurred by them by reason of any failure of the Charterers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Charterers shall promptly deliver to the Owners any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 12. Mortgages (only to apply if Box 28 has been appropriately filled in) *) (a) *) (b) The Vessel chartered under this Charter is subject to the Financial Instruments and the mortgages, as same appear in Box 28. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instruments or as may be directed from time to time during the currency of the Charter by the mortgagee(s) or any of them in conformity with the Financial Instruments. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instruments and agree to acknowledge this In writing in any form that may be required by the Mortgagees. *) (Optional Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) Throughout the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, Including maintaining financial security in accordance with sub-clause 10(a)(iii)) with first class underwriters and P&I Clubs and in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. The Charterers shall also at their expense take out any other insurance which the Mortgagees may reasonably require. All such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers, and the Charterers shall be at liberty to protect under such insurances the interest of any managers they may appropriately appoint. The relevant insurance policies shall cover the Owners and the Charterers according to their respective interests. Upon the request of a Mortgagee, the Charterers shall arrange that such Mortgagee is named as a co-assured in any of the above Insurances that the said Mortgagee has to be named as such. In addition, throughout the Charter Period, the Charterers shall pay to the First Mortagee and the Second Mortgagee the cost (in the amount to be conclusively certified by the First Mortgagee and the Second Mortgagee in writing) of any mortgagee's interest insurance-including mortgagee's additional perils (all NU risks) coverage-which the Mortgagees or either of them may from time to time effect in respect of the Vessel upon such terms and in such amounts as the Mortgagees shall deem desirable. The Mortgagees shall have the right to enforce the benefit of this Clause by taking direct action against the Charterers in seeking to get paid or to recover the payment of any monies payable to them hereunder. Subject to the provisions of the Financial Instrument any, and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for any repairs, whether under the provisions of this sub-clause 13(a) or otherwise howsoever, including any deviation, shall be for the Charterers account. (b) deleted. (c) The Charterers shall upon the request of the Owners, provide Information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instruments. (d) Subject to the provisions of the Financial Instrument should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the Owners-First Mortgagees or, as the case may be, the Second Mortgagees who shall distribute the moneys In accordance with the relevant Financial Instruments. The Charterers undertake to notify the Owners and the Mortgagee of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and of all other occurrences as required under the Financial Instrument. (e) Subject to the Financial Instruments, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of the insurance coverage of each insurance mentioned herein the insured amount shall be the sum indicated in Clause 34. 14. Deleted. 15. Redelivery At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a freely accessible, safe and ice-free port or place as indicated in Box 16 in such safe berth or anchorage as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of a sale of the Vessel in accordance with Clause 22 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent. or to the market rate, whichever is the higher, for the number of days by which the Charter Period or the date of sale is exceeded. In the latter case the Charterers shall also be liable to reimburse the Owners any further damages and/or losses which the latter may suffer as a result thereof. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10 the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, In any event free of any and all Class conditions and/or recommendations, fair wear and tear not affecting class excepted. On redelivery the Vessel shall have been dry-docked as per Class requirements or as otherwise may be appropriate or necessary. The Vessel upon redelivery shall have all her survey cycles up to date and all her trading, national, international and class certificates clean, valid and unextended for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period notices reading as follows: (a) "This Vessel is the property of (name of Owners). It is under charter to IDI SHIPPING COMPANY LIMITED of Liberia and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." (b) "NOTICE OF MORTGAGE - This Vessel is subject to a first priority mortgage and deed of covenant in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012AE, Rotterdam, the Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of this Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". (c) "NOTICE OF SECOND MORTGAGE - This Vessel is subject to a second priority mortgage and deed of covenant In favour of MAAS CAPITAL INVESTMENTS B.V. of Coolsingel 93, 3012AE, Rotterdam, The Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of the Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". Furthermore, the Charterers shall throughout the duration of this Charter procure that all their orders for any kinds of supplies (including but not limited to bunkers and luboils) for the Vessel are appropriately marked so as to warn all suppliers in advance that such supplies are exclusively provided to and payable by the Charterers, the suppliers not having any right of lien or suit against the Vessel and/or the Owners. Ail delivery receipts for such supplies shall also be appropriately marked by the Charterers before the supplies are delivered to the Vessel. 17. Indemnity (a) The Charterers shall fully indemnify the Owners, the Mortgagees and their respective successors, assigns, directors, shareholders, officers, servants and/or agents (collectively "the Indemnified Parties") from and against any loss, damage, claim, cost and/or expense incurred by them or any of them arising out of or in relation to the operation of the Vessel by the Charterers (including but without limitation, costs of operating and maintaining the Vessel, environmental claim or any claim based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of or during her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to fully indemnify the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims for which the Owners are exclusively liable hereunder, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall fully indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charterer, provided however that any such liens will be subordinate to any security interest the Mortgagees may have over the same property. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall fully indemnify the Owners or any other Indemnified Party against any sums whatsoever which the Owners or any other Indemnified Party shall-may become liable to pay and shall-may pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners and the Mortgagees, in their absolute discretion and subject to such terms and conditions as the Owners and the Mortgagees shall approve. (b) The Owners may sell the Vessel during the currency of this Charter subject to the buyer accepting an assignment of this Charter or entering Into a reasonable novation agreement, and subject to any approvals required by the Mortgagees pursuant to the Financial Instruments. In case of such sale the Charterers shall be obliged to delete the mortgage in their favour stated in-Box 28 and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,420,000. 23. Contracts of Carriage *) (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo Compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. *) Delete as applicable. 25. Requistion/Acquisition (a) Without prejudice to Clause 32E in the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) Without prejudice to Clause 32E in the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire until the time when the Charter would have been terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the express written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to immediately leave such area. (c) The Vessel shall not load contraband cargo, nor shall pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, nor shall-proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be promptly paid by the Charterers as required by the respective insurers. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) Without prejudice to Clause 32E din any and all the events of outbreak of war (whether there be a declaration of war or not) the stipulated hire shall continue to be paid in accordance with Clause 11. 27. Deleted 28. Termination (a) Charterers' Default Subject to the Financial Instruments, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to Make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers' bankers, the Owners shall give the Charterers written notice of the number of dear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice: (ii) the Charterers fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(1) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (iv) the Charter Guarantor (as defined in Clause 33) breaches or fails to meet any of the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement or Clause 10 o the Charter Guarantee (as same is defined In Clause 32A(a). (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breath continues for a period of forty five (45) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel Without prejudice to Clauses 11(e) and 32E, this Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be Deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Mortgagees' prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of: (i) an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, Ceases to carry on business or makes any special arrangement or composition with its creditors or (ii) the Charter Guarantor, as defined in Clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at sany other port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30 Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London In accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as If he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs Incurred in the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a) 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions A. Additional Securities (a) Charter Guarantee The Charterers shall procure and ensure that the Charter Guarantor, shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees and to include the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement. This guarantee shall remain in place throughout the whole duration of this Charter, even in case of the sale of the Vessel under Clause 22(b) hereof. (b) Collateral Guarantees Without prejudice to the provisions of Clause 32A(a) hereinabove and in addition to the relevant security provided thereby, the Charterers shall procure that the charterers of the m/ts "FAITHFUL", "DOUBTLESS" and "VANGUARD" ("the Collateral Guarantors") shall unconditionally and irrevocably guarantee on a joint and several basis the performance of the Charterers under this Charter as primary obligors and not merely as surety, the relevant guarantee agreements to be in form and substance acceptable to the Owners and the Mortgagees. In addition the Charterers hereby undertake to unconditionally and irrevocably guarantee on a joint and several basis with the Collateral Guarantors the performance of each respective charter party of the m/ts "FAITHFUL", "DOUBTLESS" and "VANGUARD" by the respective charterer, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees. The guarantees provided in this sub-Clause 32A(b) shall not be assignable by the Owners to the buyer of the Vessel under Clause 22(b) hereof. For the avoidance of any doubt all the securities provided in this Clause 32A shall be on a joint and several basis. B. Extension of the Charter Period At the request of the Owners which must be notified to the Charterers not later than three (3) months before the fifth anniversary of the date of delivery of the Vessel to the Charterers under this Charter and for the purpose of assisting the Owners to sell the Vessel, the Charter Period shall be extended for a period not longer than three (3) months at the option of the Owners. In such case the hire throughout such 3-month extended period shall be USD 5,000 per day. However in case the redelivery of the Vessel would have in any event delayed as a result of the Vessel not having completed a voyage, the hire shall be until the completion of such voyage at the rate provided in Clause 15 whilst the three months period provided under this sub-Clause 32B shall commence after the termination of such voyage. For any period of delay in the redelivery of the Vessel following the lapse of the said 3-month period extension, hire shall be payable in accordance with Clause 15. The Charterers shall make their best efforts to assist the Owners in selling the Vess if and when the Owners require them to provide such assistance. C. Assignment of Sub-Charters The sub-charters of the Vessel during the Charter Period as well as all hire and freight payable to the Charterers thereunder shall be assigned to the Owners and the Mortgagees as provided by the Financial Instruments. D. Charterers' Compliance with the Financial Instruments The Charterers shall timely and promptly comply with all the terms and conditions of the Financial Instruments and/or as may be required by the Mortgagees by virtue thereof. E. "Hell and Highwater" Clause This Charter is a "hell and highwater" bareboat charter and the Charterers' obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character, including (i) any setoff, counterclaim, recoupment, defence or other right which the Charterers- or any(.) other person may have against the Owners or any other person for any reason whatsoever, including any default by the Owners or any other person in its respective obligations hereunder or under any other agreement, (ii) any unavailability of the Vessel, after its delivery and acceptance by the Charterers hereunder, for any reason, including any lack or invalidity of title or any other defect in the title, seaworthiness, condition, design, operation or fitness for use of the Vessel, or the ineligibility of the Vessel for documentation or for a particular trade, (iii) any failure or delay on the part of the Owners or any other person, whether with or without fault on its part, in performing or complying with any of the terms or covenants hereunder, or any other agreement, (iv) any damage to the Vessel or interruption or cessation in the use or possession thereof by the Charterers or any subcharterer for any reason whatsoever and of whatever duration including an actual, constructive, compromised or arranged total loss or requisition of title, (v) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding by or against the Owners, the Charterers, any subcharterer or any other person, (vi) any breach of any representation or warranty of, or any act or omission of, the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers, (vii) any breach of any representation or warranty of, or any act or omission of the Owners under, any agreement at any time existing between the Owners and the Charterers and/or any subcharterer, (viii) any deprivation of use of the Vessel by reason of any act or omission of the Owners, (ix) any claims as a result of any other business dealings by the Owners, the Charterers, any subcharterer or any other person, (x) the requisitioning, seizure or other taking of title to or use of the Vessel by any governmental or other competent authority or otherwise whether or not by reason of any act or omission of the Owners, the Charterers, or any subcharterer, or any other deprivation or limitation of use of the Vessel in any respect or for any length of time, whether or not resulting from accident and whether or not without fault on the part of the Charterers or any subcharterer, (xi) any embargo on the shipment of any products or any prohibition against the loading or discharging of vessels containing the same, (xii) the interference with or prohibition of the Charterers' or any subcharterer's use of the Vessel, (xiii) the invalidity or unenforceability or lack of due authorization or other infirmity of this Charter or any other subcharter, (xiv) the lack of right, power or authority of the Owners to enter i to this Charter, (xv) any ineligibility of the Vessel for any particular trade or activ whether due to any failure of the Owners, the Charterers, any subcharterer or any other person to comply with any applicable law or otherwise, (xvi) any event of force majeure or any frustration, (xvii) any applicable law or (xviii) any war or any other event that automatically or by election cancels any available insurance cover or (xix) for any other cause, circumstance or happening, whether similar or dissimilar to the foregoing, any present or future applicable law to the contrary notwithstanding. The Charterers hereby waive, to the extent permitted by applicable law, any and all rights which they may now have or which at any time hereafter may be conferred upon them, by statute or otherwise, to terminate, cancel, quit or surrender this Charter or to any abatement, suspension, deferment, return or reduction of hire except in accordance with the express terms hereof. If for any reason whatsoever this Charter shall be terminated in whole or in part by operation of law or otherwise as specifically provided herein, the Charterers nonetheless agree to pay to the Owners or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; each payment of hire made by the Charterers shall be final, and the Charterers will not seek to recover all or any part of such payment from the Owners for any reason whatsoever, except for manifest error. 33. Definitions "Charter Guarantor" means Top Tankers Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960; "First Mortgagee" means Fortis Bank (NEDERLAND) N.V. of Coolsingel 93, 3012AE (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as any person that may replace the First Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Vessel to be executed by the Owners in favour of the First Mortgagee; "First Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the First Mortgagee; "MOA" means the Memorandum of Agreement dated 14.3.2006 and made between the Charterers, as sellers and the Owners, as buyers, pursuant to which the Owners have agreed to buy and the Charterers have agreed to sell the Vessel on the terms and conditions mentioned therein; "Second Mortgage" means the second preferred ship mortgage on the Vessel to be executed by the Owners in favour of the Second Mortgagee; "Second Mortgagee" means Maas Capital Investments B.V., a company incorporated under the laws of The Netherlands whose registered office is at Coolsingel 93, 3112AE, Rotterdam, The Netherlands and includes its successors in title, assignees transferees; "Second Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the Second Mortgagee; "Sellers' Credit" means the amount of USD 2,420,000 as provided in Clause 17 of the MOA. "Financial Instrument" means: (a) in the case of the First Mortgagee, the First Quadrapartite Agreement, and the First Mortgage; or (b) in the case of the Second Mortgagee, the Second Quadrapartite Agreement and the Second Mortgage, and "Financial Instruments" means both of them; and "Mortgagees" means, together, the First Mortgagee and the Second Mortgagee. 34. Insured Amount [for the purposes of Clause 13(f)] For the purposes of Clause 13(f) and at any relevant time, the insured amount for the relevant insurances effected or, as the case may be, to be effected for the Vessel will be an amount in United States Dollars equal to the higher of (i) the market value of the Vessel at such relevant time (as such market value is determined by an independent firm of shipbrokers appointed by the Owners in their sole discretion) and (ii) the amount required under the relevant terms of either Financial Instrument, if any. Each valuation made for the purposes of this Box, shall be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the Vessel. The value of the Vessel determined in accordance with the provisions hereof shall be binding upon the parties hereto until such time as any further such valuation shall be obtained. EX-4.37 34 d759408_ex4-37.txt Exhibit 4.37 Private & Confidential Dated 15 March 2006 ------------------- KEMP MARITIME S.A. (1) as Owner IDI SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor and FORTIS BANK (NEDERLAND) N.V. (4) ----------------------------- QUADRIPARTITE DEED relating to m.v. Spotless ----------------------------- NORTON ROSE Contents Clause Page 1 Definitions..................................................................2 2 Representations and warranties...............................................7 3 Assignment..................................................................11 4 Owner's Assignment..........................................................12 5 Continuing security and other matters.......................................13 6 Charterer's undertakings....................................................16 7 Charter Guarantor's undertakings............................................17 8 Covenants concerning insurance and operational matters......................22 9 Powers of Mortgagee to protect security and remedy defaults.................28 10 Powers of Mortgagee on Event of Default....................................29 11 Application of moneys......................................................30 12 Remedies cumulative and other provisions...................................31 13 Costs and indemnity........................................................32 14 Attorney...................................................................32 15 Further assurance..........................................................33 16 Consent, Termination of Charter and Quiet Enjoyment........................33 17 Continuation of Charter Period.............................................35 18 Notices....................................................................35 19 Counterparts...............................................................36 20 Severability of provisions.................................................36 21 Law and jurisdiction.......................................................36 Schedule 1 Forms of Loss Payable Clauses......................................38 Schedule 2 Forms of Notices of Assignment of Insurances.......................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) KEMP MARITIME S.A. a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Owner"); (2) IDI SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Tucker Navigation Co., Starcraft Marine Co. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, arranger, account bank, security agent and trustee and (4) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider" and together with the Agent (as defined in the Loan Agreement) and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 14 March 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 14 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (together the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws 9f 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Spotless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Spotless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated I Q- March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (an a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Spotless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company' set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Owner pursuant to the Loan Agreement and/or the Master Swap Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. "Spotless" registered as a Liberian ship under Official Number 9361 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability o: admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will :>e on the Delivery Date subject to any Encumbrance created by. it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3;.2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representation:; and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Spotless Operating Account ;as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (k) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (l) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (m) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (n) rental payments under Finance Leases; (o) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (p) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (q) preference share capital redeemable prior to the last day of the period of the Charter; (r) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (s) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (t) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (u) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (v) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(1); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copires of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Spotless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of,. or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constitutedo by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms. Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: + 30 210 6978 107 Attention: Legal Department (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State snail have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [.] 2006, KEMP MARITIME S.A. of 80 Broad Street, Monrovia, Republic of Liberia (the "Owner") and by a Quadripartite Deed dated [o] 2006, IDI SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Spotless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which KEMP MARITIME S.A., of 80 Broad Street, Monrovia, Republic of Liberia (the "Owner") or IDI SHIPPING COMPANY LIMITED, of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V, of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KEMP MARITIME S.A. (the "Owner") of 80 Broad Street, Monrovia, Republic of Liberia and IDI SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia, the owners and demise charterers respectively of'-the motor vessel "Spotless" HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ------------------------------------- Signed For and on behalf of KEMP MARITIME S.A. Dated [o] 2006 - ------------------------------------- Signed For and on behalf of IDI SHIPPING COMPANY LIMITED Dated [o] 2006 EXECUTED as a DEED ) /s/ Dimitri Giomelakis by Dimitri Giomelakis ) ------------------------- for and on behalf of ) Attorney-in-fact KEMP MARITIME S.A. ) /s/ Helen Dawson - ------------------------------------- in the presence of Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED ) /s/ Andreas Loucas by Andreas Loucas ) ------------------------- for and on behalf of ) Attorney-in-fact IDI SHIPPING COMPANY LIMITED ) /s/ Helen Dawson - ------------------------------------- in the presence of Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED ) /s/ Andreas Loucas by Andreas Loucas ) ------------------------- for and on behalf of ) Attorney-in-fact TOP TANKERS INC. ) /s/ Helen Dawson - ------------------------------------- in the presence of Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED ) /s/ Helen Dawson by Helen Dawson ) ------------------------- for and on behalf of ) Attorney-in-fact FORTIS BANK (NEDERLAND) N.V. ) /s/ Vikki Madia - ------------------------------------- in the presence of Witness Vikki Madian Name: Norton Rose Address: Piraeus Occupation: EX-4.38 35 d759408_ex4-38.txt Exhibit 4.38 Private & Confidential Dated 15 March 2006 ------------------- KEMP MARITIME S.A. (1) as Owner IDI SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor and MAAS CAPITAL INVESTMENTS B.V. (4) ----------------------------- SECOND PRIORITY QUADRIPARTITE DEED relating to m.v. Spotless ----------------------------- NORTON ROSE Contents Clause Page 1 Definitions ..........................................................2 2 Representations and warranties........................................8 3 Assignment ..........................................................12 4 Owner's Assignment...................................................12 5 Continuing security and other matters................................13 6 Charterer's undertakings ............................................16 7 Charter Guarantor's undertakings ....................................17 8 Covenants concerning insurance and operational matters ..............22 9 Powers of Mortgagee to protect security and remedy defaults .........29 10 Powers of Mortgagee on Event of Default..............................29 11 Application of moneys ...............................................30 12 Remedies cumulative and other provisions.............................31 13 Costs and indemnity .................................................32 14 Attorney ............................................................32 15 Further assurance ...................................................33 16 Consent, Termination of Charter and Quiet Enjoyment..................33 17 Continuation of Charter Period ......................................35 18 Notices .............................................................35 19 Counterparts ........................................................36 20 Severability of provisions...........................................36 21 Law and jurisdiction ................................................37 Schedule 1 Forms of Loss Payable Clauses.....................................38 Schedule 2 Forms of Notices of Assignment of Insurances......................39 THIS SECOND PRIORITY QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) KEMP MARITIME S.A. a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia (the "Owner"); (2) IDI SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) MAAS CAPITAL INVESTMENTS B.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 1 M March 2006 and made between (1) the Owner, Tucker Navigation Co., Starcraft Marine Co. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers") and (2) the Mortgagee as lender, the Mortgagee agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $10,000,000; (C) pursuant to the Loan Agreement there has been or will be executed by the Owner in favour of the Mortgagee a second preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (as such expression is defined in the Mortgage); (D) the security constituted by the Mortgage and this Deed is in all respects subject and subordinate to the rights of the First Mortgagee under the First Mortgage and the First Quadripartite Deed of Assignment (as those expressions are defined in the Mortgage); (E) by a "Barecon 2001" bareboat charter (the "Charter") dated I (+ March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (F) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (G) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee under the Loan Agreement and the other Security Documents; and (H) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Spotless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred Thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (E); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (F); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "First Banks" means the banks and financial institutions whose names and addresses are set out in schedule 1 to the First Loan Agreement; "First General Assignment" means a first general assignment dated (S March 2006 made between the Owner and the First Mortgagee whereby the Owner has assigned to the First Mortgagee the Earnings, the Insurances and any Requisition Compensation (each such term as defined therein) of the Ship; "First Loan" means the principal amount borrowed by the Borrowers from the First Banks under the First Loan Agreement or (as the context may require) the amount thereof at any time outstanding; "First Loan Agreement" means the loan agreement dated (Ct March 2006 made between (1) the Borrowers, (2) Fortis Bank (Nederland) N.V. in its capacities as arranger, agent, swap provider and account bank, (3) the First Mortgagee and (4) the First Banks as lenders; "First Manager's Undertaking" means the manager's undertaking and first priority assignments executed (or as the context may require) to be executed by each Manager in favour of the Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Ship dated y' March 20`.16 executed by the Owner in favour of the First Mortgagee; "First Mortgage Documents" means, together, the First Mortgage, the First General Assignment, the First Manager's Undertaking, the First Operating Account Pledge, the First Security Assignment, the First Quadripartite Deed and the First Retention Account Pledge; "First Mortgagee" means Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands; "First Operating Account Pledge" means the first priority pledge executed (or as the context may require) to be executed by, inter alios, the Owner in favour of the Mortgagee in respect of, inter alia, the Spotless Operating Account; "First Quadripartite Deed" means the deed of assignment executed or (as the context may require) to be executed by the Owner and the Charterer in favour of the Mortgagee in such form as the Mortgagee shall approve; "First Retention Account Pledge" means the first priority pledge executed or (as the context may require) to be executed by the Borrowers in favour of the Mortgagee in respect of the Retention Account; "First Security Assignment" means the first priority charter assignment of the Doubtless Charter Guarantee, the Faithful Charter Guarantee and the Vanguard Charter Guarantee and the Doubtless Time Charter Assignment, the Faithful Time Charter Assignment, the Spotless Time Charter Assignment and the Vanguard Time Charter Assignment executed (or as the context may require) to be executed by the Owner in favour of the Mortgagee; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Mortgagee pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Spotless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Mortgage" means the first preferred mortgage mentioned in recital (C) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Spotless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement,' this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon and the moneys from time to time owing by the Owner pursuant to the Loan Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Spotless registered as a Liberian ship under Official Number 9361 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and, subject to the First Mortgage Documents, neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness the Charterer with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall (subject to the First Quadripartite Deed of Assignment) be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall, subject to the First Quadripartite Deed of Assignment, be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall, subject to the First Quadripartite Deed of Assignment, be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness the Owner with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Spotless Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee any right or remedy of the Mortgagee or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee fully indemnified against any loss suffered by the Mortgagee as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee under the Loan Agreement, this Deed, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee may be exercised from time to time and as often as the Mortgagee may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness; or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments save for the First Quadripartite Deed of Assignment, assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance (other than the First Mortgage Documents) over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1.. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee (and permitted by the First Mortgagee), in the joint names of the Owner, the Mortgagee and the Charterer and, if so required by the First Mortgagee, in the joint rames of the Owner, the Charterer, the Mortgagee and the First Mortgagee (but without liability on the part of the Mortgagee or the First Mortgage for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee in its sole discretion); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of (aa) the First Loan, (bb) the Loan and (cc) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1 (a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8. 1.1 (a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee: (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(1); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which wil' or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subje';t to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Spotless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a second priority mortgage in favour of MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1 (but subject to the First Mortgage Documents): 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer tails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee shall (subject to the rights of the First Mortgagee under the First Mortgage Documents) become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be, applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall (subject to the First Mortgage Documents): 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matter- dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Chatterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not `imited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 697 8107 Attention: Legal Department (c) to the Mortgagee at: Maas Capital Investments B.V. R.01.1601 Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 5323 Attention: Mr. Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London El 8 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London, W 1 K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, KEMP MARITIME S.A. of 80 Broad Street, Monrovia, Liberia (the "Owner") and by a Quadripartite Deed dated [o] 2006, IDI SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Liberia (the "Charterer") have each assigned (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) to MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Spotless and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee or to its order. (2) Protection and indemnity Payment of any recovery which KEMP MARITIME S.A. of 80 Broad Street, Monrovia, Liberia (the "Owner") or IDI SHIPPING COMPANY LIMITED uuf 80 Broad Street, Monrovia, Liberia (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall, subject to the prior rights of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands as first assignee thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of insurances Notice of Assignment (For attachment by way of endorsement to the Policy) KEMP MARITIME S.A. (the "Owner") of 80 Broad Street, Monrovia, Liberia and IDI SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia, Liberia the owners and demise charterers respectively of the motor vessel Spotless HEREBY GIVE NOTICE that by a General Assignment dated [*12006 and entered into by the Owner (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with MAAS CAPITAL INVESTMENTS B.V. (the "Mortgagee") and by a Quadripartite Deed dated [012006 and entered into by, inter alios, the Charterer and the Owner (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with the Mortgagee, there has been assigned by us to the Mortgagee as second mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - --------------------------------------- Signed For and on behalf of KEMP MARITIME S.A. Dated [o] 2006 - --------------------------------------- Signed For and on behalf of IDI SHIPPING COMPANY LIMITED Dated [o] 2006 EXECUTED as a DEED by DIMITRI GLOMELAKIS /s/ DIMITRI GLOMELAKIS for and on behalf of ------------------------- KEMP MARITIME S.A . Attorney-in-fact /s/ H.C. Dawson - ------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Andreas Louka /s/ Andreas Louka for and on behalf of ------------------------- IDI SHIPPING COMPANY LIMITED Attorney-in-fact Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Andreas Louka /s/ Andreas Louka for and on behalf of ------------------------- TOP TANKERS INC. Attorney-in-fact /s/ H.C. Dawson - ------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Helen Dawson /s/ Helen Dawson for and on behalf of ------------------------- MASS CAPITAL INVESTMENTS B.V. Attorney-in-fact /s/ Vikki Madia - ------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Ross Occupation: Piraeus EX-4.39 36 d759408_ex4-39.txt Exhibit 4.39 Guarantee 14 March 2006 To: Kemp Maritime S.A. of 80, Broad Street, Monrovia, Liberia (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Spotless (the "Ship") to Idi Shipping Company Limited (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not baslischarged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statemerf from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 31 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result ffom a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph [101 be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to (i) Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties) and/or (ii) Maas Capital Investments B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands ("Maas"). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent and/or Maas of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in another court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED BY for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 2006 In the presence of: Witness: /s/ Christina Economides Name: Christina Economides Solicitor Address: Norton Rose Occupation Piraeus EX-4.40 37 d759408_ex4-40.txt Exhibit 4.40 MEMORANDUM OF AGREEMENT Dated: 14/03/2006 FALAKRO SHIPPING COMPANY LIMITED of Liberia Hereinafter called the Sellers, have agreed to sell, and TUCKER NAVIGATION CO. of Liberia Hereinafter called the Buyers, have agreed to buy Name: M.T. DOUBTLESS Classification Society/Class: DET NORSKE VERITAS Built: 1991 By: Halls Engineering and Heavy Ind. Ltd., Ulsan, Korea Flag: Liberia Place of Registration: Liberia Call Sign: ELNJ4 Grt/Nrt: 28223/13568 Official Number: 9363 Hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and In the place of closing stipulated in Clause 8. In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 24,200,000 (United States Dollars Twenty Four million Two hundred thousand only), subject to the provisions of Clause 17. 2. Deposit DELETED TEXT 3. Payment (See also Clause 17) The said Purchase Price less Sellers' Credit (as defined in Clause 17) shall be paid in--full free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift: RBOSGB2L, Account Key: TOPTAN-USD1, Iban: GB49 RBOS 1663 0000 3119 64, Beneficiary: Top Tankers Inc., Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel at Jounieh, Beirut, Lebanon on 13th February 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* DELETED TEXT * 4 a) and 4 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4 a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 2 days approximate notice of the estimated time of readiness for and of the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea In the Sellers option. In case the Vessel be delivered with cargo on board the Sellers shall on delivery provide a confirmation from their P&I Club that the latter shall continue to cover the Vessel in every respect irrespective of the Vessel's transfer of ownership. Expected time of delivery: Between 15th March and 30th March 2006 Date of canceling (see Clauses 5 c), 6 b) (iii) and 14): 30th March 2006, in Buyers' option. c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option either cancelling this Agreement in accordance with Clause 14 within 2 Banking days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 Banking days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery this Agreement shall be null and void. 6. Drydocking/Divers Inspection DELETED TEXT 7. Spares/bunkers, etc. (See also Clause 19) The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the stop chest are to be excluded from the sale, as well as the following additional items (including items on hire): none. 8. Documentation (See also Clause 21) The place of closing: Piraeus, Greece At the time of delivery the Sellers shall hand to the Buyers copies of the classification certificate(s)as well as all other trading/national/international certificates and plans etc., which are on board the Vessel. Copies of other certificates which are on board the Vessel shall also be handed over to the Buyers. Copies of other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers may will keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from all charters other than as provided in Clause 20 (which the Sellers warrant will not affect the smooth delivery of the Vessel hereunder and/or under the Bareboat Charter referred into Clause 18), encumbrances, mortgages and maritime liens or any other debts and claims whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel and/or the Buyers which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration under of the Buyers' title at the Vessel's Registry flag shall be for the Buyers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her present class fully maintained without condition/recommendation*, free of average and damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, clean, valid and unextended for a period of not less than 3 months from the time of delivery without condition/recommendation` by Class or the relevant authorities at the time of delivery. In addition to the above and without prejudice thereto the Sellers hereby undertake to, at their own time and expense and not later than the Vessel's next special survey, upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest classification standards and be described by the Class as being in 'good" condition. The Sellers shall provide on delivery a letter of undertaking to such effect. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Buyers shall be allowed to keep the name of the Vessel and any marking on the Vessel's funnel or hull, in general. 13. Buyers' default Should the Cash Part of the Purchase Price (as defined in Clause 17) not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, the Sellers shall be entitled to claim framer compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement. If after Notice of Readiness has be n given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives DELETED TEXT 16. Arbitration a) This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1996 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b) DELETED TEXT c) DELETED TEXT * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. in the absence of deletions, alternative 16 a) to apply. 17. Sellers' Credit a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty One million Seven hundred Eighty thousand (US$21,780,000), (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million Four hundred Twenty thousand (US$2,420,000) shall be credited (the *Sellers' Credit") and shall be payable in accordance with the terms of this Clause 17. b) Subject to the provisions of sub-paragraph 17(c) herein below, the Sellers' Credit shall be payable to the Sellers in a lumpsum, free of interest, immediately upon the expiration of the Bareboat Charter (as defined in Clause 18) by effluxion of time or the sale of the Vessel as described in Clause 22(b) of the Bareboat Charter. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as 'the Purchase Price Reduction Amount") which is equal to the lesser of (i) the Sellers' Credit and (ii) the total amount of hire that would have been paid to the Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration of five years and such reduction shall have as a result the reduction of Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as provided hereinabove, the Buyers shall provide the Sellers with a third priority Preferred Mortgage over the Vessel, being subordinate to a first priority Preferred Mortgage over the Vessel in favour of FORTIS BANK (NEDERLAND) N.V. and a second priority Preferred Mortgage over the Vessel in favour of MAAS CAPITAL INVESTMENTS B.V., as more particularly described in the Bareboat Charter. 18. Bareboat Charter The Sellers (as charterers) and the Buyers (as owners) have agreed to enter into a Bareboat Charterparty (the "Bareboat Charter") in respect of the Vessel in the form of the draft attached hereto. The parties agree that payment for and acceptance of the Vessel by the Buyers under this Agreement is subject to the simultaneous delivery to and acceptance of the Vessel by the Sellers as charterers under the Bareboat Charter. 19. Bunkers and Lubricants Remaining bunkers and lubricating oils on board the Vessel at the time of delivery hereunder shall be and remain the property of the Sellers as bareboat charterers. 20. Sub-Charter The Vessel is currently chartered to Mansel Oil Ltd. of Bermuda under a "Shelltime 4" time charterparty dated 9 June 2004. 21. Documentation In exchange for payment of the Cash Part of the Purchase Price, the Sellers shall furnish the Buyers with the following original (unless otherwise stated) delivery documents: a) Six (6) legal Bills of Sale (four (4) original and two (2) certified copies) transferring title of ownership to the vessel from the Sellers to the Buyers, free of all encumbrances, mortgages, maritime liens, claims, taxes and any other debts whatsoever, legalised; b) Minutes of a Joint Meeting of the Board of Directors and of the Shareholders (represented by proxy) of the Sellers authorising/approving the Memorandum of Agreement and all the other terms of the sale of the vessel to the Buyers, as well as the Bareboat Charter and all documents to be executed thereunder and hereunder, authorising the issuance of the Power of Attorney per (d) herebelow and empowering a person or persons to sign/execute all documents necessary for the sale (including without limitation the Bill of Sale) and the chartering of the Vessel under the Bareboat Charter. Such Minutes to be signed by all the Directors of the Sellers and by the Shareholders' proxy and all their signatures to be legalised; c) Power of Attorney in- favour of the signatory(ies) of the Bill of Sale and of all other documents required for the sale and delivery of the Vessel to the Buyers as well as of the Bareboat Charter and all documents to be executed thereunder and hereunder, legalised; d) Copies of the up-to-date Articles of Incorporation, By-Laws, Transfer of Subscription and all organisational Meetings evidencing the Sellers' current Directors per (b) above, certified as true by a Director of the Sellers or their lawyer, e) Certificate of Incumbency issued by the Sellers' Secretary, stating the Directors of the Sellers to match those per (b) above legalised; f) Certificate of Good Standing of the Sellers, issued by the competent Liberian authority, dated not more than 20 days prior to delivery; g) Should any Director or Shareholder of the Sellers be a corporate entity, duly executed proxy in favour of the person representing same duly certified as a true copy by the Seller's lawyers; h) Certificate of permission for transfer of ownership of the vessel to the Buyers confirming also that there are no outstanding fees, taxes and charges in respect of the Vessel towards Liberian authorities issued by Liberian Deputy Commissioner for Maritime Affairs and dated not more than 20 days prior to delivery; i) Certificate dated the date of delivery of the vessel to the Buyers and issued by a Liberian Deputy Commissioner for Maritime Affairs showing the vessel registered in the ownership of the Sellers free from any registered encumbrances and mortgages; j) Letter signed by a duly authorised attorney of the Sellers, confirming and warranting that, to the best of Sellers' knowledge, the Vessel is not blacklisted or boycotted by any state, country, trade or organization or the United Nations. k) Class Maintenance Certificate issued by the vessel's Classification Society confirming that the vessel maintains her Class without any condition/ recommendation, dated not more than 3. running. days prior to the date of delivery of the vessel to the-Buyers; l) Certified copy of the Certificate of Registry and original International Tonnage Measurement Certificate of the vessel; m) Without prejudice to paragraph (m) hereinabove, the Sellers shall arrange for the Vessel's Classification Society to forward to LISCR, Virginia, USA the following: i) Certificate of Confirmation of Class dated not more than ten (10) running days prior to the date of delivery; and ii) A Statement or Affidavit regarding status of class, statutory certification and seaworthiness of the vessel (which should reach the Liberian authorities at least ten (10) days prior to the date of delivery); n) The last Special Survey Report and copies of the existing statutory certificates; o) The Vessel's CSR together with notification to the Liberian Registry concerning the transfer of ownership; p) Copies of DOC, SMC, ISSC and SSP and any other documents which may be required by the Liberian Registry for the purpose of registering the Buyers' title thereto; q) The Bareboat Charter duty executed; r) The Management Agreements governing the technical and the commercial management of the Vessel upon delivery thereof to the Sellers under the Bareboat Charter, duly executed by the managers; s) A guarantee agreement (the "Charter Guarantee") by TOP TANKERS INC. of the Marshall Islands (the "Charter Guarantor"), guaranteeing as prime obligor and not as surety only, all the obligations of the Sellers as charterers under the Bareboat Charter and being otherwise in form and terms acceptable to the Buyers; t) Minutes of a Meeting of the Board of Directors of the Charter Guarantor authorising the execution of the Charter Guarantee and all documents to be executed thereunder, authorising the issuance of the Power of Attorney per (w) herebelow and empowering a person or persons to sign/execute all relevant documents. Such Minutes to be signed by all the Directors of the Charter Guarantor and all their signatures to be legalised; u) Power of Attorney in favour of the signatory(ies) of the Charter Guarantee and of all other documents to be executed thereunder, legalised; v) Copies of the up-to-date Articles of Incorporation and By-Laws of the Charter Guarantor, certified as true by a Director thereof or their lawyer; w) Certificate of Incumbency issued by the Charter Guarantor's Secretary, stating the Directors of the Charter Guarantor to match those per (v) above legalised; x) Certificate of Good Standing of the Charter Guarantor, issued by the competent Marshall Islands authority and dated not more than 20 days prior to delivery; y) The Collateral Guarantees, the assignment of sub-charters and all other security documents as provided in Clause 32 of the Bareboat Charter; z) A joint Protocol of Delivery and Acceptance under this Agreement as well as under the Bareboat Charter duly signed by the respective parties. aa) The inventory list referred into Clause 9 of the Bareboat Charter in form and substance acceptable to the Buyers. bb) The letter referred into Clause 11. All documents Should be in original form unless otherwise stated hereinabove and should be in the English language or accompanied by an official translation into English. Sellers to provide Buyers with drafts of items a, b, c, e, g, j, t, u, w, z and bb for Buyers' approval prior to execution at least three (3) days prior to delivery and with copies of all documents duly executed and legalized (where appropriate) not later than the date of tendering the final Notice of Readiness, with the exception of items i, q, r, s, y and z which will be produced on the date of delivery. When a document is required to be legalized, the document may be legalized either by a Liberian Consul (when related to the Sellers) or by a Marshall Islands Consul or Special agent (when related to the Charter Guarantor) or by way of notarization/apostille. 22. Buyers' documents The Buyers shall furnish the Sellers with the following documents on the date of delivery: a) Minutes of a Meeting of the Board of Directors of the Buyers authorising/approving the Memorandum of Agreement and all the other terms of the purchase of the vessel from the Sellers, the Bareboat Charter and the Third priority preferred mortgage over the Vessel to be granted by the Buyers in favour of the Sellers as security for the Sellers' Credit, authorising the issuance of the Power of Attorney empowering a person or persons to sign/execute all necessary documents. Such Minutes to be legalised by a Cyprus Certifying Officer; b) Original Power of Attorney to Buyers' representatives in relation to the above mentioned transactions, legalized by a Cyprus Certifying Officer; c) Copy of the Buyers' Articles of Incorporation, certified as true by a Director of the Buyers or the Buyers' lawyer. d) Certificate of Incumbency issued by the Buyers' Secretary stating the Directors of the Buyers. 23. Confidentiality This Agreement shall be kept strictly private and confidential. THE SELLERS THE BUYERS /s/ Andreas Louka /s/ Alexandra Tatagia - -------------------- ----------------------- Andreas Louka Alexandra Tatagia EX-4.41 38 d759408_ex4-41.txt Exhibit 4.41 BIMCO STANDARD BAREBOAT CHARTER CODE NAME: "BARECON 2001 1. Shipbroker Not applicable 2. Place and date Piraeus, 14th March 2006 3. Owners/Place of business (Cl. 1) TUCKER NAVIGATION CO. of Liberia 4. Bareboat Charterers/Place of business FALAKRO SHIPPING COMPANY LIMITED of Liberia 5. Vessel's name, call sign and lag (Cl. 1 and 3) M/T "DOUBTLESS", ELNJ4, Liberia 6. Type of Vessel Motor Tanker 7. GT/NT 28223/13568 8. When/Where built 1991-Halla Engineering & Heavy Industries Co., Ltd., Inchon, Korea 9. Total DWT (abt.) In metric tons on summer freeboard 47046 10. Classification society (C1. 3) Det Norske Veritas 11. Date of last special survey by the Vessel's classification society October 2001 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) Worldwide within IWL 14. Time for delivery (Cl. 4) See Clause 4 15. Cancelling date (Cl. 5) 30th March 2006 16. Port or Place of redelivery (Cl. 15) EuroMed, Gibraltar/Skaw range, Americas excluding USA, AG/Japan range, in Charterers' option but in any event within IWL 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Minimum six (6) months without extensions 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) Worldwide trading, but always within the Institute Warranty Limit (IWL) 21. Charter period (Cl. 2) Five (5) years with Owners' option to extend this period by three (3) months in accordance with Clause 32B 22. Charter hire (Cl. 11) USD 396,000 per month 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV 25. Currency and method of payment (Cl. 11) United States Dollars (USD) in same day funds by SWIFT or by other tested key electronic money transfer 26. Place of payment; also slate beneficiary and bank account (Cl. 11) Rotterdam, The Netherlands Owners' bank account nr. 24.07.56.169 with FORTIS BANK (NEDERLAND) N.V. 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 32A and 22(b) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) First Quadripartite Agreement and First Mortgage in favour of the First Mortgagee. Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee. Third priority mortgage in favour of Charterers as security for the Seller's Credit. 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Clause 14 does not apply. As regards the insured amount for Clause 13(f) purposes, see Clause 34 30. Additional insurance cover, if any, for Owners' account limited to (CI, 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, CI. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in CI. 3) Not applicable 33. Brokerage commission and to whom payable (Cl. 14(g)) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) Three (3) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) Not applicable 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) Not applicable 38. Name and place of Builders (only to be filled in if PART III applies) Not applicable 39. Vessel's Yard Building No. (only to be filled in if PART III applies) Not applicable 40. Date of Building Contract (only to be filled in if PART III applies) Not applicable 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) Not applicable b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) Not applicable 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) Not applicable 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) Not applicable 45. Country of the Underlying Registry (only to be filled in if PART V applies) Not applicable 46. Number of additional clauses covering special provisions, if agreed) Clauses number 32, 33 and 34. PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Alexandra Tatagia /s/ Andreas Louka - ------------------------ ------------------------ Alexandra Tatagia Andreas Louka Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terns shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified In Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated In Boxes 6 to 12. See also Clause 33. 2. Charter Period In consideration of the hire detailed in BK22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated In Box 37) DELETED TEXT (a) The Vessel shall be delivered under this Charter by the Owners to the Charterers on an "as is-where is" basis (and, in any event, as delivered under the MOA as defined in Clause 33 by the Charterers as sellers to the Owners as buyers) and without any warranty whatsoever by the Owners. Owners shall also not be liable for any latent defects. (b) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall AN be made simultaneously with the delivery under the MOA. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) This Charter shall be cancelled in the event the MOA Is cancelled. Any extension of the cancelling date of the 140A shall, unless otherwise specifically agreed, constitute a similar extension of the cancelling date of this Charter. (b) DELETED TEXT Cancellation under this Clause 5 shall be without prejudice to any claim a party hereto may otherwise have on the other party under this Charter. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits Indicated In Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the specific consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which Is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter ft is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. Always provided that nothing permitted under this Clause shall in any way violate the terms of the Financial Instruments, as same are defined in Clause 33. 7. Surveys on Delivery and Redelivery (not applicable when Pad ill applies, as indicated in Box 37) The Owners and the Charterers shall each appoint surveyors for the purpose of determining and agreeing In writing the condition of the Vessel at the time of redelivery hereunder. The Charterers shall bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such Inspection or survey shall be paid by the Owners unless the Vessel Is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked her in accordance with Clause 10(0). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided It does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners to inspect the Vessel's log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. All the above are without prejudice to the rights of Inspection which the Mortgagees (as defined in Clause 33) have under the relevant terms of the Financial Instruments; the Charterers shall at all times allow the respective Mortgagee to exercise same. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay only for all bunkers and lubricating oils, in the said Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. No payment shall be made by the Owners on redelivery for provisions, paints, ropes, spare parts, etc.; they shall all become Owners' property on redelivery without any payment. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for ail permissible purposes of the Charterers and under their complete control in every respect, always subject to the terms and conditions of this Charter. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and Spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, at their own expense, they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - in the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charterers' loss of time) more than the percentage stated in Box 23, or if pox 23 is left blank, 5 per cent: of the Vessel's insurance value as stated in pox 29, then the extent, if any, to which the rate of hire shall be varied and the ratio in which the cost of compliance shall be shared between the parties concerned in order to achieve a reasonable distribution thereof as between the Owners and the Charterers having regard, inter alia, to the length of the period remaining under this Charter shall, in the absence of agreement, be referred to the dispute resolution method agreed in Clause 30. In any event the Charterers are obliged to redeliver the Vessel in full compliance with all the requirements and regulations of the SOLAS and/or IMO for worldwide trading applicable or provided for at the time of redelivery, including also any U.S. Coast Guard requirements for the trading of the Vessel in U.S.A. territories. (iii) Financial Security - The Charterers shall maintain financial security or responsibility In respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall fully indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever Incidental to their use and operation of the Vessel under this Charter, including any foreign general municipality and/or state taxes. However the Owners shall pay for the Vessel's annual tonnage taxes due to the flag State. The Master, officers and crew of the Vessel she" be the smarts of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners, and shall in any event be promptly and fully paid by the Charterers, Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's Rag or any other applicable law. (c) The Charterers shall keep the Owners and the Mortgagee advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vassal in their own colours, install and display their funnel insignia and fly their own house Rag. The Charterers shall also have the liberty, however always with the Owners' prior consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period, if this becomes necessary for the proper trading of the Vessel; however in any such case the Charterers shall fully cover all the expenses relevant to such change including, but without limitation, the financial, legal and other costs relevant to the registration of such changes and the drafting, execution and/or registration of any documentation relevant to the Financial Instruments and/or to any other transactions required by the Mortgagees In view of any such change. Provided always that no such change of name or flag shall be allowed without the prior written consent of the Mortgagees -Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii) the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, If the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit, Equipment and Appliances - The Charterers shall have the use of all outfit, equipment. and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at the time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, thirty six (36) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management - The commercial, technical and/or operational management of the Vessel shall be carried out during the Charter Period by TOP TANKERS MANAGEMENT INC. or any other first class company acceptable to the Owners and the Mortgagees. Such management to be cost free for the Owners, who shall not be liable to any extent by reason of having approved such managers. In addition such approval by the Owners shall in no way constitute any limitation, discharge or waiver of any of Charterers' obligations or liabilities under and pursuant to this Charter. (i) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organization and any applicable law. (j) Financial Statements - The Charterers shall submit to the Owners and the Mortgagees their audited annual accounts as well as those of the Charter Guarantor (as the latter Is defined in Clause 33), within 180 days of each year end and semi-annual management accounts within 90 days of the half-year end. (k) Survey Reports - The Charterers shall regularly supply the Owners with the Classification survey reports, including but not limited the annual survey and follow up reports, all showing, among others, that any recommendation has been promptly and timely cleared at the Charterers' time and expense. The Charterers undertake to keep the condition of the Vessel and all her certificates In the best possible condition and standards for a vessel of the type and age of the Vessel and in any event to maintain the Vessel always In full compliance with the highest/strictest requirements of the Vessel's Classification Society, her flag State and all other applicable rules and/or requirements throughout the Charter Period. Without prejudice to the generality of the foregoing the coatings of the ballast tanks of the Vessel must be maintained by the Charterers in accordance with the Vessel's highest/strictest Classification standards throughout the duration of the Charter Period inclusive of the time of redelivery. Without prejudice to the above and notwithstanding anything to the contrary herein, the Charterers shall, not later than her next special survey, at their own time and expense upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest Classification standards and described by the latter as being In "good" condition. (l) Reporting and Owners' Representative - Throughout the duration of this Charter the Charterers shall keep the Owners closely informed about the Vessel's position and itinerary as well as the cargo carded on board and the Vessel's schedule, by providing such information in writing every fifteen (15) running days. The Owners shall have the right to place one representative on board the Vessel who will travel with the Vessel and have free access to communicate with the Owners. The latter shall pay for the relevant communication expenses but will not be charged for the victualling of their representative which shall be provided without charge. The representative shall not have the right to interfere with the operation of the Vessel, but shall have free access to all parts thereof and to all Vessel's log books. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter In respect of which time shall be of the essence. (b) The Charterers shall pay to the Owners for the hire of the Vessel on a monthly basis a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in Box 26. Hire shall always be punctually paid free and clear of any right of set-off, discount, reduction or delay whatsoever. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, hire shall be fully paid by the Charterers to the Owners as provided in Clause 32E hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months Interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, Increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately irrespective of whether the Owners have submitted their relevant interest invoice to the Charterers. (h) If at any time the Charterers are required to make any deduction or withholding in respect of any kind of taxes from any payment due under this Charter for the account of the Owners, the sum due from the Charterers In respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Owners receive on the due date for such payment (and retain, free from any liability In respect of such deduction or withholding), a net sum equal to the sum which they would have received had no such reduction or withholding been required to be made and the Charterers shall fully indemnify the Owners against any losses or costs incurred by them by reason of any failure of the Charterers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment The Charterers shall promptly deliver to the Owners any receipts, certificates or other proof evidencing the amounts (if any) paid or payable In respect of any deduction or withholding as aforesaid. 12. Mortgages (only to apply if Box 28 has been appropriately filled in) (a) DELETED TEXT (b) The Vessel chartered under this Charter is subject to the Financial instruments and the mortgages, as same appear in Box 28. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instruments or as may be directed from time to lime during the currency of the Charter by the Mortgagee or any of them in conformity with the Financial Instruments. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial instruments and agree to acknowledge this In writing in any form that may be required by the Mortgagee. * (Optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) Throughout the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel. including maintaining financial security In accordance with sub-clause 10(a)(iii)) with first class underwriters and P&I Clubs and in such form as the Owners shall In writing approve, which approval shall not be un-reasonably withheld. The Charterers shall also at their expense take out any other Insurance which the Mortgagees may reasonably require. All such Insurances shall be arranged by the Charterers to protect the Interests of both the Owners and the Charterers, and the Charterers shall be at liberty to protect under such insurances the interest of any managers they may appropriately appoint. The relevant insurance policies shall cover the Owners and the Charterers according to their respective interests. Upon the request of a Mortgagee, the Charterers shall arrange that such Mortgagee is named as a co-assured in any of the above insurances that the said Mortgagee has to be named as such. In addition, throughout the Charter Period, the Charterers shall pay to the First Mortgagee and the Second Mortgagee the cost (in the amount to be conclusively certified by the First Mortgagee and the Second Mortgagee in writing) of any mortgagee's interest insurance-Including mortgagee's additional perils (all P81 risks) coverage-which the Mortgagees or either of them may from time to time effect in respect of the Vessel upon such terms and in such amounts as the Mortgagees shall deem desirable. The Mortgagees shall have the right to enforce the benefit of this Clause by taking direct action against the Charterers in seeking to get paid or to recover the payment of any monies payable to them hereunder. Subject to the provisions of the Financial Instruments and the approval of the Owners and the insurers, the Charterers shall effect all Insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for any repairs, whether under the provisions of this sub-clause 13(a) or otherwise howsoever including any deviation, shall be for the Charterers' account. (b) DELETED TEXT (c) The Charterers shall upon the request of the Owners, provide Information and promptly execute such documents as may be required to enable the Owners to comply with the Insurance provisions of the Financial Instruments. (d) Subject to the provisions of the Financial Instruments should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such toss shall be paid to the First Mortgagees or, as the case may be, the Second Mortgagees who shall distribute the moneys in accordance with the relevant Financial Instruments. The Charterers undertake to notify the Owners and the Mortgagee of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and of all other occurrences as required under the Financial instruments. (e) Subject to the Financial Instruments, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to Insurers and claim a constructive total loss. (f) For the purpose of the insurance coverage of each insurance the insured amount shall be the sum indicated in Clause 34. 14. DELETED TEXT 15. Redelivery At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a freely accessible, safe and Ice-free port or place as indicated In Box 16 in such ready-safe berth or anchorage as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of a sale of the Vessel In accordance with Clause 22 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within ;the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent. or to the market rate, whichever is the higher, for the number of days by which the Charter Period or the date of sate is exceeded. In the latter case the Charterers shall also be liable to reimburse the Owners any further damages and/or losses which the latter may suffer as a result thereof. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 112, the Vessel shall be redelivered to the Owners In the same or as good structure, state, condition and class as that in which she was delivered. in any event tree of any and all Class conditions and/or recommendations, fair wear and tear not affecting class excepted. On redelivery the Vessel shall have been dry-docked as per Class requirements or as otherwise may be appropriate or necessary. The Vessel upon redelivery shall have all her survey cycles up to date and all her trading, national, international and class certificates clean, valid and unextended for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a-notices reading as follows: (a) "This Vessel is the property of (name of Owners). it is under charter to IDI SHIPPING COMPANY LIMITED of Liberia and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." (b) "NOTICE OF MORTGAGE This Vessel Is subject to a first priority mortgage and deed of covenant in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012AE, Rotterdam, the Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of this Vessel has any right, power or authority to create, Incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". (c) "NOTICE OF SECOND MORTGAGE This Vessel is subject to a second priority mortgage and deed of covenant in favour of MAAS CAPITAL INVESTMENTS B.V. of Ceasing& 93, 3012AE, Rotterdam, The Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of the Vessel has any right, power or authority to create, Incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". Furthermore, the Charterers shall throughout the duration of this Charter procure that all their orders for any kinds of supplies (including but not limited to bunkers and lames) for the Vessel are appropriately marked so as to warn all suppliers in advance that such supplies are exclusively provided to and payable by the Charterers, the suppliers not having any right of lien or suit against the Vessel and/or the Owners. All delivery receipts for such supplies shall also be appropriately marked by the Charterers before the supplies are delivered to the Vessel. 17. Indemnity (a) The Charterers shall fully indemnify the Owners, the Mortgagees and their respective successors, assigns, directors, shareholders, officers, servants and/or agents (collectively "the Indemnified Parties") from and against any loss, damage, claim, cost and/-or expense Incurred by them or any of them-Owners arising out of or in relation to the operation of the Vessel by the Charterers (including but without limitation, costs of operating and maintaining the Vessel, environmental claim or any claim based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of or during her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel Is released, Including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to fully indemnify the Owners the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims against-for which the Owners are exclusively liable hereunder, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, Including the provision of bail. In such circumstances the Owners shall fully Indemnify the Charterers against any toss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon ail cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, provided however that any such liens will be subordinate to any security interest the Mortgagees may have over the same property. 19. Salvage At salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be home by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall fully indemnify the Owners or any other Indemnified Party against any sums whatsoever which the Owners or any other indemnified Party shall-may become liable to pay and shall-may pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners and the Mortgagees, in their absolute discretion and subject to such terms and conditions as the Owners and the Mortgagees shall approve. (b) The Owners may sell the Vessel during the currency of this Charter subject to the buyer accepting an assignment of this Charter or entering into a reasonable novation agreement, and subject to any approvals required by the Mortgagees pursuant to the Financial Instruments. In case of such sale the Charterers shall be obliged to delete the mortgage in their favour stated In Box 28 and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,420,000. 23. Contracts of Carriage (a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause Incorporating any legislation relating to carrier's liability for cargo Compulsorily applicable in the trade; If no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. (b) DELETED TEXT * Delete as applicable. 24. DELETED TEXT 25. Requisition/Acquisition (a) Without prejudice to Clause 32E in the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not N be for an Indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) Without prejudice to Clause 32E in the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition kidlike by any governmental or other competent authority (hereinafter referred to as (degree)Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire until the time when the Charter would have been terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war. civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or . Imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the express written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to immediately leave such area. (c) The Vessel shall not load contraband cargo, nor shall pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, nor shall proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks Insurance, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel Is within, or is due to enter and remain within, any area or areas which are specified by such Insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be promptly paid by the Charterers to the as required by the respective insurers. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes. sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to Issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) Without prejudice to Clause 32E in any and all events of outbreak of war (whether there be a declaration of war or not) the stipulated hire shall continue to be paid in accordance with Clause 11. 27. DELETED TEXT 28. Termination (a) Charterers' Default Subject to the Financial Instruments, Me Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there Is a failure to Make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers'- bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of. (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause If the Charterers fall to comply with such notice: (iii) the Charterers fat to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (iv) the Charter Guarantor (as defined in Clause 33) breaches or fails to meet any of the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement or Clause 10 0 the Charter Guarantee (as same is defined In Clause 32A(a). (b) Owners' Default If the Owners shall by any act or omission be in breath of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breath continues for a period of forty five (45) naming days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel Without prejudice to Clauses 11(e) and 32E, Mils Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be Deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it Is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Mortgagees' prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of: (i) an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver Is appointed, or if ft suspends payment, Ceases to carry on business or makes any special arrangement or composition with its creditors , or (ii) the Charter Guarantor, as defined in Clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 211. the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at any other port or place convenient to thorn without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29, the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the lamination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. AU arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *) (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or In connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1896 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other patty appoints its own arbitrator and gives notice that it has done so within the 14 days specified. lithe other party does not appoint its own arbitrator and give notice that ft has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as If he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted In accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (b) DELETED TEXT (c) DELETED TEXT (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator MI be appointed promptly by the Arbitration Tribunal ("the Tribunal, or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, In the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shah continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred In the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in ail cases. * Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shell be as stated in Boxes 3 and 4 respectively. DELETED TEXT Continuation of Part II 32. Special Provisions A. Additional Securities a. Charter Guarantee The Charterers shall procure and ensure that the Charter Guarantor, shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees and to include the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement. This guarantee shall remain in place throughout the whole duration of this Charter, even in case of the sale of the Vessel under Clause 22(b) hereof. b. Collateral Guarantees Without prejudice to the provisions of Clause 32A(a) hereinabove and in addition to the relevant security provided thereby, the Charterers shall procure that the charterers of the m/ts "FAITHFUL", "SPOTLESS" and "VANGUARD" ("the Collateral Guarantors") shall unconditionally and irrevocably guarantee on a joint and several basis the performance of the Charterers under this Charter as primary obligors and not merely as surety, the relevant guarantee agreements to be in form and substance acceptable to the Owners and the Mortgagees. In addition the Charterers hereby undertake to unconditionally and irrevocably guarantee on a joint and several basis with the Collateral Guarantors the performance of each respective charter party of the m/ts "FAITHFUL", "SPOTLESS" and "VANGUARD" by the respective charterer, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees. The guarantees provided in this sub-Clause 32A(b) shall not be assignable by the Owners to the buyer of the Vessel under Clause 22(b) hereof. For the avoidance of any doubt all the securities provided in this Clause 32A shall be on a joint and several basis. B. Extension of the Charter Period At the request of the Owners which must be notified to the Charterers not later than three (3) months before the fifth anniversary of the date of delivery of the Vessel to the Charterers under this Charter and for the purpose of assisting the Owners to sell the Vessel, the Charter Period shall be extended for a period not longer than three (3) months at the option of the Owners. In such case the hire throughout such 3-month extended period shall be USD 5,000 per day. However in case the redelivery of the Vessel would have in any event delayed as a result of the Vessel not having completed a voyage, the hire shall be until the completion of such voyage at the rate provided in Clause 15 whilst the three months period provided under this sub-Clause 32B shall commence after the termination of such voyage. For any period of delay in the redelivery of the Vessel following the lapse of the said 3-month period extension, hire shall be payable in accordance with Clause 15. The Charterers shall make their best efforts to assist the Owners in selling the Vessel if and when the Owners require them to provide such assistance. C. Assignment of Sub-Charters The sub-charters of the Vessel during the Charter Period as well as all hire and freight payable to the Charterers thereunder shall be assigned to the Owners and the Mortgagees as provided by the Financial Instruments. D. Charterers' Compliance with the Financial Instruments The Charterers shall timely and promptly comply with all the terms and conditions of the Financial Instruments and/or as may be required by the Mortgagees by virtue thereof. E. "Hell and Highwater" Clause This Charter is a "hell and highwater" bareboat charter and the Charterers' obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character, including (i) any setoff, counterclaim, recoupment, defence or other right which the Charterers or any other person may have against the-Owners or any other person for any reason whatsoever, including any default by the Owners or any other person in its respective obligations hereunder or under any other agreement, (ii) any unavailability of the Vessel, after its delivery and acceptance by the Charterers hereunder, for any reason, including any lack or invalidity of title or any other defect in the title, seaworthiness, condition, design, operation or fitness for use of the Vessel, or the ineligibility of the Vessel for documentation or for a particular trade, (iii) any failure or delay on the part of the Owners or any other person, whether with or without fault on its part, in performing or complying with any of the terms or covenants hereunder, or any other agreement, (iv) any damage to the Vessel or interruption or cessation in the use or possession thereof by the Charterers or any subcharterer for any reason whatsoever and of whatever duration including an actual, constructive, compromised or arranged total loss or requisition of title, (v) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding by or against the Owners, the Charterers, any subcharterer or any other person, (vi) any breach of any representation or warranty of, or any act or omission of, the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers, (vii) any breach of any representation or warranty of, or any act or omission of the Owners under, any agreement at any time existing between the Owners and the Charterers and/or any subcharterer, (viii) any deprivation of use of the Vessel by reason of any act or omission of the Owners, (ix) any claims as a result of any other business dealings by the Owners, the Charterers, any subcharterer or any other person, (x) the requisitioning, seizure or other taking of title to or use of the Vessel by any governmental or other competent authority or otherwise whether or not by reason of any act or omission of the Owners, the Charterers, or any subcharterer, or any other deprivation or limitation of use of the Vessel in any respect or for any length of time, whether or not resulting from accident and whether or not without fault on the part of the Charterers or any subcharterer, (xi) any embargo on the shipment of any products or any prohibition against the loading or discharging of vessels containing the same, (xii) the interference with or prohibition of the Charterers' or any subcharterer's use of the Vessel, (xiii) the invalidity or unenforceability or lack of due authorization or other infirmity of this Charter or any other subcharter, (xiv) the lack of right, power or authority of the Owners to enter into this Charter, (xv) any ineligibility of the Vessel for any particular trade or activity, whether due to any failure of the Owners, the Charterers, any subcharterer or any other person to comply with any applicable law or otherwise, (xvi) any event of force majeure or any frustration, (xvii) any applicable law or (xviii) any war or any other event that automatically or by election cancels any available insurance cover or (xix) for any other cause, circumstance or happening, whether similar or dissimilar to the foregoing, any present or future applicable law to the contrary notwithstanding. The Charterers hereby waive, to the extent permitted by applicable law, any and all rights which they may now have or which at any time hereafter may be conferred upon them, by statute or otherwise, to terminate, cancel, quit or surrender this Charter or to any abatement, suspension, deferment, return or reduction of hire except in accordance with the express terms hereof. If for any reason whatsoever this Charter shall be terminated in whole or in part by operation of law or otherwise as specifically provided herein, the Charterers nonetheless agree to pay to the Owners or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; each payment of hire made by. the. Charterers .shall be final, and the Charterers will not seek to recover all or any part of such payment from the Owners for any reason whatsoever, except for manifest error. 33. Definitions "Charter Guarantor" means Top Tankers Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960; "First Mortgagee" means Fortis Bank (NEDERLAND) N.V. of Coolsingel 93, 3012AE (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as any person that may replace the First Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Vessel to be executed by the Owners in favour of the First Mortgagee; "First Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the First Mortgagee; "MOA" means the Memorandum of Agreement dated 14.3.2006 and made between the Charterers, as sellers and the Owners, as buyers, pursuant to which the Owners have agreed to buy and the Charterers have agreed to sell the Vessel on the terms and conditions mentioned therein; "Second Mortgage" means the second preferred ship mortgage on the Vessel to be executed by the Owners in favour of the Second Mortgagee; "Second Mortgagee" means Maas Capital Investments B.V., a company incorporated under the laws of The Netherlands whose registered office is at Coolsingel 93, 3112AE, Rotterdam, The Netherlands and includes its successors in title, assignees or transferees; "Second Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the Second Mortgagee; "Sellers' Credit" means the amount of USD 2,420,000 as provided in Clause 17 of the MOA. "Financial Instrument" means: (a) in the case of the First Mortgagee, the First Quadrapartite Agreement, and the First Mortgage; or (b) in the case of the Second Mortgagee, the Second Quadrapartite Agreement and the Second Mortgage, and "Financial Instruments" means both of them; and "Mortgagees" means, together, the First Mortgagee and the Second Mortgagee. 34. Insured Amount [for the purposes of Clause 13(f)] For the purposes of Clause 13(0 and at any relevant time, the insured amount for the relevant insurances effected or, as the case may be, to be effected for the Vessel will be an amount in United States Dollars equal to the higher of (i) the market value of the Vessel at such relevant time (as such market value is determined by an independent firm of shipbrokers appointed by the Owners in their sole discretion) and (ii) the amount required under the relevant terms of either Financial Instrument, if any. Each valuation made for the purposes of this Box, shall be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the Vessel. The value of the Vessel determined in accordance with the provisions hereof shall be binding upon the parties hereto until such time as any further such valuation shall be obtained. EX-4.42 39 d759408_ex4-42.txt Exhibit 4.42 Private & Confidential Dated 15 March 2006 TUCKER NAVIGATION CO. as Owner FALAKRO SHIPPING COMPANY LIMITED as Charterer TOP TANKERS INC. as Charter Guarantor and FORTIS BANK (NEDERLAND) N.V. -------------------------------------------------- QUADRIPARTITE DEED relating to m.v. Doubtless -------------------------------------------------- NORTON ROSE Contents Clause Page 1 Definitions............................................................. 2 2 Representations and warranties.......................................... 7 3 Assignment..............................................................11 4 Owner's Assignment......................................................12 5 Continuing security and other matters...................................13 6 Charterer's undertakings................................................16 7 Charter Guarantor's undertakings........................................17 8 Covenants concerning insurance and operational matters..................22 9 Powers of Mortgagee to protect security and remedy defaults.............28 10 Powers of Mortgagee on Event of Default.................................29 11 Application of moneys...................................................30 12 Remedies cumulative and other provisions................................31 13 Costs and indemnity.....................................................32 14 Attorney................................................................32 15 Further assurance.......................................................33 16 Consent, Termination of Charter and Quiet Enjoyment.....................33 17 Continuation of Charter Period..........................................35 18 Notices.................................................................35 19 Counterparts............................................................36 20 Severability of provisions..............................................36 21 Law and jurisdiction....................................................36 Schedule 1 Forms of Loss Payable Clauses......................................38 Schedule 2 Forms of Notices of Assignment of Insurances.......................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) TUCKER NAVIGATION CO. a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Owner"); (2) FALAKRO SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Starcraft Marine Co., Kemp Maritime S.A. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, arranger, account bank, security agent and trustee and (4) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provide?" and together with the Agent (as defined in the Loan Agreement) and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 14 March 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 14 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Doubtless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount' means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account' means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default' means any Event of Default or any event or circumstance which with thE. giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Doubtless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated ice March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Doubtless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Faithful, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Owner pursuant to the Loan Agreement and/or the Master Swap Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. "Doubtless" registered as a Liberian ship under Official Number 9363 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuting representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and wa'ranfies in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner'* Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Doubtless Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any charige in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterers rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, cischarge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period:. 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Suhsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (k) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover aoy moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship 'or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Doubtless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterers risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port _ and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint') shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Toti. Loss or that the Charterer shall be permanently deprived of her use for any other reason prior tc. the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 6978 107 Attention: Legal Department (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be de.emed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1 K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [__] 2006, TUCKER NAVIGATION CO. of 80 Broad Street, Monrovia, Republic of Liberia (the "Owner") and by a Quadripartite Deed dated [__] 2006, FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingei 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Doubtless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which TUCKER NAVIGATION CO., of 80 Broad Street, Monrovia, Republic of Liberia (the "Owner") or FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) TUCKER NAVIGATION CO. (the "Owner") of 80 Broad Street, Monrovia, Republic of Liberia and FALAKRO SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia,o Republic of Liberia, the owners and demise charterers respectively of the motor vessel "Doubtless" HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ---------------------------------- Signed For and on behalf of TUCKER NAVIGATION CO. Dated [__] 2006 - ---------------------------------- Signed For and on behalf of FALAKRO SHIPPING COMPANY LIMITED Dated [__] 2006 EXECUTED as a DEED ) by Dimitri Glomelakis ) /s/ Dimitri Glomelakis for and on behalf of ) ---------------------------------- TUCKER NAVIGATION CO. ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ---------------------------------- FALAKRO SHIPPING COMPANY LIMITED ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ---------------------------------- TOP TANKERS INC. ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Helen Dawson ) /s/ Helen Dawson for and on behalf of ) ---------------------------------- FORTIS BANK (NEDERLAND) N.V. ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.43 40 d759408_ex4-43.txt Exhibit 4.43 Private & Confidential Dated 15 March 2006 TUCKER NAVIGATION CO. (1) as Owner FALAKRO SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor and MAAS CAPITAL INVESTMENTS B.V. (4) ----------------------------------------------- SECOND PRIORITY QUADRIPARTITE DEED relating to m.v. Doubtless ----------------------------------------------- Norton Rose CONTENTS Clause Page 1. Definitions................................................................2 2. Representations and warranties.............................................8 3. Assignment................................................................12 4. Owner's Assignment........................................................13 5. Continuing security and other matters.....................................14 6. Charterer's undertakings..................................................17 7. Charter Guarantor's undertakings..........................................18 8. Covenants concerning insurance and operational matters....................24 9. Powers of Mortgagee to protect security and remedy defaults...............31 10. Powers of Mortgagee on Event of Default...................................32 11. Application of moneys.....................................................33 12. Remedies cumulative and other provisions..................................34 13. Costs and indemnity.......................................................35 14. Attorney..................................................................35 15. Further assurance.........................................................36 16. Consent, Termination of Charter and Quiet Enjoyment.......................36 17. Continuation of Charter Period............................................38 18. Notices...................................................................38 19. Counterparts..............................................................39 20. Severability of provisions................................................39 21. Law and jurisdiction......................................................40 Schedule 1 Forms of Loss Payable Clauses......................................41 Schedule 2 Forms of Notices of Assignment of Insurances.......................42 THIS SECOND PRIORITY QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) TUCKER NAVIGATION CO. a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia (the "Owner"); (2) FALAKRO SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) MAAS CAPITAL INVESTMENTS B.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Starcraft Marine Co., Kemp Maritime S.A. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers") and (2) the Mortgagee as lender, the Mortgagee agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $10,000,000; (C) pursuant to the Loan Agreement there has been or will be executed by the Owner in favour of the Mortgagee a second preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (as such expression is defined in the Mortgage); (D) the security constituted by the Mortgage and this Deed is in all respects subject and subordinate to the rights of the First Mortgagee under the First Mortgage and the First Quadripartite Deed of Assignment (as those expressions are defined in the Mortgage); (E) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (F) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (G) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee under the Loan Agreement and the other Security Documents; and (H) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Doubtless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1. DEFINITIONS 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred Thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (E); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer' includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (F); "Charter Guarantor' includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default' means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "First Banks" means the banks and financial institutions whose names and addresses are set out in schedule 1 to the First Loan Agreement; "First General Assignment" means a first general assignment dated 15 March 2006 made between the Owner and the First Mortgagee whereby the Owner has assigned to the First Mortgagee the Earnings, the Insurances and any Requisition Compensation (each such term as defined therein) of the Ship; "First Loan" means the principal amount borrowed by the Borrowers from the First Banks under the First Loan Agreement or (as the context may require) the amount thereof at any time outstanding; "First Loan Agreement" means the loan agreement dated 14 March 2006 made between (1) the Borrowers, (2) Fortis Bank (Nederland) N.V. in its capacities as arranger, agent, swap provider and account bank, (3) the First Mortgagee and (4) the First Banks as lenders; "First Manager's Undertaking" means the manager's undertaking and first priority assignments executed (or as the context may require) to be executed by each Manager in favour of the Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Ship dated 14 March 2006 executed by the Owner in favour of the First Mortgagee; "First Mortgage Documents" means, together, the First Mortgage, the First General Assignment, the First Manager's Undertaking, the First Operating Account Pledge, the First Security Assignment, the First Quadripartite Deed and the First Retention Account Pledge; "First Mortgagee" means Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands; "First Operating Account Pledge" means the first priority pledge executed (or as the context may require) to be executed by, inter alios, the Owner in favour of the Mortgagee in respect of, inter alia, the Doubtless Operating Account; "First Quadripartite Deed" means the deed of assignment executed or (as the context may require) to be executed by the Owner and the Charterer in favour of the Mortgagee in such form as the Mortgagee shall approve; "First Retention Account Pledge" means the first priority pledge executed or (as the context may require) to be executed by the Borrowers in favour of the Mortgagee in respect of the Retention Account; "First Security Assignment" means the first priority charter assignment of the Faithful Charter Guarantee, the Spotless Charter Guarantee and the Vanguard Charter Guarantee and the Doubtless Time Charter Assignment, the Faithful Time Charter Assignment, the Spotless Time Charter Assignment and the Vanguard Time Charter Assignment executed (or as the context may require) to be executed by the Owner in favour of the Mortgagee; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Mortgagee pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Doubtless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Mortgage" means the first preferred mortgage mentioned in recital (C) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Doubtless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Faithful, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company' of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party' means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon and the moneys from time to time owing by the Owner pursuant to the Loan Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Doubtless registered as a Liberian ship under Official Number 9363 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2. REPRESENTATIONS AND WARRANTIES 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and, subject to the First Mortgage Documents, neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3. ASSIGNMENT 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness the Charterer with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall (subject to the First Quadripartite Deed of Assignment) be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall, subject to the First Quadripartite Deed of Assignment, be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall, subject to the First Quadripartite Deed of Assignment, be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4. OWNER'S ASSIGNMENT 4.1 By way of security for payment of the Outstanding Indebtedness the Owner with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Doubtless Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5. CONTINUING SECURITY AND OTHER MATTERS 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee any right or remedy of the Mortgagee or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee fully indemnified against any loss suffered by the Mortgagee as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee under the Loan Agreement, this Deed, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee may be exercised from time to time and as often as the Mortgagee may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness; or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incupacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6. CHARTERER'S UNDERTAKINGS The Charterer hereby covenants with the Mortgagee and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments save for the First Quadripartite Deed of Assignment, assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance (other than the First Mortgage Documents) over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7. CHARTER GUARANTOR'S UNDERTAKINGS 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8. COVENANTS CONCERNING INSURANCE AND OPERATIONAL MATTERS 8.1 Covenants The Charterer hereby covenants with the Mortgagee and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee (and permitted by the First Mortgagee), in the joint names of the Owner, the Mortgagee and the Charterer and, if so required by the First Mortgagee, in the joint names of the Owner, the Charterer, the Mortgagee and the First Mortgagee (but without liability on the part of the Mortgagee or the First Mortgage for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee in its sole discretion); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of (aa) the First Loan, (bb) the Loan and (cc) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to- any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time `o time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Doubtless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a second priority mortgage in favour of MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9. POWERS OF MORTGAGEE TO PROTECT SECURITY AND REMEDY DEFAULTS 9.1 Protective action The Mortgagee shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1 (but subject to the First Mortgage Documents): 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10. POWERS OF MORTGAGEE ON EVENT OF DEFAULT 10.1 Powers Upon the happening of any Event of Default, the Mortgagee shall (subject to the rights of the First Mortgagee under the First Mortgage Documents) become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11. APPLICATION OF MONEYS 11.1 Application All moneys received by the Mortgagee in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall (subject to the First Mortgage Documents): 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12. REMEDIES CUMULATIVE AND OTHER PROVISIONS 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13. COSTS AND INDEMNITY 13.1 Costs The Owner shall pay to the Mortgagee on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14. ATTORNEY 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15. FURTHER ASSURANCE The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16. CONSENT, TERMINATION OF CHARTER AND QUIET ENJOYMENT 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterers repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17. CONTINUATION OF CHARTER PERIOD The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18. NOTICES 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: +30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 697 8107 Attention: Legal Department (c) to the Mortgagee at: Maas Capital Investments B.V. R.01.1601 Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 5323 Attention: Mr. Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19. COUNTERPARTS This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20. SEVERABILITY OF PROVISIONS Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21. LAW AND JURISDICTION 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London, W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, TUCKER NAVIGATION CO. of 80 Broad Street, Monrovia, Liberia (the "Owner") and by a Quadripartite Deed dated [o] 2006, FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Liberia (the "Charterer") have each assigned (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) to MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Doubtless and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee or to its order. (2) Protection and indemnity Payment of any recovery which TUCKER NAVIGATION CO. of 80 Broad Street, Monrovia, Liberia (the "Owner") or FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Liberia (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall, subject to the prior rights of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands as first assignee thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) TUCKER NAVIGATION CO. (the "Owner") of 80 Broad Street, Monrovia, Liberia and FALAKRO SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia, Liberia the owners and demise charterers respectively of the motor vessel Doubtless HEREBY GIVE NOTICE that by a General Assignment dated [__] 2006 and entered into by the Owner (subject to the prior assignment dated [__] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with MAAS CAPITAL INVESTMENTS B.V. (the "Mortgagee") and by a Quadripartite Deed dated [__] 2006 and entered into by, inter alios, the Charterer and the Owner (subject to the prior assignment dated [__] to FORTIS BANK (NEDERLAND) N.V of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with the Mortgagee, there has been assigned by us to the Mortgagee as second mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ---------------------------------- Signed For and on behalf of TUCKER NAVIGATION CO. Dated [__] 2006 - ---------------------------------- Signed For and on behalf of FALAKRO SHIPPING COMPANY LIMITED Dated [__] 2006 EXECUTED as a DEED ) by Dimitri Glomelakis ) /s/ Dimitri Glomelakis for and on behalf of ) ----------------------------- TUCKER NAVIGATION CO. ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ----------------------------- FALAKRO SHIPPING COMPANY LIMITED ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ----------------------------- TOP TANKERS ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Helen Dawson ) /s/ Helen Dawson for and on behalf of ) ----------------------------- MAAS CAPITAL INVESTMENTS B.V. ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.44 41 d759408_ex4-44.txt Exhibit 4.44 TOP TANKERS INC Guarantee 14 March 2006 To: Tucker Navigation Co. of 80, Broad Street, Monrovia, Liberia (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Doubtless (the "Ship") to Falakro Shipping Company Limited (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly delivef to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 31 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which., the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph [10], be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to (i) Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties) and/or (ii) Maas Capital Investments B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands ("Maas"). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent and/or Maas of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully Andreas Louca EXECUTED as a DEED BY for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 8 March 2006 In the presence of: Witness: /s/ Helen Dawson Name: Helen Dawson Address: Occupation: Trainee Solicitor - Norton Rose EX-4.45 42 d759408_ex4-45.txt Exhibit 4.45 MEMORANDUM OF AGREEMENT Dated: 14/03/2006 PAGEON SHIPPING COMPANY LIMITED of Limassol, Cyprus Hereinafter called the Sellers, have agreed to sell, and COMOROS SHIPPING LIMITED of Nicosia, Cyprus Hereinafter called the Buyers, have agreed to buy Name: M.T. VANGUARD Classification Society/Class: DET NORSKE VERITAS Built: 1992 By: Halla Engineering & Heavy Ind. Co. Ltd., Inchon, Korea Flag: Cyprus Place of Registration: Limassol Call Sign:P30F4 Grt/Nrt: 28223/13568 Official Number: IMO 8913605 Hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase Price USD 26,100,000 (United States Dollars Twenty Six million One hundred thousand only), subject to the provisions of Clause 17. 2. Deposit Paragraphs deleted 3. Payment (See also Clause 17) The said Purchase Price less Sellers' Credit (as defined in Clause 17) shall be paid free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift: RBOSGB2L, Account Key: TOPTAN-USD1, Iban: GB49 RBOS 1663 0000 3119 64, Beneficiary: Top Tankers Inc., Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel atlin-Yosu, S. Korea on 12th and 13th February 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* Paragraphs deleted 4 a) and 4 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4 a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 2 days approximate notice of the estimated time of readiness for and of the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea. In the Seller's option. In case the Vessel be delivered with cargo on board the Sellers shall on delivery provide a confirmation from their P&I Club that the latter shall continue to cover the Vessel in every respect irrespective of the Vessel's transfer of ownership. Expected time of delivery: Between 15th March and 30th March 2006 Date of canceling (see Clauses 5 c), 6 b) (iii) and 14): 30th March 2006, in Buyers' option. c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option either cancelling this Agreement in accordance with Clause 14 within 2 Banking days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 Banking days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery whereafter this Agreement shall be null and void. 6. Drydocking/Divers Inspection a)**Paragraph deleted b)**Paragraph deleted c) Paragraph deleted 7. Spares/bunkers, etc. (See also Clause 19) The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): none. 8. Documentation (See also Clause 21) The place of closing: Piraeus, Greece a) - f) Paragraphs deleted At the time of delivery the Sellers shall hand to the Buyers copies of the classification certificate(s)as well as all other trading/national/international certificates and plans etc., which are on board the Vessel. Copies of other certificates which are on board the Vessel shall also be handed over to the Buyers. Copies of other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers will keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from charters other than as provided in Clause 20 (which the Sellers warrant will not affect the smooth delivery of the Vessel hereunder and/or under the Bareboat Charter referred into Clause 18), encumbrances, mortgages and maritime liens or any other debts and claims whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel and/or the Buyers which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration of the Buyers' title at the Vessel's Registry shall be for the Buyers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her present class fully maintained without condition/recommendation*, free of average and damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, clean, valid and unextended for a period of not less than 3 months from the time of delivery without condition/recommendation' by Class or the relevant authorities -at the time of delivery. In addition to the above and without prejudice thereto the Sellers hereby undertake to, at their own time and expense and not later than the Vessel's next special survey, upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest classification standards and be described by the Class as being in "good" condition. The Sellers shall provide on delivery a letter of undertaking to such effect. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Buyers shall be allowed to keep the name of the Vessel and any marking on the Vessel's funnel or hull, in general. 13. Buyers' default Should the Cash Part of the Purchase Price (as defined in Clause 17) not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, the Sellers shall be entitled to claim compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives Paragraph deleted 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1996 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. if two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. b)* Paragraph deleted c)* Paragraph deleted 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. 17. Sellers' Credit a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty Three million Four hundred Ninety thousand (US$23,490,000), (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million Six hundred Ten thousand (US$2,610,000) shall be credited (the "Sellers' Credit") and shall be payable in accordance with the terms of this Clause 17. b) Subject to the provisions of sub-paragraph 17(c) hereinbelow, the Sellers' Credit shall be payable to the Sellers in a lumpsum, free of interest, immediately upon the expiration of the Bareboat Charter (as defined in Clause 18) by effluxion of time or the sale of the Vessel as described in Clause 22(b) of the Bareboat Charter. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as "the Purchase Price Reduction Amount") which is equal to the lesser of (i) the Sellers' Credit and (ii) the total amount of hire that would have been paid to the Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration of five years and such reduction shall have as a result the reduction of Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as provided hereinabove, the Buyers shall provide the Sellers with a third priority Preferred Mortgage over the Vessel, being subordinate to a first priority Preferred Mortgage over the Vessel in favour of FORTIS BANK (NEDERLAND) N.V. and a second priority Preferred Mortgage over the Vessel in favour of MAAS CAPITAL INVESTMENTS B.V., as more particularly described in the Bareboat Charter. 18. Bareboat Charter The Sellers (as charterers) and the Buyers (as owners) have agreed to enter into a Bareboat Charterparty (the "Bareboat Charter") in respect of the Vessel in the form of the draft attached hereto. The parties agree that payment for and acceptance of the Vessel by the Buyers under this Agreement-is subject too the-simultaneous delivery to and acceptance of the Vessel by the Sellers as charterers under the Bareboat Charter. 19. Bunkers and Lubricants Remaining bunkers and lubricating oils on board the Vessel at the time of delivery hereunder shall be and remain the property of the Sellers as bareboat charterers. 20. Sub-Charter The Vessel is currently chartered to Mansel Oil Ltd. of Bermuda under a "Shelltime 4" time charterparty dated 9 June 2004. 21. Documentation In exchange for payment of the Cash Part of the Purchase Price, the Sellers shall furnish the Buyers with the following original (unless otherwise stated) delivery documents: a. Two (2) legal Bills of Sale transferring title of ownership to the vessel from the Sellers to the Buyers, free of all encumbrances, mortgages, maritime liens, claims, taxes and any other debts whatsoever, legalised; b. Minutes of a Joint Meeting of the Board of Directors and of the Shareholders (represented by proxy) of the Sellers authorising/approving the Memorandum of Agreement and all the other terms of the sale of the vessel to the Buyers, as well as the Bareboat Charter and all documents to be executed thereunder and hereunder, authorising the issuance of the Power of Attorney per (d) herebelow and empowering a person or persons to sign/execute all documents necessary for the sale (including without limitation the Bill of Sale) and the chartering of the Vessel under the Bareboat Charter. Such Minutes to be signed by all the Directors of the Sellers and by the Shareholders' proxy and all their signatures to be legalised; c. Power of Attorney- in favour of the signatory(ies) of the Bill of Sale and of all other documents required for the sale and delivery of the Vessel to the Buyers as well as of the Bareboat Charter and all documents to be executed thereunder and hereunder, legalised; d. Copies of the up-to-date Memorandum and Articles of Association of the Sellers, certified as true by a Director of the Sellers or their lawyer; e. Certificate of Incumbency issued by the Sellers' Secretary, stating the Directors of the Sellers to match those per (b) above legalised; f. Certificate of Good Standing of the Sellers, issued by the competent Cyprus authority, dated not more than 20 days prior to delivery; g. Should any Director or Shareholder of the Sellers be a corporate entity, duly executed proxy in favour of the person representing same duly certified as a true copy by the Seller's lawyers; h. Certificate as to the Directors, Shareholders and registered address of the Sellers' company issued by the Cyprus Companies' Registrar and dated not more than 20 days prior to delivery; i. Certificate dated the date of delivery of the vessel to the Buyers and issued by the Cyprus Ships' Registry showing the vessel registered in the ownership of the Sellers free from any registered encumbrances and mortgages; j. Letter signed by a duly authorised attorney of the Sellers, confirming and warranting that, to the best of Sellers' knowledge, the Vessel is not blacklisted or boycotted by any state, country, trade or organization or the United Nations. k. Class Maintenance Certificate issued by the vessel's Classification Society confirming that the vessel maintains her Class without any condition/ recommendation, dated not more than 3 running days prior to the date of delivery of the vessel to the Buyers; l. Certified copy of the Certificate of Registry and original, International Tonnage Measurement Certificate of the vessel; m. The letter referred into Clause 11. n. The last Special Survey Report and copies of the existing statutory certificates; o. The Vessel's CSR together with notification to the Cypriot Registry concerning the transfer of ownership; p. Copies of DOC, SMC, ISSC and SSP and any other documents which may be required by the Cypriot Registry for the purpose of registering the Buyers' title thereto; q. The Bareboat Charter duly executed; r. The Management Agreements governing the technical and the commercial management of the Vessel upon delivery thereof to the Sellers under the Bareboat Charter, duly executed by the managers; s. A guarantee agreement (the "Charter Guarantee") by TOP TANKERS INC. of the Marshall Islands (the "Charter Guarantor"), guaranteeing as prime obligor and not as surety only, all the obligations of the Sellers as charterers under the Bareboat Charter and being otherwise in form and terms acceptable to the Buyers; t. Minutes of a Meeting of the Board of Directors of the Charter Guarantor authorising the execution of the Charter Guarantee and all documents to be executed thereunder, authorising the issuance of the Power of Attorney per (w) herebelow and empowering a person or persons to sign/execute all relevant documents. Such Minutes to be signed by all the Directors of the Charter Guarantor and all their signatures to be legalised; u. Power of Attorney in favour of the signatory(ies) of the Charter Guarantee and of all other documents to be executed thereunder, legalised; v. Copies of the up-to-date Articles of Incorporation and By-Laws of the Charter Guarantor, certified as true by a Director thereof or their lawyer; w. Certificate of Incumbency issued by the Charter Guarantor's Secretary, stating the Directors of the Charter Guarantor to match those per (v) above legalised; x. Certificate of Good Standing of the Charter Guarantor, issued by the competent Marshall Islands authority and dated not more than 20 days prior to delivery; y. The Collateral Guarantees, the assignment of sub-charters and all other security documents as provided in Clause 32 of the Bareboat Charter; z. A joint Protocol of Delivery and Acceptance under this Agreement as well as under the Bareboat Charter duly signed by the respective parties. aa. The inventory list referred into Clause 9 of the Bareboat Charter in form and substance acceptable to the Buyers. All documents should be in original form unless otherwise stated hereinabove and should be in the English language or accompanied by an official translation into English. Sellers to provide Buyers with drafts of items a, b, c, e, g, j, m, t, u, w and z for Buyers' approval prior to execution at least three (3) days prior to delivery and with copies of all documents duly executed and legalized (where appropriate) not later than the date of tendering the final Notice of Readiness, with the exception of items i, q, r, s, y and z which will be produced on the date of delivery. When a document is required to be legalized, the document may be legalized either by a Cyprus Consul (when related to the Sellers) or by a Marshall Islands Consul or Special agent (when related to the Charter Guarantor) or by way of notarization/apostille. 22. Buyers' documents The Buyers shall furnish the Sellers with the following documents on the date of delivery: a. Minutes of a Meeting of the Board of Directors of the Buyers authorising/approving the Memorandum of Agreement and all the other terms of the purchase of the vessel from the Sellers, the Bareboat Charter and the Third priority preferred mortgage over the Vessel to be granted by the Buyers in favour of the Sellers as security for the Sellers' Credit, authorising the issuance of the Power of Attorney empowering a person or persons to sign/execute all necessary documents. Such Minutes to be legalised by a Cypriot Certifying Officer; b. Original Power of Attorney to Buyers' representatives in relation to the above mentioned transactions, legalized by a Cypriot Certifying Officer; c. Copy of the Buyers' Articles of Incorporation, certified as true by a Director of the Buyers or the Buyers' lawyer. d. Certificate of Incumbency issued by the Buyers' Secretary stating the Directors of the Buyers. 23. Confidentiality This Agreement shall be kept strictly private and confidential. THE SELLERS THE BUYERS /s/ Andria Uma /s/ Alexandra Tatagia - ----------------------------- --------------------------- Andria Uma Alexandra Tatagia Attorney-in-fact EX-4.46 43 d759408_ex4-46.txt Exhibit 4.46 1. Shipbroker Not applicable 2. Place and date Piraeus, 14th March 2006 3. Owners/Place of business (Cl. 1) COMOROS SHIPPING LIMITED of Cyprus 4. Bareboat Charterers/Place of business (Cl. 1) PAGEON SHIPPING COMPANY LIMITED of Cyprus 5. Vessel's name, call sign and flag (Cl. 1 and 3) M/T "VANGUARD", P30F4, Cyprus 6. Type of Vessel Motor Tanker 7. GT/NT 2822313568 8. When/Where built 1992 Halla Engineering & Heavy Industries Co., Ltd., Inchon, Korea 9. Total DWT (abt.) in metric tons on summer freeboard 47059 10. Classification Society (CI, 3) Det Norske Veritas 11. Date of last special survey by the Vessel's classification society February 2002 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. to Cl. 3) 13. Port or Place of delivery (Cl. 3) Worldwide within IWL 14. Time for delivery (Cl. 4) See Clause 4 15. Cancelling date (Cl. 5) 30th March 2006 16. Port or Place of redelivery (CI. 15) EuroMed, Gibraltar/Skew range, Americas excluding USA, AG/Japan range, in Charterers' option but in any event within IWL 17. No. of months' validity class certificates upon redelivery (Cl. 15) Minimum six (6) months without extensions 18. Running days' notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) Worldwide trading, but always within the Institute Warranty Limit (IWL) 21. Charter period (Cl. 2) Five (5) years with Owners' option to extend this period by three (3) months in accordance with Clause 328 22. Charter hire (Cl. 11) USD 396,000 per month 23. New class and other safety requirements (state percentage of Vessers insurance value acc. to Box 29)(Cl. 10(a)(ii)) 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV 25. Currency and method of payment (Cl. 11) United States Dollars (USD) in same day funds by SWIFT or by other tested key electronic money transfer 26. Place of payment also state beneficiary and bank account (CI, 11) Rotterdam, The Netherlands Owners' bank account nr. 24.07.56.207 with FORTIS BANK (NEDERLAND) N.V. 27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) See Clause 32A and 22(b) 28. Mortgage(s), if any (state whether 12(1). or Da applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) First Quadripartite Agreement and First Mortgage in favour of the First Mortgagee. Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee. Third priority mortgage in favour of Charterers as security for the Seller's Credit. 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 apples) Clause 14 does not apply. As regards the insured amount for Clause 13(f) purposes, see Clause 34 30. Additional insurance cover, if any, for Owners' account limited to (Cl. 13(b) or if applicable Cl. 14(o)) Not applicable 31. Additional insurance cover, If any, for Charterers' account limited to (Cl. 13(b) or if applicable Cl. 14(a)) Not applicable 32. Latent defects (only to be filled in If period other than stated in Cl. 3) Not applicable 33. Brokerage commission and to whom payable (Cl. 27) Not applicable 34. Grace period (stale number of dear banking days) (Cl. 28) Three (3) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30 (a) 36. War cancellation (indicate countries agreed) (Cl. 26(f)) Not applicable 37. Newbuildng Vessel (Indicate with 'yes' or 'no' whether PART III applies) (optional) Not applicable 38. Name and place of Builders (only to be filled in If PART III applies) Not applicable 39. Vessel's Yard Building No. (only to be filled in if PART III applies) Not applicable 40. Date of Building Contract (only to be filled in if PART III applies) Not applicable 41. Liquidated damages and costs shall accrue to (state party acc. to Cl 1) a) Not applicable b) c) 42. Hire/Purchase agreement (indicate with 'yes' or 'no' whether PART IV applies) (optional) Not applicable 43. Bareboat Charter Registry (indicate with "yes' or 'no' whether PART V applies) (optional) Not applicable 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) Not applicable 45. Country of the Underlying Registry (only to be filled In If PART V apples) Not applicable - 46. Number of additional dauses covering special provisions, if agreed Clauses number 32, 33 and 34. PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. in the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and la. If PART III and/or PART IV and/or PART V apply, It is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV nd/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Alexandra Tatagia /s/ Anthony Pan - -------------------------------- --------------------------------- Alexandra Tatagia Anthony Pan Attorney-in-fact Attorney-in-fact PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. See also Clause 33. 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in 13ox 21 ("The Charter Period"). 3. Delivery (not applicable when Part Ill applies, as indicated in Pox 37) (a) The Vessel shall be delivered under this Charter by the Owners to the Charterers on an "as is-where is" basis (and, in any event, as delivered under the MOA as defined in Clause 33 by the Charterers as sellers to the Owners as buyers) and without any warranty whatsoever by the Owners. Owners shall also not be liable for any latent defects. (b) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3. 4. Time for Delivery (not applicable when Part applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the MOA. 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) This Charter shall be cancelled in the event the MOA is cancelled.. Any extension of the cancelling date of the MOA shall, unless otherwise specifically agreed, constitute a similar extension of the cancelling date of this Charter. (b) Paragraph deleted (c) Cancellation under this Clause 5 shall be without prejudice to any claim a party hereto may otherwise have on the other party Owners-under this Charter. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the specific consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. Always provided that nothing permitted under this Clause shall in any way violate the terms of the Financial instruments, as same are defined in Clause 33. 7. Surveys on Delivery and Redelivery (not applicable when Part Ill applies, as indicated in Box 37) The Owners and the Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of redelivery hereunder. The Charterers shall bear all expenses of the Off-hire Survey including loss of time, if a the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf: (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel Is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked l4her in accordance with Clause 10(g). The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period. The Charterers shall also permit the Owners to inspect the Vessel's log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. All the above are without prejudice to the rights of inspection which the Mortgagees (as defined in Clause 33) have under the relevant terms of the Financial instruments; the Charterers shall at all Imes allow the respective Mortgagee to exercise same. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay only for all bunkers and lubricating oils, in the Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. No payment shall be made by the Owners on redelivery for provisions, paints, ropes, spare parts, etc.; they shall all become Owners' property on redelivery without any payment. 10. Maintenance and Operation (a) (i) Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all permissible purposes of the Charterers and under their complete control in every respect, always subject to the terms and conditions of this Charter. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and Spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, at their own expense, they shall at all times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 and maintain all other necessary certificates in force at aft times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charterers' loss of time) more than the percentage stated in Box 23, or if Box 23, is left blank, 5 per cent, of the Vessel's insurance value as stated in Box 29, then the extent, if any, to which the rate of hire shall be varied and the ratio in which the cost of compliance shall be shared between the parties concerned in order to achieve a reasonable distribution thereof as between the Owners and the Charterers having regard, inter alla, to the length of the period remaining under this Charter shall, in the absence of agreement, be referred to the dispute resolution method agreed in Clause 30. In any event the Charterers are obliged to redeliver the Vessel in full compliance with all the requirements and regulations of MT SOLAS and/or IMO for worldwide trading applicable or provided for at the time of redelivery, including also any U.S. Coast Guard requirements for the trading of the Vessel in U.S.A. territories. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, Including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall fully indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including any foreign general municipality and/or state taxes. However the Owners shall pay for the Vessel's annual tonnage taxes due to the flag State. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners, and shall in any event be promptly and fully paid by the Charterers. Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the Mortgagee advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, however always with the Owners' prior consent, which shall not be unreasonably withheld, to change the flag and/or the name of the Vessel during the Charter Period, if this becomes necessary for the proper trading of the Vessel; however in any such case the Charterers shall fully cover all the expenses relevant to such change including, but without limitation, the financial, legal and other costs relevant to the registration of such changes and the drafting, execution and/or registration of any documentation relevant to the Financial Instruments and/or to any other transactions required by the Mortgagees in view of any such change. Provided always that no such change of name or flag shall be allowed without the prior written consent of the Mortgagees. Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Chancres to the Vessel - Subject to Clause 10(a)(ii), the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, if the Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's-Outfit, Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at the time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses Incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, thirty six (36) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (i) Management - The commercial, technical and/or operational management of the Vessel shall be carried out during the Charter Period by TOP TANKERS MANAGEMENT INC. or any other first class company acceptable to the Owners and the Mortgagees. Such management to be cost free for the Owners, who shall not be liable to any extent by reason of having approved such managers. In addition such approval by the Owners shall in no way constitute any limitation, discharge or waiver of any of Charterers' obligations or liabilities under and pursuant to this Charter. (j) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the international Maritime Organization and any applicable law. (k) Financial Statements - The Charterers shall submit to the Owners and the Mortgagees their audited annual accounts as well as those of the Charter Guarantor (as the latter is defined in Clause 33), within 180 days of each year end and semiannual management accounts within 90 days of the half-year end. (l) Survey Reports - The Charterers shall regularly supply the Owners with the Classification survey reports, including but not limited the annual survey and follow up reports, all showing, among others, that any recommendation has been promptly and timely cleared at the Charterers' time and expense. The Charterers undertake to keep the condition of the Vessel and all her certificates in the best possible condition and standards for a vessel of the type and age of the Vessel and in any event to maintain the Vessel always in full compliance with the highest/strictest requirements of the Vessel's Classification Society, her flag State and all other applicable rules and/or requirements throughout the Charter Period. Without prejudice to the generality of the foregoing the coatings of the ballast tanks of the' - Vessel must be maintained by the Charterers in accordance with the Vessel's highest/strictest Classification standards throughout the duration of the Charter Period inclusive of the time of redelivery. Without prejudice to the above and notwithstanding anything to the contrary herein, the Charterers shall, not later than her next special survey, at their own time and expense upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest Classification standards and described by the latter as being in "good" condition. (m) Reporting and Owners' Representative -Throughout the duration of this Charter the Charterers shall keep the Owners closely Informed about the Vessel's position and itinerary as well as the cargo carried on board and the Vessel's schedule, by providing such information in writing every fifteen (15) running days. The Owners shall have the right to place one representative on board the Vessel who will travel with the Vessel and have free access to communicate with the Owners. The latter shall pay for the relevant communication expenses but will not be charged for the victualling of their representative which shall be provided without charge. The representative shall not have the right to interfere with the operation of the Vessel, but shall have free access to all parts thereof and to all Vessel's log books. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter In respect of which time shall be of the essence. (b) The Charterers shall pay to the Owners for the hire of the Vessel on a monthly basis a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in Box 25 and at the place mentioned in )Box 26. Hire shall always be punctually paid free and clear of any right of set-off, discount, reduction or delay whatsoever. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, hire shall be fully paid by the Charterers to the Owners as provided in Clause 32E hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months Interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately irrespective of whether the Owners have submitted their relevant interest invoice to the Charterers. (h) If at any time the Charterers are required to make any deduction or withholding in respect of any kind of taxes from any payment due under this Charter for the account of the Owners, the sum due from the Charterers in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Owners receive on the due date for such payment (and retain, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which they would have received had no such reduction or withholding been required to be made and the Charterers shall fully indemnify the Owners against any losses or costs incurred by them by reason of any failure of the Charterers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Charterers shall promptly deliver to the Owners any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 12. Mortgages (only to apply if Box 28 has been appropriately filled in) *)(a) paragraph deleted *)(b) The Vessel chartered under this Charter is subject to the Financial Instruments and the mortgages, as same appear in Box 28. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instruments or as may be directed from time to time during the currency of the Charter by the Mortgagee or any : of them in conformity with the Financial Instruments. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instruments and agree to acknowledge this in writing in any form that may be required by the Mortgagee. *) (Optional, Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) Throughout the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to Insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) with first class underwriters and P&I Clubs and in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. The Charterers shall also at their expense take out any other insurance which the Mortgagees may reasonably require. All such insurances shall be arranged by the Charterers to protect the Interests of both the Owners and the Charterers, and the Charterers shall be at liberty to protect under such insurances the interest of any managers they may appropriately appoint. The relevant insurance policies shall cover the Owners and the Charterers according to their respective interests. Upon the request of a Mortgagee, the Charterers shall arrange that such Mortgagee is named as a co-assured in any of the above insurances that the said Mortgagee has to be named as such. In addition, throughout the Charter Period, the Charterers shall pay to the First Mortgagee and the Second Mortgagee the cost (in the amount to be conclusively certified by the First Mortgagee and the Second Mortgagee in writing) of any mortgagee's interest insurance-including mortgagee's additional perils (all P&l risks) coverage-which the Mortgagees or either of them may from time to time effect In respect of the Vessel upon such terms and in such amounts as the Mortgagees shall deem desirable. The Mortgagees shall have the right to enforce the benefit of this Clause by taking direct action against the Charterers in seeking to get paid or to recover the payment of any monies payable to them hereunder. Subject to the provisions of the Financial Instruments and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect. The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for any repairs, whether under the provisions of this sub-clause 13(a) or otherwise howsoever including any deviation, shall be for the Charterers' account. (b) Paragraph deleted (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instruments. (d) Subject to the provisions of the Financial Instruments should the Vessel become an actual, constructive, compromised or agreed total loss under the insurances required under sub-clause 13(a), all insurance payments for such loss shall be paid to the First Mortgagees or, as the case may be, the Second Mortgagees who shall distribute the moneys In accordance with the relevant Financial Instruments. The Charterers undertake to notify the Owners and the Mortgagee of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and of all other occurrences as required under the Financial Instruments. (e) Subject to the Financial Instruments, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of the insurance coverage of each insurance the insured amount shall be the sum indicated in Clause 34. 14. Paragraphs deleted 15. Redelivery At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a freely accessible, safe and Ice-free port or place as indicated in Box 16 in such ready-safe berth or anchorage as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter In the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of a sale of the Vessel In accordance with Clause 22 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within T-the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Pox 22 plus 10 percent or to the market rate, whichever is the higher, for the number of days by which the Charter Period or the date of sale is exceeded. In the latter case the Charterers shall also be liable to reimburse the Owners any further damages and/or losses which the latter may suffer as a result thereof. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, in any event free of any and all Class conditions and/or recommendations, fair wear and tear not affecting class excepted. On redelivery the Vessel shall have been dry-docked as per Class requirements or as otherwise may be appropriate or necessary. The Vessel upon redelivery shall have all her survey cycles up to date and all her trading, national, international and class certificates clean, valid and unextended for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a-notices reading as follows: (a) "This Vessel is the property of (name of Owners). It is under charter to IDI SHIPPING COMPANY LIMITED of Liberia and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." (b) "NOTICE OF MORTGAGE - This Vessel is subject to a first priority mortgage and deed of covenant in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012AE, Rotterdam, the Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of this Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage." (c) "NOTICE OF SECOND MORTGAGE - This Vessel is subject to a second priority mortgage and deed of covenant in favour of MAAS CAPITAL INVESTMENTS B.V. of Coolsingel 93, 3012AE, Rotterdam, The Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of the Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage." Furthermore, the Charterers shall throughout the duration of this Charter procure that all their orders for any kinds of supplies (including but not limited to bunkers and lubolls) for the Vessel are appropriately marked so as to warn all suppliers In advance that such supplies are exclusively provided to and payable by the Charterers, the suppliers not having any right of lien or suit against the Vessel and/or the Owners. All delivery receipts for such supplies shall also be appropriately marked by the Charterers before the supplies are delivered to the Vessel. 17. Indemnity (a) The Charterers shall fully indemnify the Owners, the Mortgagees and their respective successors, assigns, directors, shareholders, officers, servants and/or agents (collectively "the Indemnified Parties") from and against any loss, damage, claim, cost and/-or expense incurred by them or any of them arising out of or in relation to the operation of the Vessel by the Charterers (including but without limitation, costs of operating and maintaining the Vessel, environmental claim or any claim based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of or during her operation hereunder by the Charterers, the Charterers' shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to fully indemnify the Owners the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims for which the Owners are exclusively liable hereunder, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall fully indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter, provided however that any such liens will be subordinate to any security Interest the Mortgagees may have over the same property. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall fully indemnify the Owners or any other Indemnified Party against any sums whatsoever which the Owners or any other Indemnified Party may become liable to pay and may pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners and the Mortgagees, in their absolute discretion-which-span net-be-wireasenably4vithheldr and subject to such terms and conditions as the Owners and the Mortgagees shall approve. (b) The Owners may sell the Vessel during the currency of this Charter subject to the buyer accepting an assignment of this Charter or entering into a reasonable novation agreement, and subject to any approvals required by the Mortgagees pursuant to the Financial Instruments. In case of such sale the Charterers shall be obliged to delete the mortgage in their favour stated in Box 28 and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,610,000. 23. Contracts of Carriage *)(a) The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo Compulsorily applicable in the trade; If no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. *)(b) Paragraph deleted *) Delete as applicable. 24. Paragraph deleted 25. Requisition/Acquisition (a) Without prejudice to Clause 32E in the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as "Requisition for Hire") irrespective of the date during the Charter Period when "Requisition for Hire" may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) Without prejudice to Clause 32E in the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition' may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire until the time when the Charter would have been terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words 'War Risks' shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or. ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the express written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry Into it, the Owners shall have the right to require the Vessel to immediately leave such area. (c) The Vessel shall not load contraband cargo, nor shall pass through any blockade, whether such blockade be Imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, nor shall proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be promptly paid by the Charterers as required by the respective insurers. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) Without prejudice to Clause 32E tin any and all the events of outbreak of war (whether there be a declaration of war or not) the stipulated hire shall continue to be paid In accordance with Clause 11. 27. Paragraph deleted 28. Termination (a) Charterers' Default Subject to the Financial Instruments, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fall to pay hire in accordance with Clause 11. However, where there is a failure to Make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers' bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognised at the agreed place of payment) In which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in pox 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of: (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them In writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (iv) the Charter Guarantor (as defined in Clause 33) breaches or fails to meet any of the Financial Undertakings provided in Clause 71 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement or Clause 10 of the Charter Guarantee (as same is defined in Clause 32A(a). (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of few:teen-(-4) forty five (45) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel Without prejudice to Clauses 11(e) and 32E, this Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be Deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreementtew with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Mortgagees' prior approval, either party shall be entitled to terminate this Charter with Immediate effect by written notice to the other party in the event of: (i) an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or If it suspends payment, Ceases to carry on business or makes any special arrangement or composition with its creditors or (It) the Charter Guarantor, as defined In Clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28 the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at easy other port or place convenient lo them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution *)(a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as If he had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of.a sole arbitrator. . - -. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. *)(b) Paragraph deleted *)(c) Paragraph deleted (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply: (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal') or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, In the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may-be brought to the attention of the Tribunal and may be taken into account by the Tnbunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed orspedfiedoin the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator's costs and expenses. (vii) The mediation process shall be without prejudice and confidentlatvmd no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disdosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply In all cases. *) Sub-clauses 30(a) 30(b) and 301c) are alternatives; indicate alternative agreed in Pox 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. PART III, IV and V Paragraphs deleted Continuation of PART II 32. Special Provisions A. Additional Securities a. Charter Guarantee The Charterers shall procure and ensure that the Charter Guarantor, shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees and to include the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement. This guarantee shall remain in place throughout the whole duration of this Charter, even in case of the sale of the Vessel under Clause 22(b) hereof. b. Collateral Guarantees Without prejudice to the provisions of Clause 32A(a) hereinabove and in addition to the relevant security provided thereby, the Charterers shall procure that the charterers of the m/ts "SPOTLESS", "DOUBTLESS" and "FAITHFUL" ("the Collateral Guarantors") shall unconditionally and irrevocably guarantee on a joint and several basis the performance of the Charterers under this Charter as primary obligors and not merely as surety, the relevant guarantee agreements to be in form and substance acceptable to the Owners and the Mortgagees. In addition the Charterers hereby undertake to unconditionally and irrevocably guarantee on a joint and several basis with the Collateral Guarantors the performance of each respective charter party of the m/ts "SPOTLESS", "DOUBTLESS" and "FAITHFUL" by the respective charterer, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees. The guarantees provided in this sub-Clause 32A(b) shall not be assignable by the Owners to the buyer of the Vessel under Clause 22(b) hereof. For the avoidance of any doubt all the securities provided in this Clause 32A shall be on a joint and several basis. B. Extension of the Charter Period At the request of the Owners which must be notified to the Charterers not later than three (3) months before the fifth anniversary of the date of delivery of the Vessel to the Charterers under this Charter and for the purpose of assisting the Owners to sell the Vessel, the Charter Period shall be extended for a period not longer than three (3) months at the option of the Owners. In such case the hire throughout such 3-month extended period shall be USD 5,000 per day. However in case the redelivery of the Vessel would have in any event delayed as a result of the Vessel not having completed a voyage, the hire shall be until the completion of such voyage at the rate provided in Clause 15 whilst the three months period provided under this sub-Clause 32B shall commence after the termination of such voyage. For any period of delay in the redelivery of the Vessel following the lapse of the said 3-month period extension, hire shall be payable in accordance with Clause 15. The Charterers shall make their best efforts to assist the Owners in selling the Vessel if and when the Owners require them to provide such assistance. C. Assignment of Sub-Charters The sub-charters of the Vessel during the Charter Period as well as all hire and freight payable to the Charterers thereunder shall be assigned to the Owners and the Mortgagees as provided by the Financial Instruments. D. Charterers' Compliance with the Financial Instruments The Charterers shall timely and promptly comply with all the terms and conditions of the Financial Instruments and/or as may be required by the Mortgagees by virtue thereof. E. "Hell and Highwater" Clause This Charter is a "hell and highwater" bareboat charter and the Charterers' obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character, including (i) any setoff, counterclaim, recoupment, defence or other right which the .Charterers or any. other person may have against the. Owners or any other person for any reason whatsoever, including any default by the Owners or any other person in its respective obligations hereunder or under any other agreement, (ii) any unavailability of the Vessel, after its delivery and acceptance by the Charterers hereunder, for any reason, including any lack or invalidity of title or any other defect in the title, seaworthiness, condition, design, operation or fitness for use of the Vessel, or the ineligibility of the Vessel for documentation or for a particular trade, (iii) any failure or delay on the part of the Owners or any other person, whether with or without fault on its part, in performing or complying with any of the terms or covenants hereunder, or any other agreement, (iv) any damage to the Vessel or interruption or cessation in the use or possession thereof by the Charterers or any subcharterer for any reason whatsoever and of whatever duration including an actual, constructive, compromised or arranged total loss or requisition of title, (v) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding by or against the Owners, the Charterers, any subcharterer or any other person, (vi) any breach of any representation or warranty of, or any act or omission of, the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers, (vii) any breach of any representation or warranty of, or any act or omission of the Owners under, any agreement at any time existing between the Owners and the Charterers and/or any subcharterer, (viii) any deprivation of use of the Vessel by reason of any act or omission of the Owners, (ix) any claims as a result of any other business dealings by the Owners, the Charterers, any subcharterer or any other person, (x) the requisitioning, seizure or other taking of title to or use of the Vessel by any governmental or other competent authority or otherwise whether or not by reason of any act or omission of the Owners, the Charterers, or any subcharterer, or any other deprivation or limitation of use of the Vessel in any respect or for any length of time, whether or. not resulting from accident and whether or not without fault on the part of the Charterers or any subcharterer, (xi) any embargo on the shipment of any products or any prohibition against the loading or discharging of vessels containing the same, (xii) the interference with or prohibition of the Charterers' or any subcharterer's use of the Vessel, (xiii) the invalidity or unenforceability or lack of due authorization or other infirmity of this Charter or any other subcharter, (xiv) the lack of right, power or authority of the Owners to enter into this Charter, (xv) any ineligibility of the Vessel for any particular trade or activity, whether due to any failure of the Owners, the Charterers, any subcharterer or any other person to comply with any applicable law or otherwise, (xvi) any event of force majeure or any frustration, (xvii) any applicable law or (xviii) any war or any other event that automatically or by election cancels any available insurance cover or (xix) for any other cause, circumstance or happening, whether similar or dissimilar to the foregoing, any present or future applicable law to the contrary notwithstanding. The Charterers hereby waive, to the extent permitted by applicable law, any and all rights which they may now have or which at any time hereafter may be conferred upon them, by statute or otherwise, to terminate, cancel, quit or surrender this Charter or to any abatement, suspension, deferment, return or reduction of hire except in accordance with the express terms hereof. If for any reason whatsoever this Charter shall be terminated in whole or in part by operation of law or otherwise as specifically provided herein, the Charterers nonetheless agree to pay to the Owners or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; each payment of hire made by. the Charterers. shall be final, and the Charterers will not seek to recover all or any part of such payment from the Owners for any reason whatsoever, except for manifest error. 33. Definitions "Charter Guarantor" means Top Tankers Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960; "First Deed of Covenant" means the deed of covenant collateral to the First Mortgage executed or (as the context may require) to be executed by the Owners in favour of the First Mortgagee; "First Mortgagee" means Fortis Bank (NEDERLAND) N.V. of Coolsingel 93, 3012AE (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as any person that may replace the First Mortgagee; "First Mortgage" means the first priority statutory ship mortgage on the Vessel to be executed by the Owners in favour of the First Mortgagee; "First Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the First Mortgagee; "MOA" means the Memorandum of Agreement dated 14.3.2006 and made between the Charterers, as sellers and the Owners, as buyers, pursuant to which the Owners have agreed to buy and the Charterers have agreed to sell the Vessel on the terms and conditions mentioned therein; "Second Deed of Covenant" means the deed of covenant collateral to the Second Mortgage executed or (as the context may require) to be executed by the Owners in favour of the Second Mortgagee; "Second Mortgage" means the second priority statutory ship mortgage on the Vessel to be executed by the Owners in favour of the Second Mortgagee; "Second Mortgagee" means Maas Capital Investments B.V., a company incorporated under the laws of The Netherlands whose registered office is at Coolsingel 93, 3112AE, Rotterdam, The Netherlands and includes its successors in title, assignees or transferees; "Second Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the Second Mortgagee; "Sellers' Credit" means the amount of USD 2,610,000 as provided in Clause 17 of the MOA. "Financial Instrument" means: (a) in the case of the First Mortgagee, the First Quadrapartite Agreement, and the First Mortgage and the First Deed of Covenant; or (b) in the case of the Second Mortgagee, the Second Quadrapartite Agreement and the Second Mortgage and the Second Deed of Covenant, and "Financial Instruments" means both of them; and "Mortgagees" means, together, the First Mortgagee and the Second Mortgagee. 31. Insured Amount [for the purposes of Clause 13(1)] For the purposes of Clause 13(f) and at any relevant time, the insured amount for the relevant insurances effected or, as the case may be, to be effected for the Vessel will be an amount in United States Dollars equal to the higher of (i) the market value of the Vessel at such relevant time (as such market value is determined by an independent firm of shipbrokers appointed by the Owners in their sole discretion) and (ii) the amount required under the relevant terms of either Financial Instrument, if any. Each valuation made for the purposes of this Box, shall be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the Vessel. The value of the Vessel determined in accordance with the provisions hereof shall be binding upon the parties hereto until such time as any further such valuation shall be obtained. EX-4.47 44 d759408_ex4-47.txt Exhibit 4.47 Private & Confidential Dated 15 March 2006 COMOROS SHIPPING LIMITED (1) as Owner PAGEON SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor and FORTIS BANK (NEDERLAND) N.V. (4) ------------------------------------ QUADRIPARTITE DEED relating to m.v. Vanguard ------------------------------------ NORTON ROSE Contents Clause Page 1 Definitions............................................................2 2 Representations and warranties.........................................8 3 Assignment............................................................11 4 Owner's Assignment....................................................12 5 Continuing security and other matters................................ 13 6 Charterer's undertakings..............................................16 7 Charter Guarantor's undertakings......................................17 8 Covenants concerning insurance and operational matters................22 9 Powers of Mortgagee to protect security and remedy defaults...........29 10 Powers of Mortgagee on Event of Default...............................29 11 Application of moneys.................................................30 12 Remedies cumulative and other provisions..............................31 13 Costs and indemnity...................................................32 14 Attorney..............................................................32 15 Further assurance.....................................................33 16 Consent, Termination of Charter and Quiet Enjoyment...................33 17 Continuation of Charter Period........................................35 18 Notices...............................................................35 19 Counterparts..........................................................36 20 Severability of provisions............................................36 21 Law and jurisdiction.................................................37 Schedule 1 Forms of Loss Payable Clauses......................................38 Schedule 2 Forms of Notices of Assignment of Insurances.......................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) COMOROS SHIPPING LIMITED a company incorporated in the Republic of Cyprus whose registered office is at Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806 -807, P.C. 1066, Lefkosia, Cyprus (the "Owner"); (2) PAGEON SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Cyprus whose registered office is at 284 Arch. Makarios Ill Avenue, Limassol, Cyprus (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Tucker Navigation Co., Starcraft Marine Co. and Kemp Maritime S.A. (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, arranger, account bank, security agent and trustee and (4) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider' and together with the Agent (as defined in the Loan Agreement) and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 14 March 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 14 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first priority statutory ship mortgage and a deed of covenant collateral thereto (together the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of the laws of Cyprus as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Vanguard Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor' includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and; in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Vanguard General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated 14 March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first priority statutory mortgage and deed of covenant collateral thereto mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Vanguard General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Spotless and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Owner pursuant to the Loan Agreement and/or the Master Swap Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Vanguard registered as a Cyprus ship under IMO Number 8913605 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary' of a person means any company or entity directly or indirectly controlled Dy such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Cyprus as a limited liability company and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulai ion or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Vanguard Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and ;flat the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals: 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1S Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the reievant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (k) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (l) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened al behalf of the Charter Guarantor or any Subsidiary; (m) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (n) rental payments under Finance Leases; (o) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (p) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (q) preference share capital redeemable prior to the last day of the period of the Charter; (r) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (s) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (t) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (u) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (v) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Cyprus ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Cyprus flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Cyprus law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as tie Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Vanguard Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, he entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)00 above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed breach of the Charter which would entitle the Owner to terminate the, Charter (including, but nit limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time, prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterers repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned tr. the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: do V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: do Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: + 30 210 6978 107 Attention: Legal Department (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 'i999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be-enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated M 2006, COMOROS SHIPPING LIMITED of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806 - 807, P.C. 1066, Lefkosia, Cyprus (the "Owner") and by a Quadripartite Deed dated Eo] 2006, PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios Ill Avenue; Limassol, Cyprus (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Vanguard and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which COMOROS SHIPPING LIMITED, of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806 - 807, P.C. 1066, Lefkosia, Cyprus (the "Owner") or PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios III Avenue, Limassol, Cyprus (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) COMOROS SHIPPING LIMITED (the "Owner") of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806 - 807, P.C. 1066, Lefkosia, Cyprus and PAGEON SHIPPING COMPANY LIMITED (the "Charterer") of 284 Arch. Makarios Ili Avenue, Limassol, Cyprus, the owners and demise charterers respectively of the motor vessel Vanguard HEREBY GIVE NOTICE that by a General Assignment dated H2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - -------------------------- Signed For and on behalf of COMOROS SHIPPING LIMITED Dated [_] 2006 - -------------------------- Signed For and on behalf of PAGEON SHIPPING COMPANY LIMITED Dated [_] 2006 SIGNED, SEALED and DELIVERED ) /s/ Dimitri Glomelakis by Dimitri Glomelakis ) ------------------------- by ) Attorney-in-fact for and on behalf of ) COMOROS SHIPPING LIMITED ) in the presence of: /s/ Helen Dawson Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose SIGNED, SEALED and DELIVERED ) /s/ Andreas Louka as a DEED ) ------------------------- by Andreas Louka ) Attorney-in-fact for and on behalf of ) PAGEON SHIPPING COMPANY LIMITED ) /s/ Helen Dawson - ------------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) /s/ Andreas Louka by Andreas Louka ) ------------------------- for and on behalf of ) Attorney-in-fact TOP TANKERS INC. ) /s/ Helen Dawson - ------------------------------------- in the presence of Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) /s/ Helen Dawson by Helen Dawson ) ------------------------- for and on behalf of ) Attorney-in-fact FORTIS BANK (NEDERLAND) N.V. ) /s/ Vikki Madia - ------------------------------------- in the presence of Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.48 45 d759408_ex4-48.txt Exhibit 4.48 Private & Confidential Dated 15 March 2006 COMOROS SHIPPING LIMITED (1) as Owner PAGEON SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor and MAAS CAPITAL INVESTMENTS B.V. (4) ----------------------------------------------- SECOND PRIORITY QUADRIPARTITE DEED relating to m.v. Vanguard ----------------------------------------------- Norton Rose CONTENTS Clause Page 1. Definitions................................................................2 2. Representations and warranties.............................................8 3. Assignment................................................................12 4. Owner's Assignment........................................................13 5. Continuing security and other matters.....................................14 6. Charterer's undertakings..................................................17 7. Charter Guarantor's undertakings..........................................19 8. Covenants concerning insurance and operational matters....................24 9. Powers of Mortgagee to protect security and remedy defaults...............32 10. Powers of Mortgagee on Event of Default...................................32 11. Application of moneys.....................................................33 12. Remedies cumulative and other provisions..................................35 13. Costs and indemnity.......................................................35 14. Attorney..................................................................35 15. Further assurance.........................................................36 16. Consent, Termination of Charter and Quiet Enjoyment.......................36 17. Continuation of Charter Period............................................39 18. Notices...................................................................39 19. Counterparts..............................................................40 20. Severability of provisions................................................40 21. Law and jurisdiction......................................................40 Schedule 1 Forms of Loss Payable Clauses......................................41 Schedule 2 Forms of Notices of Assignment of Insurances.......................42 THIS SECOND PRIORITY QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) COMOROS SHIPPING LIMITED a company incorporated in the Republic of Cyprus whose registered office is at Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus (the "Owner"); (2) PAGEON SHIPPING COMPANY LIMITED, a company incorporated the Republic of Cyprus whose registered office is at 284 Arch Makarios III Avenue, Limassol, Cyprus (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) MAAS CAPITAL INVESTMENTS B.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Tucker Navigation Co., Starcraft Marine Co. and Kemp Maritime S.A. (therein and herein together referred to as the "Borrowers") and (2) the Mortgagee as lender, the Mortgagee agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $10,000,000; (C) pursuant to the Loan Agreement there has been or will be executed by the Owner in favour of the Mortgagee a second priority statutory ship mortgage and a deed of covenant collateral thereto (together the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of the laws of Cyprus as security for the payment by the Borrowers of the Outstanding Indebtedness (as such expression is defined in the Mortgage); (D) the security constituted by the Mortgage and this Deed is in all respects subject and subordinate to the rights of the First Mortgagee under the First Mortgage and the First Quadripartite Deed of Assignment (as those expressions are defined in the Mortgage); (E) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (F) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (G) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee under the Loan Agreement and the other Security Documents; and (H) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Vanguard Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1. DEFINITIONS 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred Thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (E); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer' includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: the Insurances; and any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (F); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "First Banks" means the banks and financial institutions whose names and addresses are set out in schedule 1 to the First Loan Agreement; "First General Assignment" means a first general assignment dated 15 March 2006 made between the Owner and the First Mortgagee whereby the Owner has assigned to the First Mortgagee the Earnings, the Insurances and any Requisition Compensation (each such term as defined therein) of the Ship; "First Loan" means the principal amount borrowed by the Borrowers from the First Banks under the First Loan Agreement or (as the context may require) the amount thereof at any time outstanding; "First Loan Agreement" means the loan agreement dated 14 March 2006 made between (1) the Borrowers, (2) Fortis Bank (Nederland) N.V. in its capacities as arranger, agent, swap provider and account bank, (3) the First Mortgagee and (4) the First Banks as lenders; "First Manager's Undertaking" means the manager's undertaking and first priority assignments executed (or as the context may require) to be executed by each Manager in favour of the Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Ship dated 14 March 2006 executed by the Owner in favour of the First Mortgagee; "First Mortgage Documents" means, together, the First Mortgage, the First General Assignment, the First Manager's Undertaking, the First Operating Account Pledge, the First Security Assignment, the First Quadripartite Deed and the First Retention Account Pledge; "First Mortgagee" means Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands; "First Operating Account Pledge" means the first priority pledge executed (or as the context may require) to be executed by, inter alios, the Owner in favour of the Mortgagee in respect of, inter alia, the Vanguard Operating Account; "First Quadripartite Deed" means the deed of assignment executed or (as the context may require) to be executed by the Owner and the Charterer in favour of the Mortgagee in such form as the Mortgagee shall approve; "First Retention Account Pledge" means the first priority pledge executed or (as the context may require) to be executed by the Borrowers in favour of the Mortgagee in respect of the Retention Account; "First Security Assignment' means the first priority charter assignment of the Doubtless Charter Guarantee, the Faithful Charter Guarantee and the Spotless Charter Guarantee and the Doubtless Time Charter Assignment, the Faithful Time Charter Assignment, the Spotless Time Charter Assignment and the Vanguard Time Charter Assignment executed (or as the context may require) to be executed by the Owner in favour of the Mortgagee; "Government Entity' means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Mortgagee pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Vanguard General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Mortgage" means the first priority statutory mortgage and deed of covenant collateral thereto mentioned in recital (C) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Vanguard General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Spotless and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon and the moneys from time to time owing by the Owner pursuant to the Loan Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Vanguard registered as a Cyprus ship under IMO Number 8913605 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2. REPRESENTATIONS AND WARRANTIES 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Cyprus as a limited liability company and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and, subject to the First Mortgage Documents, neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3. ASSIGNMENT 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness the Charterer with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall (subject to the First Quadripartite Deed of Assignment) be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall, subject to the First Quadripartite Deed of Assignment, be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall, subject to the First Quadripartite Deed of Assignment, be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4. OWNER'S ASSIGNMENT 4.1 By way of security for payment of the Outstanding Indebtedness the Owner with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Vanguard Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5. CONTINUING SECURITY AND OTHER MATTERS 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee any right or remedy of the Mortgagee or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee fully indemnified against any loss suffered by the Mortgagee as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee under the Loan Agreement, this Deed, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee may be exercised from time to time and as often as the Mortgagee may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness; or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6. CHARTERER'S UNDERTAKINGS The Charterer hereby covenants with the Mortgagee and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments save for the First Quadripartite Deed of Assignment, assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance (other than the First Mortgage Documents) over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7. CHARTER GUARANTOR'S UNDERTAKINGS 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 arid 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time: when, and in relation to any period in relation to which, the Charter Guarantor shall lot: obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8. COVENANTS CONCERNING INSURANCE AND OPERATIONAL MATTERS 8.1 Covenants The Charterer hereby covenants with the Mortgagee and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee (and permitted by the First Mortgagee), in the joint names of the Owner, the Mortgagee and the Charterer and, if so required by the First Mortgagee, in the joint names of the Owner, the Charterer, the Mortgagee and the First Mortgagee (but without liability on the part of the Mortgagee or the First Mortgage for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee in its sole discretion); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of (aa) the First Loan, (bb) the Loan and (cc) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Cyprus ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Cyprus flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Cyprus law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Vanguard Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a second priority mortgage in favour of MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9. POWERS OF MORTGAGEE TO PROTECT SECURITY AND REMEDY DEFAULTS 9.1 Protective action The Mortgagee shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1 (but subject to the First Mortgage Documents): 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10. POWERS OF MORTGAGEE ON EVENT OF DEFAULT 10.1 Powers Upon the happening of any Event of Default, the Mortgagee shall (subject to the rights of the First Mortgagee under the First Mortgage Documents) become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11. APPLICATION OF MONEYS 11.1 Application All moneys received by the Mortgagee in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall (subject to the First Mortgage Documents): 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12. REMEDIES CUMULATIVE AND OTHER PROVISIONS 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13. COSTS AND INDEMNITY 13.1 Costs The Owner shall pay to the Mortgagee on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14. ATTORNEY 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15. FURTHER ASSURANCE The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16. CONSENT, TERMINATION OF CHARTER AND QUIET ENJOYMENT 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchase ; or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17. CONTINUATION OF CHARTER PERIOD The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18. NOTICES 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of dispatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: +30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 697 8107 Attention: Legal Department (c) to the Mortgagee at: Maas Capital Investments B.V. R.01.1601 Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 5323 Attention: Mr. Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19. COUNTERPARTS This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20. SEVERABILITY OF PROVISIONS Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21. LAW AND JURISDICTION 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts. or in the courts. of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London, W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Pasties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [__] 2006, COMOROS SHIPPING LIMITED of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus (the "Owner") and by a Quadripartite Deed dated [__] 2006, PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios III Avenue, Limassol, Cyprus (the "Charterer") have each assigned (subject to the prior assignment dated [__] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) to MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Vanguard and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee or to its order. (2) Protection and indemnity Payment of any recovery which COMOROS SHIPPING LIMITED, of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus (the "Owner") or PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios III Avenue, Limassol, Cyprus (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall, subject to the prior rights of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands as first assignee thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) COMOROS SHIPPING LIMITED (the "Owner") of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus and PAGEON SHIPPING COMPANY LIMITED (the "Charterer") of 284 Arch. Makarios III Avenue, Limassol, Cyprus the owners ..and demise charterers respectively of the motor vessel Vanguard HEREBY GIVE NOTICE that by a General Assignment dated [__] 2006 and entered into by the Owner (subject to the prior assignment dated [__] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with MAAS CAPITAL INVESTMENTS B.V. (the "Mortgagee") and by a Quadripartite Deed dated [__] 2006 and entered into by, inter alios, the Charterer and the Owner (subject to the prior assignment dated [__] to FORTIS BANK (NEDERLAND) N.V of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with the Mortgagee, there has been assigned by us to the Mortgagee as second mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ------------------------------------ Signed For and on behalf of COMOROS SHIPPING LIMITED Dated [__] 2006 - ------------------------------------ Signed For and on behalf of PAGEON SHIPPING COMPANY LIMITED Dated [__] 2006 EXECUTED as a DEED ) by Dimitri Glomelakis ) /s/ Dimitri Glomelakis for and on behalf of ) ----------------------------- COMOROS SHIPPING LIMITED ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ----------------------------- PAGEON SHIPPING COMPANY LIMITED ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Andreas Louka ) /s/ Andreas Louka for and on behalf of ) ----------------------------- TOP TANKERS INC. ) Attorney-in-fact /s/ Helen Dawson - ---------------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Rose EXECUTED as a DEED ) by Helen Dawson ) /s/ Helen Dawson for and on behalf of ) ----------------------------- TOP TANKERS INC. ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.49 46 d759408_ex4-49.txt Exhibit 4.49 TOP TANKERS INC. Guarantee 14 March 2006 To: COMOROS SHIPPING LIMITED of Themistokli Dervi 41, Hawai Nicosia Tower, 8th Floor, Flat/office 806 - 807, P.C. 1066, Lefkosia, Cyprus (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Vanguard (the "Ship") to Pageon Shipping Company Limited (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 31 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantors Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (C) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (9) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph [10], be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to (i) Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties) and/or (ii) Maas Capital Investments B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands ("Maas"). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent and/or Maas of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in an other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully Andreas Louca EXECUTED as a DEED BY for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 8 March 2006 In the presence of: Witness: /s/ Helen Dawson Name: Helen Dawson Address: Occupation: Trainee Solicitor - Norton Rose EX-4.50 47 d759408_ex4-50.txt Exhibit 4.50 MEMORANDUM OF AGREEMENT Dated 14/03/2006 GRAMOS SHIPPING COMPANY INC. of Marshall Islands Hereinafter called the Sellers, have agreed to sell, and STARCRAFT MARINE CO. of Marshall Islands Hereinafter called the Buyers, have agreed to buy Name: M/T FAITHFUL Classification Society/Class: Lloyds Register of Shipping Built: 1992 By: Tsuneishi Shipbuilding Co. Ltd., Japan Flag: Marshall Islands Place of registration: Majuro Call Sign: V7DP9 Grt/Nrt: 25887/12610 Official Number: 1689 Hereinafter called the Vessel, on the following terms and conditions: Definitions "Banking days" are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 and in the place of closing stipulated in Clause 8. "In writing" or "written" means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, telex, telefax or other modern form of written communication. "Classification Society" or "Class" means the Society referred to in line 4. 1. Purchase price USD 25,500,000 (United States Dollars Twenty Five million Five hundred thousand only), subject to the provisions of Clause 17. 2. Deposit deleted 3. Payment (See also Clause 17) The said Purchase Price less Sellers' Credit (as defined in Clause 17) shall be paid free of bank charges to The Royal Bank of Scotland, Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX, Sort Code: 16-01-01, Swift: RBOSGB2L, Account Key: TOPTAN-USD1, lban: GB49 RBOS 1663 0000 3119 64, Beneficiary: Top Tankers Inc., Correspondent Bank: American Express Bank Limited, New York - Swift AEIBUS33XXX on delivery of the Vessel, but not later than 3 banking days after the Vessel is in every respect physically ready for delivery in accordance with the terms and conditions of this Agreement and Notice of Readiness has been given in accordance with Clause 5. 4. Inspections a)* The Buyers have inspected and accepted the Vessel's classification records. The Buyers have also inspected the Vessel in New York, U.S.A. on 24th February 2006 and have accepted the Vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement. b)* * 4 a) and 4 b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4 a) to apply. 5. Notices, time and place of delivery a) The Sellers shall keep the Buyers well informed of the Vessel's itinerary and shall provide the Buyers with 2 days approximate notice of the estimated time of readiness for and of the intended place of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. b) The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage or at high sea. In the Seller's option. In case the Vessel be delivered with cargo on board the Sellers shall on delivery provide a confirmation from their P&I Club that the latter shall continue to cover the Vessel in every respect irrespective of the Vessel's transfer of ownership. Expected time of delivery: Between 15th March and 30th March 2006 Date of canceling (see Clauses 5 c), 6 b) (iii) and 14): 30th March 2006, in Buyers' option. c) If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option either cancelling this Agreement in accordance with Clause 14 within 2 Banking days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 2 Banking days of receipt of the Sellers' notification or if the Buyers accept the new date, the date proposed in the Sellers' notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date. d) Should the Vessel become an actual, constructive or compromised total loss before delivery this Agreement shall be null and void. 6. Drydocking/Divers inspection deleted 7. Spares/bunkers, etc. (See also Clause 19) The Sellers shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail-end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether on board or not shall become the Buyers' property, but spares on order are to be excluded. Forwarding charges, if any, shall be for the Buyers' account. The Sellers are not required to replace spare parts including spare tail-end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. The radio installation and navigational equipment shall be included in the sale without extra payment. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment. The Sellers have the right to take ashore crockery, plates, cutlery, linen and other articles bearing the Sellers' flag or name, provided they replace same with similar unmarked items. Library, forms, etc., exclusively for use in the Sellers' vessel(s), shall be excluded without compensation. Captain's, Officers' and Crew's personal belongings including the slop chest are to be excluded from the sale, as well as the following additional items (including items on hire): none. 8. Documentation (See also Clause 21) The place of closing: Piraeus Greece At the time of delivery the Sellers shall hand to the Buyers copies of the classification certificate(s) as well as all other trading/national/international certificates and plans etc., which are on board the Vessel. Copies of other certificates which are on board the Vessel shall also be handed over to the Buyers. Copies of other technical documentation which may be in the Sellers' possession shall be promptly forwarded to the Buyers at their expense, if they so request. The Sellers will keep the Vessel's log books but the Buyers to have the right to take copies of same. 9. Encumbrances The Sellers warrant that the Vessel, at the time of delivery, is free from charters other than as provided in Clause 20 (which the Sellers warrant will not affect the smooth delivery of the Vessel hereunder and/or under the Bareboat Charter referred into Clause 18), encumbrances, mortgages and maritime liens or any other debts and claims whatsoever. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel and/or the Buyers which have been incurred prior to the time of delivery. 10. Taxes, etc. Any taxes, fees and expenses in connection with the purchase and registration of the Buyers' title at the Vessel's Registry shall be for the Buyers' account. 11. Condition on delivery The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her present class fully maintained without condition/recommendation*, free of average and damage affecting the Vessel's class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, clean, valid and unextended for a period of not less than 3 months from the time of delivery without condition/recommendation* by Class or-the relevant authorities at the time of delivery, save for the currently existing two (2) conditions of Class, namely items 008 and 009, which the Sellers hereby undertake to at their own time and expense and not later than the Vessel's next special survey rectify same to the full satisfaction of the Class. The Sellers shall on delivery provide a letter of undertaking to such effect. In addition to the above and without prejudice thereto the Sellers hereby undertake to, at their own time and expense and not later than the Vessel's next special survey, upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest classification standards and be described by the Class as being in "good" condition. The Sellers shall provide on delivery a letter of undertaking to such effect. "Inspection" in this Clause 11, shall mean the Buyers' inspection according to Clause 4 a) or 4 b), if applicable, or the Buyers' inspection prior to the signing of this Agreement. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date. * Notes, if any, in the surveyor's report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. 12. Name/markings Buyers shall be allowed to keep the name of the Vessel and any marking on the Vessel's funnel or hull, in general. 13. Buyers' default Should the Cash Part of the Purchase Price (as defined in Clause 17) not be paid in accordance with Clause 3, the Sellers have the right to cancel the Agreement, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest. 14. Sellers' default Should the Sellers fail to give Notice of Readiness in accordance with Clause 5 a) or fail to be ready to validly complete a legal transfer by the date stipulated in line 61 the Buyers shall have the option of cancelling this Agreement. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again in every respect by the date stipulated in line 61 and new Notice of Readiness given, the Buyers shall retain their option to cancel. Should the Sellers fail to give Notice of Readiness by the date stipulated in line 61 or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest and whether or not the Buyers cancel this Agreement. 15. Buyers' representatives deleted 16. Arbitration a)* This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London in accordance with the Arbitration Acts 1996 or any statutory modification or re-enactment thereof for the time being in force, one arbitrator being appointed by each party. On the receipt by one party of the nomination in writing of the other party's arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If two arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final. * 16 a), 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. 17. Sellers' Credit a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty Two million Nine hundred Fifty thousand (US$22,950,000), (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million Five hundred Fifty thousand (US$2,550,000) shall be credited (the "Sellers' Credit") and shall be payable in accordance with the terms of this Clause 17. b) Subject to the provisions of sub-paragraph 17(c) hereinbelow, the Sellers' Credit shall be payable to the Sellers in a lumpsum, free of interest, immediately upon the expiration of the Bareboat Charter (as defined in Clause 18) by effluxion of time or the sale of the Vessel as described in Clause 22(b) of the Bareboat Charter. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as "the Purchase Price Reduction Amount") which is equal to the lesser of (i) the Sellers' Credit and (ii) the total amount of hire that would have been paid to the Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration of five years and such reduction shall have as a result the reduction of Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as provided hereinabove, the Buyers shall provide the Sellers with a third priority Preferred Mortgage over the Vessel, being subordinate to a first priority Preferred Mortgage over the Vessel in favour of FORTIS BANK (NEDERLAND) N.V. and a second priority Preferred Mortgage over the Vessel in favour of MAAS CAPITAL INVESTMENTS B.V., as more particularly described in the Bareboat Charter. 18. Bareboat Charter The Sellers (as charterers) and the Buyers (as owners) have agreed to enter into a Bareboat Charterparty (the "Bareboat Charter") in respect of the Vessel in the form of the draft attached hereto. The parties agree that payment for and acceptance of the Vessel by the Buyers under this Agreement is subject to the simultaneous delivery to and acceptance of the Vessel by the Sellers as charterers under the Bareboat Charter. 19. Bunkers and Lubricants Remaining bunkers and lubricating oils on board the Vessel at the time of delivery hereunder shall be and remain the property of the Sellers as bareboat charterers. 20. Sub-Charter The Vessel is currently chartered to Mansei Oil Ltd. of Bermuda under a "Shelltime 4" time charterparty dated 9 June 2004. 21. Documentation In exchange for payment of the Cash Part of the Purchase Price, the Sellers shall furnish the Buyers with the following original (unless otherwise stated) delivery documents: a. Six (6) legal Bills of Sale (four (4) original and two (2) certified copies) transferring title of ownership to the vessel from the Sellers to the Buyers, free of all encumbrances, mortgages, maritime liens, claims, taxes and any other debts whatsoever, legalised;' b. Minutes of a Joint Meeting of the Board of Directors and of the Shareholders (represented by proxy) of the Sellers authorising/approving the Memorandum of Agreement and all the other terms of the sale of the vessel to the Buyers, as well as the Bareboat Charter and all documents to be executed thereunder and hereunder, authorising the issuance of the Power of Attorney per (d) herebelow and empowering a person or persons to sign/execute all documents necessary for the sale (including without limitation the Bill of Sale) and the chartering of the Vessel under the Bareboat Charter. Such Minutes to be signed by all the Directors of the Sellers and by the Shareholders' proxy and all their signatures to be legalised; c. Power of Attorney in favour of the signatory(ies) of the Bill of Sale and of all other documents required for the sale and delivery of the Vessel to the Buyers as well as of the Bareboat Charter and all documents to be executed thereunder and hereunder, legalised; d. Copies of the up-to-date Articles of Incorporation, By-Laws, Transfer of Subscription and all organisational Meetings evidencing the Sellers' current Directors per (b) above , certified as true by a Director of the Sellers or their lawyer; e. Certificate of Incumbency issued by the Sellers' Secretary, stating the Directors of the Sellers to match those per (b) above legalised; f. Certificate of Good Standing of the Sellers, issued by the competent Marshall Islands authority, dated not more than 20 days prior to delivery; g. Should any Director or Shareholder of the Sellers be a corporate entity, duly executed proxy in favour of the person representing same duly certified as a true copy by the Seller's lawyers; h. Certificate of permission for transfer of ownership of the vessel to the Buyers confirming also that there are no outstanding fees, taxes and charges in respect of the Vessel towards Marshall Islands authorities issued by the competent Marshall Islands authority and dated not more than 20 days prior to delivery; i. Certificate dated the date of delivery of the vessel to the Buyers and issued by the competent Marshall Islands authority showing the vessel registered in the ownership of the Sellers free from any registered encumbrances and mortgages; j. Letter signed by a duly authorised attorney of the Sellers, confirming and warranting that, to the best of Sellers' knowledge, the Vessel is not blacklisted or boycotted by any state, country, trade or organization or the United Nations. k. Class Maintenance Certificate issued by the vessel's Classification Society confirming that the vessel maintains her Class without any condition/ recommendation, dated not more than 3 running days prior to the date of delivery of the vessel to the Buyers; l. Certified copy of the Certificate of Registry and original International Tonnage Measurement Certificate of the vessel; m. Without prejudice to paragraph (m) hereinabove, the Sellers shall arrange for the Vessel's Classification Society to forward directly to the Maritime Administrator's Office of the Marshall Islands the following: i) Certificate of Confirmation of Class dated not more than ten (10) running days prior to the date of delivery; and ii) A Statement or Affidavit regarding status of class, statutory certification and seaworthiness of the vessel (which should reach the Marshall Islands authorities at least ten (10) days prior to the date of delivery); n. The last Special Survey Report and copies of the existing statutory certificates; o. The Vessel's CSR together with notification to the Marshall Islands Registry concerning the transfer of ownership; p. Copies of DOC, SMC, ISSC and SSP and any other documents which may be required by the Marshall Islands Registry for the purpose of registering the Buyers' title thereto; q. The Bareboat Charter duly executed; r. The Management Agreements governing the technical and the commercial management of the Vessel upon delivery thereof to the Sellers under the Bareboat Charter, duly executed by the managers; s. A guarantee agreement (the "Charter Guarantee") by TOP TANKERS INC. of the Marshall Islands (the "Charter Guarantor"), guaranteeing as prime obligor and not as surety only, all the obligations of the Sellers as charterers under the Bareboat Charter and being otherwise in form and terms acceptable to the Buyers; t. Minutes of a Meeting of the Board of Directors of the Charter Guarantor authorising the execution of the Charter Guarantee and all documents to be executed thereunder, authorising the issuance of the Power of Attorney per (w) herebelow and empowering a person or persons to sign/execute all relevant documents. Such Minutes to be signed by all the Directors of the Charter Guarantor and all their signatures to be legalised; u. Power of Attorney in favour of the signatory(ies) of the Charter Guarantee and of all other documents to be executed thereunder, legalised; v. Copies of the up-to-date Articles of Incorporation and By-Laws of the Charter Guarantor, certified as true by a Director thereof or their lawyer; w. Certificate of Incumbency issued by the Charter Guarantor's Secretary, stating the Directors of the Charter Guarantor to match those per (v) above legalised; x. Certificate of Good Standing of the Charter Guarantor, issued by the competent Marshall Islands authority and dated not more than 20 days prior to delivery; y. The Collateral Guarantees, the assignment of sub-charters and all other security documents as provided in Clause 32 of the Bareboat Charter; z. A joint Protocol of Delivery and Acceptance under this Agreement as well as under the Bareboat Charter duly signed by the respective parties. aa. The inventory list referred into Clause 9 of the Bareboat Charter in form and substance acceptable to the Buyers. bb. The letters referred into Clause 11. All documents should be in original form unless otherwise stated hereinabove and should be in the English language or accompanied by an official translation into English. Sellers to provide Buyers with drafts of items a, b, c, e, g, j, t, u, w, z and bb for Buyers' approval prior to execution at least three (3) days prior to delivery and with copies of all documents duly executed and legalized (where appropriate) not later than the date of tendering the final Notice of Readiness, with the exception of items i, q, r, s, y and z which will be produced on the date of delivery. When a document is required to be legalized, the document may be legalized either by a Marshall Islands Consul or Special agent or by way of notarization/apostille. 22. Buyers' documents The Buyers shall furnish the Sellers with the following documents on the date of delivery: a. Minutes of a Meeting of the Board of Directors of the Buyers authorising/approving the Memorandum of Agreement and all the other terms of the purchase of the vessel from the Sellers, the Bareboat Charter and the Third priority preferred mortgage over the Vessel to be granted by the Buyers in favour of the Sellers as security for the Sellers' Credit, authorising the issuance of the Power of Attorney empowering a person or persons to sign/execute all necessary documents. Such Minutes to be legalised by a Cyprus Certifying Officer; b. Original Power of Attorney to Buyers' representatives in relation to the above mentioned transactions, legalized by a Cyprus Certifying Officer; c. Copy of the Buyers' Articles of Incorporation, certified as true by a Director of the Buyers or the Buyers' lawyer. d. Certificate of Incumbency issued by the Buyers' Secretary stating the Directors of the Buyers. 23. Confidentiality This Agreement shall be kept strictly private and confidential. THE SELLERS THE BUYERS /s/ Andreas Louka /s/ Alexandra Tatagia - --------------------------- ------------------------------ EX-4.51 48 d759408_ex4-51.txt Exhibit 4.51 1. Shipbroker Not Applicable 2. Place and date Piraeus, 14th March 2006 3. Owners/Place of business (Cl. 1) STARCRAFT MARINE CO. of the Marshall Islands 4. Bareboat Charterers/Place of business (Cl. 1) GRAMOS SHIPPING COMPANY INC. of the Marshall Islands 5. Vessel's name, call sign and flag (CI. 1 and 3) M/T "FAITHFUL" V7DP9, Marshall Islands 6. Type of Vessel Motor Tanker 7. GT/NT 25877/12610 8. When/Where built 1992 Tsuneishi Shipbuilding Co. Ltd., Japan 9. Total DWT (abt.) In metric tons on summer freeboard 45720 10. Classification society (C1. 3) Lloyds Register of Shipping 11. Date of last special survey by the Vessel's classification society March 2002 12. Further particulars of Vessel (also indicate minimum number of months' validity of class certificates agreed acc. To Cl. 3) 13. Port or Place of delivery (Cl. 3) Worldwide within IWL 14. Time for delivery (Cl. 4) See Clause 4 15. Cancelling date (Cl. 5) 30th March 2006 16. Port or Place of redelivery (Cl. 15) EuroMed, Gibraltar/Skaw range, Americas excluding USA, AG/Japan range, in Charterers' option but in any event within IWL 17. No. of months' validity, of trading and class certificates upon redelivery (Cl. 15) Minimum Six (6) months without extensions 18. Running days' notice if other than stated In Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) Worldwide trading, but always within the Institute Warranty Limit (IWL) 21. Charter period (Cl. 2) Five (5) years with Owners' option to extend this period by three (3) months in accordance with Clause 32B 22. Charter hire (Cl. 11) USD$396,000 23. New class and other safety requirements (state percentage of Vessel's insurance value acc. To Box 29)(Cl. 10(a)(II)) 24. Rate of interest payable acc. To Cl. 11(f) and, if applicable, acc. To PART IV 25. Currency and method of payment (Cl. 11) United States Dollars (USD), in same day funds by SWIFT of by other tested key electronic money transfer 26. Place of payment; also slate beneficiary and bank account (Cl. 11) Rotterdam, The Netherlands Owners' bank account nr. 24.07.56.185 with FORTIS BANK (NEDERLAND) N.V. 27. Bank guarantee/bond (sum and place)((Cl. 24)(optional) See Clause 32A and 22(b) 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business)(Cl. 12) First Quadripartite Agreement and First Mortgage in favour of the First Mortgagee. Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee. Third priority mortgage in favour of Charterers as security for the Seller's Credit 29. Insurance (hull and machinery and war risks)(state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k))(also state if Cl. 14 applies) Clause 14 does not apply. As regards the insured amount for Clause 13(f) purposes, see Clause 34 30. Additional insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g) Not applicable 31. Additional insurance cover, if any, for Charterers' account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) Not applicable 32. Latent defects (only to be filled in if period other than stated in CI. 3) Not applicable 33. Brokerage commission and to whom payable (Cl. 27) Not applicable 34. Grace period (state number of clear banking days)(Cl. 28) Three (3) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) 30(a) 36. War cancellation (indicate countries agreed)(Cl. 26(f)) Not applicable 37. Newbuilding Vessel (indicate with "yes" or "no": whether PART III applies)(optional) Not applicable 38. Name and place of Builders (only to be filled in if PART III applies) Not applicable 39. Vessel's Yard Building No. (only to be filled in if PART III applies) Not applicable 40. Date of Building Contract (only to be filled in if PART III applies) Not applicable 41. Liquidated damages and costs shall accrue to (state party acc. To Cl. 1) a) Not applicable b) c) 42. Hire/Purchase agreement (indicate with "yes" or "no" whether PART IV applies)(optional) Not applicable 43. Bareboat Charter Registry (indicate "yes" or "no" whether PART V applies)(optional) Not applicable 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) Not applicable 45. Country of the Underlying Registry (only to be filled in if PART V applies) Not applicable 46. Number of additional clauses covering special provisions, if agreed) Clauses number 32, 33, 34 PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. Signature (Owners) Signature (Charterers) /s/ Alexandra Tatagia /s/ Andreas Louka - ------------------------------ --------------------------------- PART II "BARECON 2001" Standard Bareboat Charter 1. Definitions In this Charter, the following terms shall have the meanings hereby assigned to them: "The Owners" shall mean the party identified in Box 3; "The Charterers" shall mean the party identified in Box 4; "The Vessel" shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12. See also Clause 33 2. Charter Period In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the period stated in Box 21 ("The Charter Period"). 3. Delivery (not applicable when Part III applies, as indicated in Box 37) (a) The Vessel to be delivered under this Charter by the Owners to the Charterers on an "as is-where is" basis (and, in any event, as delivered under the MOA (as defined in Clause 33 by the Charterers as sellers to the Owners as buyers) and without any warranty whatsoever by the Owners. Owners shall also not be liable for any latent defects. (b) The delivery of the Vessel by the Owners and the taking over of the Vessel by the Charterers shall constitute a full performance by the Owners of all the Owners' obligations under this Clause 3. 4. Time for Delivery (not applicable when Part III applies, as indicated in Box 37) The delivery of the Vessel under this Charter shall be made simultaneously with the delivery under the MOA 5. Cancelling (not applicable when Part III applies, as indicated in Box 37) (a) This Charter shall be cancelled in the event the MOA is cancelled. Any extension of the cancelling date of the MOA shall, unless otherwise specifically agreed, constitute a similar extension of the cancelling date of this Charter. (b) deleted (c) Cancellation under this Clause 5 shall be without prejudice to any claim a party hereto may otherwise have on the other party under this Charter. 6. Trading Restrictions The Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box 20. The Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the contracts of insurance (including any warranties expressed or implied therein) without first obtaining the specific consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. The Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation, destruction, seizure or confiscation. Notwithstanding any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded from the cargo permitted to be loaded or carried under this Charter. This exclusion does not apply to radio-isotopes used or intended to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Owners' prior approval has been obtained to loading thereof. Always provided that nothing permitted under this Clause shall in any way violate the terms of the Financial Instruments, as same are defined in Clause 33. 7. Surveys on Delivery and Redelivery (not applicable when Part III applies, as indicated in Box 37) The Owners and the Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of redelivery hereunder. The Charterers shall bear all expenses of-the-Off-hire Survey including loss of time, if any, at Society indicated in Box 10 and maintain all other necessary certificates in force at all times. (ii) New Class and Other Safety Requirements - In the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation costing (excluding the Charterers' loss of time) more than the percentage stated in Box 23 or if Box 23 is left blank, 5 per cent of the Vessel's insurance value as stated in Box 29 then the extent, if any, to which the rate of hire shall be varied and the ratio in which the cost of compliance shall be shared between the parties concerned in order to achieve a reasonable distribution thereof as between the Owners and the Charterers having regard, inter alia, to the length of the period remaining under this Charter shall, in the absence of agreement, be referred to the dispute resolution method agreed in Clause 30. In any event the Charterers are obliged to redeliver the Vessel in full compliance with all the requirements and regulations of the SOLAS and/or IMO for worldwide trading applicable or provided for at the time of redelivery, including also any U.S. Coast Guard requirements for the trading of the Vessel in U.S.A. territories. (iii) Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including federal, state or municipal or other division or authority thereof, to enable the Vessel, without penalty or charge, lawfully to enter, remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter without any delay. This obligation shall apply whether or not such requirements have been lawfully imposed by such government or division or authority thereof. The Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at the Charterers' sole expense and the Charterers shall fully indemnify the Owners against all consequences whatsoever (including loss of time) for any failure or inability to do so. (b) Operation of the Vessel - The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required, repair the Vessel during the Charter Period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter, including any foreign general municipality and/or state taxes. However the Owners shall pay for the Vessel's annual tonnage taxes due to the flag State. The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners, and shall in any event be promptly and fully paid by the Chatterers., Charterers shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law. (c) The Charterers shall keep the Owners and the Mortgagee(s) advised of the intended employment, planned dry-docking and major repairs of the Vessel, as reasonably required. (d) Flag and Name of Vessel - During the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel insignia and fly their own house flag. The Charterers shall also have the liberty, however always with the Owners' prior consent, which shall not be unreasonably withheld, to the daily equivalent to the rate of hire or pro rata thereof. 8. Inspection The Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf:- (a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained. The costs and fees for such inspection or survey shall be paid by the Owners unless the Vessel Is found to require repairs or maintenance in order to achieve the condition so provided; (b) in dry-dock if the Charterers have not dry-docked 44her in accordance with Clause 10(c0. The costs and fees for such inspection or survey shall be paid by the Charterers; and (c) for any other commercial reason they consider necessary (provided it does not unduly interfere with the commercial operation of the Vessel). The costs and fees for such inspection and survey shall be paid by the Owners. All time used in respect of inspection, survey or repairs shall be for the Charterers' account and form part of the Charter Period: The Charterers shall also permit the Owners to inspect the Vessel's log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. All the above are without prejudice to the rights of inspection which the Mortgagees (as defined in Clause 33) have under the relevant terms of the Financial Instruments; the Charterers shall at all tines allow the respective Mortgagee to exercise same. 9. Inventories, Oil and Stores A complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Owners shall at the time of redelivery take over and pay only for all bunkers; and lubricating oils, in the Vessel at the then current market prices at the ports of redelivery. The Charterers shall ensure that all spare parts listed in the inventory and used during the Charter Period are replaced at their expense prior to redelivery of the Vessel. No payment shall be made by the Owners on redelivery for provisions, paints, ropes, spare parts, etc.; they shall all become Owners' property on redelivery without any payment 10. Maintenance and Operation (a)(i)Maintenance and Repairs - During the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all permissible purposes of the Charterers and under their complete control in every respect, always subject to the terms and conditions of this Charter. The Charterers shall maintain the Vessel, her machinery, boilers, appurtenances and Spare parts in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice and, at their own expense, they shall at all times keep the Vessel's Class fully up to date with the Classification change the flag and/or the name of the Vessel during the Charter Period, if this becomes necessary for the proper trading of the Vessel; however in any such case the Charterers shall fully cover all the expenses relevant to such change including, but without limitation, the financial, legal and other costs relevant to the registration of such changes and the drafting, execution and/or registration of any documentation relevant to the Financial Instruments and/or to any other transactions required by the Mortgagees in view of any such change. Provided always that no such change of name or flag shall be allowed without the prior written consent of the Mortgagees.- Painting and re-painting, instalment and re-instalment, registration and re-registration, if required by the Owners, shall be at the Charterers' expense and time. (e) Changes to the Vessel - Subject to Clause 10(a)(ii) the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances or spare parts thereof without in each instance first securing the Owners' approval thereof. If the Owners so agree, the Charterers shall, lithe Owners so require, restore the Vessel to its former condition before the termination of this Charter. (f) Use of the Vessel's Outfit. Equipment and Appliances - The Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as shall be so damaged or worn as to be unfit for use. The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right to fit additional equipment at their expense and risk but the Charterers shall remove such equipment at the end of the period if requested by the Owners. Any equipment including radio equipment on hire on the Vessel at the time of delivery shall be kept and maintained by the Charterers and the Charterers shall assume the obligations and liabilities of the Owners under any lease contracts in connection therewith and shall reimburse the Owners for all expenses incurred in connection therewith, also for any new equipment required in order to comply with radio regulations. (g) Periodical Dry-Docking - The Charterers shall dry-dock the Vessel and dean and paint her underwater parts whenever the same may be necessary, but not less than once during the period stated in Box 19 or if Box 19 has been left blank, thirty six (36) calendar months after delivery or such other period as may be required by the Classification Society or flag State. (h) Management-The commercial, technical and/or operational management of the Vessel shall be carried out during the Charter Period by TOP TANKERS MANAGEMENT INC. or any other first class company acceptable to the Owners and the Mortgagees. Such management to be cost free for the Owners, who shall not be liable to any extent by reason of having approved such managers. In addition such approval by the Owners shall in no way constitute any limitation, discharge or waiver of any of Charterers' obligations or liabilities under and pursuant to this Charter. (j) Compliance - The Charterers shall comply with any and all requirements under the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organization and any applicable law. (k) Financial Statements - The Charterers shall submit to the Owners and the Mortgagees their audited annual accounts as well as those of the Charter Guarantor (as the latter Is defined in Clause 33), within 180 days of each year end and semiannual management accounts within 90 days of the half-year end. (l) Survey Reports - The Charterers shall regularly supply the Owners with the Classification survey reports, including but not limited the annual survey and follow up reports, all showing, among others, that any recommendation has been promptly and timely cleared at the Charterers' time and expense. The Charterers undertake to keep the condition of the Vessel and all her certificates in the best possible condition and standards for a vessel of the type and age of the Vessel and in any event to maintain the Vessel always in full compliance with the highest/strictest requirements of the Vessel's Classification Society, her flag State and all other applicable rules and/or requirements throughout the Chatter Period. Without prejudice to the generality of - the foregoing the coatings of the ballast tanks of the Vessel must be maintained by the Charterers in accordance with the Vessel's highest/strictest Classification standards throughout the duration of the Charter Period Inclusive of the time of redelivery. Without prejudice to the above and notwithstanding anything to the contrary herein, the Charterers shall, not later than her next special survey, at their own time and expense upgrade the coatings of all the Vessel's ballast tanks so as to bring them up to the highest Classification standards and described by the latter as being In "good" condition. In addition and within the same time period the Charterers shall, also at their own time and expense, rectify the two conditions of Class which exist against the Vessel at the time of delivery, namely items 008 and 009, to the full satisfaction of the Class. (m) Reporting and Owners' Representative-Throughout the duration of this Charter the Charterers shall keep the Owners closely informed about the Vessel's position and itinerary as well as the cargo carried on board and the Vessel's schedule, by providing such information in writing every fifteen (15) running days. The Owners shall have the right to place one representative on board the Vessel who will travel with the Vessel and have free access to communicate with the Owners. The latter shall pay for the relevant communication expenses but will not be charged for the victualling of their representative which shall be provided without charge. The representative shall not have the right to interfere with the operation of the Vessel, but shall have free access to all parts thereof and to all Vessel's log books. 11. Hire (a) The Charterers shall pay hire due to the Owners punctually in accordance with the terms of this Charter in respect of which time shall be of the essence. (b) The Charterers shall pay to the Owners for the hire of the Vessel on a monthly basis a lump sum in the amount indicated in Box 22 which shall be payable not later than every thirty (30) running days in advance, the first lump sum being payable on the date and hour of the Vessel's delivery to the Charterers. Hire shall be paid continuously throughout the Charter Period. (c) Payment of hire shall be made in cash without discount in the currency and in the manner indicated in. Box 25 and at the place mentioned in Box 26. Hire shall always be punctually paid free and clear of any right of set-off, discount, reduction or delay whatsoever. (d) Final payment of hire, if for a period of less than thirty (30) running days, shall be calculated proportionally according to the number of days and hours remaining before redelivery and advance payment to be effected accordingly. (e) Notwithstanding whether the Vessel be lost or missing, hire shall be fully paid by the Charterers to the Owners as provided in Clause 32E hereunder. (f) Any delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed in Box 24. If Box 24 has not been filled in, the three months Interbank offered rate in London (LIBOR or its successor) for the currency stated in Box 25, as quoted by the British Bankers' Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply. (g) Payment of interest due under sub-clause 11(f) shall be made immediately irrespective of whether the Owners have submitted their relevant interest invoice to the Charterers. (h) If at any time the Charterers are required to make any deduction or withholding in respect of any kind of taxes from any payment due under this Charter for the account of the Owners, the sum due from the Charterers in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Owners receive on the due date for such payment (and retain, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which they would have received had no such reduction or withholding been required to be made and the Charterers shall fully indemnify the Owners against any losses or costs incurred by them by reason of any failure of the Charterers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Charterers shall promptly deliver to the Owners any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 12. Mortgages (only to apply if Box 28 has been appropriately filled in) *)(b)The Vessel chartered under this Charter is subject to the Financial Instruments and the mortgages, as same appear in Box 28. The Charterers undertake to comply, and provide such information and documents to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in the Financial Instruments or as may be directed from time to time during the currency of the Charter by the Mortgagee or any of them in conformity with the Financial Instruments. The Charterers confirm that, for this purpose, they have acquainted themselves with all relevant terms, conditions and provisions of the Financial Instruments and agree to acknowledge this in writing in any form that may be required by the Mortgagee *) (Optional, Clauses 12(a) and 12(6) are alternatives; indicate alternative agreed in Box 28). 13. Insurance and Repairs (a) Throughout the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war and Protection and Indemnity risks (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) with first class underwriters and P&I Clubs and in such form as the Owners shall in writing approve, which approval shall not be un-reasonably withheld. The Charterers shall also at their expense take out any other insurance which the Mortgagees may reasonably require. All such insurances shall be arranged by the Charterers to protect the interests of both the Owners and the Charterers, and the Charterers shall be at liberty to protect under such Insurances the Interest of any managers they may appropriately appoint. The relevant insurance policies shall cover the Owners and the Charterers according to their respective interests. Upon the request of a Mortgagee, the Charterers shall arrange that such Mortgagee is named as a co-assured in any of the above insurances that the said Mortgagee has to be named as such. In addition, throughout the Charter Period, the Charterers shall pay to the First Mortgagee and the Second Mortgagee the cost (in the amount to be conclusively certified by the First Mortgagee and the Second Mortgagee in writing) of any mortgagee's Interest insurance-including mortgagee's additional perils (all P&I risks) coverage-which the Mortgagees or either of them may from time to time effect in respect of the Vessel upon such terms and in such amounts as the Mortgagees shall deem desirable. The Mortgagees shall have the right to enforce the benefit of this Clause by taking direct action against the Charterers In seeking to get paid or to recover the payment of any monies payable to them hereunder. Subject to the provisions of the Financial Instruments and the approval of the Owners and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. The insurances shall not be subject to any deduction, franchise or any other restrictions of similar effect The Charterers also to remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. All time used for any repairs, whether under the provisions of this sub-clause 13(a) or otherwise howsoever, including any deviation, shall be for the Charterers' account. (b) deleted (c) The Charterers shall upon the request of the Owners, provide information and promptly execute such documents as may be required to enable the Owners to comply with the insurance provisions of the Financial Instruments. (d) Subject to the provisions of the Financial Instruments should the Vessel become an actual, constructive, compromised or agreed total loss under - the insurances required ounder sub-clause 13(a), all insurance payments for such loss shall be paid to the First Mortgagees or, as the case may be, the Second Mortgagees who shall distribute the moneys In accordance with the relevant Financial Instruments. The Charterers undertake to notify the Owners and the Mortgagee of any occurrences in consequence of which the Vessel is likely to become a total loss as defined in this Clause and of all other occurrences as required under the Financial Instruments. (e) Subject to the Financial Instruments, the Owners shall upon the request of the Charterers, promptly execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a constructive total loss. (f) For the purpose of the insurance coverage of each insurance against mentioned herein the Insured amount shall be the sum indicated in Clause 34. 15. Redelivery At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a freely accessible, safe and ice-free port or place as indicated in Box 16 in such safe berth or anchorage as the Owners may direct. The Charterers shall give the Owners not less than thirty (30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than fourteen (14) running days' definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel's position shall be notified immediately to the Owners. The Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within the Charter Period or on the date of a sale of the Vessel in accordance with Clause 22 at the place as directed by the Owners. Notwithstanding the above, should the Charterers fail to redeliver the Vessel within the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire stated in Box 22 plus 10 per cent. or to the market rate, whichever is the higher, for the number of days by which the Charter Period or the date of sale is exceeded. In the latter case the Charterers shall also be liable to reimburse the Owners any further damages and/or losses which the latter may suffer as a result thereof. All other terms, conditions and provisions of this Charter shall continue to apply. Subject to the provisions of Clause 10, the Vessel shall -be redelivered 4o the Owners in the same or as good structure, state, condition and class as that in which she was delivered, in any event free of any and all Class conditions and/or recommendations, fair wear and tear not affecting class excepted. On redelivery the Vessel shall have been dry-docked as per Class requirements or as otherwise may be appropriate or necessary. The Vessel upon redelivery shall have all her survey cycles up to date and all her trading, national, international and class certificates clean, valid and unextended for at least the number of months agreed in Box 17. 16. Non-Lien The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the Owners in the Vessel. The Charterers further agree to fasten to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a-notices reading as follows: (a) This Vessel is the property of (name of Owners). It is under charter to IDI SHIPPING COMPANY LIMITED of Liberia and by the terms of the Charter Party neither the Charterers nor the Master have any right, power or authority to create, incur or permit to be imposed on the Vessel any lien whatsoever." (b) "NOTICE OF MORTGAGE This Vessel is subject to a first priority mortgage and deed of covenant in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012AE, Rotterdam, the Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of this Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". (c) "NOTICE OF SECOND MORTGAGE This Vessel is subject to a second priority mortgage and deed of covenant in favour of MAAS CAPITAL INVESTMENTS B.V. of Coolsingel 93, 3012AE, Rotterdam, The Netherlands. Under the said mortgage, neither the Owners nor any charterer nor the Master of the Vessel has any right, power or authority to create, incur or permit to be imposed upon this Vessel any commitments or encumbrances whatsoever other than for crew's wages and salvage". Furthermore, the Charterers shall throughout the duration of this Charter procure that all their orders for any kinds of supplies (including but not limited to bunkers and luboil) for the Vessel are appropriately marked so as to warn all suppliers in advance that such supplies are exclusively provided to and payable by the Charterers, the suppliers not having any right of lien or suit against the Vessel and/or the Owners. All delivery receipts for such supplies shall also be appropriately marked by the Charterers before the supplies are delivered to the Vessel. 17. Indemnity (a) The Charterers shall fully indemnify the Owners, the Mortgagees and their respective successors, assigns, directors, shareholders, officers, servants and/or agents (collectively "the Indemnified Parties") from and against any loss, damage, claim, cost and/-or expense incurred by them or any of them arising out of or in relation to the operation of the Vessel by the Charterers (including but without limitation, costs of operating and maintaining the Vessel, environmental(.) claim or any claim based on environmental laws), and against any lien of whatsoever nature arising out of an event occurring during the Charter Period. If the Vessel be arrested or otherwise detained by reason of claims or liens arising out of or during her operation hereunder by the Charterers, the Charterers shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. Without prejudice to the generality of the foregoing, the Charterers agree to fully indemnify the Owners the Indemnified Parties against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. (b) If the Vessel be arrested or otherwise detained by reason of a claim or claims for which the Owners are exclusively liable hereunder, the Owners shall at their own expense take all reasonable steps to secure that within a reasonable time the Vessel is released, including the provision of bail. In such circumstances the Owners shall fully indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including hire paid under this Charter) as a direct consequence of such arrest or detention. 18. Lien The Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers and any Bill of Lading freight for all claims under this Charter; provided however that any such liens will be subordinate to any security interest the Mortgagees may have over the same property. 19. Salvage All salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall be borne by the Charterers. 20. Wreck Removal In the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall fully indemnify the Owners or any other indemnified Party against any sums whatsoever which the Owners or any other Indemnified Party shall-may become liable to pay and may pay in consequence of the Vessel becoming a wreck or obstruction to navigation. 21. General Average The Owners shall not contribute to General Average. 22. Assignment, Sub-Charter and Sale (a) The Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis except with the prior consent in writing of the Owners and the Mortgagees, in their absolute discretion and subject to such terms and conditions as the Owners and the Mortgagees shall approve. (b) The Owners may sell the Vessel during the currency of this Charter subject to the buyer accepting an assignment of this Charter or entering into a reasonable novation agreement, and subject to any approvals required by the Mortgagees pursuant to the Financial Instruments. In case of such sale the Charterers shall be obliged to delete the mortgage in their favour stated in Box 28 and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and In the amount of USD 2,550,000. 23. Contracts of Carriage *)(a)The Charterers are to procure that all documents issued during the Charter Period evidencing the terms and conditions agreed in respect of carriage of goods shall contain a paramount clause incorporating any legislation relating to carrier's liability for cargo Compulsorily applicable in the trade; if no such legislation exists, the documents shall incorporate the Hague-Visby Rules. The documents shall also contain the New Jason Clause and the Both-to-Blame Collision Clause. *) Delete as applicable. 25. Requisition/Acquisition (a) Without prejudice to Clause 32E in the event of the Requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to as 'Requisition for Hire") irrespective of the date during the Charter Period when 'Requisition for Hire' may occur and irrespective of the length thereof and whether or not it be for an indefinite or a limited period of time, and irrespective of whether it may or will remain in force for the remainder of the Charter Period, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire in the manner provided by this Charter until the time when the Charter would have terminated pursuant to any of the provisions hereof. (b) Without prejudice to Clause 32E in the event of the Owners being deprived of their ownership in the Vessel by any Compulsory Acquisition of the Vessel or requisition for title by any governmental or other competent authority (hereinafter referred to as "Compulsory Acquisition"), then, irrespective of the date during the Charter Period when "Compulsory Acquisition" may occur, this Charter shall not be deemed thereby or thereupon to be frustrated or otherwise terminated and the Charterers shall continue to pay the stipulated hire until the time when the Charter would have been terminated pursuant to any of the provisions hereof. 26. War (a) For the purpose of this Clause, the words "War Risks" shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel. (b) The Vessel, unless the express written consent of the Owners be first obtained, shall not continue to or go through any port, place, area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous, after her entry into it, the Owners shall have the right to require the Vessel to immediately leave such area. (c) The Vessel shall not load contraband cargo, nor shall pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, nor shall proceed to an area where she shall be subject, or is likely to be subject to a belligerent's right of search and/or confiscation. (d) If the insurers of the war risks insurance, should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject to additional premiums -because of War Risks, then such premiums and/or calls shall be promptly paid by the Charterers. (e) The Charterers shall have the liberty: (i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages. destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions; (ii) to comply with the orders, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance; (iii) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement. (f) Without prejudice to Clause 32E in any and all the events of outbreak of war (whether there be a declaration of war or not) the stipulated hire shall continue to be paid in accordance with Clause 11. 28. Termination (a) Charterers' Default Subject to the Financial Instruments, the Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by written notice to the Charterers if: (i) the Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure to Make punctual payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers' bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 34 (as recognised at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners' notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay hire within the number of days stated in Box 34 of their receiving the Owners' notice as provided herein, shall entitle the Owners to withdraw the Vessel from the service of the Charterers and terminate the Charter without further notice; (ii) the Charterers fail to comply with the requirements of (1) Clause 6 (Trading Restrictions) (2) Clause 13(a) (Insurance and Repairs) provided that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within which to rectify the failure without prejudice to the Owners' right to withdraw and terminate under this Clause if the Charterers fail to comply with such notice; (iii) the Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i) (Maintenance and Repairs) as soon as practically possible after the Owners have requested them in writing so to do and in any event so that the Vessel's insurance cover is not prejudiced. (iv) the Charter Guarantor (as defined in Clause 33) breaches or fails to meet any of the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement or Clause 10 of the Charter Guarantee (as same is defined in Clause 32A(a). (b) Owners' Default If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the Vessel and such breach continues for a period of forty five (45) running days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to the Owners. (c) Loss of Vessel Without prejudice to Clauses 11(e) and 32E, this Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss. For the purpose of this sub-clause, the Vessel shall not be Deemed to be lost unless she has either become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred. (d) Subject to the Mortgagees' prior approval, either party shall be entitled to terminate this Charter with immediate effect by written notice to the other party in the event of (i) an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the other party (otherwise than for the purpose of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment, Ceases to carry on business or makes any special arrangement or composition with its creditors , or (ii) the Charter Guarantor, as defined in Clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments. (e) The termination of this Charter shall be without prejudice to all rights accrued due between the parties prior to the date of termination and to any claim that either party might have. 29. Repossession In the event of the termination of this Charter in accordance with the applicable provisions of Clause 28 the Owners shall have the right to repossess the Vessel from the Charterers at her current or next port of call, or at any other port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance with this Clause 29 the Charterers shall hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners' representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the sole responsibility of the Charterers. 30. Dispute Resolution (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been appointed by agreement Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. (d) Notwithstanding (a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Contract. In the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:- (i) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the "Mediation Notice") calling on the other party to agree to mediation. (ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator. (iii) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties. (iv) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest. (v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration. (vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediators costs and expenses. (vii) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration. (Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.) (e) If Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply. Sub-clause 30(d) shall apply in all cases. *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives: indicate alternative agreed in Box 35. 31. Notices (a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, telex, registered or recorded mail or by personal service. (b) The address of the Parties for service of such communication shall be as stated in Boxes 3 and 4 respectively. 32. Special Provisions A. Additional Securities a. Charter Guarantee The Charterers shall procure and ensure that the Charter Guarantor, shall unconditionally and irrevocably guarantee the performance of the Charterers under this Charter as a primary obligor and not merely as a surety, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees and to include the Financial Undertakings provided in Clause 7.2 of each of the First Quadripartite Agreement and the Second Quadripartite Agreement. This guarantee shall remain in place throughout the whole duration of this Charter, even in case of the sale of the Vessel under Clause 22(b) hereof. b. Collateral Guarantees Without prejudice to the- provisions of Clause 32A(a) hereinabove and in addition to the relevant security provided thereby, the Charterers shall procure that the charterers of the rafts "SPOTLESS" "DOUBTLESS" and "VANGUARD" ("the Collateral Guarantors") shall unconditionally and irrevocably guarantee on a joint and several basis the performance of the Charterers under this Charter as primary obligors and not merely as surety, the relevant guarantee agreements to be in form and substance acceptable to the Owners and the Mortgagees. In addition the Charterers hereby undertake to unconditionally and irrevocably guarantee on a joint and several basis with the Collateral Guarantors the performance of each respective charter party of the m/ts "SPOTLESS", "DOUBTLESS" and "VANGUARD" by the respective charterer, the relevant guarantee agreement to be in form and substance acceptable to the Owners and the Mortgagees. The guarantees provided in this sub-Clause 32A(b) shall not be assignable by the Owners to the buyer of the Vessel under Clause 22(b) hereof. For the avoidance of any doubt all the securities provided in this Clause 32A shall be on a joint and several basis. B. Extension of the Charter Period At the request of the Owners which must be notified to the Charterers not later than three (3) months before the fifth anniversary of the date of delivery of the Vessel to the Charterers under this Charter and for the purpose of assisting the Owners to sell the Vessel, the Charter Period shall be extended for a period not longer than three (3) months at the option of the Owners. In such case the hire throughout such 3-month extended period shall be USD 5,000 per day. However in case the redelivery of the Vessel would have in any event delayed as a result of the Vessel not having completed a voyage, the hire shall be until the completion of such voyage at the rate provided in Clause 15 whilst the three months period provided under this sub-Clause 32B shall commence after the termination of such voyage. For any period of delay in the redelivery of the Vessel following the lapse of the said 3-month period extension, hire shall be payable in accordance with Clause 15. The Charterers shall make their best efforts to assist the Owners in selling the Vessel if and when the Owners require them to provide such assistance. C. Assignment of Sub-Charters The sub-charters of the Vessel during the Charter Period as well as all hire and freight payable to the Charterers thereunder shall be assigned to the Owners and the Mortgagees as provided by the Financial Instruments. D. Charterers' Compliance with the Financial Instruments The Charterers shall timely and promptly comply with all the terms and conditions of the Financial Instruments and/or as may be required by the Mortgagees by virtue thereof. E. "Hell and Highwater" Clause This Charter is a "hell and highwater" bareboat charter and the Charterers' obligation for payments hereunder shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any character, including (i) any setoff, counterclaim, recoupment, defence or other right which the Charterers or any other person may have against the Owners or any other person for any reason whatsoever, including any default by the -Owners or any other person in its respective obligations hereunder or under any other agreement, (ii) any unavailability of the Vessel, after its delivery and acceptance by the Charterers hereunder, for any reason, including any lack or invalidity of title or any other defect in the title, seaworthiness, condition, design, operation or fitness for use of the Vessel, or the ineligibility of the Vessel for documentation or for a particular trade, (iii) any failure or delay on the part of the Owners or any other person, whether with or without fault on its part, in performing or complying with any of the terms or covenants hereunder, or any other agreement, (iv) any damage to the Vessel or interruption or cessation in the use or possession thereof by the Charterers or any subcharterer for any reason whatsoever and of whatever duration including an actual, constructive, compromised or arranged total loss or requisition of title, (v) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding by or against the Owners, the Charterers, any subcharterer or any other person, (vi) any breach of any representation or warranty of, or any act or omission of, the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers, (vii) any breach of any representation or warranty of, or any act or omission of the Owners under, any agreement at any time existing between the Owners and the Charterers and/or any subcharterer, (viii) any deprivation of use of the Vessel by reason of any act or omission of the Owners, (ix) any claims as a result of any other business dealings by the Owners, the Charterers, any subcharterer or any other person, (x) the requisitioning, seizure or other taking of title to or use of the Vessel by any governmental or other competent authority or otherwise whether or not by reason of any act or omission of the Owners, the Charterers, or any subcharterer, or any other deprivation or limitation of use of the Vessel in any respect or for any length of time, whether or not resulting from accident and whether or not without fault on the part of the Charterers or any subcharterer, (xi) any embargo on the shipment of any products or any prohibition against the loading or discharging of vessels containing the same, WO the interference with or prohibition of the Charterers' or any subcharterer's use of the Vessel, (xiii) the invalidity or unenforceability or lack of due authorization or other infirmity of this Charter or any other subcharter, (xiv) the lack of right, power or authority of the Owners to enter into this Charter, (xv) any ineligibility of the Vessel for any particular trade or activity, whether due to any failure of the Owners, the Charterers, any subcharterer or any other person to comply with any applicable law or otherwise, (xvi) any event of force majeure or any frustration, (xvii) any applicable law or (xviii) any war or any other event that automatically or by election cancels any available insurance cover or (xix) for any other cause, circumstance or happening, whether similar or dissimilar to the foregoing, any present or future applicable law to the contrary notwithstanding. The Charterers hereby waive, to the extent permitted by applicable law, any and all rights which they may now have or which at any time hereafter may be conferred upon them, by statute or otherwise, to terminate, cancel, quit or surrender this Charter or to any abatement, suspension, deferment, return or reduction of hire except in accordance with the express terms hereof. If for any reason whatsoever this Charter shall be terminated in whole or in part by operation of law or otherwise as specifically provided herein, the Charterers nonetheless agree to pay to the Owners or to the person entitled thereto an amount equal to each payment of hire at the time such payment would have become due and payable in accordance with the terms hereof had this Charter not been terminated in whole or in part; each payment of hire made by the Charterers shall be final, and the Charterers will not seek to recover all or any part of such payment from the Owners for any reason whatsoever,-except for manifest error. 33. Definitions "Charter Guarantor" means Top Tankers Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960; "First Mortgagee" means Fortis Bank (NEDERLAND) N.V. of Coolsingel 93, 3012AE (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as any person that may replace the First Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Vessel to be executed by the Owners in favour of the First Mortgagee; "First Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the First Mortgagee; "MOA" means the Memorandum of Agreement dated 14.3.2006 and made between the Charterers, as sellers and the Owners, as buyers, pursuant to which the Owners have agreed to buy and the Charterers have agreed to sell the Vessel on the terms and conditions mentioned therein; "Second Mortgage" means the second preferred ship mortgage on the Vessel to be executed by the Owners in favour of the Second Mortgagee; "Second Mortgagee" means Maas Capital Investments B.V., a company incorporated under the laws of The Netherlands whose registered office is at Coolsingel 93, 3112AE, Rotterdam, The Netherlands and includes its successors in title, assignees or transferees; "Second Quadripartite Agreement" means the deed of assignment to be executed by the Owners, the Charterers and the Charter Guarantor in favour of the Second Mortgagee; "Sellers' Credit" means the amount of USD 2,550,000 as provided in Clause 17 of the MOA. "Financial Instrument" means: (a) in the case of the First Mortgagee, the First Quadrapartite Agreement, and the First Mortgage; or (b) in the case of the Second Mortgagee, the Second Quadrapartite Agreement and the Second Mortgage, and "Financial Instruments" means both of them; and "Mortgagees" means, together, the First Mortgagee and the Second Mortgagee. 34. Insured Amount [for the purposes of Clause 13(f)] For the purposes of Clause 13(f) and at any relevant time, the insured amount for the relevant insurances effected or, as the case may be, to be effected for the Vessel will be an amount in United States Dollars equal to the higher of (i) the market value of the Vessel at such relevant time (as such market value is determined by an independent firm of shipbrokers appointed by the Owners in their sole discretion) and (ii) the amount required under the relevant terms of either Financial Instrument, if any. Each valuation made for the purposes of this Box, shall be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any charterparty or other engagement concerning the Vessel. The value of the Vessel determined in accordance with the provisions hereof shall be binding upon the parties hereto until such time as any further such valuation shall be obtained. EX-4.52 49 d759408_ex4-52.txt Exhibit 4.52 Private & Confidential Dated 15 March 2006 STARCRAFT MARINE CO. as Owner (1) GRAMOS SHIPPING COMPANY INC. as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) QUADRIPARTITE DEED relating to m.v. Faithful Contents Clause Page 1 Definitions........................................................2 2 Representations and warranties.....................................7 3 Assignment........................................................11 4 Owner's Assignment................................................12 5 Continuing security and other matters.............................13 6 Charterer's undertakings .........................................16 7 Charter Guarantor's undertakings..................................17 8 Covenants concerning insurance and operational matters............22 9 Powers of Mortgagee to protect security and remedy defaults.......28 10 Powers of Mortgagee on Event of Default...........................29 11 Application of moneys.............................................30 12 Remedies cumulative and other provisions..........................31 13 Costs and indemnity...............................................32 14 Attorney..........................................................32 15 Further assurance.................................................33 16 Consent, Termination of Charter and Quiet Enjoyment...............33 17 Continuation of Charter Period....................................35 18 Notices...........................................................35 19 Counterparts......................................................36 20 Severability of provisions........................................36 21 Law and jurisdiction.............................................36 Schedule 1 Forms of Loss Payable Clauses..................................38 Schedule 2 Forms of Notices of Assignment of Insurances...................39 THIS QUADRIPARTITE DEED is dated 15 March 2006 BETWEEN: (1) STARCRAFT MARINE CO. a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner"); (2) GRAMOS SHIPPING COMPANY INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Tucker Navigation Co., Kemp Maritime S.A. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) the Mortgagee as agent, arranger, account bank, security agent and trustee and (4) Fortis Bank (Nederland) N.V. as swap provider (the "Swap Provider" and together with the Agent (as defined in the Loan Agreement) and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 14 March 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 14 March 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of the Maritime Act of 1990 as amended of the Republic of the Marshall Islands as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Faithful Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount' means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account' means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity' means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Faithful General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated ict March 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means at any relevant time, all liabilities actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Faithful General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Owner pursuant to the Loan Agreement and/or the Master Swap Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Faithful registered as a Marshall Islands ship under Official Number 1689 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether ay contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is o be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties. The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable- to the Faithful Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors ()party of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8. Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (k) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (l) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (m) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (n) rental payments under Finance Leases; (o) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (p) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (q) preference share capital redeemable prior to the last day of the period of the Charter; (r) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (s) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (t) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the Loan and the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which s' Ian at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Marshall Islands ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Marshall Islands flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Marshall Islands law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Faithful Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy cc the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or Hause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shal;.(as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint) shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further irstalments of charterhire snail become due and payable on any date after the earlier of the expii y of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: + 30 210 6978 107 Attention: Legal Department (c) to the Mortgagee at: Fortis Bank (Nederland) N.V. Cools ingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, STARCRAFT MARINE CO. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner") and by a Quadripartite Deed dated [.] 2006, GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Faithful and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which STARCRAFT MARINE CO., of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner") or GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) STARCRAFT MARINE CO. (the "Owner") of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and GRAMOS SHIPPING COMPANY INC. (the "Charterer') of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, the owners and demise charterers respectively of the motor vessel Faithful HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [s] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ------------------------------ Signed For and on behalf of STARCRAFT MARINE CO. Dated [o] 2006 - ------------------------------ Signed For and on behalf of GRAMOS SHIPPING COMPANY INC. Dated [o] 2006 EXECUTED as a DEED by DIMITRI GIOMELAKIS /s/ Dimitri Giomelakis for and on behalf of ------------------------- STARCRAFT MARINE CO. /s/ Helen Dawson - ----------------------------- in the presence of: Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED by Andreas Loucas /s/ Andreas Loucas for and on behalf of ------------------------- GRAMOS SHIPPING COMPANY INC. /s/ Helen Dawson - ----------------------------- in the presence of: Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED by Andreas Loucas /s/ Andreas Loucas for and on behalf of ------------------------- TOP TANKERS INC. /s/ Helen Dawson - ----------------------------- in the presence of: Witness Helen Dawson Name: Trainee Solicitor Address: Norton Rose Occupation: EXECUTED as a DEED by Helen Dawson /s/ Helen Dawson FORTIS BANK (NEDERLAND) N.V. ------------------------- /s/ Vikki Madia - ------------------------------ in the presence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EX-4.53 50 d759408_ex4-53.txt Exhibit 4.53 Private & Confidential Dated 15 March 2006 STARCRAFT MARINE CO. (1) as Owner GRAMOS SHIPPING COMPANY INC. (2) as Charterer TOP TANKERS INC. as Charter Guarantor (3) and MAAS CAPITAL INVESTMENTS B.V. (4) SECOND PRIORITY QUADRIPARTITE DEED relating to m.v. Faithful NORTON ROSE Contents Clause Page 1 Definitions............................................................2 2 Representations and warranties.........................................8 3 Assignment............................................................12 4 Owner's Assignment....................................................12 5 Continuing security and other matters................................ 13 6 Charterer's undertakings..............................................16 7 Charter Guarantor's undertakings......................................17 8 Covenants concerning insurance and operational matters................22 9 Powers of Mortgagee to protect security and remedy defaults...........29 10 Powers of Mortgagee on Event of Default...............................29 11 Application of moneys.................................................30 12 Remedies cumulative and other provisions..............................31 13 Costs and indemnity...................................................32 14 Attorney..............................................................32 15 Further assurance.....................................................33 16 Consent, Termination of Charter and Quiet Enjoyment...................33 17 Continuation of Charter Period........................................35 18 Notices...............................................................35 19 Counterparts..........................................................36 20 Severability of provisions............................................36 21 Law and jurisdiction..................................................37 Schedule 1 Forms of Loss Payable Clauses...................................38 Schedule 2 Forms of Notices of Assignment of Insurances....................39 THIS SECOND PRIORITY QUADRIPARTITE DEED is dated 14 March 2006 BETWEEN: (1) STARCRAFT MARINE CO. a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner"); (2) GRAMOS SHIPPING COMPANY INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) MAAS CAPITAL INVESTMENTS B.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of sixty-four sixty-fourth shares in the Ship described in clause 1.2; (B) by a loan agreement (the "Loan Agreement") dated 14 March 2006 and made between (1) the Owner, Tucker Navigation Co., Kemp Maritime S.A. and Comoros Shipping Limited (therein and herein together referred to as the "Borrowers") and (2) the Mortgagee as lender, the Mortgagee agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $10,000,000; (C) pursuant to the Loan Agreement there has been or will be executed by the Owner in favour of the Mortgagee a second preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of the Maritime Act of 1990 as amended of the Republic of the Marshall Islands as security for the payment by the Borrowers of the Outstanding Indebtedness (as such expression is defined in the Mortgage); (D) the security constituted by the Mortgage and this Deed is in all respects subject and subordinate to the rights of the First Mortgagee under the First Mortgage and the First Quadripartite Deed of Assignment (as those expressions are defined in the Mortgage); (E) by a "Barecon 2001" bareboat charter (the "Charter") dated 14 March 2006 made between the Owner and the Charterer, the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (F) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (G) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Loan, the Owner and the Charterer should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee under the Loan Agreement and the other Security Documents; and (H) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Faithful Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred Thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter entered or (as the context may require) to be entered into by the Owner and the Charterer referred to in recital (E); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (F); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Mortgagee (acting as account bank) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "First Banks" means the banks and financial institutions whose names and addresses are set out in schedule 1 to the First Loan Agreement; "First General Assignment" means a first general assignment dated 15 March 2006 made between the Owner and the First Mortgagee whereby the Owner has assigned to the First Mortgagee the Earnings, the Insurances and any Requisition Compensation (each such term as defined therein) of the Ship; "First Loan" means the principal amount borrowed by the Borrowers from the First Banks under the First Loan Agreement or (as the context may require) the amount thereof at any time outstanding; "First Loan Agreement" means the loan agreement dated 14 March 2006 made between (1) the Borrowers, (2) Fortis Bank (Nederland) N.V. in its capacities as arranger, agent, swap provider and account bank, (3) the First Mortgagee and (4) the First Banks as lenders; "First Manager's Undertaking" means the manager's undertaking and first priority assignments executed (or as the context may require) to be executed by each Manager in favour of the Mortgagee; "First Mortgage" means the first preferred ship mortgage on the Ship dated 14 March 2006 executed by the Owner in favour of the First Mortgagee; "First Mortgage Documents" means, together, the First Mortgage, the First General Assignment, the First Manager's Undertaking, the First Operating Account Pledge, the First Security Assignment, the First Quadripartite Deed and the First Retention Account Pledge; "First Mortgagee" means Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands; "First Operating Account Pledge" means the first priority pledge executed (or as the context may require) to be executed by, inter alia, the Owner in favour of the Mortgagee in respect of, inter alia, the Faithful Operating Account; "First Quadripartite Deed" means the deed of assignment executed or (as the context may require) to be executed by the Owner and the Charterer in favour of the Mortgagee in such form as the Mortgagee shall approve; "First Retention Account Pledge" means the first priority pledge executed or (as the context may require) to be executed by the Borrowers in favour of the Mortgagee in respect of the Retention Account; "First Security Assignment" means the first priority charter assignment of the Doubtless Charter Guarantee, the Spotless Charter Guarantee and the Vanguard Charter Guarantee and the Doubtless Time Charter Assignment, the Faithful Time Charter Assignment, the Spotless Time Charter Assignment and the Vanguard Time Charter Assignment executed (or as the context may require) to be executed by the Owner in favour of the Mortgagee; "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "BPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Mortgagee pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in Schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Faithful General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Mortgage" means the first preferred mortgage mentioned in recital (C) hereto; "Mortgagee" includes the successors in title and assignees of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in Schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Faithful General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Security Documents or any of them; "Owner" includes the successors in title and permitted assignees of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon and the moneys from time to time owing by the Owner pursuant to the Loan Agreement (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the vessel m.v. Faithful registered as a Marshall Islands ship under Official Number 1689 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Reed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.8 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and, subject to the First Mortgage Documents, neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness the Charterer with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall (subject to the First Quadripartite Deed of Assignment) be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): any moneys payable under the Insurances, shall, subject to the First Quadripartite Deed of Assignment, be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall, subject to the First Quadripartite Deed of Assignment, be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 By way of security for payment of the Outstanding Indebtedness the Owner with full title guarantee (subject to the First Quadripartite Deed of Assignment) hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Faithful Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Agent. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee in respect of the Outstanding Indebtedness or any part thereof and the Mortgagee) and shall remain in full force and effect until the Outstanding Indebtedness has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee any right or remedy of the Mortgagee or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee fully indemnified against any loss suffered by the Mortgagee as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional All the rights, remedies and powers vested in the Mortgagee hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee under the Loan Agreement, this Deed, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee may be exercised from time to time and as often as the Mortgagee may deem expedient. 5.2.1 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness; or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee for the Outstanding Indebtedness or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness. 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings The Charterer hereby covenants with the Mortgagee and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments save for the First Quadripartite Deed of Assignment, assign or otherwise dispose of the Charterer's rights and obligations under the Charter; (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the Managers or terminate or amend the terms of either of the Management Agreements; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance (other than the First Mortgage Documents) over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; and 6.1.9 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; and 7.1.2 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 31 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity' means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of US Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee (and permitted by the First Mortgagee), in the joint names of the Owner, the Mortgagee and the Charterer and, if so required by the First Mortgagee, in the joint names of the Owner, the Charterer, the Mortgagee and the First Mortgagee (but without liability on the part of the Mortgagee or the First Mortgage for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as determined by the Mortgagee in its sole discretion); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of (aa) the First Loan, (bb) the Loan and (cc) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (including all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.10); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in one registration of Ship as a Marshall Islands ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Marshall Islands flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the Classification as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the Flag State or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Marshall Islands law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the Classification Society or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Faithful Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a second priority mortgage in favour of MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and will procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC; (b) in respect of such Ship; (c) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; (d) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1 (but subject to the First Mortgage Documents): 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default, the Mortgagee shall (subject to the rights of the First Mortgagee under the First Mortgage Documents) become forthwith entitled by notice given to the Owner in accordance with the provisions of clause 10.2 of the Loan Agreement to declare the Outstanding Indebtedness to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee in respect of: recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as the Mortgagee may require in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)00 above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall (subject to the First Mortgage Documents): 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated March 2006 made between, inter alia, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charterer has not failed to pay any charterhire in accordance with the terms of a notice (the "Notice") received by the Owner under the Charter Assignment or (e) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; 16.3.5 if the Charterer shall be in breach of the terms of the Notice; or 16.3.6 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable on any date after the earlier of the expiry of the period for the prepayment of the Loan specified in clause 4.3 of the Loan Agreement or the date upon which the Loan is prepaid in full in accordance with clauses 4.3 and 4.5 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) to the Owner at: c/o V&P Law Firm 61-65 Filonos Street 185 35 Piraeus Greece Fax no: 30 210 413 5505 Attention: Ms Aleka Tatagia (b) to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 697 8107 Attention: Legal Department (c) to the Mortgagee at: Maas Capital Investments B.V. R.01.1601 Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 5323 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London, W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 No term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, STARCRAFT MARINE CO. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Owner") and by a Quadripartite Deed dated [o] 2006, GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MI-196960 (the "Charterer") have each assigned (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) to MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Cooreingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. Faithful and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee or to its order. (2) Protection and indemnity Payment of any recovery which STARCRAFT MARINE CO., of Trust Company Complex, Ajeltake Road, Ajeltake Majuro, Marshall Islands MH96960 (the "Owner") or GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from MAAS CAPITAL INVESTMENTS B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall, subject to the prior rights of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands as first assignee thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) STARCRAFT MARINE CO. (the "Owner") of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and GRAMOS SHIPPING COMPANY INC. (the "Charterer") of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 the owners and demise charterers respectively of the motor vessel Faithful HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner (subject to the prior assignment dated Ajeltake to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AC Rotterdam, The Netherlands) with MAAS CAPITAL INVESTMENTS B.V. (the "Mortgagee") and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alia, the Charterer and the Owner (subject to the prior assignment dated [o] to FORTIS BANK (NEDERLAND) N.V of Coolsingel 93, 3012 AE Rotterdam, The Netherlands) with the Mortgagee, there has been assigned by us to the Mortgagee as second mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - ------------------------------- Signed For and on behalf of STARCRAFT MARINE CO. Dated [_] 2006 - ------------------------------- Signed For and on behalf of GRAMOS SHIPPING COMPANY INC. Dated [_] 2006 EXECUTED as a DEED by DIMITRI GLOMELAKIS /s/ DIMITRI GLOMELAKIS for and on behalf of ------------------------- STARCRAFT MARINE CO. Attorney-in-fact /s/ H.C. Dawson - ------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Andreas Louka /s/ Andreas Louka for and on behalf of ------------------------- GRAMOS SHIPPING COMPANY INC. Attorney-in-fact /s/ H.C. Dawson - ------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Andreas Louka /s/ Andreas Louka for and on behalf of ------------------------- TOP TANKERS INC. Attorney-in-fact /s/ H.C. Dawson - ------------------------- in the presence of: Witness Name: Helen Dawson Address: Trainee Solicitor Occupation: Norton Ross EXECUTED as a DEED by Helen Dawson /s/ Helen Dawson for and on behalf of ------------------------- MASS CAPITAL INVESTMENTS B.V. Attorney-in-fact /s/ Vikki Madia - ------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Ross Occupation: Piraeus EX-4.54 51 d759408_ex4-54.txt Exhibit 4.54 TOP TANKERS INC. Guarantee 14 March 2006 To: Starcraft Marine Co. of Trust Company Qomplex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Faithful (the "Ship") to Gramos Shipping Company Inc. (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 (as amended and supplemented from time to time, the "Charter") between the Beneficiary and the Charterer and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 31 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, ban stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph [10], be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to (i) Fortis Bank (Nederland) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties) and/or (ii) Maas Capital Investments B.V. of R.01.1601, Coolsingel 93, 3012 AE Rotterdam, The Netherlands ("Maas"). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent and/or Maas of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competenLjurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 No term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully Andreas Louca EXECUTED as a DEED BY for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 8 March 2006 In the presence of: Witness: /s/ Helen Dawson Name: Helen Dawson Address: Occupation: Trainee Solicitor - Norton Rose EX-4.55 52 d759408_ex4-55.txt Exhibit 4.55 DATED 16 JUNE 2006 SUPPLEMENTAL AGREEMENT relating to a memorandum of agreement dated 14 March 2006 in relation to m.v. Spotless Contents Clause Page 1 Definitions...............................................................1 2 Consent of Original Owner.................................................2 3 Assumption of liability and obligations...................................3 4 Amendments to Original MOA................................................3 5 Conditions................................................................4 6 Counterparts..............................................................4 7 Applicable law............................................................4 THIS SUPPLEMENTAL AGREEMENT is dated 16 June 2006 and made BETWEEN: (1) IDI Shipping Company Limited, a company incorporated in the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia (the "Original Owner"); (2) Kemp Maritime S.A., a company incorporated in the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia (the "Current Owner"); and (3) ICON Spotless, LLC, a limited liability company formed under the laws of the State of Delaware, United States of America with its registered office at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owner"). WHEREAS: (A) this Agreement is supplemental to a "NSF93" memorandum of agreement dated 14 March 2006 (the "Original MOA") made between the Original Owner (therein referred to as the "Sellers") and the Current Owner (therein referred to as the "Buyers") relating to the sale by the Original Owner and the purchase by the Current Owner of m.v. Spotless (the "Ship"), currently registered in the name of the Current Owner under Liberian flag with official number 9361; (B) the Current Owner has taken delivery of the Ship pursuant to the terms of the Original MOA and has paid to the Original Owner the Cash Part of the Purchase Price (as such term is defined in clause 17 of the Original MOA); (C) pursuant to clause 17 of the Original MOA it has been agreed between the Original Owner and the Current Owner that part of the Purchase Price (as defined therein) amounting to US$2,420,000 (the "Sellers' Credit") will not be paid by the Current Owner to the Original Owner on the delivery and acceptance of the Ship under the Original MOA and that payment the Sellers' Credit shall be made in the manner and at the time provided in clause 17 of the Original MOA; (D) the Original Owner and the Current Owner have entered into a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") whereby the Current Owner has let and the Original Owner has taken on demise charter the Ship on the terms contained therein; (E) the Current Owner wishes to transfer the ownership of the Ship to Linnea Enterprises Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Intermediate Owner") pursuant to a memorandum of agreement dated 14 March 2006 and made between the Current Owner and Oceanbulk Maritime S.A. who at a later date nominated as buyers the Intermediate Owner (the "First MOA") who in turn wishes to transfer the ownership of the Ship to the New Owner pursuant to a memorandum of agreement dated 14 March 2006 and made between the Intermediate Owner and the New Owner; (F) the Current Owner and the New Owner wish to novate the Charter in favour of the New Owner to enable the New Owner to charter the Ship to the Original Owner following the transfer of the Ship to the New Owner; and (G) this Agreement sets out the consent of the Original Owner, at the request of the Current Owner, to (i) the transfer of ownership of the Ship from the Current Owner to the Intermediate Owner and from the Intermediate Owner to the New Owner and (H) the said novation of the Charter. NOW IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Defined expressions Words and expressions defined in the Original MOA shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. 1.2 Definitions In this Agreement, unless the context otherwise requires: "Effective Date" means the date on which the Ship is delivered and accepted by the Intermediate Owner under the First MOA; "Existing Mortgage" means the third preferred mortgage dated 16 March 2006 executed by the Current Owner in favour of the Original Owner in respect of the Ship; and "Existing Register" means the register of ships of the Republic of Liberia. 1.3 Original MOA References in the Original MOA to "this Agreement" shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Original MOA as amended by this Agreement and words such as "herein", "hereof', "hereunder", "hereafter", "hereby" and "hereto", where they appear in the Original MOA, shall be construed accordingly. 1.4 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.5 Construction of certain terms In this Agreement, unless the context otherwise requires: 1.5.1 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement includes its schedules; 1.5.2 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.5.3 words importing the plural shall include the singular and vice versa; 1.5.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any government entity; and 1.5.5 references to a "guarantee" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly. 2 Consent of Original Owner 2.1 Consent The Original Owner agrees with the Current Owner and the New Owner that as of the date of this Agreement the Original Owner consents to: 2.1.1 the transfer of the Ship by the Current Owner to the Intermediate Owner and by the Intermediate Owner to the New Owner; and 2.1.2 the novation of the Charter by the Current Owner in favour of the New Owner. 2.2 Discharge of Mortgage The Original Owner hereby agrees that it shall, simultaneously with the delivery of the Vessel to the Intermediate Owner under the First MOA, execute and thereafter register at the Existing Register, a deed of discharge in respect of the Existing Mortgage. 3 Assumption of liability and obligations 3.1 Substitution It is hereby agreed that, as and with effect from the Effective Date, the New Owner shall be, and is hereby made, a party to the Original MOA in respect of the provisions of clause 17 of the MOA and in substitution for the Current Owner as regards the provisions of clause 17 of the Original MOA and the Original MOA shall henceforth be construed and treated in all respect as if the New Owner was named in clause 17 instead of the Current Owner from the time the Original MOA was executed by the Original Owner and the Current Owner. 3.2 Assumption of liability The New Owner hereby agrees with the Original Owner that, as and with effect from the Effective Date, it shall be indebted to the Original Owner for the full amount of the Sellers' Credit and all other sums which may be or become due to the Original Owner pursuant to clause 17 of the Original MOA and the New Owner further agrees that it shall duly and punctually perform all the liabilities and obligations whatsoever from time to time to be performed or discharged by the Original Owner under clause 17 of the Original MOA and shall be bound by the terms of the Original MOA as if the New Owner had at all times been named therein as the Buyer. 3.3 Release The Original Owner hereby agrees that, as and with effect from the Effective Date, it shall release and discharge the Current Owner from all liabilities, obligations, claims and demands whatsoever touching or concerning clause 17 of the Original MOA and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the Original Owner and the New Owner against each other in respect of any such liabilities, obligations, claims and demands. 4 Amendments to Original MOA 4.1 Amendments Clause 17 of the Original MOA shall, with effect on and from the Effective Date, be (and it is hereby) deleted and the following new clause inserted in its place (and the Original MOA (as so amended) will continue to be binding upon the Original Owner, the Current Owner and the New Owner upon such terms as so amended): "a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty-one million seven hundred and eighty thousand (US$21,780,000) (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million four hundred and twenty thousand (US$2,420,000) shall be credited (the "Sellers' Credit") and shall be payable by ICON Spotless, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Buyers") to the Sellers in accordance with the terms of this Clause 17. b) Subject to the provisions of Clause 17(c) hereinbelow, the Sellers' Credit shall be payable by the New Buyers to the Sellers in one instalment, free of interest, immediately upon either expiration of the "Barecon 2001" form demise charter dated 14 March 2006 made between the Sellers and the Buyers (the "Original Charter") as novated in favour of the New Buyers and amended pursuant to a novation agreement dated 16 June 2006 made between the Sellers, the Buyers and the New Buyers (the "Novation Agreement" and together with the Original Charter the "Bareboat Charter) by effluxion of time or the sale of the Vessel to another party (the "buying party") as described in Clause 22(b) of the Bareboat Charter provided however that such sale is on terms that the buying party shall pay to the New Buyers the relevant acquisition price in cash and in full at the time of delivery and acceptance of the Vessel by the buying party. IT IS HEREBY FURTHER AGREED THAT in the event that the New Buyers sell the Vessel on terms providing that the buying party shall pay for the acquisition of the Vessel by, inter alia, agreeing to take over the New Buyers' obligation under this Clause 17 to repay the Sellers' Credit to the Sellers, then (1) the Seller's Credit shall not be repayable upon such sale being agreed or the relevant delivery and acceptance of the Vessel thereunder taking place (since the sale consideration is not payable in cash and in full on delivery and acceptance of the Vessel) and (2) the Sellers shall execute any such document and take any such action as the New Buyers may consider necessary or desirable for the buying party to (i) take the place of the New Buyers under this Clause 17 and under the Bareboat Charter and (ii) receive the benefit of any of the securities provided under the Bareboat Charter and, in particular but without limitation to the foregoing, clauses 32Aa, 32Ab and 32C thereof c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as the "Purchase Price Reduction Amount") which is equal to the lesser of (i) the Seller's Credit and (ii) the total amount of hire that would have been paid to the New Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration up to 14 March 2011 and such reduction shall have as a result the reduction of the Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as hereinabove, the New Buyers shall provide the Sellers with a second preferred Mortgage over the Vessel, being subordinate to a first preferred Mortgage over the Vessel in favour of Fortis Bank NV/SA, as more particularly described in the Bareboat Charter." 4.2 Continued force and effect Save as clauses 16 and 17 have been amended by this Agreement, no other provision of the Original MOA shall be amended by this Agreement and the Original MOA and this Agreement shall be read and construed as one instrument. 5 Conditions The consent of the Original Owner referred to in clause 2 shall be subject to the conditions precedent contained in schedule 1 being satisfied. 6 Counterparts This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. 7 Applicable law 7.1 Law This Agreement is governed by, and shall be construed in accordance with, English law. 7.2 Arbitration The provisions of clause 16 of the Original Agreement shall be deemed incorporated in this Agreement and the terms of the said clause shall apply herein mutatis mutandis, provided however that if each party to this Agreement appoints its own arbitrator it will not be required for an umpire to be appointed and any decision to be taken in relation to any such arbitration shall be taken by the panel of the three appointed arbitrators. IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed as a deed on the date first above written. EXECUTED as a DEED by IDI SHIPPING COMPANY LIMITED by Eirini Alexandropoulou /s/ Eirini Alexandropoulou its duly authorised attorney-in-fact -------------------------- pursuant to a power of attorney dated 13 June 2006 Attorney-in-fact in the presence of Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED by ICON SPOTLESS, LLC by Mark Gatto its duly authorised attorney-in-fact /s/ Mark Gatto pursuant to a power of attorney dated 15 June 2006 -------------------------- in the presence of Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED by KEMP MARITIME S.A. by Alexandra Tatagia its duly authorised attorney-in-fact /s/ Alexandra Tatagia pursuant to a power of attorney dated 14 June 2006 --------------------------- in the presence of Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.56 53 d759408_ex4-56.txt Exhibit 4.56 ADDENDUM NO. 1 dated 16 June 2006 to a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") made between, Kemp Maritime S.A. (the "Original Owners") as owners and IDI Shipping Company Limited (the "Charterers") as charterers, in respect of m.v. Spotless (the "Vessel"), whereby it is agreed by the parties to this Addendum as follows: 1 In connection with the sale of the Vessel by the Original Owners to Linnea Enterprises Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Intermediate Owners") and by the Intermediate Owners to ICON Spotless, LLC a Delaware limited liability company whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owners") in accordance with the terms of the respective sale and purchase agreements (each respectively referred to hereinafter as an "MOA"): (a) the Charterers hereby consent to the proposed consecutive sale of the Vessel from the Original Owners to the Intermediate Owners and from the Intermediate Owners to the New Owners; (b) the Original Owners, the New Owners and the Charterers hereby agree that, with effect from the date of delivery of the Vessel by the Intermediate Owners to the New Owners pursuant to the relevant MOA (the "Effective Date"), the New Owners shall be and are hereby substituted in place of the Original Owners as a party to the Charter and as the "Owners" of the Vessel under the Charter and that the Charter shall henceforth be construed and treated in all respects as if the New Owners were named therein instead of the Original Owners; (c) the New Owners hereby agree with the Charterers that, as and with effect from the Effective Date, the New Owners shall duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by them or by virtue of the Charter in all respects as if the New Owners were named therein instead of the Original Owners; (d) the Charterers hereby agree with the New Owners that, as and with effect from the Effective Date, the Charterers shall be bound by the Charter in all respects as if the New Owners were (and had at all times been) named therein instead of the Original Owners; and (e) the Charterers and the Original Owners hereby mutually release and discharge each other from all liabilities, obligations, claims and demands whatsoever touching or concerning the Charter and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the New Owners and the Charterers against each other in respect of any such liabilities, obligations, claims and demands. 2 The Original Owners and the Charterers warrant and represent to the New Owners that the Charter constitutes the entire agreement with the Charterers for the charter of the Vessel and that the Charter is in full force and effect. 3 The Charterers hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Original Owners or the Intermediate Owners. 4 The Original Owners hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Charterers. 5 The Original Owners hereby agree that they shall, within 7 days of the Effective Date, reimburse to the New Owners the amount of advance charter hire paid to the Original Owners by the Charterers in respect of the period from the Effective Date to the end of the period to which that payment of charterhire relates. 6 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the charter hire payable to FORTIS BANK (NEDERLAND) N.V. in accordance with Box 26 should now be payable to FORTIS BANK NV/SA of 166 Syngrou Avenue, 176 71, Athens Greece account no. 1000170205. 7 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the Charter shall be amended as follows: (a) by amending throughout the Charter any references to "Financial Instruments", "relevant Financial Instruments" to read "Financial Instrument"; (b) by amending throughout the Charter any references to "Mortgagees", "Mortgagees", "a Mortgagee", "such Mortgagee", "said Mortgagee", "respective Mortgagee" to read "First Mortgagee" or, as the context may require, "First Mortgagee's"; (c) by deleting throughout the Charter the words "and the Second Mortgagee", "or, as the case may be, the Second Mortgagees" (d) by deleting in Box 28 the words "Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee"; (e) by amending in paragraph (a) following line 32 the words "by the Owners" and "to the Owners as buyers" to read "by the Original Owners (as defined in Clause 33 hereof)" and "to the Original Owners (as defined in Clause 33 hereof)", respectively; (f) by deleting in line 342 the words "or any of them"; (g) by deleting in the 20th line following line 366 (but before line 367) the words "or either of them"; (h) by amending in clause 16, line 559, sub-paragraph (b), the words "FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE, Rotterdam, The Netherlands" to read "FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium"; (i) by deleting in clause 16, line 559, the whole of sub-paragraph (c) starting from the words "NOTICE OF SECOND MORTGAGE" up to and including the words "other than for crew's wages and salvage" (j) by amending in the line immediately following line 561, the words "and their respective" to read "and its"; (k) by amending in the fifth line following line 618, the words "and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000." to read: "and: (a) in the event such sale is on terms pursuant to which the buyer has agreed to pay to the Owners the relevant acquisition price of the Vessel in cash and in full upon delivery and acceptance of the Vessel to such buyer, the Charterers shall provide to the buyer of the Vessel a performance guarantee of all the Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000; or (b) in the event such sale is on terms pursuant to which the buyer has agreed to pay for the acquisition of the Vessel by, inter alia, taking over from the Owners the Owners' obligation under Clause 17 of the MOA to repay the Sellers' Credit to the Charterers, then the Charterers shall execute any such document and take any such action as provided in clause 17(b) of the MOA including, but without any limitation to the generality of the foregoing, any such document or action as the Owners may consider necessary or desirable for the said buyer to (i) take the place of the Owners under Clause 17 of the MOA and under this Charter and (ii) receive the benefit of any of the securities under this Charter and, in particular but without limitation to the foregoing, Clauses 32Aa, 32Ab and 32C hereof."; (l) by amending in line 815, sub-paragraph (iv) to read as follows: "the Charterers or the Charter Guarantor (as defined in Clause 33 hereof) breach any of the terms of any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) to which the Charterers and/or the Charter Guarantor (as such term is further defined in Clause 33 hereof) is, or is to become, a party to (for the avoidance of doubt, the making of a misrepresentation by the Charterers and/or the Charter Guarantor under, or in relation to or in connection with, any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) shall constitute a breach of such document for the purposes of this Clause 28(a)(iv))."; (m) by deleting from line 845 the words "or (ii) the Charter Guarantor, as defined in clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments."; (n) by amending in lines 5 and 6 of clause 32A(a), the words "each of the First Quadripartite Agreement and the Second Quadripartite Agreement" to read "the First Quadripartite Agreement"; (o) by adding in clause 33 the following definition of "Original Owners": "Original Owners" means Kemp Maritime S.A. of 80 Broad Street, Monrovia, Liberia."; (p) by deleting the existing definitions of "First Mortgagee", "MOA" and Financial Instrument" and replacing them by the following new definitions of "First Mortgagee", "MOA" and "Financial Instrument": "First Mortgagee" means FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium acting through its Athens branch at 166 Syngrou Avenue, Athens Greece (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as nay person that may replace the First Mortgagee; "MOA" means the memorandum of agreement dated 14 March 2006, made between the Charterers, as sellers and the Original Owners, as buyers, pursuant to which the Original Owners purchased the Vessel on the terms and conditions mentioned therein as amended by a supplemental agreement dated 16 June 2006 made between the Owners, the Original Owners and the Charterers; "Financial Instrument" means the First Quadripartite Agreement and the First Mortgage;"; and (q) by deleting in clause 33 the definitions of Second Mortgage, Second Mortgagee, Second Quadripartite Agreement and Mortgagees. 8 Subject to the foregoing the terms of the Charter shall not have been amended and remain in full force and effect. 9 No term of this Addendum is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum. 10 This Addendum shall be construed in accordance with, and shall be governed by, English law. SIGNED by KEMP MARITIME S.A. by: Alexandra Tatagia /s/ Alexandra Tatagia -------------------------------- SIGNED by ICON SPOTLESS, LLC by: Mark Gatto /s/ Mark Gatto -------------------------------- SIGNED by IDI SHIPPING COMPANY LIMITED by: Eirini Alexandropoulou /s/ Eirini Alexandropoulou -------------------------------- EX-4.57 54 d759408_ex4-57.txt Exhibit 4.57 Private & Confidential Dated 16 June 2006 ICON SPOTLESS, LLC as Owner (1) IDI SHIPPING COMPANY LIMITED as Charterer (2) TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) as Mortgagee ------------------------------------- QUADRIPARTITE DEED relating to m.v. "Spotless" ------------------------------------- NORTON ROSE Contents Clause Page 1 Definitions...........................................................2 2 Representations and warranties........................................8 3 Assignment...........................................................12 4 Owner's Assignment...................................................12 5 Continuing security and other matters................................13 6 Charterer's undertakings.............................................16 7 Charter Guarantor's undertakings.....................................18 8 Covenants concerning insurance and operational matters...............22 9 Powers of Mortgagee to protect security and remedy defaults..........29 10 Powers of Mortgagee on Event of Default..............................30 11 Application of moneys................................................30 12 Remedies cumulative and other provisions.............................32 13 Costs and indemnity..................................................32 14 Attorney.............................................................33 15 Further assurance....................................................33 16 Consent, Termination of Charter and Quiet Enjoyment..................33 17 Continuation of Charter Period.......................................35 18 Notices..............................................................36 19 Counterparts.........................................................36 20 Severability of provisions...........................................37 21 Law and jurisdiction.................................................37 Schedule 1 Forms of Loss Payable Clauses...................................38 Schedule 2 Forms of Notices of Assignment of Insurances....................39 THIS QUADRIPARTITE DEED is dated 16 June 2006 BETWEEN: (1) ICON SPOTLESS, LLC, whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner"); (2) 101 SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) NM., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands as security agent and trustee for and on behalf of the Secured Creditors (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of all of the shares in the Ship described in clause 1.1; (B) by a loan agreement (the "Loan Agreement") dated 16 June 2006 and made between (1) the Owner, ICON Doubtless, LLC, ICON Faithful, LLC and Isomar Marine Company Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) Fortis Bank NV/SA as arranger and account bank (in such capacity the "Account Bank"), (4) the Mortgagee as agent (in such capacity the "Agent") and security agent and (4) Fortis Bank (Nederland) N.V. as swap provider (in such capacity the "Swap Provider and together with the Agent and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated June 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 16' June 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter dated 14 March 2006 made between Kemp Maritime S.A. of Liberia (the "Original Owner) and the Charterer as novated and amended in favour of the Owner and the Charterer by a novation agreement dated 16 June 2006 made between the Original Owner, the Charterer and the Owner (the "Charter), the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Spotless Advance, the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Spotless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter means the "Barecon 2001" demise charter between the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterers rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Account Bank with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition; requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of eamings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and retum of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an Intemational Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Spotless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated 16 June 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means, at any relevant time, all liabilities, actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and replacements of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Spotless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concemed in the operation of the Ship and falls within the definition of "Company' set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined In the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Borrowers or any of them pursuant to the Loan Agreement and/or the Master Swap Agreement or by any other Security Party pursuant to any other Security Document (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the m.v. "Spotless" registered as a Liberian ship under Official Number 9361 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Govemment Entity, or by persons acting or purporting to act on behalf of any Govemment Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terns In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 'war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Govemment Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings of this Deed shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions of the Charter. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No material adverse change there has been no material adverse change in the financial position of the Charterer from that disclosed by the Charterer to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.1.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of The Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (by contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No material adverse change there has been no material adverse change in the financial position of the Charter Guarantor from that disclosed by the Charter Guarantor to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.2.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter and the Spotless Time Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterers Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterers name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 Assignment By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Spotless Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Mortgagee. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional and no enquiry 5.2.1 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.2 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings 6.1 The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; and (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the relevant Managers or terminate or amend the terms of the relevant Management Agreements to which it is a party; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; 6.1.9 Provision of further information provide the Mortgagee with such financial or other information concerning the Charterer and its affairs as the Mortgagee may from time to time require; and 6.1.10 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; 7.1.2 Provision of further information provide the Mortgagee with such financial or other information conceming the Charter Guarantor and its affairs as the Mortgagee may from time to time require; and 7.1.3 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 15 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits eamed up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Eamings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in. Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; and (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted intemational accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as most recently determined by the Agent pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the (aa) Loan and (bb) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (all P81 risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover.which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers (other than the said mortgagee's interest insurance which shall be effected through brokers nominated by the Mortgagee) and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall fumish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (i) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in the registration of the Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the relevant Classification (as defined in the Loan Agreement) as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the relevant Flag State (as defined In the Loan Agreement) or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of. (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the relevant Classification Society (as defined in the Loan Agreement) or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casually Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Spotless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Masters cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement' with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance (and procure that any Operator of the Ship will): (a) maintain at all times a valid and current 1SSC in respect of the Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; and (c) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owners duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, 'to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or altematively, to require the Ship (at the Charterers risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default which has not been remedied or expressly waived in writing by the Creditors, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Borrowers in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterers Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterers Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterers Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owners Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as is required in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred and which has not been remedied or expressly waived in writing by the Creditors, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of eamings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterers Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attomey under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the(.) Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated ___ June 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' (as defined in the Loan Agreement) interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of any of the following: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; or 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; or 16.3.5 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiators, breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterers repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owners assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterers right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable after the Borrowers have prepaid the Advance relevant to such Ship or any other part of the Loan As may be required in clause 4.3 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) if to the Owner at: c/o ICON Capital Corp. 100 Fifth Avenue New York, NY 10011 USA Fax no: +1 212 418 4739 Attention: General Counsel (b) if to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 6978 107 Attention: Legal Department (c) if to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is govemed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Law Debenture Corporate Services Limited at present of Fifth Floor, 100 Wood Street, London EC2V 7EX, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, ICON SPOTLESS, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner") and by a Quadripartite Deed dated [e] 2006 and IDI SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer) have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Spotless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which ICON SPOTLESS, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner") or IDI SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer) is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) ICON SPOTLESS, LLC (the "Owner") of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America and IDI SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia, the owners and demise charterers respectively of the motor vessel "Spotless" HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - -------------------------- Signed For and on behalf of ICON SPOTLESS, LLC Dated [o] 2006 - -------------------------- Signed For and on behalf of IDI SHIPPING COMPANY LIMITED Dated [o] 2006 EXECUTED as a DEED ) by Mark Gatto ) /s/ Mark Gatto for and on behalf of ) ------------------ ICON SPOTLESS, LLC ) Attorney-in-fact as Owner ) /s/ Vikki Madia - -------------------------- in the esence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EXECUTED as a DEED ) by Eirin Alexandropoulou ) /s/ Eirin Alexandropoulou for and on behalf of ) ------------------------- IDI SHIPPING COMPANY LIMITED ) Attorney-in-fact as Charterer ) /s/ Vikki Madia - -------------------------- in the esence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EXECUTED as a DEED ) by Eirin Alexandropoulou ) /s/ Eirin Alexandropoulou for and on behalf of ) ------------------------- TOP TANKERS INC. ) Attorney-in-fact as Charterer Guarantor ) /s/ Vikki Madia - -------------------------- in the esence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EXECUTED as a DEED ) by CHRISTINA ECONOMIPES ) /s/ CHRISTINA ECONOMIPES for and on behalf of ) ------------------------- FORTIS BANK (NEDERLAND) N.V. ) Attorney-in-fact as Mortgagee ) /s/ Vikki Madia - -------------------------- in the esence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EX-4.58 55 d759408_ex4-58.txt Exhibit 4.58 Guarantee June 2006 To: ICON Spotless, LLC a Delaware limited liability company of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19806, United States of America (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Spotless (the "Ship") to Idi Shipping Company Limited (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 between Kemp Maritime S.A. of 80 Broad Street, Monrovia, Liberia (the "Original Owner") and the Charterer (the "Original Charter") as novated in favour of the Beneficiary and amended pursuant to a novation agreement dated 16 June 2006 made between the Original Owner, the Beneficiary and the Charterer (the "Novation Agreement" and together with the Original Charter and as further amended and supplemented from time to time, the "Charter") and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 15 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Ddllars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (f) deducting any debit balance on such consolidated profit and loss account; (g) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (h) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (h) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (i) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (j) deducting all amounts attributable to minority interests in Subsidiaries; (k) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (l) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (m) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (n) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (o) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shalt be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph 10, be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium, acting through its Athens branch at 166 Syngrou Avenue, 176 71 Athens, Greece (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 Other than with respect to the Beneficiary, no term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED By Eirni Alexandropolou TOP TANKERS INC. pursuant to a Power of Attorney dated 13th June 2006 In the presence of: /s/ Vikki Madia - ------------------------------ Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.59 56 d759408_ex4-59.txt Exhibit 4.59 Private & Confidential DATED 16 JUNE 2006 SUPPLEMENTAL AGREEMENT relating to a memorandum of agreement dated 14 March 2006 in relation to m.v. Doubtless Contents Clause Page 1 Definitions................................................ 2 2 Consent of Original Owner...................................3 3 Assumption of liability and obligations.....................3 4 Amendments to Original MOA..................................3 5 Conditions..................................................4 6 Counterparts................................................4 7 Applicable law..............................................5 THIS SUPPLEMENTAL AGREEMENT is dated 16 June 2006 and made BETWEEN: (1) Falakro Shipping Company Limited, a company incorporated in the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia (the "Original Owner"); (2) Tucker Navigation Co., a company incorporated in the Republic of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia (the "Current Owner"); and (3) ICON Doubtless, LLC, a limited liability company formed under the laws of the State of Delaware, United States of America with its registered office at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owner"). WHEREAS: (A) this Agreement is supplemental to a "NSF93" memorandum of agreement dated 14 March 2006 (the "Original MOA") made between the Original Owner (therein referred to as the "Sellers") and the Current Owner (therein referred to as the "Buyers") relating to the sale by the Original Owner and the purchase by the Current Owner of m.v. Doubtless (the "Ship"), currently registered in the name of the Current Owner under Liberian flag with official number 9363; (B) the Current Owner has taken delivery of the Ship pursuant to the terms of the Original MOA and has paid to the Original Owner the Cash Part of the Purchase Price (as such term is defined in clause 17 of the Original MOA); (C) pursuant to clause 17 of the Original MOA it has been agreed between the Original Owner and the Current Owner that part of the Purchase Price (as defined therein) amounting to US$2,420,000 (the "Sellers' Credit") will not be paid by the Current Owner to the Original Owner on the delivery and acceptance of the Ship under the Original MOA and that payment the Sellers' Credit shall be made in the manner and at the time provided in clause 17 of the Original MOA; (D) the Original Owner and the Current Owner have entered into a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") whereby the Current Owner has let and the Original Owner has taken on demise charter the Ship on the terms contained therein; (E) the Current Owner wishes to transfer the ownership of the Ship to Eloise Finance Ltd. of 80 Broad Street, Monrovia, Liberia (the "Intermediate Owner") pursuant to a memorandum of agreement dated 14 March 2006 and made between the Current Owner and Oceanbulk Maritime S.A. who at a later date nominated as buyers the Intermediate Owner (the "First MOA") who in turn wishes to transfer the ownership of the Ship to the New Owner pursuant to a memorandum of agreement dated 14 March 2006 and made between the Intermediate Owner and the New Owner; (F) the Current Owner and the New Owner wish to novate the Charter in favour of the New Owner to enable the New Owner to charter the Ship to the Original Owner following the transfer of the Ship to the New Owner; and (G) this Agreement sets out the consent of the Original Owner, at the request of the Current Owner, to (i) the transfer of ownership of the Ship from the Current Owner to the Intermediate Owner and from the Intermediate Owner to the New Owner and (ii) the said novation of the Charter. NOW IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Defined expressions Words and expressions defined in the Original MOA shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. 1.2 Definitions In this Agreement, unless the context otherwise requires: "Effective Date" means the date on which the Ship is delivered and accepted by the Intermediate Owner under the First MOA; "Existing Mortgage" means the third preferred mortgage dated 16 March 2006 executed by the Current Owner in favour of the Original Owner in respect of the Ship; and "Existing Register" means the register of ships of the Republic of Liberia. 1.3 Original MOA References in the Original MOA to "this Agreement" shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Original MOA as amended by this Agreement and words such as "herein", "hereof', "hereunder", "hereafter", "hereby" and "hereto", where they appear in the Original MOA, shall be construed accordingly. 1.4 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.5 Construction of certain terms In this Agreement, unless the context otherwise requires: 1.5.1 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement includes its schedules; 1.5.2 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.5.3 words importing the plural shall include the singular and vice versa; 1.5.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any government entity; and 1.5.5 references to a "guarantee" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly. 2 Consent of Original Owner 2.1 Consent The Original Owner agrees with the Current Owner and the New Owner that as of the date of this Agreement the Original Owner consents to: 2.1.1 the transfer of the Ship by the Current Owner to the Intermediate Owner and by the Intermediate Owner to the New Owner; and 2.1.2 the novation of the Charter by the Current Owner in favour of the New Owner. 2.2 Discharge of Mortgage The Original Owner hereby agrees that it shall, simultaneously with the delivery of the Vessel to the Intermediate Owner under the First MOA, execute and thereafter register at the Existing Register, a deed of discharge in respect of the Existing Mortgage. 3 Assumption of liability and obligations 3.1 Substitution It is hereby agreed that, as and with effect from the Effective Date, the New Owner shall be, and is hereby made, a party to the Original MOA in respect of the provisions of clause 17 of the MOA and in substitution for the Current Owner as regards the provisions of clause 17 of the Original MOA and the Original MOA shall henceforth be construed and treated in all respect as if the New Owner was named in clause 17 instead of the Current Owner from the time the Original MOA was executed by the Original Owner and the Current Owner. 3.2 Assumption of liability The New Owner hereby agrees with the Original Owner that, as and with effect from the Effective Date, it shall be indebted to the Original Owner for the full amount of the Sellers' Credit and all other sums which may be or become due to the Original Owner pursuant to clause 17 of the Original MOA and the New Owner further agrees that it shall duly and punctually perform all the liabilities and obligations whatsoever from time to time to be performed or discharged by the Original Owner under clause 17 of the Original MOA and shall be bound by the terms of the Original MOA as if the New Owner had at all times been named therein as the Buyer. 3.3 Release The Original Owner hereby agrees that, as and with effect from the Effective Date, it shall release and discharge the Current Owner from all liabilities, obligations, claims and demands whatsoever touching or concerning clause 17 of the Original MOA and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the Original Owner and the New Owner against each other in respect of any such liabilities, obligations, claims and demands. 4 Amendments to Original MOA 4.1 Amendments Clause 17 of the Original MOA shall, with effect on and from the Effective Date, be (and it is hereby) deleted and the following new clause inserted in its place (and the Original MOA (as so amended) will continue to be binding upon the Original Owner, the Current Owner and the New Owner upon such terms as so amended): "a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty-one million seven hundred and eighty thousand (US$21,780,000) (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million four hundred and twenty thousand (US$2,420,000) shall be credited (the "Sellers' Credit") and shall be payable by ICON Doubtless, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Buyers") to the Sellers in accordance with the terms of this Clause 17. b) Subject to the provisions of Clause 17(c) hereinbelow, the Sellers' Credit shall be payable by the New Buyers to the Sellers in one instalment, free of interest, immediately upon either expiration of the "Barecon 2001" form demise charter dated 14 March 2006 made between the Sellers and the Buyers (the "Original Charter") as novated in favour of the New Buyers and amended pursuant to a novation agreement dated 16 June 2006 made between the Sellers, the Buyers and the New Buyers (the "Novation Agreement" and together with the Original Charter the "Bareboat Charter) by effluxion of time or the sale of the Vessel to another party (the "buying party") as described in Clause 22(b) of the Bareboat Charter provided however that such sale is on terms that the buying party shall pay to the New Buyers the relevant acquisition price in cash and in full at the time of delivery and acceptance of the Vessel by the buying party. IT IS HEREBY FURTHER AGREED THAT in the event that the New Buyers sell the Vessel on terms providing that the buying party shall pay for the acquisition of the Vessel by, inter alia, agreeing to take over the New Buyers' obligation under this Clause 17 to repay the Sellers' Credit to the Sellers, then (1) the Seller's Credit shall not be repayable upon such sale being agreed or the relevant delivery and acceptance of the Vessel thereunder taking place (since the sale consideration is not payable in cash and in full on delivery and acceptance of the Vessel) and (2) the Sellers shall execute any such document and take any such action as the New Buyers may consider necessary or desirable for the buying party to (i) take the place of the New Buyers under this Clause 17 and under the Bareboat Charter and (ii) receive the benefit of any of the securities provided under the Bareboat Charter and, in particular but without limitation to the foregoing, clauses 32Aa, 32Ab and 32C thereof. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as the "Purchase Price Reduction Amount") which is equal to the lesser of (i) the Seller's Credit and (ii) the total amount of hire that would have been paid to the New Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration up to 14 March 2011 and such reduction shall have as a result the reduction of the Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as hereinabove, the New Buyers shall provide the Sellers with a second preferred Mortgage over the Vessel, being subordinate to a first preferred Mortgage over the Vessel in favour of Fortis Bank NV/SA, as more particularly described in the Bareboat Charter.". 4.2 Continued force and effect Save as clauses 16 and 17 have been amended by this Agreement, no other provision of the Original MOA shall be amended by this Agreement and the Original MOA and this Agreement shall be read and construed as one instrument. 5 Conditions The consent of the Original Owner referred to in clause 2 shall be subject to the conditions precedent contained in schedule 1 being satisfied. 6 Counterparts This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. 7 Applicable law 7.1 Law This Agreement is governed by, and shall be construed in accordance with, English law. 7.2 Arbitration The provisions of clause 16 of the Original Agreement shall be deemed incorporated in this Agreement and the terms of the said clause shall apply herein mutatis mutandis, provided however that if each party to this Agreement appoints its own arbitrator it will not be required for an umpire to be appointed and any decision to be taken in relation to any such arbitration shall be taken by the panel of the three appointed arbitrators. IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed as a deed on the date first above written. EXECUTED as a DEED by Erini Alexandropolou FALAKRO SHIPPING COMPANY /s/ Erini Alexandropolou its duly authorised --------------------------- attorney-in-fact pursuant to a power of attorney dated 13 June 2006 in the presence of: V. Madia Norton Rose Piraeus EXECUTED as a DEED by ICON DOUBTLESS, LLC by Mark Gatto its duly authorised attorney-in-fact /s/ Mark Gatto pursuant to a power of attorney dated --------------------------- 15 June 2006 in the presence of: V. Madia Norton Rose Piraeus EXECUTED as a DEED by TUCKER NAVIGATION CO. by Alexandra Tatagia its duly authorised attorney-in-fact /s/ Alexandra Tatagia pursuant to a power of attorney dated --------------------------- 14 June 2006 Attorney-in-fact in the presence of: V. Madia Norton Rose Piraeus EX-4.60 57 d759408_ex4-60.txt Exhibit 4.60 ADDENDUM NO. 1 dated 16 June 2006 to a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") made between, Tucker Navigation Co. (the "Original Owners") as owners and Falakro Shipping Company Limited (the "Charterers") as charterers, in respect of m.v. Doubtless (the "Vessel"), whereby it is agreed by the parties to this Addendum as follows: 1 In connection with the sale of the Vessel by the Original Owners to Eloise Finance Ltd. of 80 Broad Street, Monrovia, Liberia (the "Intermediate Owners") and by the Intermediate Owners to ICON Doubtless, LLC a Delaware limited liability company whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owners") in accordance with the terms of the respective sale and purchase agreements (each respectively referred to hereinafter as an "MOA"): (a) the Charterers hereby consent to the proposed consecutive sale of the Vessel from the Original Owners to the Intermediate Owners and from the Intermediate Owners to the New Owners; (b) the Original Owners, the New Owners and the Charterers hereby agree that, with effect from the date of delivery of the Vessel by the Intermediate Owners to the New Owners pursuant to the relevant MOA (the "Effective Date"), the New Owners shall be and are hereby substituted in place of the Original Owners as a party to the Charter and as the "Owners" of the Vessel under the Charter and that the Charter shall henceforth be construed and treated in all respects as if the New Owners were named therein instead of the Original Owners; (c) the New Owners hereby agree with the Charterers that, as and with effect from the Effective Date, the New Owners shall duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by them or by virtue of the Charter in all respects as if the New Owners were named therein instead of the Original Owners; (d) the Charterers hereby agree with the New Owners that, as and with effect from the Effective Date, the Charterers shall be bound by the Charter in all respects as if the New Owners were (and had at all times been) named therein instead of the Original Owners; and (e) the Charterers and the Original Owners hereby mutually release and discharge each other from all liabilities, obligations, claims and demands whatsoever touching or concerning the Charter and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the New Owners and the Charterers against each other in respect of any such liabilities, obligations, claims and demands. 2 The Original Owners and the Charterers warrant and represent to the New Owners that the Charter constitutes the entire agreement with the Charterers for the charter of the Vessel and that the Charter is in full force and effect 3 The Charterers hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Original Owners or the Intermediate Owners. 4 The Original Owners hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Charterers. 5 The Original Owners hereby agree that they shall, within 7 days of the Effective Date, reimburse to the New Owners the amount of advance charter hire paid to the Original Owners by the Charterers in respect of the period from the Effective Date to the end of the period to which that payment of charterhire relates. 6 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the charter hire payable to FORTIS BANK (NEDERLAND) N.V. in accordance with Box 26 should now be payable to FORTIS BANK NV/SA of 166 Syngrou Avenue, 176 71, Athens Greece account no. 1000150205. 7 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the Charter shall be amended as follows: (a) by amending throughout the Charter any references to "Financial Instruments", "relevant Financial Instruments" to read "Financial Instrument"; (b) by amending throughout the Charter any references to "Mortgagees", "Mortgagees", "a Mortgagee", "such Mortgagee", "said Mortgagee", "respective Mortgagee" to read "First Mortgagee" or, as the context may require, "First Mortgagee's"; (c) by deleting throughout the Charter the words "and the Second Mortgagee", "or, as the case may be. the Second Mortgagees" (d) by deleting in Box 28 the words "Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee"; (e) by amending in paragraph (a) following line 32 the words "by the Owners" and "to the Owners as buyers" to read "by the Original Owners (as defined in Clause 33 hereof)" and "to the Original Owners (as defined in Clause 33 hereof)", respectively; (f) by deleting in line 342 the words "or any of them"; (g) by deleting in the 20th line following line 366 (but before line 367) the words "or either of them"; (h) by amending in clause 16, line 559, sub-paragraph (b), the words "FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE, Rotterdam, The Netherlands" to read "FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium"; (i) by deleting in clause 16, line 559, the whole of sub-paragraph (c) starting from the words "NOTICE OF SECOND MORTGAGE" up to and including the words "other than for crew's wages and salvage"; (j) by amending in the line immediately following line 561, the words "and their respective" to read "and its"; (k) by amending in the fifth line following line 618, the words "and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000." to read: "and: (a) in the event such sale is on terms pursuant to which the buyer has agreed to pay to the Owners the relevant acquisition price of the Vessel in cash and in full upon delivery and acceptance of the Vessel to such buyer, the Charterers shall provide to the buyer of the Vessel a performance guarantee of all the Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000; or (b) in the event such sale is on terms pursuant to which the buyer has agreed to pay for the acquisition of the Vessel by, inter alia, taking over from the Owners the Owners' obligation under Clause 17 of the MOA to repay the Sellers' Credit to the Charterers, then the Charterers shall execute any such document and take any such action as provided in clause 17(b) of the MOA including, but without any limitation to the generality of the foregoing, any such document or action as the Owners may consider necessary or desirable for the said buyer to (i) take the place of the Owners under Clause 17 of the MOA and under this Charter and (ii) receive the benefit of any of the securities under this Charter and, in particular but without limitation to the foregoing, Clauses 32Aa, 32Ab and 32C hereof."; (l) by amending in line 815, sub-paragraph (iv) to read as follows: "the Charterers or the Charter Guarantor (as defined in Clause 33 hereof) breach any of the terms of any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) to which the Charterers and/or the Charter Guarantor (as such term is further defined in Clause 33 hereof) is, or is to become, a party to (for the avoidance of doubt, the making of a misrepresentation by the Charterers and/or the Charter Guarantor under, or in relation to or in connection with, any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) shall constitute a breach of such document for the purposes of this Clause 28(a)(iv))."; (m) by deleting from line 845 the words "or (ii) the Charter Guarantor, as defined in clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments."; (n) by amending in lines 5 and 6 of clause 32A(a), the words "each of the First Quadripartite Agreement and the Second Quadripartite Agreement" to read "the First Quadripartite Agreement"; (o) by adding in clause 33 the following definition of "Original Owners": ""Original Owners" means Tucker Navigation Co. of 80 Broad Street, Monrovia, Liberia."; (p) by deleting the existing definitions of "First Mortgagee", "MOA" and Financial Instrument" and replacing them by the following new definitions of "First Mortgagee", "MOA" and "Financial Instrument": --First Mortgagee" means FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium acting through its Athens branch at 166 Syngrou Avenue, Athens Greece (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as nay person that may replace the First Mortgagee; "MOA" means the memorandum of agreement dated 14 March 2006, made between the Charterers, as sellers and the Original Owners, as buyers, pursuant to which the Original Owners purchased the Vessel on the terms and conditions mentioned therein as amended by a supplemental agreement dated 16 June 2006 made between the Owners, the Original Owners and the Charterers; "Financial Instrument" means the First Quadripartite Agreement and the First Mortgage;"; and (q) by deleting in clause 33 the definitions of Second Mortgage, Second Mortgagee, Second Quadripartite Agreement and Mortgagees. 8 Subject to the foregoing the terms of the Charter shall not have been amended and remain in full force and effect. 9 No term of this Addendum is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum. 10 This Addendum shall be construed in accordance with, and shall be governed by, English law. SIGNED by TUCKER NAVIGATION CO. by: Alexandra Tatagia /s/ Alexandra Tatagia -------------------------------- SIGNED by ICON DOUBTLESS, LLC by: Mark Gatto /s/ Mark Gatto -------------------------------- SIGNED by FALAKRO SHIPPING COMPANY LIMITED by: Eirini Alexandropoulou /s/ Eirini Alexandropoulou -------------------------------- EX-4.61 58 d759408_ex4-61.txt Exhibit 4.61 Private & Confidential Dated 16 June 2006 ICON DOUBTLESS, LLC (1) as Owner FALAKRO SHIPPING COMPANY LIMITED (2) as Charterer TOP TANKERS INC. as Charter Guarantor (3) and FORTIS BANK (NEDERLAND) N.V. (4) as Mortgagee ----------------------------------------------- QUADRIPARTITE DEED relating to m.v. "Doubtless" ----------------------------------------------- NORTON ROSE Contents Clause Page 1 Definitions................................................................2 2 Representations and warranties.............................................8 3 Assignment................................................................12 4 Owner's Assignment........................................................12 5 Continuing security and other matters.....................................13 6 Charterer's undertakings..................................................16 7 Charter Guarantor's undertakings..........................................18 8 Covenants concerning insurance and operational matters....................22 9 Powers of Mortgagee to protect security and remedy defaults...............29 10 Powers of Mortgagee on Event of Default...................................30 11 Application of moneys.....................................................30 12 Remedies cumulative and other provisions..................................32 13 Costs and indemnity.......................................................32 14 Attorney..................................................................33 15 Further assurance.........................................................33 16 Consent, Termination of Charter and Quiet Enjoyment.......................34 17 Continuation of Charter Period............................................36 18 Notices...................................................................36 19 Counterparts..............................................................37 20 Severability of provisions................................................37 21 Law and jurisdiction......................................................37 Schedule 1 Forms of Loss Payable Clauses......................................39 Schedule 2 Forms of Notices of Assignment of Insurances.......................40 THIS QUADRIPARTITE DEED is dated 16 June 2006 BETWEEN: (1) ICON DOUBTLESS, LLC, whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner"); (2) FALAKRO SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands as security agent and trustee for and on behalf of the Secured Creditors (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of all of the shares in the Ship described in clause 1.1; (B) by a loan agreement (the "Loan Agreement") dated 16 June 2006 and made between (1) the Owner, ICON Faithful, LLC, ICON Spotless, LLC and Isomar Marine Company Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) Fortis Bank NV/SA as arranger and account bank (in such capacity the "Account Bank"), (4) the Mortgagee as agent (in such capacity the "Agent") and security agent and (4) Fortis Bank (Nederland) N.V. as swap provider (in such capacity the "Swap Provider and together with the Agent and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 16 June 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 16 June 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of title 21 of the Liberian Code of Laws of 1956 as amended as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter dated 14 March 2006 made between Tucker Navigation Co. of Liberia (the "Original Owner) and the Charterer as novated and amended in favour of the Owner and the Charterer by a novation agreement dated 16 June 2006 made between the Original Owner, the Charterer and the Owner (the "Charter"), the Owner has agreed to let, and Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Doubtless Advance, the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Doubtless Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter between the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or, pursuant to the Charter; "Charterer includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Account Bank with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Doubtless General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated June 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means, at any relevant time, all liabilities, actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and replacements of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Doubtless General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Faithful, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owners Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Borrowers or any of them pursuant to the Loan Agreement and/or the Master Swap Agreement or by any other Security Party pursuant to any other Security Document (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the m.v. "Doubtless" registered as a Liberian ship under Official Number 9363 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings of this Deed shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions of the Charter. 2 Representations and warranties 2.1 Charterers continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Liberia as a Liberian corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No material adverse change there has been no material adverse change in the financial position of the Charterer from that disclosed by the Charterer to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.1.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No material adverse change there has been no material adverse change in the financial position of the Charter Guarantor from that disclosed by the Charter Guarantor to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.2.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter and the Doubtless Time Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's Initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 Assignment By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the(.) Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Doubtless Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Mortgagee. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and maybe enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional and no enquiry 5.2.1 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.2 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owners Assigned Property and the Charterers Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterers rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings 6.1 The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterers rights and obligations under the Charter; and (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the relevant Managers or terminate or amend the terms of the relevant Management Agreements to which it is a party; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; 6.1.9 Provision of further information provide the Mortgagee with such financial or other information concerning the Charterer and its affairs as the Mortgagee may from time to time require; and 6.1.10 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; 7.1.2 Provision of further information provide the Mortgagee with such financial or other information concerning the Charter Guarantor and its affairs as the Mortgagee may from time to time require; and 7.1.3 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 15 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts(degree) shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed-evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other issued by the Charter Guarantor or any of its Subsidiaries not for beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor Subsidiaries or by any bank or acceptance house under acceptance on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; and (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as most recently determined by the Agent pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the (aa) Loan and (bb) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers (other than the said mortgagee's interest insurance which shall be effected through brokers nominated by the Mortgagee) and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in the registration of the Ship as a Liberian ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Liberian flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the relevant Classification (as defined in the Loan Agreement) as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the relevant Flag State (as defined in the Loan Agreement) or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Liberian law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the relevant Classification Society (as defined in the Loan Agreement) or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Doubtless Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Masters cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance and procure that any Operator of the Ship will: (a) maintain at all times a valid and current ISSC in respect of the Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; and (c) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default which has not been remedied or expressly waived in writing by the Creditors, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Borrowers in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterers Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterers Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owners Assigned Property and/or the Charterers Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owners Assigned Property and/or the Charterers Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owners Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as is required in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred and which has not been remedied or expressly waived in writing by the Creditors, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated June 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterers quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' (as defined in the Loan Agreement) interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of any of the following: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; or 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; or 16.3.5 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable after the Borrowers have prepaid the Advance relevant to such Ship or any other part of the Loan As may be required in clause 4.3 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) if to the Owner at: c/o ICON Capital Corp. 100 Fifth Avenue New York, NY 10011 USA Fax no: +1 212 418 4739 Attention: General Counsel (b) if to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 6978 107 Attention: Legal Department (c) if to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr. Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to Jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Law Debenture Corporate Services Limited at present of Fifth Floor, 100 Wood Street, London EC2V 7EX, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, ICON DOUBTLESS, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner") and by a Quadripartite Deed dated [o] 2006 and FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer') have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owners and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Doubtless" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which ICON DOUBTLESS, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner) or FALAKRO SHIPPING COMPANY LIMITED of 80 Broad Street, Monrovia, Republic of Liberia (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) ICON DOUBTLESS, LLC (the "Owner") of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America and FALAKRO SHIPPING COMPANY LIMITED (the "Charterer") of 80 Broad Street, Monrovia, Republic of Liberia, the owners and demise charterers respectively of the motor vessel "Doubtless" HEREBY GIVE NOTICE that by a General Assignment dated [ ] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [ ] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. /s/ Mark Gatto - ---------------------------------- Signed For and on behalf of ICON DOUBTLESS, LLC Dated [__] 2006 - ---------------------------------- Signed For and on behalf of FALAKRO SHIPPING COMPANY LIMITED Dated [__] 2006 EXECUTED as a DEED ) by Mark Gatto ) /s/ Mark Gatto for and on behalf of ) ----------------------------- ICON DOUBTLESS, LLC ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Eirini Alexandropolou ) /s/ Eirini Alexandropolou for and on behalf of ) ----------------------------- FALAKRO SHIPPING COMPANY LIMITED ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Eirini Alexandropolou ) /s/ Eirini Alexandropolou for and on behalf of ) ----------------------------- TOP TANKERS ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Christina Economides ) /s/ Christina Economides for and on behalf of ) ----------------------------- FORTIS BANK (NEDERLAND) N.V. ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Address: Occupation: EX-4.62 59 d759408_ex4-62.txt Exhibit 4.62 Guarantee June 2006 To: ICON Doubtless, LLC a Delaware limited liability company of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Doubtless (the "Ship") to Falakro Shipping Company Limited (the "Charterer", which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 between Tucker Navigation Co. of 80 Broad Street, Monrovia, Liberia (the "Original Owner") and the Charterer (the "Original Charter) as novated in favour of the Beneficiary and amended pursuant to a novation agreement dated 16 June 2006 made between the Original Owner, the Beneficiary and the Charterer (the "Novation Agreement" and together with the Original Charter and as further amended and supplemented from time to time, the "Charter") and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effiuxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (I) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 15 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantors issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (f) deducting any debit balance on such consolidated profit and loss account; (g) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (h) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (h) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (i) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (j) deducting all amounts attributable to minority interests in Subsidiaries; (k) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (l) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (m) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (n) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (o) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group(degree) means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph 10, be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium, acting through its Athens branch at 166 Syngrou Avenue, 176 71 Athens, Greece (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 Other than with respect to the Beneficiary, no term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED By: Eirini Alexandropoulou for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 13th June 2006 In the presence of: Witness: /s/ Vikki Madia Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.63 60 d759408_ex4-63.txt Exhibit 4.63 Private & Confidential DATED 16 JUNE 2006 SUPPLEMENTAL AGREEMENT relating to a memorandum of agreement dated 14 March 2006 in relation to m.v. Vanguard Contents Clause Page 1 Definitions.........................................................2 2 Consent of Original Owner...........................................3 3 Assumption of liability and obligations.............................3 4 Amendments to Original MOA..........................................3 5 Conditions..........................................................4 6 Counterparts........................................................4 7 Applicable law......................................................5 THIS SUPPLEMENTAL AGREEMENT is dated 16 June 2006 and made BETWEEN: (1) Pageon Shipping Company Limited, a company incorporated in the Republic of Cyprus with its registered office at 284 Arch. Makarios Ill Avenue, Limassol, Cyprus (the "Original Owner"); (2) Comoros Shipping Limited, a company incorporated in the Republic of Cyprus with its registered office at 41 Themistokli Dervi, Hawai, Nicosia Tower, 8th floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus (the "Current Owner"); and (3) Isomar Marine Company Limited, a limited liability company incorporated in the Republic of Cyprus with its registered office at 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus, Cyprus (the "New Owner"). WHEREAS: (A) this Agreement is supplemental to a "NSF93" memorandum of agreement dated 14 March 2006 (the "Original MOA") made between the Original Owner (therein referred to as the "Sellers") and the Current Owner (therein referred to as the "Buyers") relating to the sale by the Original Owner and the purchase by the Current Owner of m.v. Vanguard (the "Ship"), currently registered in the name of the Current Owner under Cyprus flag with IMO number 8913605; (B) the Current Owner has taken delivery of the Ship pursuant to the terms of the Original MOA and has paid to the Original Owner the Cash Part of the Purchase Price (as such term is defined in clause 17 of the Original MOA); (C) pursuant to clause 17 of the Original MOA it has been agreed between the Original Owner and the Current Owner that part of the Purchase Price (as defined therein) amounting to US$2,610,000 (the "Sellers' Credit") will not be paid by the Current Owner to the Original Owner on the delivery and acceptance of the Ship under the Original MOA and that payment the Sellers' Credit shall be made in the manner and at the time provided in clause 17 of the Original MOA; (D) the Original Owner and the Current Owner have entered into a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") whereby the Current Owner has let and the Original Owner has taken on demise charter the Ship on the terms contained therein; (E) the Current Owner wishes to transfer the ownership of the Ship to Oceanmaximum Shipping Limited of Nicosia, Cyprus (the "Intermediate Owner") pursuant to a memorandum of agreement dated 14 March 2006 and made between the Current Owner and Oceanbulk Maritime S.A. who at a later date nominated as buyers the Intermediate Owner (the "First MOA") who in turn wishes to transfer the ownership of the Ship to the New Owner pursuant to a memorandum of agreement dated 14 March 2006 and made between the Intermediate Owner and the New Owner; (F) the Current Owner and the New Owner wish to novate the Charter in favour of the New Owner to enable the New Owner to charter the Ship to the Original Owner following the transfer of the Ship to the New Owner; and (G) this Agreement sets out the consent of the Original Owner, at the request of the Current Owner, to (i) the transfer of ownership of the Ship from the Current Owner to the Intermediate Owner and from the Intermediate Owner to the New Owner and (ii) the said novation of the Charter. NOW IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Defined expressions Words and expressions defined in the Original MOA shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. 1.2 Definitions In this Agreement, unless the context otherwise requires: "Effective Date" means the date on which the Ship is delivered and accepted by the Intermediate Owner under the First MOA; "Existing Mortgage" means the third priority statutory mortgage dated 17 March 2006 executed by the Current Owner in favour of the Original Owner in respect of the Ship; and "Existing Register" means the register of ships of the Republic of Cyprus. 1.3 Original MOA References in the Original MOA to "this Agreement" shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Original MOA as amended by this Agreement and words such as "herein", "hereof", "hereunder", "hereafter", "hereby" and "hereto", where they appear in the Original MOA, shall be construed accordingly. 1.4 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.5 Construction of certain terms In this Agreement, unless the context otherwise requires: 1.5.1 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement includes its schedules; 1.5.2 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.5.3 words importing the plural shall include the singular and vice versa; 1.5.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any government entity; and 1.5.5 references to a "guarantee" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly. 2 Consent of Original Owner 2.1 Consent The Original Owner agrees with the Current Owner and the New Owner that as of the date of this Agreement the Original Owner consents to: 2.1.1 the transfer of the Ship by the Current Owner to the Intermediate Owner and by the Intermediate Owner to the New Owner; and 2.1.2 the novation of the Charter by the Current Owner in favour of the New Owner. 2.2 Discharge of Mortgage The Original Owner hereby agrees that it shall, simultaneously with the delivery of the Vessel to the Intermediate Owner under the First MOA, execute and thereafter register at the Existing Register, a deed of discharge in respect of the Existing Mortgage. 3 Assumption of liability and obligations 3.1 Substitution It is hereby agreed that, as and with effect from the Effective Date, the New Owner shall be, and is hereby made, a party to the Original MOA in respect of the provisions of clause 17 of the MOA and in substitution for the Current Owner as regards the provisions of clause 17 of the Original MOA and the Original MOA shall henceforth be construed and treated in all respect as if the New Owner was named in clause 17 instead of the Current Owner from the time the Original MOA was executed by the Original Owner and the Current Owner. 3.2 Assumption of liability The New Owner hereby agrees with the Original Owner that, as and with effect from the Effective Date, it shall be indebted to the Original Owner for the full amount of the Sellers' Credit and all other sums which may be or become due to the Original Owner pursuant to clause 17 of the Original MOA and the New Owner further agrees that it shall duly and punctually perform all the liabilities and obligations whatsoever from time to time to be performed or discharged by the Original Owner under clause 17 of the Original MOA and shall be bound by the terms of the Original MOA as if the New Owner had at all times been named therein as the Buyer. 3.3 Release The Original Owner hereby agrees that, as and with effect from the Effective Date, it shall release and discharge the Current Owner from all liabilities, obligations, claims and demands whatsoever touching or concerning clause 17 of the Original MOA and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the Original Owner and the New Owner against each other in respect of any such liabilities, obligations, claims and demands. 4 Amendments to Original MOA 4.1 Amendments Clause 17 of the Original MOA shall, with effect on and from the Effective Date, be (and it is hereby) deleted and the following new clause inserted in its place (and the Original MOA (as so amended) will continue to be binding upon the Original Owner, the Current Owner and the New Owner upon such terms as so amended): "a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty-three million four hundred and ninety thousand (US$23,490,000) (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million six hundred and ten thousand (US$2,610,000) shall be credited (the "Sellers' Credit") and shall be payable by isomar Marine Company Limited of 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "New Buyers") to the Sellers in accordance with the terms of this Clause 17. b) Subject to the provisions of Clause 17(c) hereinbelow, the Sellers' Credit shall be payable by the New Buyers to the Sellers in one instalment, free of interest, immediately upon either expiration of the "Barecon 2001" form demise charter dated 14 March 2006 made between the Sellers and the Buyers (the "Original Charter") as novated in favour of the New Buyers and amended pursuant to a novation agreement dated 16 June 2006 made between the Sellers, the Buyers and the New Buyers (the "Novation Agreement" and together with the Original Charter the "Bareboat Charter") by effluxion of time or the sale of the Vessel to another party (the "buying party") as described in Clause 22(b) of the Bareboat Charter provided however that such sale is on terms that the buying party shall pay to the New Buyers the relevant acquisition price in cash and in full at the time of delivery and acceptance of the Vessel by the buying party. IT IS HEREBY FURTHER AGREED THAT in the event that the New Buyers sell the Vessel on terms providing that the buying party shall pay for the acquisition of the Vessel by, inter alia, agreeing to take over the New Buyers' obligation under this Clause 17 to repay the Sellers' Credit to the Sellers, then (1) the Seller's Credit shall not be repayable upon such sale being agreed or the relevant delivery and acceptance of the Vessel thereunder taking place (since the sale consideration is not payable in cash and in full on delivery and acceptance of the Vessel) and (2) the Sellers shall execute any such document and take any such action as the New Buyers may consider necessary or desirable for the buying party to (i) take the place of the New Buyers under this Clause 17 and under the Bareboat Charter and 00 receive the benefit of any of the securities provided under the Bareboat Charter and, in particular but without limitation to the foregoing, clauses 32Aa, 32Ab and 32C thereof. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as the "Purchase Price Reduction Amount") which is equal to the lesser of (i) the Seller's Credit and (U) the total amount of hire that would have been paid to the New Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration up to 14 March 2011 and such reduction shall have as a result the reduction of the Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as hereinabove, the New Buyers shall provide the Sellers with a second priority statutory Mortgage over the Vessel, being subordinate to a first priority statutory Mortgage over the Vessel in favour of Fortis Bank NV/SA, as more particularly described in the Bareboat Charter.". 4.2 Continued force and effect Save as clauses 16 and 17 have been amended by this Agreement, no other provision of the Original MOA shall be amended by this Agreement and the Original MOA and this Agreement shall be read and construed as one instrument. 5 Conditions The consent of the Original Owner referred to in clause 2 shall be subject to the conditions precedent contained in schedule 1 being satisfied. 6 Counterparts This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. 7 Applicable law 7.1 Law This Agreement is governed by, and shall be construed in accordance with, English law. 7.2 Arbitration The provisions of clause 16 of the Original Agreement shall be deemed incorporated in this Agreement and the terms of the said clause shall apply herein mutatis mutandis, provided however that if each party to this Agreement appoints its own arbitrator it will not be required for an umpire to be appointed and any decision to be taken in relation to any such arbitration shall be taken by the panel of the three appointed arbitrators. IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed as a deed on the date first above written. SIGNED, SEALED and DELIVERED as a DEED by PAGEON SHIPPING COMPANY LIMITED by E. Alexandropolou its duly authorised attorney-in-fact /s/ E. Alexandropolu pursuant to a power of attorney dated 13 June 2006 ------------------------ in the presence of Attorney-in-fact /s/ Angela Makri Norton Rose Piraeu SIGNED, SEALED and DELIVERED as a DEED by ISOMAR MARINE COMPANY LIMITED by M. Gatto its duly authorised attorney-in-fact /s/ M. Gatto pursuant to a power of attorney dated 15 June 2006 ------------------------ in the presence of Attorney-in-fact /s/ Angela Makri Norton Rose Piraeu SIGNED, SEALED and DELIVERED as a DEED by COMOROS SHIPPING LIMITED by A. Tatagia its duly authorised attorney-in-fact /s/ A. Tatagia pursuant to a power of attorney dated 14 June 2006 ------------------------ in the presence of Attorney-in-fact /s/ Angela Makri Norton Rose Piraeus EX-4.64 61 d759408_ex4-64.txt Exhibit 4.64 ADDENDUM NO. 1 dated 16 June 2006 to a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") made between, Comoros Shipping Limited (the "Original Owners") as owners and Pageon Shipping Company Limited (the "Charterers") as charterers, in respect of m.v. Vanguard (the "Vessel"), whereby it is agreed by the parties to this Addendum as follows: 1 In connection with the sale of the Vessel by the Original Owners to Oceanmaximum Shipping Limited of Nicosia, Cyprus (the "Intermediate Owners") and by the Intermediate Owners to Isomer Marine Company Limited a Cyprus company whose registered office is at 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "New Owners") in accordance with the terms of the respective sale and purchase agreements (each respectively referred to hereinafter as an "MOA"): (a) the Charterers hereby consent to the proposed consecutive sale of the Vessel from the Original Owners to the Intermediate Owners and from the Intermediate Owners to the New Owners; (b) the Original Owners, the New Owners and the Charterers hereby agree that, with effect from the date of delivery of the Vessel by the Intermediate Owners to the New Owners pursuant to the relevant MOA (the "Effective Date"), the New Owners shall be and are hereby substituted in place of the Original Owners as a party to the Charter and as the "Owners" of the Vessel under the Charter and that the Charter shall henceforth be construed and treated in all respects as if the New Owners were named therein instead of the Original Owners; (c) the New Owners hereby agree with the Charterers that, as and with effect from the Effective Date, the New Owners shall duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by them or by virtue of the Charter in all respects as if the New Owners were named therein instead of the Original Owners; (d) the Charterers hereby agree with the New Owners that, as and with effect from the Effective Date, the Charterers shall be bound by the Charter in all respects as if the New Owners were (and had at all times been) named therein instead of the Original Owners; and (e) the Charterers and the Original Owners hereby mutually release and discharge each other from all liabilities, obligations, claims and demands whatsoever touching or concerning the Charter and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the New Owners and the Charterers against each other in respect of any such liabilities, obligations, claims and demands. 2 The Original Owners and the Charterers warrant and represent to the New Owners that the Charter constitutes the entire agreement with the Charterers for the charter of the Vessel and that the Charter is in full force and effect. 3 The Charterers hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Original Owners or the Intermediate Owners. 4 The Original Owners hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Charterers. 5 The Original Owners hereby agree that they shall, within 7 days of the Effective Date, reimburse to the New Owners the amount of advance charter hire paid to the Original Owners by the Charterers in respect of the period from the Effective Date to the end of the period to which that payment of charterhire relates. 6 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the charter hire payable to FORTIS BANK (NEDERLAND) N.V. in accordance with Box 26 should now be payable to FORTIS BANK NV/SA of 166 Syngrou Avenue, 176 71, Athens Greece account no. 1000180205. 7 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the Charter shall be amended as follows: (a) by amending throughout the Charter any references to "Financial Instruments", "relevant Financial Instruments" to read "Financial Instrument"; (b) by amending throughout the Charter any references to "Mortgagees", "Mortgagees", "a Mortgagee", "such Mortgagee", "said Mortgagee", "respective Mortgagee" to read "First Mortgagee" or, as the context may require, "First Mortgagee's"; (c) by deleting throughout the Charter the words "and the Second Mortgagee", "or, as the case may be, the Second Mortgagees" (d) by deleting in Box 28 the words "Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee"; (e) by amending in paragraph (a) following line 32 the words "by the Owners" and "to the Owners as buyers" to read "by the Original Owners (as defined in Clause 33 hereof)" and "to the Original Owners (as defined in Clause 33 hereof)", respectively; (f) by deleting in line 342 the words "or any of them"; (g) by deleting in the 20th line following line 366 (but before line 367) the words "or either of them"; (h) by amending in clause 16, line 559, sub-paragraph (b), the words "FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE, Rotterdam, The Netherlands" to read "FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium"; (i) by deleting in clause 16, line 559, the whole of sub-paragraph (c) starting from the words "NOTICE OF SECOND MORTGAGE" up to and including the words "other than for crew's wages and salvage"; (j) by amending in the line immediately following line 561, the words "and their respective" to read "and its"; (k) by amending in the fifth line following line 618, the words "and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000." to read: "and: a) in the event such sale is on terms pursuant to which the buyer has agreed to pay to the Owners the relevant acquisition price of the Vessel in cash and in full upon delivery and acceptance of the Vessel to such buyer, the Charterers shall provide to the buyer of the Vessel a performance guarantee of all the Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000; or (b) in the event such sale is on terms pursuant to which the buyer has agreed to pay for the acquisition of the Vessel by, inter alia, taking over from the Owners the Owners' obligation under Clause 17 of the MOA to repay the Sellers' Credit to the Charterers, then the Charterers shall execute any such document and take any such action as provided in clause 17(b) of the MOA including, but without any limitation to the generality of the foregoing, any such document or action as the Owners may consider necessary or desirable for the said buyer to (i) take the place of the Owners under Clause 17 of the MOA and under this Charter and (ii) receive the benefit of any of the securities under this Charter and, in particular but without limitation to the foregoing, Clauses 32Aa, 32Ab and 32C hereof."; (l) by amending in line 815, sub-paragraph (iv) to read as follows: "the Charterers or the Charter Guarantor (as defined in Clause 33 hereof) breach any of the terms of any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) to which the Charterers and/or the Charter Guarantor (as such term is further defined in Clause 33 hereof) is, or is to become, a party to (for the avoidance of doubt, the making of a misrepresentation by the Charterers and/or the Charter Guarantor under, or in relation to or in connection with, any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) shall constitute a breach of such document for the purposes of this Clause 28(a)(iv))."; (m) by deleting from line 845 the words "or (ii) the Charter Guarantor, as defined in clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments."; (n) by amending in lines 5 and 6 of clause 32A(a), the words "each of the First Quadripartite Agreement and the Second Quadripartite Agreement" to read "the First Quadripartite Agreement"; (o) by adding in clause 33 the following definition of "Original Owners": "Original Owners" means Comoros Shipping Limited of 41 Themistokli Dervi, Hawai, Nicosia Tower, 8th floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus."; (p) by deleting the existing definitions of "First Mortgagee", "MOA" and Financial Instrument" and replacing them by the following new definitions of "First Mortgagee", "MOA" and "Financial Instrument": "First Mortgagee" means FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium acting through its Athens branch at 166 Syngrou Avenue, Athens Greece (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as nay person that may replace the First Mortgagee; "MOA" means the memorandum of agreement dated 14 March 2006, made between the Charterers, as sellers and the Original Owners, as buyers, pursuant to which the Original Owners purchased the Vessel on the terms and conditions mentioned therein as amended by a supplemental agreement dated 16 June 2006 made between the Owners, the Original Owners and the Charterers; "Financial Instrument" means the First Quadripartite Agreement, the First Mortgage and the First Deed of Covenant"; and (q) by deleting in clause 33 the definitions of Second Deed of Covenant, Second Mortgage, Second Mortgagee, Second Quadripartite Agreement and Mortgagees. 8 Subject to the foregoing the terms of the Charter shall not have been amended and remain in full force and effect. 9 No term of this Addendum is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum. 10 This Addendum shall be construed in accordance with, and shall be governed by, English law. SIGNED by COMOROS SHIPPING LIMITED by: Alexandra Tatagia /s/ Alexandra Tatagia -------------------------------- SIGNED by ISOMAR MARINE COMPANY LIMITED by: Mark Gatto /s/ Mark Gatto -------------------------------- SIGNED by PAGEON SHIPPING COMPANY LIMITED by: Eirini Alexandropoulou /s/ Erini Alexandropoulou -------------------------------- EX-4.65 62 d759408_ex4-65.txt Exhibit 4.65 Private & Confidential Dated 16- June 2006 ISOMAR MARINE COMPANY LIMITED as Owner PAGEON SHIPPING COMPANY LIMITED as Charterer TOP TANKERS INC. as Charter Guarantor and FORTIS BANK (NEDERLAND) N.V. as Mortgagee QUADRIPARTITE DEED relating to m.v. "Vanguard" Contents Clause Page 1 Definitions..........................................................2 2 Representations and warranties.......................................8 3 Assignment..........................................................12 4 Owner's Assignment..................................................12 5 Continuing security and other matters.............................. 13 6 Charterer's undertakings........................................... 16 7 Charter Guarantor's undertakings....................................18 8 Covenants concerning insurance and operational matters..............22 9 Powers of Mortgagee to protect security and remedy defaults........ 29 10 Powers of Mortgagee on Event of Default.............................30 11 Application of moneys...............................................30 12 Remedies cumulative and other provisions............................32 13 Costs and indemnity.................................................32 14 Attorney............................................................33 15 Further assurance...................................................33 16 Consent, Termination of Charter and Quiet Enjoyment.................34 17 Continuation of Charter Period......................................36 18 Notices.............................................................36 19 Counterparts........................................................37 20 Severability of provisions..........................................37 21 Law and jurisdiction................................................37 Schedule 1 Forms of Loss Payable Clauses....................................39 Schedule 2 Forms of Notices of Assignment of Insurances.....................40 THIS QUADRIPARTITE DEED is dated 16 June 2006 BETWEEN: (1) ISOMAR MARINE COMPANY LIMITED, whose registered office is at 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "Owner"); (2) PAGEON SHIPPING COMPANY LIMITED, a company incorporated in the Republic of Cyprus whose registered office is at 284 Arch. Makarios III Avenue, Limassol, Cyprus (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands as security agent and trustee for and on behalf of the Secured Creditors (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of all of the shares in the Ship described in clause 1.1; (B) by a loan agreement (the "Loan Agreement') dated 16 June 2006 and made between (1) the Owner, ICON Doubtless, LLC, ICON Faithful, LLC and ICON Spotless, LLC (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) Fortis Bank NV/SA as arranger and account bank (in such capacity the "Account Bank"), (4) the Mortgagee as agent (in such capacity the "Agent") and security agent and (4) Fortis Bank (Nederland) N.V. as swap provider (in such capacity the "Swap Provider" and together with the Agent and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated t6 June 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated to June 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first priority statutory ship mortgage and a deed of covenant collateral thereto (together the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of the laws of Cyprus as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter dated 14 March 2006 made between Comoros Shipping Limited of Cyprus (the "Original Owner") and the Charterer as novated and amended in favour of the Owner and the Charterer by a novation agreement dated 16 June 2006 made between the Original Owner, the Charterer and the Owner (the "Charter"), the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Vanguard Advance, the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Vanguard Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter between the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Account Bank with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default" means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "ISSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Vanguard General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated June 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means, at any relevant time, all liabilities, actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first priority statutory mortgage and deed of covenant collateral thereto mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and replacements of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Vanguard General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Faithful and Spotless and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title of the Owner; "Owner's Assigned Property" means: (a) the Charter; (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Borrowers or any of them pursuant to the Loan Agreement and/or the Master Swap Agreement or by any other Security Party pursuant to any other Security Document (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the m.v. "Vanguard' registered as a Cyprus ship under IMO Number 8913605 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings of this Deed shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions of the Charter. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Republic of Cyprus as a limited liability company and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No material adverse change there has been no material adverse change in the financial position of the Charterer from that disclosed by the Charterer to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.1.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No material adverse change there has been no material adverse change in the financial position of the Charter Guarantor from that disclosed by the Charter Guarantor to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.2.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter and the Vanguard Time Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterer's Assigned Property and neither the Charterer's Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 Assignment By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Vanguard Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Mortgagee. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional and no enquiry 5.2.1 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.2 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6A exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5.9 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterer's undertakings 6.1 The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterer's rights and obligations under the Charter; and (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the relevant Managers or terminate or amend the terms of the relevant Management Agreements to which it is a party; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; 6.1.9 Provision of further information provide the Mortgagee with such financial or other information concerning the Charterer and its affairs as the Mortgagee may from time to time require; and 6.1.10 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 72.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; 7.1.2 Provision of further information provide the Mortgagee with such financial or other information concerning the Charter Guarantor and its affairs as the Mortgagee may from time to time require; and 7.1.3 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 15 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; and (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as most recently determined by the Agent pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the (aa) Loan and (bb) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (all P&I risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers (other than the said mortgagee's interest insurance which shall be effected through brokers nominated by the Mortgagee) and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in the registration of the Ship as a Cyprus ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Cyprus flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the relevant Classification (as defined in the Loan Agreement) as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of the Cyprus Merchant Shipping Acts and all regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the relevant Flag State (as defined in the Loan Agreement) or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof; 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Cyprus law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the relevant Classification Society (as defined in the Loan Agreement) or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty.Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Vanguard Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and/or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement" with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer; 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance (and procure that any Operator of the Ship will): (a) maintain at all times a valid and current ISSC in respect of the Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; and (c) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default which has not been remedied or expressly waived in writing by the Creditors, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Borrowers in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as is required in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred and which has not been remedied or expressly waived in writing by the Creditors, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 111 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterer's Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated June 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterer's quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' (as defined in the Loan Agreement) interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of any of the following: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; or 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; or 16.3.5 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owner's assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter; 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable after the Borrowers have prepaid the Advance relevant to such Ship or any other part of the Loan As may be required in clause 4.3 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) if to the Owner at: c/o ICON Capital Corp. 100 Fifth Avenue, 4th Floor New York, NY 10011 USA Fax no: +1 (212) 4184739 Attention: General Counsel (b) if to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: +30 210 6978 107 Attention: Legal Department (c) if to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Law Debenture Corporate Services Limited at present of Fifth Floor, 100 Wood Street, London EC2V 7EX, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, ISOMAR MARINE COMPANY LIMITED of 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "Owner") and by a Quadripartite Deed dated [o] 2006 and PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios III Avenue, Limassol, Cyprus (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterer's rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Vanguard' and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which ISOMAR MARINE COMPANY LIMITED of 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "Owner") or PAGEON SHIPPING COMPANY LIMITED of 284 Arch. Makarios Ill Avenue, Limassol, Cyprus (the "Charterer") is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) ISOMAR MARINE COMPANY LIMITED (the "Owner") of 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus and PAGEON SHIPPING COMPANY LIMITED (the "Charterer") of 284 Arch. Makarios III Avenue, Limassol, Cyprus, the owners and demise charterers respectively of the motor vessel "Vanguard' HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. /s/ Mark Gatto - --------------------------------- Signed For and on behalf of ISOMAR MARINE COMPANY LIMITED Dated [o] 2006 - -------------------------------- Signed For and on behalf of PAGEON SHIPPING COMPANY LIMITED Dated [o] 2006 SIGNED, SEALED and DELIVERED by Mark Gatto /s/ Mark Gatto for and on behalf of ----------------------------- ISOMAR MARINE COMPANY LIMITED Attorney-in-fact as Owner /s/ Vikki Madia - -------------------------------- In the presence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: SIGNED, SEALED and DELIVERED by Eirini Alexandropolou /s/ Eirini Alexandropolou for and on behalf of ----------------------------- PAGEON SHIPPING COMPANY LIMITED Attorney-in-fact as Charterer /s/ Vikki Madia - --------------------------------- in the presence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EXECUTED as a DEED by Eirini Alexandropolou for and on behalf of /s/ E. Alexandropolou TOP TANKERS INC. as ----------------------------- Charter Guarantor Attorney-in-fact /s/ Vikki Madia - ------------------------------- in the presence of Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EXECUTED as a DEED by C. Economides for and on behalf of /s/ C. Economides FORTIS BANK (NEDERLAND) N.V. ----------------------------- as Mortgage Attorney-in-fact /s/ Vikki Madia - -------------------------------- In the presence of: Witness Vikki Madia Name: Norton Rose Address: Piraeus Occupation: EX-4.66 63 d759408_ex4-66.txt Exhibit 4.66 Guarantee June 2006 To: Isomer Marine Company Limited of 1 Costakis Pantelides Avenue, Kolokasides Building, 1010 Nicosia, Cyprus (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Vanguard (the "Ship") to Pageon Shipping Company Limited (the "Charterer, which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 between Comoros Shipping Limited of Themistokli Dervi 41, Hawai Nicosia Tower, 8th floor, Flat/office 806-807, P.C. 1066, Lefkosia, Cyprus (the "Original Owner") and the Charterer (the "Original Charter") as novated in favour of the Beneficiary and amended pursuant to a novation agreement dated 16 June 2006 made between the Original Owner, the Beneficiary and the Charterer (the "Novation Agreement" and together with the Original Charter and as further amended and supplemented from time to time, the "Charter") and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor) irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantors liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 15 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($U525,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (f) deducting any debit balance on such consolidated profit and loss account; (g) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (h) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (h) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (i) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (j) deducting all amounts attributable to minority interests in Subsidiaries; (k) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (l) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (m) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (n) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (o) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it is hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph 10, be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium, acting through its Athens branch at 166 Syngrou Avenue, 176 71 Athens, Greece (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shall be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 Other than with respect to the Beneficiary, no term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully EXECUTED as a DEED /s/ E. Alexandropoulou By Elrini Alexandropoulou -------------------------- TOP TANKERS INC. Attorney-in-fact pursuant to a Power of Attorney dated 13th June 2006 In the presence of: /s/ Vikki Madia - -------------------------------- Witness: Name: Vikki Madia Address: Norton Rose Occupation Piraeus EX-4.67 64 d759408_ex4-67.txt Exhibit 4.67 Private & Confidential DATED 16 JUNE 2006 SUPPLEMENTAL AGREEMENT relating to a memorandum of agreement dated 14 March 2006 in relation to m.v. Faithful Contents Clause Page 1 Definitions......................................................2 2 Consent of Original Owner........................................3 3 Assumption of liability and obligations..........................3 4 Amendments to Original MOA.......................................3 5 Conditions.......................................................4 6 Counterparts.....................................................4 7 Applicable law...................................................5 THIS SUPPLEMENTAL AGREEMENT is dated 16 June 2006 and made BETWEEN: (1) Gramos Shipping Company Inc., a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Original Owner"); (2) Starcraft Marine Co., a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Current Owner"); and (3) ICON Faithful, LLC, a limited liability company formed under the laws of the State of Delaware, United States of America with its registered office at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owner"). WHEREAS: (A) this Agreement is supplemental to a "NSF93" memorandum of agreement dated 14 March 2006 (the "Original MOA") made between the Original Owner (therein referred to as the "Sellers") and the Current Owner (therein referred to as the "Buyers") relating to the sale by the Original Owner and the purchase by the Current Owner of m.v. Faithful (the "Ship"), currently registered in the name of the Current Owner under Marshall Islands flag with official number 1689; (B) the Current Owner has taken delivery of the Ship pursuant to the terms of the Original MOA and has paid to the Original Owner the Cash Part of the Purchase Price (as such term is defined in clause 17 of the Original MOA); (C) pursuant to clause 17 of the Original MOA it has been agreed between the Original Owner and the Current Owner that part of the Purchase Price (as defined therein) amounting to US$2,550,000 (the "Sellers' Credit") will not be paid by the Current Owner to the Original Owner on the delivery and acceptance of the Ship under the Original MOA and that payment the Sellers' Credit shall be made in the manner and at the time provided in clause 17 of the Original MOA; (D) the Original Owner and the Current Owner have entered into a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") whereby the Current Owner has let and the Original Owner has taken on demise charter the Ship on the terms contained therein; (E) the Current Owner wishes to transfer the ownership of the Ship to Ivy Services Co. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Intermediate Owner") pursuant to a memorandum of agreement dated 14 March 2006 and made between the Current Owner and Oceanbulk Maritime S.A. who at a later date nominated as buyers the Intermediate Owner (the "First MOA") who in turn wishes to transfer the ownership of the Ship to the New Owner pursuant to a memorandum of agreement dated 14 March 2006 and made between the Intermediate Owner and the New Owner; (F) the Current Owner and the New Owner wish to novate the Charter in favour of the New Owner to enable the New Owner to charter the Ship to the Original Owner following the transfer of the Ship to the New Owner; and (G) this Agreement sets out the consent of the Original Owner, at the request of the Current Owner, to (i) the transfer of ownership of the Ship from the Current Owner to the Intermediate Owner and from the Intermediate Owner to the New Owner and (ii) the said novation of the Charter. NOW IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Defined expressions Words and expressions defined in the Original MOA shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. 1.2 Definitions In this Agreement, unless the context otherwise requires: "Effective Date" means the date on which the Ship is delivered and accepted by the Intermediate Owner under the First MOA; "Existing Mortgage" means the third preferred mortgage dated 17 March 2006 executed by the Current Owner in favour of the Original Owner in respect of the Ship; and "Existing Register" means the register of ships of the Republic of Marshall Islands. 1.3 Original MOA References in the Original MOA to "this Agreement" shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Original MOA as amended by this Agreement and words such as "herein", "hereof', "hereunder", "hereafter", "hereby" and "hereto", where they appear in the Original MOA, shall be construed accordingly. 1.4 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.5 Construction of certain terms In this Agreement, unless the context otherwise requires: 1.5.1 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement includes its schedules; 1.5.2 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.5.3 words importing the plural shall include the singular and vice versa; 1.5.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any government entity; and 1.5.5 references to a "guarantee" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly. 2 Consent of Original Owner 2.1 Consent The Original Owner agrees with the Current Owner and the New Owner that as of the date of this Agreement the Original Owner consents to: 2.1.1 the transfer of the Ship by the Current Owner to the Intermediate Owner and by the Intermediate Owner to the New Owner; and 2.1.2 the novation of the Charter by the Current Owner in favour of the New Owner. 2.2 Discharge of Mortgage The Original Owner hereby agrees that it shall, simultaneously with the delivery of the Vessel to the Intermediate Owner under the First MOA, execute and thereafter register at the Existing Register, a deed of discharge in respect of the Existing Mortgage. 3 Assumption of liability and obligations 3.1 Substitution It is hereby agreed that, as and with effect from the Effective Date, the New Owner shall be, and is hereby made, a party to the Original MOA in respect of the provisions of clause 17 of the MOA and in substitution for the Current Owner as regards the provisions of clause 17 of the Original MOA and the Original MOA shall henceforth be construed and treated in all respect as if the New Owner was named in clause 17 instead of the Current Owner from the time the Original MOA was executed by the Original Owner and the Current Owner. 3.2 Assumption of liability The New Owner hereby agrees with the Original Owner that, as and with effect from the Effective Date, it shall be indebted to the Original Owner for the full amount of the Sellers' Credit and all other sums which may be or become due to the Original Owner pursuant to clause 17 of the Original MOA and the New Owner further agrees that it shall duly and punctually perform all the liabilities and obligations whatsoever from time to time to be performed or discharged by the Original Owner under clause 17 of the Original MOA and shall be bound by the terms of the Original MOA as if the New Owner had at all times been named therein as the Buyer. 3.3 Release The Original Owner hereby agrees that, as and with effect from the Effective Date, it shall release and discharge the Current Owner from all liabilities, obligations, claims and demands whatsoever touching or concerning clause 17 of the Original MOA and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the Original Owner and the New Owner against each other in respect of any such liabilities, obligations, claims and demands. 4 Amendments to Original MOA 4.1 Amendments Clause 17 of the Original MOA shall, with effect on and from the Effective Date, be (and it is hereby) deleted and the following new clause inserted in its place (and the Original MOA (as so amended) will continue to be binding upon the Original Owner, the Current Owner and the New Owner upon such terms as so amended): "a) At the time stipulated in Clause 3, the Buyers shall pay to the Sellers part of the Purchase Price amounting to United States Dollars Twenty-two million nine hundred and fifty thousand (US$22,950,000) (the "Cash Part of the Purchase Price") while the balance amounting to United States Dollars Two million five hundred and fifty thousand (US$2,550,000) shall be credited (the "Sellers' Credit") and shall be payable by ICON Faithful, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Buyers") to the Sellers in accordance with the terms of this Clause 17. b) Subject to the provisions of Clause 17(c) hereinbelow, the Sellers' Credit shall be payable by the New Buyers to the Sellers in one instalment, free of interest, immediately upon either expiration of the "Barecon 2001" form demise charter dated 14 March 2006 made between the Sellers and the Buyers (the "Original Charter") as novated in favour of the New Buyers and amended pursuant to a novation agreement dated 16 June 2006 made between the Sellers, the Buyers and the New Buyers (the "Novation Agreement" and together with the Original Charter the "Bareboat Charter) by effluxion of time or the sale of the Vessel to another party (the "buying party") as described in Clause 22(b) of the Bareboat Charter provided however that such sale is on terms that the buying party shall pay to the New Buyers the relevant acquisition price in cash and in full at the time of delivery and acceptance of the Vessel by the buying party. IT IS HEREBY FURTHER AGREED THAT in the event that the New Buyers sell the Vessel on terms providing that the buying party shall pay for the acquisition of the Vessel by, inter alia, agreeing to take over the New Buyers' obligation under this Clause 17 to repay the Sellers' Credit to the Sellers, then (1) the Seller's Credit shall not be repayable upon such sale being agreed or the relevant delivery and acceptance of the Vessel thereunder taking place (since the sale consideration is not payable in cash and in full on delivery and acceptance of the Vessel) and (2) the Sellers shall execute any such document and take any such action as the New Buyers may consider necessary or desirable for the buying party to (i) take the place of the New Buyers under this Clause 17 and under the Bareboat Charter and (ii) receive the benefit of any of the securities provided under the Bareboat Charter and, in particular but without limitation to the foregoing, clauses 32Aa, 32Ab and 32C thereof. c) In the event that the Bareboat Charter be terminated because of any of the reasons provided in Clause 28(a) of the Bareboat Charter and/or any other reason attributable to the Sellers as charterers under the Bareboat Charter, then upon such termination taking place, the Purchase Price shall be automatically reduced by an amount (such amount referred to as the "Purchase Price Reduction Amount") which is equal to the lesser of (i) the Seller's Credit and (ii) the total amount of hire that would have been paid to the New Buyers under the terms of the Bareboat Charter had the Bareboat Charter continued uninterrupted for its full duration up to 14 March 2011 and such reduction shall have as a result the reduction of the Sellers' Credit by an amount equal to the Purchase Price Reduction Amount. As security for the payment of the Sellers' Credit, as hereinabove, the New Buyers shall provide the Sellers with a second preferred Mortgage over the Vessel, being subordinate to a first preferred Mortgage over the Vessel in favour of Fortis Bank NV/SA, as more particularly described in the Bareboat Charter.". 4.2 Continued force and effect Save as clauses 16 and 17 have been amended by this Agreement, no other provision of the Original MOA shall be amended by this Agreement and the Original MOA and this Agreement shall be read and construed as one instrument. 5 Conditions The consent of the Original Owner referred to in clause 2 shall be subject to the conditions precedent contained in schedule 1 being satisfied. 6 Counterparts This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. 7 Applicable law 7.1 Law This Agreement is governed by, and shall be construed in accordance with, English law. 7.2 Arbitration The provisions of clause 16 of the Original Agreement shall be deemed incorporated in this Agreement and the terms of the said clause shall apply herein mutatis mutandis, provided however that if each party to this Agreement appoints its own arbitrator it will not be required for an umpire to be appointed and any decision to be taken in relation to any such arbitration shall be taken by the panel of the three appointed arbitrators. IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed as a deed on the date first above written. EXECUTED as a DEED by GRAMOS SHIPPING COMPANY INC. by Eirini Alexandroplou /s/ Eirini Alexandroplou its duly authorised attorney-in-fact ------------------------- pursuant to a power of attorney dated 13 June 2006 in the presence of: V. Madia Norton Rose Piraeus EXECUTED as a DEED by ICON FAITHFUL, LLC by Mark Gatto /s/ Mark Gatto its duly authorised attorney-in-fact ------------------------- pursuant to a power of attorney dated 13 June 2006 in the presence of: V. Madia Norton Rose Piraeus EXECUTED as a DEED by STARCRAFT MARINE CO. by Alexandra Tatagia /s/ Alexandra Tatagia its duly authorised attorney-in-fact ------------------------- pursuant to a power of attorney dated 13 June 2006 in the presence of: V. Madia Norton Rose Piraeus EX-4.68 65 d759408_ex4-68.txt Exhibit 4.68 ADDENDUM NO. 1 dated 16 June 2006 to a "Barecon 2001" bareboat charter dated 14 March 2006 (the "Charter") made between, Starcraft Marine Co. (the "Original Owners") as owners and Gramos Shipping Company Inc. (the "Charterers") as charterers, in respect of m.v. Faithful (the "Vessel"), whereby it is agreed by the parties to this Addendum as follows: 1 In connection with the sale of the Vessel by the Original Owners to Ivy Services Co. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Intermediate Owners") and by the Intermediate Owners to ICON Faithful, LLC a Delaware limited liability company whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "New Owners") in accordance with the terms of the respective sale and purchase agreements (each respectively referred to hereinafter as an "MOA"): (a) the Charterers hereby consent to the proposed consecutive sale of the Vessel from the Original Owners to the Intermediate Owners and from the Intermediate Owners to the New Owners; (b) the Original Owners, the New Owners and the Charterers hereby agree that, with effect from the date of delivery of the Vessel by the Intermediate Owners to the New Owners pursuant to the relevant MOA (the "Effective Date"), the New Owners shall be and are hereby substituted in place of the Original Owners as a party to the Charter and as the "Owners" of the Vessel under the Charter and that the Charter shall henceforth be construed and treated in all respects as if the New Owners were named therein instead of the Original Owners; (c) the New Owners hereby agree with the Charterers that, as and with effect from the Effective Date, the New Owners shall duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by them or by virtue of the Charter in all respects as if the New Owners were named therein instead of the Original Owners; (d) the Charterers hereby agree with the New Owners that, as and with effect from the Effective Date, the Charterers shall be bound by the Charter in all respects as if the New Owners were (and had at all times been) named therein instead of the Original Owners; and (e) the Charterers and the Original Owners hereby mutually release and discharge each other from all liabilities, obligations, claims and demands whatsoever touching or concerning the Charter and in respect of anything done or omitted to be done under or in connection therewith but without prejudice to the rights of the New Owners and the Charterers against each other in respect of any such liabilities, obligations, claims and demands. 2 The Original Owners and the Charterers warrant and represent to the New Owners that the Charter constitutes the entire agreement with the Charterers for the charter of the Vessel and that the Charter is in full force and effect. 3 The Charterers hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Original Owners or the Intermediate Owners. 4 The Original Owners hereby acknowledge that there are no defaults or claims outstanding under the Charter on the part of or against the Charterers. 5 The Original Owners hereby agree that they shall, within 7 days of the Effective Date, reimburse to the New Owners the amount of advance charter hire paid to the Original Owners by the Charterers in respect of the period from the Effective Date to the end of the period to which that payment of charterhire relates. 6 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the charter hire payable to FORTIS BANK (NEDERLAND) N.V. in accordance with Box 26 should now be payable to FORTIS BANK NV/SA of 166 Syngrou Avenue, 176 71, Athens Greece account no. 1000160205. 7 The New Owners and the Charterers hereby agree that, as and with effect from the Effective Date, the Charter shall be amended as follows: (a) by amending throughout the Charter any references to "Financial Instruments", "relevant Financial Instruments" to read "Financial Instrument"; (b) by amending throughout the Charter any references to "Mortgagees", "Mortgagees", "a Mortgagee", "such Mortgagee", "said Mortgagee", "respective Mortgagee" to read "First Mortgagee" or, as the context may require, "First Mortgagee's"; (c) by deleting throughout the Charter the words "and the Second Mortgagee", "or, as the case may be, the Second Mortgagees" (d) by deleting in Box 28 the words "Second Quadripartite Agreement and Second Mortgage in favour of the Second Mortgagee"; (e) by amending in paragraph (a) following line 32 the words "by the Owners" and "to the Owners as buyers" to read "by the Original Owners (as defined in Clause 33 hereof)" and "to the Original Owners (as defined in Clause 33 hereof)", respectively; (f) by deleting in line 342 the words "or any of them"; (g) by deleting in the 20th line following line 366 (but before line 367) the words "or either of them"; (h) by amending in clause 16, line 559, sub-paragraph (b), the words "FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE, Rotterdam, The Netherlands" to read "FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium"; (i) by deleting in clause 16, line 559, the whole of sub-paragraph (c) starting from the words "NOTICE OF SECOND MORTGAGE" up to and including the words "other than for crew's wages and salvage"; (j) by amending in the line immediately following line 561, the words "and their respective" to read "and its"; (k) by amending in the fifth line following line 618, the words "and to provide to the buyers of the Vessel a performance guarantee of all Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000." to read: "and: (a) in the event such sale is on terms pursuant to which the buyer has agreed to pay to the Owners the relevant acquisition price of the Vessel in cash and in full upon delivery and acceptance of the Vessel to such buyer, the Charterers shall provide to the buyer of the Vessel a performance guarantee of all the Charterers' obligations hereunder by way of a first class bank guarantee acceptable to the buyer and in the amount of USD 2,550,000; or (b) in the event such sale is on terms pursuant to which the buyer has agreed to pay for the acquisition of the Vessel by, inter alia, taking over from the Owners the Owners' obligation under Clause 17 of the MOA to repay the Sellers' Credit to the Charterers, then the Charterers shall execute any such document and take any such action as provided in clause 17(b) of the MOA including, but without any limitation to the generality of the foregoing, any such document or action as the Owners may consider necessary or desirable for the said buyer to (i) take the place of the Owners under Clause 17 of the MOA and under this Charter and 00 receive the benefit of any of the securities under this Charter and, in particular but without limitation to the foregoing, Clauses 32Aa, 32Ab and 32C hereof."; (l) by amending in line 815, sub-paragraph (iv) to read as follows: "the Charterers or the Charter Guarantor (as defined in Clause 33 hereof) breach any of the terms of any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) to which the Charterers and/or the Charter Guarantor (as such term is further defined in Clause 33 hereof) is, or is to become, a party to (for the avoidance of doubt, the making of a misrepresentation by the Charterers and/or the Charter Guarantor under, or in relation to or in connection with, any of the Security Documents (as such term is defined in the First Quadripartite Agreement (as such term is further defined in Clause 33 hereof)) shall constitute a breach of such document for the purposes of this Clause 28(a)(iv))."; (m) by deleting from line 845 the words "or (H) the Charter Guarantor, as defined in clause 33, breaches any of the financial undertakings stated in the Charter Guarantee and/or the Financial Instruments."; (n) by amending in lines 5 and 6 of clause 32A(a), the words "each of the First Quadripartite Agreement and the Second Quadripartite Agreement" to read "the First Quadripartite Agreement"; (o) by adding in clause 33 the following definition of "Original Owners": "Original Owners" means Starcraft Marine Co. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960."; (p) by deleting the existing definitions of "First Mortgagee", "MOA" and Financial Instrument" and replacing them by the following new definitions of "First Mortgagee", "MOA" and "Financial Instrument": "First Mortgagee" means FORTIS BANK NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium acting through its Athens branch at 166 Syngrou Avenue, Athens Greece (or of such other address as may be notified to the relevant parties) and includes its successors in title as well as nay person that may replace the First Mortgagee; "MOA" means the memorandum of agreement dated 14 March 2006, made between the Charterers, as sellers and the Original Owners, as buyers, pursuant to which the Original Owners purchased the Vessel on the terms and conditions mentioned therein as amended by a supplemental agreement dated 16 June 2006 made between the Owners, the Original Owners and the Charterers; "Financial Instrument" means the First Quadripartite Agreement and the First Mortgage;"; and (q) by deleting in clause 33 the definitions of Second Mortgage, Second Mortgagee, Second Quadripartite Agreement and Mortgagees. 8 Subject to the foregoing the terms of the Charter shall not have been amended and remain in full force and effect. 9 No term of this Addendum is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Addendum. 10 This Addendum shall be construed in accordance with, and shall be governed by, English law. SIGNED by STARCRAFT MARINE CO. by: Alexandra Tatagia /s/ Alexandra Tatagia ----------------------------- SIGNED by ICON FAITHFUL, LLC by: Mark Gatto /s/ Mark Gatto ----------------------------- SIGNED by GRAMOS SHIPPING COMPANY INC. by: Eirini Alexandropoulou /s/ Eirini Alexandropoulou ----------------------------- EX-4.69 66 d759408_ex4-69.txt Exhibit 4.69 Private & Confidential Dated 16 June 2006 ICON FAITHFUL, LLC (1) as Owner GRAMOS SHIPPING COMPANY INC. (2) as Charterer TOP TANKERS INC. (3) as Charter Guarantor FORTIS BANK (NEDERLAND) N.V. (4) as Mortgagee ----------------------------------------------- QUADRIPARTITE DEED relating to m.v. "Faithful' ----------------------------------------------- NORTON ROSE Contents Clause Page 1 Definitions................................................................2 2 Representations and warranties.............................................8 3 Assignment................................................................12 4 Owners Assignment.........................................................12 5 Continuing security and other matters.....................................13 6 Charterers undertakings...................................................16 7 Charter Guarantor's undertakings..........................................18 8 Covenants concerning insurance and operational matters....................22 9 Powers of Mortgagee to protect security and remedy defaults...............29 10 Powers of Mortgagee on Event of Default...................................30 11 Application of moneys.....................................................30 12 Remedies cumulative and other provisions..................................32 13 Costs and indemnity.......................................................32 14 Attorney..................................................................33 15 Further assurance.........................................................33 16 Consent, Termination of Charter and Quiet Enjoyment.......................33 17 Continuation of Charter Period............................................35 18 Notices...................................................................36 19 Counterparts..............................................................36 20 Severability of provisions................................................37 21 Law and jurisdiction......................................................37 Schedule 1 Forms of Loss Payable Clauses......................................38 Schedule 2 Forms of Notices of Assignment of Insurances.......................39 THIS QUADRIPARTITE DEED is dated 16 June 2006 BETWEEN: (1) ICON FAITHFUL, LLC, whose registered office is at 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner"); (2) GRAMOS SHIPPING COMPANY INC., a company incorporated in the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer"); (3) TOP TANKERS INC., a company incorporated in The Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charter Guarantor"); and (4) FORTIS BANK (NEDERLAND) N.V., a company incorporated under the laws of The Netherlands acting for the purposes of this Deed through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands as security agent and trustee for and on behalf of the Secured Creditors (the "Mortgagee"). WHEREAS: (A) the Owner is the sole, absolute and unencumbered, legal and beneficial owner of all of the shares in the Ship described in clause 1.1; (B) by a loan agreement (the "Loan Agreement") dated 16 June 2006 and made between (1) the Owner, ICON Doubtless, LLC, ICON Spotless, LLC, and Isomar Marine Company Limited (therein and herein together referred to as the "Borrowers"), (2) the banks and financial institutions whose names are set out at schedule 1 thereto as lenders (the "Banks"), (3) Fortis Bank NV/SA as arranger and account bank (in such capacity the "Account Bank"), (4) the Mortgagee as agent (in such capacity the "Agent") and security agent and (4) Fortis Bank (Nederland) N.V. as swap provider (in such capacity the "Swap Provider and together with the Agent and the Banks, the "Secured Creditors"), the Banks agreed (inter alia) to advance by way of loan to the Borrowers, upon the terms and conditions therein, a maximum aggregate amount of up to $80,000,000; (C) by a 1992 ISDA Master Agreement dated 16 June 2006 (the "Master Swap Agreement") made between (1) the Borrowers and (2) the Swap Provider, the Swap Provider agreed the terms and conditions upon which it would enter into (inter alia) interest rate swap transactions with the Borrowers in respect of the Loan (whether in whole or in part as the case may be from time to time); (D) pursuant to clause 16.14 of the Loan Agreement, each of the Secured Creditors has appointed the Mortgagee as its security agent and trustee and pursuant to a deed of trust dated 16 June 2006 executed by the Mortgagee (as trustee) in favour of the Creditors, the Mortgagee agreed to hold, receive, administer and enforce this Deed for and on behalf of itself and the Secured Creditors; (E) pursuant to the Loan Agreement and the Master Swap Agreement there has been or will be executed by the Owner in favour of the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) a first preferred ship mortgage (the "Mortgage") on the Ship and the Mortgage of even date herewith has been or will be registered under the provisions of Chapter 3 of the Maritime Act of 1990 as amended of the Republic of the Marshall Islands as security for the payment by the Borrowers of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) (as those expressions are defined in the Mortgage); (F) by a "Barecon 2001" bareboat charter dated 14 March 2006 made between Starcraft Marine Co. of the Marshall Islands (the "Original Owner") and the Charterer as novated and amended in favour of the Owner and the Charterer by a novation agreement dated 16 June 2006 made between the Original Owner, the Charterer and the Owner (the "Charter"), the Owner has agreed to let, and the Charterer has agreed to take, the Ship on demise charter for a period of sixty (60) months from the date of delivery of the Ship to the Charterer thereunder upon the terms and conditions therein mentioned; (G) as security for the obligations of the Charterer under the Charter, the Charter Guarantor has or, as the case may be, will execute a guarantee in favour of the Owner (the "Charter Guarantee"); (H) the Loan Agreement provided (inter alia) that, as a condition precedent to the advance of the Faithful Advance, the Owner, the Charterer and the Charter Guarantor should enter into a deed supplemental to the Mortgage substantially in the form of this Deed, to secure (inter alia) all sums of money from time to time owing to the Mortgagee and/or the Secured Creditors under the Loan Agreement, the Master Swap Agreement and the other Security Documents; and (I) this Deed is supplemental to the Loan Agreement and the Mortgage and to the security thereby created and is the Faithful Quadripartite Deed referred to in the Loan Agreement but shall nonetheless continue in full force and effect notwithstanding any discharge of the Mortgage. NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows: 1 Definitions 1.1 Definitions In this Deed, unless the context otherwise requires: "Approved Brokers" means such firm of insurance brokers, appointed by the Charterer during the Charter Period, as may from time to time be approved in writing by the Mortgagee for the purposes of this Deed; "Casualty Amount" means Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency); "Charter" means the "Barecon 2001" demise charter between the Owner and the Charterer referred to in recital (F); "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Owner under or pursuant to the Charter and/or any moneys payable to the Owner under or pursuant to the Charter Guarantee and/or any guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Charterer" includes the successors in title and permitted assignees of the Charterer; "Charterer's Assigned Property" means all of the Charterer's rights, title and interest in and to: (a) the Insurances; and (b) any Requisition Compensation; "Charter Guarantee" means the guarantee executed or (as the context may require) to be executed by the Charter Guarantor in favour of the Owner as referred to in recital (G); "Charter Guarantor" includes the successors in title and permitted assignees of the Charter Guarantor; "Charter Guarantor's Account" means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Account Bank with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Mortgagee to be the Charter Guarantor's Account for the purposes of this Deed; "Charter Period" means such part of the period of the Charter as falls within the Security Period or, in the event of expiration or determination of the period of the Charter prior to the expiration of the Security Period, the period down to the expiration or determination of the period of the Charter; "Charter Rights" means all of the rights of the Owner under or pursuant to the Charter, the Charter Guarantee and any other guarantee, security or other assurance given to the Owner at any time in respect of the Charterer's obligations under or pursuant to the Charter including (without limitation) the right to receive the Charter Earnings; "Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention Constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention on Safety of Life at Sea 1974 (as amended) and includes any amendment or extensions thereto and any regulation issued pursuant thereto; "Collateral Instruments" means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrowers or any of them or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind; "Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "DOC" means a document of compliance issued to an Operator in accordance with rule 13 of the Code; "Default" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; "Delivery" means the delivery of the Ship by the Owner, and the acceptance of the Ship by the Charterer, pursuant to the Charter; "Delivery Date" means the date on which Delivery occurs; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Environmental Affiliate" means any agent or employee of the Charterer or any other Relevant Party or any person having a contractual relationship with the Charterer or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Relevant Ship; "Environmental Approval" means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; "Environmental Claim" means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; "Environmental Laws" means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; "Event of Default' means any of the events or circumstances described in clause 10.1 of the Loan Agreement; "Expenses" means the aggregate at any relevant time (to the extent that the same have not been received or recovered by the Mortgagee) of: (a) all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature (including, without limitation, Taxes, registration fees and insurance premiums) suffered, incurred or paid by the Mortgagee in connection with the exercise of the powers referred to in or granted by this Deed or otherwise payable by the Owner in accordance with clause 13; and (b) interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Mortgagee until the date of receipt or recovery thereof (whether before or after judgment) at a rate per annum calculated in accordance with clause 3.4 of the Loan Agreement (as conclusively certified by the Mortgagee); "Government Entity" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; "Incapacity" means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership); "Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of, among others, the Owner and/or the Charterer (whether in the sole name of the Owner, or in the joint names of the Owner, the Charterer and the Mortgagee or otherwise) in respect of the Ship (but not loss of earnings) or otherwise howsoever in connection with the Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; "SSC" means an International Ship Security Certificate issued in respect of the Ship pursuant to the ISPC Code; "Loan" means the aggregate principal amount owing to the Banks or any of them pursuant to the Loan Agreement at any relevant time; "Loan Agreement" means the agreement referred to in recital (B) hereto as the same may from time to time be supplemented and/or amended; "Loss Payable Clauses" means the provisions regulating the manner of payment of sums receivable under the Insurances which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in schedule 1 during the Charter Period (which shall, during the Charter Period, replace the forms of Loss Payable Clauses specified in the Faithful General Assignment (as such term is defined in the Loan Agreement)) or in such other forms as may from time to time be required or agreed in writing by the Mortgagee; "Master Swap Agreement" means the 1992 ISDA Master Agreement made between the Swap Provider and the Borrowers dated June 2006 mentioned in recital (C) hereto, comprising a 1992 ISDA Master Agreement (and a Schedule thereto), together with any Confirmations (as defined therein) supplemental thereto; "Master Swap Agreement Liabilities" means, at any relevant time, all liabilities, actual or contingent, present or future, owing to the Swap Provider under the Master Swap Agreement; "Mortgage" means the first preferred mortgage mentioned in recital (E) hereto; "Mortgagee" includes the successors in title and replacements of the Mortgagee; "Notice of Assignment of Insurances" means a notice of assignment in the form set out in schedule 2 during the Charter Period (which shall, during the Charter Period, replace the form of Notice of Assignment of Insurances specified in the Faithful General Assignment), or in such other form as may from time to time be required or agreed in writing by the Mortgagee; "Operator" means any person who is from time to time during the Security Period concerned in the operation of the Ship and falls within the definition of "Company" set in rule 1.1.2 of the Code; "Other Ships" means together, Doubtless, Spotless and Vanguard and "Other Ship" means any of them; "Outstanding Indebtedness" means the aggregate of the Loan and interest accrued and accruing thereon, the Master Swap Agreement Liabilities, the Expenses and all other sums of money from time to time owing by the Borrowers to the Mortgagee and/or any of the Secured Creditors, whether actually or contingently, present or future, under or pursuant to the Loan Agreement, the Master Swap Agreement, the Security Documents or any of them; "Owner" includes the successors in title of the Owner; "Owner's Assigned Property" means: (a) the Charter, (b) the Charter Guarantee; (c) the Charter Earnings; and (d) all other Charter Rights; "Pollutant" means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; "Related Company" of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; "Relevant Party" means the Owner, the Owner's Related Companies, any other Security Party and any other Security Party's Related Companies; "Relevant Ship" means the Ship and any other vessel from time to time (whether before or after the date of this Deed) owned, managed or crewed by, or chartered to, any Relevant Party; "Requisition Compensation" means all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of the Ship; "Security Documents" means the Loan Agreement, this Deed, the Mortgage and any other such document as is defined in the Loan Agreement as a Security Document or as may have been or may hereafter be executed to guarantee and/or secure all or any part of the Loan, any interest thereon, the Master Swap Agreement Liabilities and the moneys from time to time owing by the Borrowers or any of them pursuant to the Loan Agreement and/or the Master Swap Agreement or by any other Security Party pursuant to any other Security Document (whether or not such documents, also secure moneys from time to time owing pursuant to any other document or agreement); "Security Party" means any person who may at any time be a party to any of the Security Documents (other than the Secured Creditors); "Security Period" means the period commencing on the date hereof and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; "Ship" means the m.v. "Faithful" registered as a Marshall Islands ship under Official Number 1689 and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and also any and all additions, improvements and replacements hereafter made in or to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; "SMC" means a safety management certificate issued in respect of a ship in accordance with rule 13 of the Code; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; and "Total Loss" means: (a) the actual, constructive, compromised or arranged total loss of the Ship; or (b) the Compulsory Acquisition of the Ship; or (c) the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless the Ship be released and restored to the Owner or (during the Charter Period) the Charterer (as the case may be) from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof. 1.2 Insurance terms In clause 8.1.1: 1.2.1 "excess risks" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value; 1.2.2 "protection and indemnity risks" means the usual risks (including oil pollution and freight, demurrage and defence cover) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London (including, without limitation, 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 reasons of the incorporation in such policies of clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and 1.2.3 "war risks" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses Hulls - Time (1/11/95) attached or similar cover. 1.3 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Deed. 1.4 Construction of certain terms In this Deed, unless the context otherwise requires: 1.4.1 references to clauses and Schedules are to be construed as references to clauses of, and Schedules to, this Deed and references to this Deed include its Schedules; 1.4.2 references to (or to any specified provision of) this Deed or any other document shall be construed as references to this Deed, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; 1.4.3 words importing the plural shall include the singular and vice versa; 1.4.4 references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; 1.4.5 references to a "guarantee" shall include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly; and 1.4.6 references to statutory provisions shall be construed as references to those provisions as replaced or amended or re-enacted from time to time. 1.5 Conflict with Loan Agreement As between the Owner and the Mortgagee, this Deed shall be read together with the Loan Agreement but in case of any conflict between the two instruments, the provisions of the Loan Agreement shall prevail. 1.6 Conflict with Charter If and to the extent that any of the covenants and undertakings given by the Charterer in this Deed may conflict with any of the provisions of the Charter, such covenants and undertakings of this Deed shall (as between the Mortgagee on the one hand and the Owner and the Charterer on the other hand but not otherwise) prevail over such provisions of the Charter. 2 Representations and warranties 2.1 Charterer's continuing representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.1.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.1.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter and such of the Security Documents to which it is, or is to be, a party and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same; 2.1.3 Binding obligations the Charter and the Security Documents to which it is, or is to be, a party constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.1.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under; and compliance with the provisions of the Charter and the Security Documents to which it is, or is to be, a party by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject, or (b) contravene or conflict with any provision of its constitutional documents; 2.1.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter or any of the Security Documents to which it is, or is to be, a party that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter or any of such Security Documents and the Charter and each of such Security Documents are in proper form for its enforcement in the courts of each Relevant Jurisdiction; 2.1.6 Choice of law the choice of English law to govern the Charter and the Security Documents to which it is, or is to be, a party and the submission by the Charterer to the non-exclusive jurisdiction of the English courts are valid and binding; 2.1.7 No material adverse change there has been no material adverse change in the financial position of the Charterer from that disclosed by the Charterer to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.1.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); and 2.1.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by it to authorise, or required by it in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter and the Security Documents to which it is, or is to be, a party or the performance by it of its obligations under the Charter and such Security Documents have been obtained or made and are in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.2 Charter Guarantor's continuing representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.2.1 Due incorporation it is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a Marshall Islands corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; 2.2.2 Corporate power it has power to execute, deliver and perform its obligations under the Charter Guarantee and this Deed and has power to execute and deliver and perform its obligations under the Charter Guarantee and this Deed, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Charter Guarantor to give guarantees or security will be exceeded as a result of the execution, delivery and performance of the Charter Guarantee or the Charter Guarantor's obligations under this Deed; 2.2.3 Binding obligations the Charter Guarantee and this Deed constitute or will, when executed, constitute its valid and legally binding obligations enforceable in accordance with their respective terms; 2.2.4 No conflict with other obligations the execution and delivery of, the performance of its obligations under, and compliance with the provisions of the Charter Guarantee and this Deed by it will not (a) contravene, any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which it is subject or (b) contravene or conflict with any provision of its constitutional documents; 2.2.5 No filings required it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Charter Guarantee or this Deed that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Charter Guarantee or this Deed and both the Charter Guarantee and this Deed are in proper form for their enforcement in the courts of each Relevant Jurisdiction; 2.2.6 Choice of law the choice of English law to govern the Charter Guarantee and this Deed and the submission by the Charter Guarantor to the non-exclusive jurisdiction of the English courts are valid and binding; 2.2.7 No material adverse change there has been no material adverse change in the financial position of the Charter Guarantor from that disclosed by the Charter Guarantor to the Arranger and/or the Agent in the negotiation of the Loan Agreement; 2.2.8 No immunity neither it nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); and 2.2.9 Consents obtained every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Charter Guarantor to authorise, or required by the Charter Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of the Charter Guarantee and this Deed or the performance by the Charter Guarantor of its obligations under the Charter Guarantee and this Deed has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same. 2.3 Charterer's initial representations and warranties The Charterer represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that: 2.3.1 No withholding Taxes no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter or the Security Documents to which it is, or is to be, a party or are imposed on or by virtue of its execution or delivery of the Charter or any of such Security Documents or any other document or instrument to be executed or delivered under the Charter or any of such Security Documents; 2.3.2 Ship's employment (save for the Charter and the Faithful Time Charter) the Ship is not and will not on the Delivery Date be subject to any charter or contract or to any agreement to enter into any charter or contract entered into by the Charterer which, if entered into by it after the date of this Deed, would have required the consent of the Mortgagee; 2.3.3 Freedom from Encumbrances the Charterer is the sole, legal and beneficial owner of the whole of the Charterers Assigned Property and neither the Charterers Assigned Property nor any part thereof are or will be on the Delivery Date subject to any Encumbrance created by it or arising due to its act or omission or its use or operation of the Ship and it has not (save as disclosed in writing to the Mortgagee) received notice of any Encumbrance (other than pursuant to this Deed) in respect thereof created by any other person; 2.3.4 Commissions etc. there are no commissions, rebates, premiums or other payments in connection with the Charter other than as disclosed to the Mortgagee in writing prior to the date hereof; 2.3.5 Compliance with Environmental Laws and Approvals except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee: (a) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have complied with the provisions of all Environmental Laws; (b) the Charterer and to the best of its knowledge and belief (having made due enquiry) its Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and (c) neither the Charterer nor to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates has received notice of any Environmental Claim that the Charterer or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; 2.3.6 No Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there is no Environmental Claim pending or, to the best of its knowledge and belief (having made due enquiry), threatened against the Charterer or the Ship or any other ship owned, managed or crewed by, or chartered to, the Charterer or, to the best of its knowledge and belief (having made due enquiry) any of its Environmental Affiliates; and 2.3.7 No potential Environmental Claims except as may already have been disclosed by it in writing to, and acknowledged in writing by, the Mortgagee, there has been no emission, spill, release or discharge of a Pollutant from the Ship or any other ship owned by, managed or crewed by, or chartered to, the Charterer nor to the best of its knowledge and belief (having made due enquiry) from any other ship owned by, managed or crewed by, or chartered to, the Charterer which could give rise to an Environmental Claim. 2.4 Charter Guarantor's initial representations and warranties The Charter Guarantor represents and warrants to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and the Owner that no Taxes are imposed by withholding or otherwise on any payment to be made by it under the Charter Guarantee or are imposed on or by virtue of its execution or delivery of the Charter Guarantee or this Deed or any other document or instrument to be executed or delivered under the Charter Guarantee or this Deed. 2.5 Repetition of representations and warranties On and as of the Delivery Date and (except in relation to the representations and warranties in clauses 2.3, 2.4 and 5) each Interest Payment Date during the Charter Period, the Charterer and the Charter Guarantor shall be deemed to repeat the representations and warranties in clauses 2.1, 2.2, 2.3 and 2.4 as if made with reference to the facts and circumstances existing on such day. 3 Assignment 3.1 Charterer's Assignment By way of security for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Charterer with full title guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all its rights, title and interest in and to the Charterer's Assigned Property and all its benefits and interests present and future therein. Provided however that unless and until a Default shall occur (whereupon all insurance recoveries shall be receivable by the Mortgagee and applied in accordance with clause 11.1 or clause 11.3 (as the case may be)): 3.1.1 any moneys payable under the Insurances, shall be payable in accordance with the terms of the relevant Loss Payable Clause and the Mortgagee will not in the meantime give any notification to the contrary to the insurers as contemplated by the Loss Payable Clauses; and 3.1.2 any insurance moneys received by the Mortgagee in respect of any major casualty (as specified in the relevant Loss Payable Clause) shall, unless prior to receipt or whilst such moneys are in the hands of the Mortgagee there shall have occurred a Default (whereupon such insurance monies shall be applied in accordance with clause 11.1 or clause 11.3 (as the case may be)), be paid over to the Charterer upon the Charterer furnishing evidence satisfactory to the Mortgagee that all loss and damage resulting from such casualty has been properly made good and repaired, and that all repair accounts and other liabilities whatsoever in connection with the casualty have been fully paid and discharged by the Charterer, provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a major casualty, and with the previous consent in writing of the Mortgagee, make payment on account of repairs in the course of being effected. 3.2 Use of Charterer's name The Charterer covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 3.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Charterer, re-assign the Charterer's Assigned Property to the Charterer or as it may direct. 3.4 Liability of Charterer The Charterer shall remain liable to perform all the obligations assumed by it in relation to the Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Charterer to perform its obligations in respect thereof. 4 Owner's Assignment 4.1 Assignment By way of security for payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) the Owner with full title guarantee hereby assigns and agrees to assign to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) absolutely all its rights, title and interest in and to the Owner's Assigned Property and all benefits accruing to the Owner thereunder Provided however that the Charter Earnings shall be payable to the Faithful Operating Account (as such term is defined in the Loan Agreement) until such time as a Default shall occur and the Mortgagee shall direct to the contrary whereupon the Owner shall forthwith, and the Mortgagee may at any time thereafter, instruct the persons from whom the Charter Earnings are then payable to pay the same to the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) or as it may direct and any Charter Earnings then in the hands of the Owner's brokers or other agents shall be deemed to have been received by them for the use and on behalf of the Mortgagee. 4.2 Use of Owner's name The Owner covenants and undertakes with the Mortgagee to do or permit to be done each and every act or thing which the Mortgagee may from time to time require to be done for the purpose of enforcing the Mortgagee's rights under this Deed and to allow its name to be used as and when required by the Mortgagee for that purpose. 4.3 Reassignment Upon payment and discharge in full to the satisfaction of the Mortgagee of the Outstanding Indebtedness, the Mortgagee shall, at the request and cost of the Owner, re-assign the Owner's Assigned Property to the Owner or as it may direct. 4.4 Liability of Owner The Owner shall remain liable to perform all the obligations assumed by it in relation to the Mortgaged Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner to perform its obligations in respect thereof. 4.5 Acknowledgement by Charterer By its execution of this Deed, each of the Charterer and the Charter Guarantor has received written notice of, and consents to, the assignment to the Mortgagee of the Charter, the Charter Earnings, the other Charter Rights and the Charter Guarantee. 5 Continuing security and other matters 5.1 Continuing security The security created by this Deed shall: 5.1.1 be held by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as a continuing security for the payment of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Security Documents, express or implied, and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the amount hereby and thereby secured (or by any settlement of accounts between the Owner or any other person who may be liable to the Mortgagee and/or the Secured Creditors in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or any part thereof and the Mortgagee and/or the Secured Creditors) and shall remain in full force and effect until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been discharged in full (which expression shall not embrace payment or a dividend in liquidation or bankruptcy of less than 100%); 5.1.2 be in addition to, and shall not in any way prejudice or affect, and may be enforced by the Mortgagee without prior recourse to, the security created by any other of the Security Documents or by any present or future Collateral Instruments, right or remedy held by or available to the Mortgagee and/or the Secured Creditors or any of them any right or remedy of the Mortgagee and/or the Secured Creditors or any of them or any right or remedy of the Mortgagee thereunder; 5.1.3 not be in any way prejudiced or affected by the existence of any of the other Security Documents or any such Collateral Instrument, rights or remedies or by the same becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Mortgagee and/or the Secured Creditors or any of them dealing with, exchanging, varying or failing to perfect or enforce any of the same, or giving time for payment or performance or indulgence or compounding with any other person liable; and 5.1.4 not in any way be prejudiced or affected by any change in the constitution of, or any amalgamation or reconstruction of the Owner, the Mortgagee or any other person or by any legal limitation, disability, incapacity or other circumstances relating to the Owner or any other person, whether or not known to the Mortgagee and/or the Secured Creditors, by any invalidity in or irregularity or unenforceability of the obligations of the Owner or any other person under the Loan Agreement or any of the other Security Documents or otherwise and so that in the event that any obligation or purported obligation of the Owner or any other person which, if enforceable or valid or continuing, would be secured by this Deed is or becomes wholly or in part unenforceable or invalid or terminated for any reason whatsoever, the Owner will keep the Mortgagee and the Secured Creditors fully indemnified against any loss suffered by the Mortgagee and/or the Secured Creditors as a result of any failure by the Owner or such other party to perform any such obligation or purported obligation. 5.2 Rights additional and no enquiry 5.2.1 Rights additional All the rights, remedies and powers vested in the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) hereunder shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee and/or the Secured Creditors or any of them under the Loan Agreement, this Deed, the Master Swap Agreement, the other Security Documents or any such Collateral Instrument or at law and that all the powers so vested in the Mortgagee and/or the Secured Creditors or any of them may be exercised from time to time and as often as the Mortgagee and/or the Secured Creditors or any of them may deem expedient. 5.2.2 No enquiry The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Deed or to make any claim or take any action to collect any moneys hereby assigned or to enforce any rights or benefits hereby assigned to the Mortgagee or to which the Mortgagee (as security agent and trustee on behalf of the Creditors) may at any time be entitled under this Deed. 5.3 Obligations of Owner, Charterer and Mortgagee The Owner and the Charterer shall each remain liable to perform all the obligations assumed by it in relation to the Owner's Assigned Property and the Charterer's Assigned Property and the Mortgagee shall be under no obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in the event of any failure by the Owner or the Charterer to perform its obligations in respect thereof. 5.4 Discharge of Mortgage This Deed shall continue in full force and effect after any discharge of the Mortgage. 5.5 Liability unconditional The rights, remedies and powers vested in the Mortgagee under this Deed shall not be affected nor shall this Deed be discharged or reduced by reason of: 5.5.1 the Incapacity or any change in the name, style or constitution of the Owner or any other person liable; 5.5.2 the Mortgagee granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Owner or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Owner or any other person liable; or 5.5.3 any act or omission which would not have discharged or affected the security constituted by the Charterer under this Deed had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such security. 5.6 Waiver of Charterer's rights Until the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) has been paid, discharged or satisfied in full (and notwithstanding payment of a dividend in any liquidation or under any compromise or arrangement) and notwithstanding that the security created by this Deed and the other Security Documents may have been realised, the Charterer agrees that, without the prior written consent of the Mortgagee, it will not: 5.6.1 exercise its rights of subrogation, reimbursement and indemnity against the Owner, the other Borrowers or any other person liable; 5.6.2 demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Charterer from the Owner, the other Borrowers or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same; 5.6.3 take any step to enforce any right against the Owner, the other Borrowers or any other person liable in respect of any Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities); or 5.6.4 claim any set-off or counterclaim against the Owner, the other Borrowers or any other person liable or claim or prove in competition with the Mortgagee and/or the Secured Creditors or any of them in the liquidation of the Owner, the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the Owner, the other Borrowers or any other person liable or any other Collateral Instrument now or hereafter held by the Mortgagee and/or the Secured Creditors or any of them for the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) or for the obligations or liabilities of any other person liable but so that, if so directed by the Mortgagee, it will prove for the whole or any part of its claim in the liquidation of the Owner on terms that the benefit of such proof and of all money received by it in respect thereof shall be paid to the Mortgagee for application in or towards discharge of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) in such manner as the Mortgagee shall deem appropriate. 5.7 Suspense account Any moneys received in connection with this Deed (whether before or after any Incapacity of the Owner or the Charterer) which would (but for this Deed) have been payable to the Charterer may, if an Event of Default has happened, be placed to the credit of a suspense account with a view to preserving the rights of the Mortgagee to prove for the whole of its and the Secured Creditors' claims against the Owner, the other Borrowers or any other person liable or may be applied in or towards satisfaction of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities). 5.8 Settlements conditional Any release, discharge or settlement between the Charterer and the Mortgagee shall be conditional upon no security, disposition or payment to the Mortgagee and/or the Secured Creditors or any of them by the Owner, the other Borrowers or any other person liable being void, set aside or ordered to be refunded pursuant to any enactment or law relating to bankruptcy, liquidation, administration or insolvency or for any other reason whatsoever and if such condition shall not be fulfilled the Mortgagee shall be entitled to enforce this Deed subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made. 5,5 Delivery of certain property If, contrary to the provisions of this Deed, the Charterer takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Mortgagee (as security agent and trustee on behalf of the Secured Creditors) and shall be delivered to the Mortgagee on demand. 5.10 Certificates conclusive Any certificate submitted by the Mortgagee to the Charterer as to the amount or any part thereof hereby secured shall, in the absence of manifest error, be conclusive and binding on the Charterer. 5.11 Collateral Instruments The Mortgagee shall not be obliged to make any claim or demand on the Owner or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Deed and no action taken or omitted by the Mortgagee in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the security created by the Charterer under this Deed nor shall the Mortgagee be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Outstanding Indebtedness. 6 Charterers undertakings 6.1 The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes that throughout the Charter Period: 6.1.1 Notice it will from time to time upon the request of the Mortgagee give written notice (in such form and to such persons as the Mortgagee may reasonably require) of the assignment contained in clause 3.1 to any person from whom any part of the Charterer's Assigned Property is or may be due and will procure that the interest of the Mortgagee in the Insurances shall be endorsed on the instruments of insurance from time to time issued in connection with the Insurances as are placed with the Approved Brokers by reason of a Notice of Assignment of Insurances (signed by the Charterer, the Owner and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee); 6.1.2 Negative undertakings relating to Charter it will not without the prior written consent of the Mortgagee: (a) Assignments assign or otherwise dispose of the Charterers rights and obligations under the Charter; and (b) Variations agree to any variation of the Charter; 6.1.3 Performance of Charter obligations it will perform its obligations under the Charter; 6.1.4 Total Loss recovery it will, in the event that, upon a Total Loss of the Ship, the Mortgagee is disabled from recovering under the Insurances or any of them or the amount of the recovery thereunder is diminished and such disablement or diminution results from any breach by the Charterer of any of its obligations under this Deed and/or the Charter, pay to the Mortgagee on demand a sum (which shall be applied in accordance with clause 11.1 as if the same had been a recovery under the Insurances in respect of such Total Loss) equal to the amount which would but for such disablement have been recoverable under the Insurances or (as the case may be) a sum equal to the amount hereby the insurance recovery has been diminished; 6.1.5 Compliance with Environmental Laws it will comply with, and procure that all its Environmental Affiliates comply with, all Environmental Laws including, without limitation, requirements relating to manning and establishment of financial responsibility and will obtain and comply with, and procure that all its Environmental Affiliates obtain and comply with, all Environmental Approvals; 6.1.6 Abandonment it will not without the prior written consent of the Mortgagee (and then only subject to any conditions the Mortgagee may impose) abandon the Ship; 6.1.7 Charterer's Manager it will not without the prior written consent of the Mortgagee (and then only on and subject to such terms as the Mortgagee may agree) appoint a commercial or technical manager of the Ship other than the relevant Managers or terminate or amend the terms of the relevant Management Agreements to which it is a party; 6.1.8 Encumbrances it will not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) create or purport or agree to create or permit to arise or subsist any Encumbrance over or in respect of any part of the Charterer's Assigned Property otherwise than to or in favour of the Mortgagee; 6.1.9 Provision of further information provide the Mortgagee with such financial or other information concerning the Charterer and its affairs as the Mortgagee may from time to time require; and 6.1.10 Notification of certain events it will notify the Mortgagee forthwith by facsimile confirmed by letter of: (a) any petition or notice of meeting to consider any resolution to wind up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); (b) the occurrence of any Default of which it is aware; or (c) the occurrence of any Environmental Claim against the Charterer, the Ship, any other Relevant Party or any other Relevant Ship or any incident, event or circumstances which may give rise to any such Environmental Claim. 7 Charter Guarantor's undertakings 7.1 General Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.1.1 deliver to the Mortgagee sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Charter Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Charter Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Charter Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by clauses 7.2.1, 7.2.4 and 7.2.5 have or have not been exceeded at such time and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to clause 7.2.8) be conclusive evidence of such amounts or facts for the purposes of this Deed; 7.1.2 Provision of further information provide the Mortgagee with such financial or other information concerning the Charter Guarantor and its affairs as the Mortgagee may from time to time require; and 7.1.3 comply with its obligations under the Charter Guarantee. 7.2 Financial Undertakings The Charter Guarantor hereby agrees and undertakes to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) that it will at all times throughout the Security Period: 7.2.1 ensure that: (a) a minimum amount of Twenty million Dollars ($20,000,000) shall be standing to the credit of the Charter Guarantor's Account for the period commencing on the first Drawdown Date and ending on 15 December 2006 and thereafter and until the final date of the Security Period a minimum amount of Twenty Five million Dollars ($25,000,000) shall be standing to the credit of the Charter Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; and (b) it maintains cash balances of at least Fifty million Dollars ($50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Mortgagee in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 7.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Charter Guarantor's Account; 7.2.3 provide details to the Mortgagee at three (3) monthly intervals starting from the date of this Deed evidencing the operating expenses and the Earnings of the Ship; 7.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million Dollars ($125,000,000); and 7.2.5 ensure that its Book Equity shall at all times exceed Seventy five million Dollars ($75,000,000). 7.2.6 For the purpose of this clause 7, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Charter Guarantors issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Deed but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Mortgagee before the date of this Deed, or under clause 7.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Charter Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Charter Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Charter Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (l) making such adjustments as may be appropriate in the opinion of the Mortgagee in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Charter Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Charter Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Charter Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Charter Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Charter Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Charter Guarantor or any Subsidiary; (d) deferred indebtedness of the Charter Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Charter Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Charter Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter, (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Charter Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Charter Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; and (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Charter Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Charter Guarantor to a Subsidiary or by a Subsidiary to the Charter Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of clauses 7.2 and 7.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of clause 7.3 of this Deed by means of valuations obtained by the Mortgagee in accordance with the provisions of clause 7.3 of this Deed (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 7.2.7 All the terms defined in this clause 7.2 and used in this Deed are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. 7.2.8 The compliance of the Charter Guarantor with the covenants set out in clauses 7.2.1, 7.2.4 and 7.2.5 shall be determined on the basis of calculations made by the Mortgagee at any time by reference to then latest consolidated financial statements of the Group delivered to the Mortgagee pursuant to clause 7.1.1. For the avoidance of doubt, it is hereby agreed that the Mortgagee shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Charter Guarantor shall be obliged to comply with each of the covenants out in clauses 7.2.1, 7.2.4 and 7.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Mortgagee pursuant to clause 7.1. 7.2.9 For the purposes of this clause 7.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with Applicable Accounting Principles. 7.3 Valuation of Relevant Ships 7.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this clause 7, be valued in Dollars as and when the Mortgagee shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Mortgagee. Such valuation shall be made without, unless required by the Mortgagee, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this clause 7.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 7.3.2 Information The Charter Guarantor undertakes to the Mortgagee to supply to the Mortgagee and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 7.3.3 Costs All costs in connection with the Mortgagee obtaining any valuation of each of the Relevant Ships referred to in clause 7.3.1 shall be borne by the Owner. 8 Covenants concerning insurance and operational matters 8.1 Covenants The Charterer hereby covenants with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and undertakes throughout the Charter Period: 8.1.1 Insurance (a) Insured risks, amounts and terms to insure and keep the Ship insured free of cost and expense to the Mortgagee and in the joint names only of the Owner and the Charterer or, if so required by the Mortgagee, in the joint names of the Owner, the Mortgagee and the Charterer (but without liability on the part of the Mortgagee for premiums or calls): (i) against fire and usual marine risks (including excess risks) and war risks, on an agreed value basis, in such amounts and upon such terms as shall from time to time be acceptable to the Mortgagee. For the avoidance of doubt, the Charterer hereby covenants with the Mortgagee and undertakes throughout the Security Period to ensure that the Ship will be insured for not less than the greater of: (A) the value of the Ship for the time being (as most recently determined by the Agent pursuant to clause 8.2.2 of the Loan Agreement); and (B) such amount as will, when aggregated with the amounts of the equivalent insurance of the Other Ships, be at least equal to one hundred and thirty per cent (130%) of the aggregate of the (aa) Loan and (bb) the Swap Exposure (as such expression is defined in the Loan Agreement); (ii) and upon such terms as should from time to time be approved in writing by the Mortgagee; (iii) against protection and indemnity risks (including pollution risks for the highest amount in respect of which cover is or may become available for ships of the same type, size, age and flag as the Ship and a freight, demurrage and defence cover) for the full value and tonnage of the Ship (as approved in writing by the Mortgagee) and upon such terms as shall from time to time be approved in writing by the Mortgagee; and (iv) in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of the Ship. and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of (A) any mortgagee's interest insurance (including, if the Mortgagee shall so require, mortgagee's additional perils (all P&l risks) coverage) which the Mortgagee may from time to time effect in respect of the Ship upon such terms in such amounts as it shall deem desirable and (B) any other insurance cover which the Mortgagee may from time to time effect in respect of the Ship and/or in respect of its interest or potential third party liability as mortgagee of the Ship as the Mortgagee shall deem desirable having regard to any limitations in respect of amount or extent of cover which may from time to time be applicable to any of the other insurances referred to in this clause 8.1.1(a); (b) Approved brokers, insurers and associations to effect the insurances aforesaid in such currency as the Mortgagee may approve and through the Approved Brokers (other than the said mortgagee's interest insurance which shall be effected through brokers nominated by the Mortgagee) and with such insurance companies and/or underwriters as shall from time to time be approved in writing by the Mortgagee; provided however that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Ship with such war risks and protection and indemnity associations as shall from time to time be approved in writing by the Mortgagee; (c) Fleet liens, set-off and cancellation if any of the insurances referred to in clause 8.1.1(a) form part of a fleet cover, to procure that the Approved Brokers shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Ship any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel the insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the Ship if and when so requested by the Mortgagee; (d) Payment of premiums and calls punctually to pay all premiums, calls, contributions or other sums payable in respect of all such insurances and to produce all relevant receipts or other evidence of payment when so required by the Mortgagee; (e) Renewal at least 14 days before the relevant policies, contracts or entries expire, to notify the Mortgagee of the names of the brokers and/or the war risks and protection and indemnity associations proposed to be employed by the Charterer or any other party for the purposes of the renewal of such insurances and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, subject to compliance with any requirements of the Mortgagee pursuant to this clause 8.1.1, to procure that appropriate instructions for the renewal of such insurances on the terms so specified are given to the Approved Brokers and/or to the approved war risks and protection and indemnity associations at least 10 days before the relevant policies, contracts or entries expire, and that the Approved Brokers and/or the approved war risks and protection and indemnity associations will at least 7 days before such expiry (or within such shorter period as the Mortgagee may from time to time agree) confirm in writing to the Mortgagee as and when such renewals have been effected in accordance with the instructions so given; (f) Guarantees to arrange for the execution and delivery of such guarantees or indemnities as may from time to time be required by any protection and indemnity or war risks association; (g) Hull policy documents, notices, loss payable clauses and brokers' undertakings to deposit with the Approved Brokers (or procure the deposit of) all slips, cover notes, policies, certificates of entry or other instruments of insurance from time to time issued in connection with such of the insurances referred to in clause 8.1.1(a) as are effected through the Approved Brokers and procure that the interest of the Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable Clause and, where the Insurances have been assigned to the Mortgagee, by means of a Notice of Assignment of Insurances (signed by the Owner and the Charterer and by any other assured who shall have assigned its interest in the Insurances to the Mortgagee) and that the Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of undertaking from the Approved Brokers in such form as shall from time to time be required by the Mortgagee; (h) Associations' loss payable clauses, undertakings and certificates to procure that any protection and indemnity and/or war risks associations in which the Ship is for the time being entered shall endorse the relevant Loss Payable Clause on the relevant certificate of entry or policy and shall furnish the Mortgagee with a copy of such certificate of entry or policy and a letter or letters of undertaking in such form as shall from time to time be required by the Mortgagee; (i) Extent of cover and exclusions to take all necessary action and comply with all requirements which may from time to time be applicable to the Insurances (including, without limitation, the making of all requisite declarations within any prescribed time limits and the payment of any additional premiums or calls) so as to ensure that the Insurances are not made subject to any exclusions or qualifications to which the Mortgagee has not given its prior written consent and are otherwise maintained on terms and conditions from time to time approved in writing by the Mortgagee; (j) Correspondence with brokers and associations to provide to the Mortgagee, at the time of each such communication, copies of all written communications between the Charterer and the Approved Brokers and approved war risks and protection and indemnity associations which relate to compliance with requirements from time to time applicable to the Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls referred to in clause 8.1.1(i); (k) Collection of claims to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; (l) Employment of Ship not to employ the Ship or suffer the Ship to be employed otherwise than in conformity with the terms of the Insurances (including any warranties express or implied therein) without first obtaining the consent of the insurers to such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; and (m) Application of recoveries to apply all sums receivable under the Insurances which are paid to it in accordance with the Loss Payable Clauses in repairing all damage and/or in discharging the liability in respect of which such sums shall have been received; 8.1.2 Ship's registration not to do or suffer to be done anything, or omit to do anything the doing or omission of which could or might result in the registration of the Ship as a Marshall Islands ship being forfeited or imperilled or which could or might result in the Ship being required to be registered under any other flag than the Marshall Islands flag and not to register the Ship or permit its registration under any other flag without the prior written consent of the Mortgagee; 8.1.3 Repair to keep the Ship in a good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Ship; 8.1.4 Modification; removal of parts; equipment owned by third parties not without the prior written consent of the Mortgagee to, or suffer any other person to: (a) make any modification to the Ship in consequence of which her structure, type or performance characteristics could or might be materially altered or her value materially reduced; or (b) remove any material part of the Ship or any equipment the value of which is such that its removal from the Ship would materially reduce the value of the Ship without replacing the same with equivalent parts or equipment which are owned by the Owner free from Encumbrances; or (c) install on the Ship any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Ship; 8.1.5 Maintenance of class; compliance with regulations to maintain the relevant Classification (as defined in the Loan Agreement) as the class of the Ship and to comply with and ensure that the Ship at all times complies with the provisions of and all laws, regulations and requirements (statutory or otherwise) from time to time applicable to vessels registered under the laws and flag of the relevant Flag State (as defined in the Loan Agreement) or otherwise applicable to the Ship; 8.1.6 Surveys to submit the Ship to continuous surveys and such periodical or other surveys as may be required for classification purposes and to supply to the Mortgagee copies of all survey reports issued in respect thereof, 8.1.7 Inspection to ensure that the Mortgagee, by surveyors or other persons appointed by it for such purpose, may board the Ship at all reasonable times for the purpose of inspecting her and to afford all proper facilities for such inspections and for this purpose to give the Mortgagee reasonable advance notice of any intended drydocking of the Ship (whether for the purpose of classification, survey or otherwise); 8.1.8 Prevention of and release from arrest promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever which have given or may give rise to maritime, statutory or possessory liens on, or claims enforceable against, the Ship, her Insurances or any part thereof and, in the event of a writ or libel being filed against the Ship, her Insurances or any part thereof, or of any of the same being arrested, attached or levied upon pursuant to legal process or purported legal process or in the event of detention of the Ship in exercise or purported exercise of any such lien or claim as aforesaid, to procure the release of the Ship, her Insurances from such arrest, detention attachment or levy or, as the case may be, the discharge of the writ or libel forthwith upon receiving notice thereof by providing bail or procuring the provision of security or otherwise as the circumstances may require; 8.1.9 Employment not to employ the Ship or permit her employment in any manner, trade or business which is forbidden by Marshall Islands law, or which is unlawful or illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited goods, or in any manner whatsoever which may render her liable to condemnation in a prize court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of hostilities in any part of the world (whether war be declared or not), not to employ the Ship or permit her employment in carrying any contraband goods, or enter or trade to or to continue to trade in any zone which has been declared a war zone by any Government Entity or by the Ship's war risks insurers unless the prior written consent of the Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall have been effected by the Charterer and at the expense of the Charterer; 8.1.10 Information promptly to furnish the Mortgagee with all such information as it may from time to time require regarding the Ship, her employment, position and engagements, particulars of all towages and salvages, and copies of all charters and other contracts for her employment, or otherwise howsoever concerning it; 8.1.11 Notification of certain events to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of (a) any damage to the Ship requiring repairs the cost of which will or might exceed the Casualty Amount; (b) any occurrence in consequence of which the Ship has or may become a Total Loss; (c) any requisition of the Ship for hire; (d) any requirement or recommendation made by any insurer or the relevant Classification Society (as defined in the Loan Agreement) or by any competent authority which is not, or cannot be, complied with in accordance with its terms; or (e) any arrest or detention of the Ship or any exercise or purported exercise of a lien or other claim on the Ship or the Insurances or any part thereof; (f) any petition or notice of meeting to consider any resolution to wind-up the Charterer (or any event analogous thereto under the laws of the place of its incorporation); or (g) the occurrence of any Default; 8.1.12 Payment of outgoings and evidence of payments promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and the Ship's Insurances and to keep proper books of account in respect of the Ship and, as and when the Mortgagee may so require, to make such books available for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the wages and allotments and the insurance and pension contributions of the Master and crew are being promptly and regularly paid and that all deductions from crew's wages in respect of any applicable tax liability are being properly accounted for and that the Master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; 8.1.13 Repairers' liens not without the prior written consent of the Mortgagee to put the Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed the Casualty Amount unless such person shall first have given to the Mortgagee in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship for the cost of such work or otherwise; 8.1.14 Chartering save for any charter disclosed by the Charterer to the Mortgagee in writing and agreed by the Mortgagee in writing, in either case prior to the date of this Deed, not without the prior written consent of the Mortgagee (which the Mortgagee shall have full liberty to withhold) and, if such consent is given, only subject to such conditions as the Mortgagee may impose, to let the Ship: (a) on demise charter for any period; (b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months' duration; (c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance; or (d) below the market rate prevailing at the time when the Ship is fixed or other than on arms' length terms; 8.1.15 Sharing of Earnings not without the prior written consent of the Mortgagee (and then only subject to such conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby the Earnings may be shared with any other person; 8.1.16 Manager not without the prior written consent of the Mortgagee to appoint a manager of the Ship other than the Commercial Manager (as such term is defined in the Loan Agreement), or terminate or amend the terms of the Faithful Commercial Management Agreement (as such term is defined in the Loan Agreement); 8.1.17 Notice of Mortgage to place and at all times and places to retain a properly certified copy of the Mortgage (which shall form part of the Ship's documents) on board the Ship with her papers and cause such certified copy of the Mortgage to be exhibited to any and all persons having business with the Ship which might create or imply any commitment or encumbrance whatsoever on or in respect of the Ship (other than a lien for crew's wages and salvage) and to any representative of the Mortgagee and to place and keep prominently displayed in the navigation room and in the Master's cabin of the Ship a framed printed notice in plain type reading as follows: "NOTICE OF MORTGAGE" This Ship is subject to a first priority mortgage in favour of FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands. Under the said mortgage, neither the Owner nor any charterer nor the Master of this Ship has any right, power or authority to create, incur or permit to be imposed upon this Ship any commitments or encumbrances whatsoever other than for crew's wages and salvage" and in terms of the said notice it is hereby agreed that save and subject as otherwise herein provided, neither the Owner nor the Charterer nor any other charterer nor the Master of the Ship nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Ship any lien whatsoever other than for crew's wages and salvage; 8.1.18 Anti-drug abuse without prejudice to clause 8.1.9, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or located or trade or which may otherwise be applicable to the Ship and or the Owner and/or the Charterer and, if the Mortgagee shall so require, to enter into a "Carrier Initiative Agreement' with the United States Customs and Border Protection and to procure that the same agreement (or any similar agreement hereafter introduced by any Government Entity of the United States of America) is maintained in full force and effect and performed by the Charterer, 8.1.19 Compliance with environmental laws to comply with, and procure that all Environmental Affiliates of the Charterer comply with, all Environmental Laws including, without limitation, requirements relating to manning submission of oil response plans, designations of qualified individuals and establishment of financial responsibility and to obtain and comply with, and procure that all Environmental Affiliates of the Charterer obtain and comply with, all Environmental Approvals; 8.1.20 Compliance with Code comply and will procure that any Operator will comply with and ensure that the Ship and any Operator will comply with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; 8.1.21 Withdrawal of DOC and SMC procure that any Operator will, immediately inform the Mortgagee if there is any threatened or actual withdrawal of its DOC or the SMC in respect of the Ship; 8.1.22 Issuance of DOC and SMC procure that any Operator will, promptly inform the Mortgagee upon the issue to the Owner or any Operator of a DOC and to the Ship of an SMC or the receipt by the Owner or any Operator of notification that its application for the same has been refused; and 8.1.23 ISPS Code compliance (and procure that any Operator of the Ship will): (a) maintain at all times a valid and current ISSC in respect of the Ship; (b) immediately notify the Mortgagee in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; and (c) procure that the Ship will comply at all times with the ISPS Code. 8.2 Substitute performance of Mortgage To the extent that, pursuant to the Charter or this Deed, the Charterer duly performs and discharges (or procures the performance and discharge of) the duties and liabilities undertaking by the Owner in the Mortgage, then such performance and discharge of the said duties and liabilities by the Charterer shall, to that extent, be deemed to be proper and due performance and discharge of the Owner's duties and liabilities under the Mortgage. 9 Powers of Mortgagee to protect security and remedy defaults 9.1 Protective action The Mortgagee (as security agent and trustee on behalf of the Secured Creditors) shall, without prejudice to its other rights, powers and remedies under any of the Security Documents, be entitled (but not bound) at any time, and as often as may be necessary, to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Deed and the other Security Documents, and all Expenses attributable thereto shall be payable by the Owner on demand. 9.2 Remedy of defaults Without prejudice to the generality of the provisions of clause 9.1: 9.2.1 if the Charterer fails to comply with any of the provisions of clause 8.1.1 the Mortgagee shall be entitled (but not bound) to effect and thereafter to maintain all such insurances upon the Ship as in its discretion it may think fit in order to procure the compliance with such provisions or alternatively, to require the Ship (at the Charterer's risk) to remain in, or to proceed to and remain in a port designated by the Mortgagee until such provisions are fully complied with; 9.2.2 if the Charterer fails to comply with any of the provisions of clauses 8.1.3, 8.1.5 or 8.1.6, the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs, changes or surveys as it may deem expedient or necessary in order to procure the compliance with such provisions; and 9.2.3 if the Charterer fails to comply with any of the provisions of clause 8.1.8, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities and outgoings as are therein mentioned and/or to take any such measures as it may deem expedient or necessary for the purpose of securing the release of the Ship in order to procure the compliance with such provisions, and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be payable by the Owner to the Mortgagee on demand. 10 Powers of Mortgagee on Event of Default 10.1 Powers Upon the happening of any Event of Default which has not been remedied or expressly waived in writing by the Creditors, the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) shall become forthwith entitled by notice given to the Borrowers in accordance with the provisions of clause 10.2 of the Loan Agreement or, as regards the Master Swap Agreement, in accordance with the relevant terms of the Master Swap Agreement, to declare the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) to be due and payable immediately or in accordance with such notice, whereupon the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) shall become so due and payable and (whether or not the Mortgagee shall have given any such notice) the Mortgagee shall become forthwith entitled, as and when it may see fit, to put into force and exercise in relation to the Owner's Assigned Property and/or the Charterer's Assigned Property or any part thereof all or any of the rights, powers and remedies possessed by it as mortgagee and/or assignee of the Owner's Assigned Property and/or the Charterer's Assigned Property (whether at law, by virtue of the Mortgage and this Deed or otherwise) and in particular (without limiting the generality of the foregoing): 10.1.1 to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee may nominate; 10.1.2 to collect, recover, compromise and give a good discharge for, all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property, and to take over or institute (if necessary using the name of the Owner or, as the case may be, the Charterer) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit, and, in the case of the Insurances, to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefore; 10.1.3 to discharge, compound, release or compromise claims in respect of the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property which have given or may give rise to any charge or lien or other claim on the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property or which are or may be enforceable by proceedings against the Ship or any other part of the Owner's Assigned Property and/or the Charterer's Assigned Property; and 10.1.4 to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in connection with the exercise of the powers (or any of them) referred to in this clause 10.1. 10.2 Liability of Mortgagee The Mortgagee shall not be liable as mortgagee in possession in respect of all or any of the Owner's Assigned Property and/or the Charterer's Assigned Property to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such. 11 Application of moneys 11.1 Application All moneys received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in respect of: 11.1.1 recovery under the Insurances (other than under any loss of earnings insurance and any such sum or sums as may have been received by the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) in accordance with the relevant Loss Payable Clause in respect of a major casualty as therein defined and paid over to the Charterer as provided in clause 3.1.2 or which fall to be otherwise applied under clause 11.3); 11.1.2 Requisition Compensation; and 11.1.3 the Owner's Assigned Property, shall be held by it upon trust in the first place to pay or make good the Expenses and the balance shall: (a) in the case of moneys received in respect of sale of the Ship or recovery under the Insurances in relation to a Total Loss of the Ship or her Requisition Compensation: (i) if no Default has occurred and is continuing, be applied in making such prepayment as is required in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement and the balance, if any, shall be paid to the Owner; or (ii) if a Default has occurred and is continuing but no Event of Default has occurred, be retained by the Mortgagee on a suspense account until such time as such Default is remedied and no other Default has occurred and is continuing (whereupon such moneys shall be applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement) and the balance, if any, shall be paid to the Owner provided that, until applied in accordance with clause 4.3 of the Loan Agreement and in or towards any payments required pursuant to clause 4.4 of the Loan Agreement or paragraph (b) below, moneys so retained shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner under the Security Documents or any of them by virtue of payment demanded thereunder in each case as the Mortgagee may in its absolute discretion determine; and (b) in any case, if an Event of Default has occurred and which has not been remedied or expressly waived in writing by the Creditors, be applied by the Mortgagee in the manner specified in clause 13.1 of the Loan Agreement and/or (at the absolute discretion of the Mortgagee) in accordance with sub-clause (a)(ii) above, and the surplus (if any) shall be paid to the Owner, the Charterer or such other person as may for the time being be entitled thereto. 11.2 Shortfalls In the event that the balance referred to in clause 11.1 is insufficient to pay in full the whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the shortfall from the Owner or any other person liable for the time being therefore. 11.3 Application of Insurances received by Mortgagee Any moneys received by the Mortgagee in respect of the Insurances (other than in respect of recovery under any loss of earnings insurance or in respect of a Total Loss) pursuant to the Mortgage and/or the assignments by the Charterer contained in clause 3.1 shall: 11.3.1 if received by the Mortgagee, or in the hands of the Mortgagee after the occurrence of a Default but prior to the occurrence of an Event of Default, be retained by the Mortgagee and shall be paid over by the Mortgagee to the Charterer (during the Charter Period) at such times, in such amounts and for such purposes and/or shall be applied by the Mortgagee in or towards satisfaction of any sums from time to time accruing due and payable by the Owner or the other Borrowers under the Security Documents or any of them or by virtue of payment demanded thereunder, in each case the Mortgagee may in its absolute discretion determine; and 11.3.2 if received by the Mortgagee, or in the hands of the Mortgagee, after the occurrence of an Event of Default, be applied by the Mortgagee in the manner specified in clause 11.1 and/or clause 11.3, as the Mortgagee may in its absolute discretion determine. 12 Remedies cumulative and other provisions 12.1 No implied waivers; remedies cumulative No failure or delay on the part of the Mortgagee and/or the Secured Creditors or any of them to exercise any right, power or remedy vested in it under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee and/or the Secured Creditors or any of them of any right, power or remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken by the Mortgagee and/or the Secured Creditors or any of them to enforce any right, power or remedy preclude any other or further exercise thereof or proceedings to enforce the same or the exercise of any other right, power or remedy nor shall the giving by the Mortgagee of any consent to any act which by the terms of this Deed requires such consent prejudice the right of the Mortgagee to withhold or give consent to the doing of any other similar act. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 12.2 Delegation The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate all or any of the powers and discretions vested in it by the Mortgage and this Deed (including the power vested in it by virtue of clause 14) or any of the other Security Documents in such manner, upon such terms, and to such persons as the Mortgagee in its absolute discretion may think fit. 13 Costs and indemnity 13.1 Costs The Owner shall pay to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) and/or any of the Secured Creditors on demand on a full indemnity basis all expenses or liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing, out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee and/or any of the Secured Creditors in connection with the enforcement of, or preservation of any rights under, this Deed or otherwise in respect of the Outstanding Indebtedness (which expression, for the avoidance of doubt, includes the Master Swap Agreement Liabilities) and the security therefor or in connection with the preparation, completion, execution or registration of this Deed. 13.2 Mortgagee's indemnity The Owner hereby agrees and undertakes to indemnify the Mortgagee and each of the Secured Creditors against all losses, actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising which may now or hereafter be incurred by the Mortgagee and/or any of the Secured Creditors, or by any manager, agent, officer or employee for whose liability, act or omission it or he may be answerable, in respect of, in relation to, or in connection with anything done or omitted in the exercise or purported exercise of the powers contained this Deed or otherwise in connection therewith and herewith or with any part of the Owner and the Owner's Assigned Property or the Charterer's Assigned Property or otherwise howsoever in relation to, or in connection with, any of the matters dealt with in this Deed. 14 Attorney 14.1 Power By way of security, the Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney generally for and in its name and on its behalf and as its act and deed or otherwise to execute, seal and deliver and otherwise perfect and do all such deeds, assurances, agreements, instruments, acts and things which may be required for the full exercise of all or any of the rights, powers or remedies conferred by this Deed or which may be deemed proper in or in connection with all or any of the purposes aforesaid. The power hereby conferred shall be a general power of attorney under the Powers of Attorney Act 1971, and the Owner and the Charterer ratifies and confirms, and agrees to ratify and confirm, any deed, assurance, agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto. Provided always that such power shall not be exercisable by or on behalf of the Mortgagee until the happening of an Event of Default. 14.2 Exercise of power The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor shall such person be in any way affected by notice that no such Event of Default has happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the Mortgagee's right to exercise the same. 14.3 Filings The Owner and the Charterer each hereby irrevocably appoints the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) to be its attorney in its name and on its behalf and as its act and deed or otherwise of it, to agree the form of and to execute and do all deeds, instruments, acts and things in order to file, record, register or enrol the Mortgage and/or this Deed in any court, public office or elsewhere which the Mortgagee may in its discretion consider necessary or advisable, now or in the future, to ensure the legality, validity, enforceability or admissibility in evidence thereof and any other assurance, document, act or thing required to be executed by the Owner and the Charterer pursuant to clause 15. 15 Further assurance The Charterer hereby further undertakes at its own expense from time to time to execute, sign, perfect, do and (if required) register every such further assurance, document, act or thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more effectually mortgaging and charging the Charterers Assigned Property or perfecting the security constituted or intended to be constituted by this Deed. 16 Consent, Termination of Charter and Quiet Enjoyment 16.1 Consent In consideration of the Charterer executing this Deed, the Mortgagee consents to the entry by the Owner into the Charter and the performance of its obligations thereunder. 16.2 Quiet Enjoyment and termination In consideration of the undertakings of the Charterer contained in clauses 6 and 8 and of the Charter Guarantor contained in clause 7, provided (a) the Charterer has not committed a breach of the Charter which would entitle the Owner to terminate the Charter (including, but not limited to, a failure to pay charterhire in accordance with the Charter) or (b) the Charterer has not committed a breach of this Deed or (c) the Charterer has not committed a breach of any of the terms of the co-ordination deed dated June 2006 made between, inter alios, the Charterer and the Mortgagee (the "Co-ordination Deed") or (d) the Charter Guarantor has not committed a breach of this Deed, the Mortgagee agrees that it will not take any action as mortgagee against the Ship under (i) the Loan Agreement and (ii) any of the other Security Documents, which action would have the effect of interfering with the Charterers quiet enjoyment of the Ship PROVIDED ALWAYS THAT: 16.2.1 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from exercising any of their respective rights under the Loan Agreement and/or the Security Documents (including without limitation, rights thereunder to foreclose, take possession of and sell the Ship) if those rights are exercised in such a way as to enable the Ship to be available to the Charterer during the Charter Period; and 16.2.2 nothing in this clause 16 shall prevent the Mortgagee and/or the other Creditors (as defined in the Loan Agreement) from joining or intervening in or otherwise supporting any proceedings arising from or relating to the arrest or detention of the Ship by any other person with a view to substantiating, preserving or protecting the Mortgagee and/or the other Creditors' (as defined in the Loan Agreement) interest in the Ship as mortgagee or otherwise. 16.3 Termination by Mortgagee On the occurrence of any of the following: 16.3.1 an Event of Default; and 16.3.2 if any event or circumstance shall have occurred which would, under the terms of the Charter, entitle the Owner to terminate the Charter; or 16.3.3 if the Charterer shall be in default of any of its obligations under this Deed; or 16.3.4 if the Charterer is in breach of any of the terms of the Co-ordination Deed; or 16.3.5 if the Charter Guarantor shall be in default of its obligations under this Deed, the Mortgagee shall be entitled to terminate the Charter by notice to the Owner and the Charterer, which notice shall operate to terminate the Charter forthwith if the Ship is then in port and free of cargo or otherwise upon completion of the voyage (including discharge of cargo, if any) upon which the Ship was engaged at the time when the notice to determine was given and upon any termination of the Charter pursuant to this clause 16.3: (a) all obligations whatsoever of the Owner thereunder shall be absolutely discharged and extinguished; (b) if the Charterer shall, at any time prior to such termination, have been in repudiatory breach of the terms of the Charter, such termination by the Mortgagee shall, as between the Owner and the Charterer, operate as an acceptance by the Owner of the Charterers repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation (as such right has been assigned to the Mortgagee by the Charter Assignment) shall be fully preserved; and (c) the Charterer shall cease to be in possession of the Ship with the consent of the Owner (or with the consent of the Mortgagee as the Owners assignee) and shall forthwith vacate possession of the Ship in an orderly fashion, Provided that such vacating of possession of the Ship by the Charterer shall not of itself constitute the Mortgagee a mortgagee-in-possession of the Ship. 16.4 Preservation of Owner's rights If the circumstances in which the Mortgagee becomes entitled under clauses 16.2 or 16.3 to determine the Charter shall constitute or include grounds on which the Owner was entitled to determine the same, any determination by the Mortgagee shall (as between the Owner and the Charterer) operate as an acceptance by the Owner of the Charterer's repudiation of the Charter and the Owner's right to recover damages in respect of such repudiation shall be fully preserved. 16.5 Remedy of Owner's breach Notwithstanding anything herein contained, the Owner shall remain liable to perform all the obligations assumed by it under the Charter and the Mortgagee shall have no obligations whatsoever thereunder or be under any liability whatsoever to the Charterer in event of any failure by the Owner to perform its obligations thereunder or hereunder provided however that: 16.5.1 a notice in writing (which shall set out full particulars of the matters complained of and which is hereinafter called the "notice of complaint") shall be immediately given by the Charterer to the Mortgagee in event of any breach or alleged breach of the Charter by the Owner by reason whatsoever the Charterer claims to be entitled to determine the Charter 16.5.2 within fifteen (15) days after receipt by the Mortgagee of any notice of complaint by the Mortgagee shall be entitled (but not bound) to notify the Charterer in writing of its intention to remedy the matters complained of by such notice of complaint and any remedial measures thereafter taken by the Mortgagee shall be without prejudice to the Charterer's right to claim against the Owner in respect of any loss and damage suffered by the Charterer by reason of such breach but in no circumstances shall the Mortgagee be under any liability therefore or for any loss or damage suffered by the Charterer arising from delay or otherwise in effecting such remedial measures as the Mortgagee (whose decision shall be final) deems appropriate; and 16.5.3 all expenses whatsoever incurred by the Mortgagee in or about such remedial measures as may be undertaken on its behalf pursuant to clause 16.5.2 shall be recoverable by the Mortgagee from the Owner on demand but payment by the Owner to the Mortgagee pursuant to such demand shall not as between the Owner and the Charterer operate as an admission by the Owner of liability for the matters complained of in the relevant notice of complaint. 16.6 Sale free of or subject to Charter Notwithstanding anything herein contained, in the event of a sale of the Ship during the Charter Period pursuant to the power in that behalf vested in the Mortgagee by virtue of the Security Documents, such sale shall be free of or subject to the Charter at the option of the Mortgagee. 16.7 Sale subject to Charter If the Ship is sold subject to the Charter (which expression means that the purchaser of the Ship or any other person chartering the Ship from the purchaser shall as from the date on which the Ship is registered in the name of the purchaser assume all future obligations and acquire all future rights and benefits under the Charter), the Owner and/or the Charterer shall enter into such form of agreement with the purchaser as the Mortgagee may require to the intent that such purchaser or other person shall be substituted in place of the Owner as owner or disponent owner of the Ship for the purposes of the Charter. 16.8 Sale free of Charter Without prejudice to clauses 16.2 and 16.3, if the Ship is sold free of the Charter, the Owner and the Charterer shall enter into such form of agreement or agreements as the Mortgagee may require for determination of the Charter by mutual consent. 17 Continuation of Charter Period The Charterer shall continue to pay charterhire under the Charter on the days and in the amounts required under the Charter notwithstanding that the Ship shall become a Total Loss or that the Charterer shall be permanently deprived of her use for any other reason prior to the end of the Charter Period, provided that no further instalments of charterhire shall become due and payable after the Borrowers have prepaid the Advance relevant to such Ship or any other part of the Loan As may be required in clause 4.3 of the Loan Agreement. 18 Notices 18.1 Every notice, request, demand or other communication under this Deed shall: 18.1.1 be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; 18.1.2 be deemed to have been received in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and 18.1.3 be sent: (a) if to the Owner at: c/o ICON Capital Corp. 100 Fifth Avenue, 4th Floor New York, NY 10011 USA Fax no: +1 (212) 418 4739 Attention: General Counsel (b) if to the Charterer at: c/o Top Tanker Management Inc. 109-111 Messogion Avenue 155 26 Athens Greece Fax no: + 30 210 6978 107 Attention: Legal Department (c) if to the Mortgagee at: Fortis Bank (Nederland) N.V. Coolsingel 93 3012 AE Rotterdam The Netherlands Fax no: +31 10 401 2353 Attention: Mr Tom van Vonderen or to such other address and/or numbers as is notified by one party to the other parties under this Deed. 19 Counterparts This Deed may be entered into in the form of two or more counterparts, each executed by one or more of the parties, and, provided all the parties shall so execute this Deed, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 20 Severability of provisions Each of the provisions in this Deed are severable and distinct from the others, and if at any time one or more such provisions is or becomes invalid, illegal or enforceable, the validity, legality and enforceability of the remaining provisions of this Deed shall not in any way be affected or impaired thereby. 21 Law and jurisdiction 21.1 Law This Deed is governed by, and shall be construed in accordance with, English law. 21.2 Submission to jurisdiction For the benefit of the Mortgagee, the parties hereto irrevocably agree that any legal action or proceedings in connection with this Deed may be brought in the English courts, or in the courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to settle any disputes arising out of or in connection with this Deed. Each of the Owner, the Charter Guarantor and the Charterer irrevocably and unconditionally submits to the jurisdiction of the English courts, and the courts of any country chosen by the Mortgagee and the Owner, the Charter Guarantor and the Charterer irrevocably designate, appoint and empower Law Debenture Corporate Services Limited at present of Fifth Floor, 100 Wood Street, London EC2V 7EX, England (in the case of the Owner) and Top Tankers (UK) Limited at present of 50 Park Street, London W1K 2JJ, United Kingdom (in the case of the Charterer and the Charter Guarantor) to receive, for it and on its behalf, service of process issued out of the English courts in any legal action or proceedings arising out of or in connection with this Deed. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Mortgagee to take proceedings against the Owner and/or the Charterer and/or the Charter Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which the Owner or the Charterer and/or the Charter Guarantor may have against the Mortgagee arising out of or in connection with this Deed. 21.3 Contracts (Rights of Third Parties) Act 1999 Save for clauses 5.6, 5.7 and 5.8 (which can be enforced by the Secured Creditors although they are not a party to this Deed), no term of this Deed shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Deed. IN WITNESS whereof this Deed has been duly executed as a deed the day and year first above written Schedule 1 Forms of Loss Payable Clauses (1) Hull and machinery (marine and war risks) By a General Assignment dated [o] 2006, ICON FAITHFUL, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner") and by a Quadripartite Deed dated [o] 2006, GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer") have each assigned to FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) all the Owner's and the Charterers rights, title and interest in and to all policies and contracts of insurance from time to time taken out or entered into by or for the benefit of the Owner and/or the Charterer in respect of m.v. "Faithful" and accordingly: (a) all claims hereunder in respect of an actual or constructive or compromised or arranged total loss, and all claims in respect of a major casualty (that is to say any casualty the claim in respect of which exceeds Five hundred thousand Dollars ($500,000) (or the equivalent in any other currency) inclusive of any deductible shall be paid in full to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order; and (b) all other claims hereunder shall be paid in full to the Charterer or to its order, unless and until the Mortgagee shall have notified insurers hereunder to the contrary, whereupon all such claims shall be paid to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) or to its order. (2) Protection and indemnity Payment of any recovery which ICON FAITHFUL, LLC of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Owner") or GRAMOS SHIPPING COMPANY INC. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the "Charterer') is entitled to make out of the funds of the Association in respect of any liability, costs or expenses incurred by the Owner or the Charterer, shall be made to the Owner or the Charterer or to its order, unless and until the Association receives notice to the contrary from FORTIS BANK (NEDERLAND) N.V. of Coolsingel 93, 3012 AE Rotterdam, The Netherlands (the "Mortgagee") in which event all recoveries shall thereafter be paid to the Mortgagee or their order; provided that no liability whatsoever shall attach to the Association, its Managers or their agents for failure to comply with the latter obligation until the expiry of two clear business days from the receipt of such notice. Schedule 2 Forms of Notices of Assignment of Insurances Notice of Assignment (For attachment by way of endorsement to the Policy) ICON FAITHFUL, LLC (the "Owner) of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America GRAMOS SHIPPING COMPANY INC. (the "Charterer") of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, the owners and demise charterers respectively of the motor vessel "Faithful HEREBY GIVE NOTICE that by a General Assignment dated [o] 2006 and entered into by the Owner with FORTIS BANK (NEDERLAND) N.V. (the "Mortgagee") (as security agent and trustee for and on behalf of the Secured Creditors as therein defined (the "Secured Creditors")) and by a Quadripartite Deed dated [o] 2006 and entered into by, inter alios, the Charterer and the Owner with the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors), there has been assigned by us to the Mortgagee (as security agent and trustee for and on behalf of the Secured Creditors) as mortgagees of the said vessel all insurances in respect thereof, including the insurances constituted by the policy whereon this notice is endorsed. - -------------------------------- Signed For and on behalf of ICON FAITHFUL, LLC Dated [o] 2006 - -------------------------------- Signed For and on behalf of GRAMOS SHIPPING COMPANY INC. Dated [o] 2006 EXECUTED as a DEED ) by Mark Gatto ) /s/ Mark Gatto for and on behalf of ) ----------------------------- ICON FAITHFUL, LLC ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Eirini Alexandropolou ) /s/ Eirini Alexandropolou for and on behalf of ) ----------------------------- GRAMOS SHIPPING COMPANY LIMITED ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Eirini Alexandropolou ) /s/ Eirini Alexandropolou for and on behalf of ) ----------------------------- TOP TANKERS ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EXECUTED as a DEED ) by Christina Economides ) /s/ Christina Economides for and on behalf of ) ----------------------------- FORTIS BANK (NEDERLAND) N.V. ) Attorney-in-fact /s/ Vikki Madia - ---------------------------------- in the presence of: Witness Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-4.70 67 d759408_ex4-70.txt Exhibit 4.70 Guarantee To: ICON Faithful, LLC a Delaware limited liability company of 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808, United States of America (the "Beneficiary") 1 In consideration of (i) the Beneficiary, which expression includes its successors and assignees), at our request, agreeing to let the m.v. Faithful (the "Ship") to Gramos Shipping Company Inc. (the "Charterer, which expression includes its successors and assigns) pursuant to a "Barecon 2001" bareboat charter dated 14 March 2006 between Starcraft Marine Co. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of Marshall Islands MH96960 (the "Original Owner") and the Charterer (the "Original Charter) as novated in favour of the Beneficiary and amended pursuant to a novation agreement dated 16 June 2006 made between the Original Owner, the Beneficiary and the Charterer (the "Novation Agreement" and together with the Original Charter and as further amended and supplemented from time to time, the "Charter") and (ii) US$1 and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged) we, Top Tankers Inc. (the "Guarantor") irrevocably and unconditionally guarantee the due and punctual payment of all sums payable by the Charterer to the Beneficiary under or pursuant to the Charter (including, without limitation, all charterhire, interest, fees, costs, charges and expenses) together with interest to the date of payment (as well after as before judgment) at such rates and upon such terms as may from time to time be expressed to be payable by the Charterer and any damages (whether liquidated or otherwise for breach of the Charter) on a full and unqualified indemnity basis and undertake that if for any reason the Charterer shall fail to pay any sums due under or pursuant to the Charter on the due date of payment thereunder the Guarantor shall, on demand by the Beneficiary, unconditionally pay such sum to the Beneficiary. 2 As a separate and independent stipulation, the Guarantor irrevocably and unconditionally agrees that if any purported obligation or liability of the Charterer which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Charterer on any ground whatsoever whether or not known to the Beneficiary (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach Of duty by, any person purporting to act on behalf of the Charterer or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or incapacity or any change in the constitution of the Charterer) the Guarantor shall nevertheless be liable to the Beneficiary in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Beneficiary fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Charterer to perform or discharge any such purported obligation or liability or from any invalidity or unenforceability of any of the same against the Charterer. 3 The Guarantor's liability under this Guarantee shall not be discharged in whole or in part or otherwise be affected in any way by reason of (a) the Beneficiary giving the Charterer time or any other concession or taking, holding, varying, realising or not enforcing any other security for the liabilities of the Charterer under the Charter, (b) any legal limitation or incapacity relating to the Charterer, (c) the invalidity or unenforceability of the obligations of the Charterer under the Charter or (d) any other act or omission of the Beneficiary or any other circumstances which but for this provision would discharge the Guarantor and any moneys expressed to be payable by the Charterer under the terms of the Charter which may not be recoverable from the Charterer for any such reason shall be recoverable by the Beneficiary from the Guarantor as principal debtor. 4 This Guarantee shall expire upon termination by effluxion of time of the Charter or otherwise in circumstances where all obligations of the Charterer shall have been irrevocably and unconditionally discharged in full. 5 The Beneficiary may enforce this Guarantee without first making demand on, or taking any proceeding against, the Charterer. 6 All payments by the Guarantor hereunder shall be made without set-off or counterclaim and, subject to paragraph 7 hereof, free and clear of any deductions or withholdings in United States Dollars in same day funds (or such other funds as may then be customary for the settlement of international bank transactions in the relevant currency) not later than 10am (local time in the place of payment) on the due date to the account of the Beneficiary notified to the Guarantor by the Beneficiary. 7 If at any time the Guarantor is required to make any deduction or withholding in respect of any taxes (which for the purpose of this Guarantee includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof) from any payment due under this Guarantee, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Beneficiary receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Beneficiary against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Beneficiary any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. 8 If any sum due from the Guarantor under this Guarantee or any order or judgment given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under this Guarantee or under such order or judgment into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Guarantor, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order to judgment given or made in relation to this Guarantee, the Guarantor shall indemnify and hold harmless the Beneficiary from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Beneficiary may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Guarantor under this clause 8 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of this Guarantee and the term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 9 The Guarantor represents and warrants to the Beneficiary that: (a) the Guarantor is duly incorporated and validly existing in good standing under the laws of the Marshall Islands as a limited liability corporation and has power to carry on its business as it is now being conducted and to own its property and other assets; (b) the Guarantor has power to execute, deliver and perform its obligations under this Guarantee, and all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the power of the Guarantor to give guarantees will be exceeded as a result of this Guarantee; (c) this Guarantee constitutes valid, legal and enforceable binding obligations of the Guarantor; (d) the execution and delivery of, the performance of its obligations under and compliance with the provisions of this Guarantee by the Guarantor will not (i contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Guarantor is subject, or (ii) contravene or conflict with any provision of the Guarantor's Articles of Incorporation, By-Laws or other constitutional documents; (e) it is not necessary to ensure that legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in the Marshall Islands or that any stamp, registration or similar tax or charge be paid in the Marshall Islands on or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts of the Marshall Islands; (f) the choice by the Guarantor of English law to govern this Guarantee is valid and binding; and (g) neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement). 10 Guarantor's Undertakings 10.1 General Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 thereof deliver to the Beneficiary sufficient copies of each of the following documents: (a) not later than one hundred and eighty (180) days after the end of each financial year, the audited balance sheet and profit and loss account of the Guarantor and the audited consolidated balance sheet and the consolidated profit and loss account of the Group for such financial year and a cash flow statement for the Group for such financial year together with the report of the auditors thereon, the notes thereto and the directors' report thereon, if any; (b) at the time of issue thereof every report, circular, notice or like document issued by the Guarantor to its shareholders or creditors generally; and (c) at the time of the delivery of the annual audited financial statements, a statement from the Guarantor's auditors stating the respective amounts of the Net Asset Value, Book Equity, the Total Debt and the Total Market Value Adjusted Assets, in respect of or, as the case may be, as at the end of the financial year to which such financial statements relate indicating the manner in which the same have been calculated and whether or not the limits imposed by paragraphs 10.2.1, 10.2.4 and 10.2.5 have or have not been exceeded at such lime and so that each such statement shall (in the absence of manifest error or in the absence of the Mortgagee reaching a different determination pursuant to paragraph 10.2.8) be conclusive evidence of such amounts or facts for the purposes of this Guarantee. 10.2 Financial Undertakings The Guarantor hereby agrees and undertakes to the Beneficiary that it will at all times until expiry of this Guarantee in accordance with paragraph 4 hereof: 10.2.1 ensure that: (d) (i) a minimum amount of Twenty million United States Dollars ($US20,000,000) shall be standing to the credit of the Guarantor's Account for the period commencing on the date of this Guarantee and ending on 15 December 2006 and (ii) thereafter and until the expiry of this Guarantee in accordance with paragraph 4 hereof a minimum amount of Twenty five million United States Dollars ($US25,000,000) shall be standing to the credit of the Guarantor's Account and further ensure that there are no Encumbrances whatsoever existing over or in relation to such minimum amount; (e) it maintains cash balances of at least Fifty million United States Dollars (US$50,000,000) in bank accounts in its name or in the name of a member of the Group and agreed by the Beneficiary in writing from time to time and for the purposes of this clause 7.2.1(b) the expression "bank accounts" shall exclude any bank accounts which are subject to an Encumbrance; 10.2.2 endeavour that any Excess Cash Flow in relation to the Ship will be paid into the Guarantor's Account; 10.2.3 provide details to the Beneficiary at three (3) monthly intervals starting from the date of this Guarantee evidencing the operating expenses and the Earnings of the Ship; 10.2.4 ensure that its Net Asset Value at all times exceeds One hundred and twenty five million United States Dollars (US$125,000,000); and 10.2.5 ensure that its Book Equity shall at all times exceed Seventy five million United States Dollars ($US75,000,000). 10.2.6 For the purpose of this paragraph 10, the following expressions shall have the following meanings: "Applicable Accounting Principles" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied; "Book Equity" means the aggregate of the amounts paid-up or credited as paid-up on the Guarantor's issued share capital and the amount of the consolidated capital and revenue reserves of the Group (including any share premium account, capital redemption reserve fund and any credit balance on the consolidated profit and loss account of the Group) all as shown by the latest audited consolidated balance sheet and profit and loss account of the Group delivered under this Guarantee but after: (a) deducting any debit balance on such consolidated profit and loss account; (b) deducting any amount shown in such consolidated balance sheet in respect of goodwill (including goodwill arising on consolidation) and other intangible assets; (c) deducting (so far as not otherwise excluded as attributable to minority interests) a sum equal to the aggregate of the amount by which the book value of any fixed assets of any member of the Group has been written up after 31 December 2005 (or, in the case of a company becoming a subsidiary after that date, the date on which that company became a subsidiary) by way of revaluation. For the purposes of this paragraph (c) any increase in the book value of any fixed asset resulting from its transfer by one member of the Group to another member of the Group shall be deemed to result from a writing up of its book value by way of revaluation; (d) excluding amounts set aside for taxation as at the date of such balance sheet and making such adjustments as may be appropriate in respect of any significant additional taxation expected to result from transactions carried out by any member of the Group after such date and not reflected in that balance sheet; (e) deducting all amounts attributable to minority interests in Subsidiaries; (f) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital or any such reserves after the date of the relevant balance sheet (but so that no such adjustment shall be made in respect of any variation in profit and loss account except to the extent of any profit or loss, calculated on a cumulative basis, recorded in the consolidated profit and loss account of the Group delivered to the Beneficiary before the date of this Deed, or under paragraph 10.1.1 in respect of any subsequent period); (g) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by any member of the Group (otherwise than attributable directly or indirectly to the Guarantor) out of profits earned up to and including the date of the latest audited balance sheet of that member of the Group to the extent that such distribution is not provided for in that balance sheet; (h) making such adjustments as may be appropriate in respect of any variation in the interests of the Guarantor in its Subsidiaries since the date of the latest published audited consolidated balance sheet of the Group; (i) if the calculation is required for the purpose of or in connection with a transaction under or in connection with which any company is to become or cease to be a Subsidiary of the Guarantor, making all such adjustments as would be appropriate if that transaction had been carried into effect; and (j) making such adjustments as may be appropriate in the opinion of the Beneficiary in order that the above amounts are calculated in accordance with the Original Accounting Principles; "Charter Earnings" means all moneys whatsoever from time to time payable by the Charterer to the Beneficiary under or pursuant to the Charter and/or any moneys payable to the Beneficiary under or pursuant to this Guarantee and/or any guarantee, security or other assurance given to the Beneficiary at any time in respect of the Charterer's obligations under or pursuant to the Charter; "Guarantors Account' means the interest bearing Dollar account of the Charter Guarantor opened or (as the context may require) to be opened with the Agent (as defined in paragraph 12 below) with account number 24.07.56.150 and includes any sub-accounts thereof and any other account designated in writing by the Agent to be the Guarantor's Account for the purposes of this Guarantee; "Earnings" means all earnings of the Ship payable under or pursuant to any charters entered into by the Charterer in respect of the employment of the Ship; "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements having a similar effect); "Excess Cash Flow" means any Earnings of the Ship minus (a) the aggregate of the Charter Earnings and (b) the operating expenses in relation to the Ship; "Finance Lease" means a lease treated as a finance lease pursuant to the Applicable Accounting Principles. "Group" means, together, the Guarantor and its Subsidiaries and "member of the Group" means any of them; "Net Asset Value" means, at any relevant time, the amount in Dollars resulting after deducting the Total Debt from the Total Market Value Adjusted Assets, in either case at such time; "Original Accounting Principles" means those accounting principles, standards and practices which were used in the preparation of the consolidated audited financial statements of the Group as at 31 December 2005, and for the year then ended and, to the extent that they do not conflict with those principles, standards and practices, such other accounting principles, standards and practices as were generally acceptable in the United States of America on 31 December 2005; "Subsidiary" of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; "Total Debt" means the aggregate principal amount (including any fixed or minimum premium payable on final repayment) of: (a) moneys borrowed or raised by the Guarantor and its Subsidiaries; (b) bonds, notes, loan stock, debentures, commercial paper or other debt securities issued by the Guarantor or any of its Subsidiaries not for the time being beneficially owned by the Guarantor or any of its Subsidiaries; (c) sums outstanding under acceptances by the Guarantor or any of its Subsidiaries or by any bank or acceptance house under acceptance credits opened on behalf of the Guarantor or any Subsidiary; (d) deferred indebtedness of the Guarantor or any of its Subsidiaries for payment of the acquisition or construction price for assets or services acquired or constructed; (e) rental payments under Finance Leases; (f) receivables sold or discounted with a right of recourse to the Guarantor or any of its Subsidiaries; (g) the nominal amount of any issued and paid up share capital (other than equity share capital) of any Subsidiary not beneficially owned by the Guarantor or another Subsidiary; (h) preference share capital redeemable prior to the last day of the period of the Charter; (i) indebtedness secured by any Encumbrance over all or any part of the undertaking, property, assets, rights or revenues of the Guarantor or any of its Subsidiaries irrespective of whether or not such indebtedness is supported by a personal covenant on the part of the Guarantor or any of its Subsidiaries; (j) indebtedness incurred in respect of swaps, forward exchange contracts, futures or other derivatives; (k) any other liability arising from a transaction having the commercial effect of a borrowing or the raising of money; (l) obligations under guarantees in respect of the obligations of any other person which, if such person were the Guarantor or a Subsidiary, would fall within paragraphs (a) to (k) above, PROVIDED THAT: (i) moneys owing by the Guarantor to a Subsidiary or by a Subsidiary to the Guarantor or to another Subsidiary shall not be taken into account; (ii) the principal amount of Total Debt deemed to be outstanding in relation to Finance Leases or hire purchase agreements shall be the present value of the minimum lease or hire payments discounted at the interest rate implicit in the relevant lease or hire purchase agreement; and "Total Market Value Adjusted Assets" means the aggregate of: (a) the value (less depreciation computed in accordance with generally accepted international accounting principles consistently applied) on a consolidated basis of all tangible fixed assets of the Group, as stated in the relevant consolidated financial statements of the Group, but excluding any ships at the relevant time owned by members of the Group which, for the purposes of such consolidated financial statements, are included in the consolidated tangible fixed assets of the Group (for the purposes of paragraphs 10.2 and 10.3, the "Relevant Ships"); and (b) the aggregate of the market value of the Relevant Ships, as such market value shall have been most recently determined (as of the date of the relevant calculation) pursuant to the provisions of paragraph 10.3 of this Guarantee by means of valuations obtained by the Beneficiary in accordance with the provisions of paragraph 10.3 of this Guarantee (and not the value of the Relevant Ships as stated in the relevant consolidated financial statements of the Group). 10.2.7 All the terms defined in this paragraph 10.2 and used in this Guarantee are to be determined on a consolidated basis in respect of the Group and (except as items are expressly included or excluded in the relevant definition or clause) are used and shall be construed in accordance with Applicable Accounting Principles and as determined from the latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. 10.2.8 The compliance of the Guarantor with the covenants set out in paragraphs 10.2.1, 10.2.4 and 10.2.5 shall be determined on the basis of calculations made by the Beneficiary at any time by reference to then latest consolidated financial statements of the Group delivered to the Beneficiary pursuant to paragraph 10.1.1. For the avoidance of doubt, it iS hereby agreed that the Beneficiary shall be entitled to make such determinations and/or calculations at any time when, and in relation to any period in relation to which, the Guarantor shall be obliged to comply with each of the covenants out in paragraphs 10.2.1, 10.2.4 and 10.2.5 without regard to when any such financial statements are due to be delivered or have been actually delivered to the Beneficiary pursuant to paragraph 10.1. 10.2.7 For the purposes of this paragraph 10.2: (a) no item shall be deducted or credited more than once in any calculation; and (b) any amount expressed in a currency other than United States Dollars shall be converted into United States Dollars in accordance with Applicable Accounting Principles. 10.3 Valuation of Relevant Ships 10.3.1 Valuations Each of the Relevant Ships shall, for the purposes of this paragraph 10, be valued in United States Dollars as and when the Beneficiary shall require. Each such valuation of a Relevant Ship shall be made by an independent firm of shipbrokers appointed by the Beneficiary. Such valuation shall be made without, unless required by the Beneficiary, physical inspection, and on the basis of a sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a wiling seller and without taking into account the benefit of any charterparty or other employment of such Relevant Ship. The value of each of the Relevant Ships determined in accordance with the provisions of this paragraph 10.3 shall be binding upon the parties hereto for the purposes of calculating the Total Market Value Adjusted Assets until such time as any further such valuations shall be obtained. 10.3.2 Information The Guarantor undertakes to the Beneficiary to supply to the Beneficiary and to any such shipbroker such information concerning any Relevant Ship and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. 10.3.3 Costs All costs in connection with the Beneficiary obtaining any valuation of each of the Relevant Ships referred to in paragraph 10.3.1 of this Guarantee shall be borne by the Guarantor. 11 No failure or delay on the part of the Beneficiary to exercise any right, power or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Beneficiary, of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law. 12 The Guarantor may not assign any of its rights or obligations hereunder. The Beneficiary may assign any of its rights hereunder to Fortis Bank NV/SA of Montagne de Parc 3, 1000 Brussels, Belgium, acting through its Athens branch at 166 Syngrou Avenue 176 71 Athens, Greece (the "Agent") (acting as security agent and trustee on behalf of a syndicate of banks and other ancillary parties). The Guarantor hereby agrees that it will promptly execute an acknowledgement in favour of the Agent of any notice of assignment delivered to it relating to any such assignment. 13 Every claim or notice under this Guarantee shall be in writing and may be given or made by post or fax, to the Guarantor or the Beneficiary at their respective addresses given above or to another address notified by the Guarantor or the Beneficiary (or its assignee) to the other under this Guarantee. Every notice shall be deemed to have been received, in the case of a fax at the time of despatch (provided that if the date of despatch is not a working day in the country of the addressee, it shalt be deemed received on the next working day), and in the case of a letter, when delivered. 14 (a) This Guarantee shall be governed by and construed in accordance with English law. (b) The Guarantor agrees, for the benefit of the Beneficiary, that any legal action or proceedings arising out of or in connection with this Guarantee may be brought in English courts. The Guarantor irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Top Tankers (UK) Limited at present of 50 Park Street, W1K 2JJ, London, England to receive for it and on its behalf, service or process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Beneficiary to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 15 Other than with respect to the Beneficiary, no term of this Guarantee shall be enforceable pursuant to the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Guarantee. Yours faithfully, EXECUTED as a DEED By: Eirini Alexandropoulou for and on behalf of TOP TANKERS INC. Pursuant to a Power of Attorney dated 13th June 2006 In the presence of: Witness: /s/ Vikki Madia Name: Vikki Madia Address: Norton Rose Occupation: Piraeus EX-8.1 68 d761832_ex8-1.txt Exhibit 8.1 Subsidiaries of TOP Tankers Country of Portion of Name of Significant Subsidiary Incorporation Ownership Interest - ------------------------------ ------------- ------------------ Top Tanker Management Inc. Marshall Islands 100% Top Bulker Management Inc. Marshall Islands 100% Vermio Shipping Company Limited Marshall Islands 100% Rupel Shipping Company Inc. Marshall Islands 100% Gramos Shipping Company Inc. Marshall Islands 100% Olympos Shipping Company Limited Marshall Islands 100% Helidona Shipping Company Limited Marshall Islands 100% Kalidromo Shipping Company Limited Marshall Islands 100% Mytikas Shipping Company Limited Marshall Islands 100% Litochoro Shipping Company Limited Marshall Islands 100% Kisavos Shipping Company Limited Marshall Islands 100% Parnis Shipping Company Limited Marshall Islands 100% Imitos Shipping Company Limited Marshall Islands 100% Giona Shipping Company Limited Marshall Islands 100% Lefka Shipping Company Limited Marshall Islands 100% Agrafa Shipping Company Limited Marshall Islands 100% Nedas Shipping Company Limited Marshall Islands 100% Ilisos Shipping Company Limited Marshall Islands 100% Sperios Shipping Company Limited Marshall Islands 100% Ardas Shipping Company Limited Marshall Islands 100% Kifisos Shipping Company Limited Marshall Islands 100% Agion Oros Shipping Company Limited Marshall Islands 100% Falakro Shipping Company Limited Liberia 100% Psiloritis Shipping Company Limited Liberia 100% Pylio Shipping Company Limited Liberia 100% Idi Shipping Company Limited Liberia 100% Taygetus Shipping Company Limited Liberia 100% Vitsi Shipping Company Limited Liberia 100% Parnasos Shipping Company Limited Liberia 100% Pageon Shipping Company Limited Cyprus 100% Vardousia Shipping Company Limited Cyprus 100% Parnon Shipping Company Limited Cyprus 100% Menalo Shipping Company Limited Cyprus 100% Pintos Shipping Company Limited Cyprus 100% Top Tankers (U.K.) Limited United Kingdom 100% SK 23116 0001 761832 EX-12.1 69 d761833_ex12-1.txt Exhibit 12.1 CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER - ------------------------------------------------ I, Evangelos J. Pistiolis, certify that: 1. I have reviewed this annual report on Form 20-F of TOP Tankers Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by this annual report that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting. 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: April 20, 2007 /s/ Evangelos J. Pistiolis - -------------------------- Evangelos J. Pistiolis Chief Executive Officer EX-12.2 70 d761833_ex12-2.txt Exhibit 12.2 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER - ------------------------------------------------ I, Stamatios N. Tsantanis, certify that: 1. I have reviewed this annual report on Form 20-F of TOP Tankers Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by this annual report that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting. 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: April 20, 2007 /s/ Stamatios N. Tsantanis - -------------------------- Stamatios N. Tsantanis Chief Financial Officer EX-13.1 71 d761833_ex13-1.txt Exhibit 13.1 CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 In connection with this Annual Report of TOP Tankers Inc. (the "Company") on Form 20-F for the year ended December 31, 2005 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, Evangelos J. Pistiolis, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request. Date: April 20, 2007 /s/ Evangelos J. Pistiolis - -------------------------- Chief Executive Officer EX-13.2 72 d761833_ex13-2.txt Exhibit 13.2 CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Annual Report of TOP Tankers Inc. (the "Company") on Form 20-F for the year ended December 31, 2005 as filed with the Securities and Exchange Commission (the "SEC") on or about the date hereof (the "Report"), I, Stamatios N. Tsantanis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request. Date: April 20, 2007 /s/ Stamatios N. Tsantanis - -------------------------- Chief Financial Officer SK 23116 0001 761833 EX-15.1 73 d759408_ex15-1.txt Exhibit 15.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement (Form F-3 No. 333-127086) of Top Tankers Inc. of our report dated February 24, 2006, with respect to the consolidated financial statements of Top Tankers Inc. for the year ended December 31, 2005, included in Top Tankers Inc.'s Annual Report on Form 20-F for the year ended December 31, 2006. /s/Ernst & Young - ------------------------- Athens, Greece April 20, 2007 EX-15.2 74 d759408_ex15-2.txt Exhibit 15.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement No. 333-127086 on Form F-3 of our report dated April 12, 2007, relating to the consolidated financial statements of Top Tankers Inc. and subsidiaries appearing in this Annual Report on Form 20-F of Top Tankers Inc. for the year ended December 31, 2006. /s/ Deloitte - ------------------------- Deloitte., Hadjipavlou, Sofianos & Cambanis S.A. Athens, Greece April 20, 2007. -----END PRIVACY-ENHANCED MESSAGE-----