6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2009

Commission File Number 001-32520

NEWLEAD HOLDINGS LTD.

(Translation of registrant’s name into English)

NewLead Holdings Ltd.
83 Akti Miaouli & Flessa Str.
185 38 Piraeus Greece
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ          Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o          No þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o          No þ

Indicate by check mark whether the registrant by furnishing the information contained in the Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o          No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): .

NEWLEAD HOLDINGS LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements (unaudited) and the notes thereto included elsewhere in this report. Reference in the following discussion to “our”, “us”, “we”, “NewLead” and “the Company” refer to NewLead Holdings Ltd. and its subsidiaries. Effective December 21, 2009, the Company changed its name from “Aries Maritime Transport Limited” to “NewLead Holdings Ltd” and the disclosures contained herein give effect to this change.

Operating and Financial Review

          The following is a discussion of the financial condition and results of operations for the three and nine months ended September 30, 2009 and 2008 of NewLead Holdings Ltd. All of the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and, where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. The discussion and analysis should be read in conjunction with our condensed consolidated financial statements (unaudited) and the notes thereto included elsewhere in this report, as well as the consolidated financial statements and accompanying notes included in the Company’s 2008 Annual Report on Form 20-F filed with the Securities and Exchange Commission.

          This report contains forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Reform Act of 1995. These forward-looking statements are based on the Company’s current expectations and observations. Included among the factors that, in management’s view, could cause actual results to differ materially from the forward-looking statements contained in this report are changes in any of the following: (i) charter demand and/or charter rates; (ii) production or demand for the types of product tanker, container vessel and drybulk products that are transported by the Company’s vessels; (iii) operating costs, including but not limited to changes in crew salaries, insurance, provisions, repairs, maintenance and overhead expenses; (iv) changes in interest rates; (v) vessel values; (vi) shipyard performance; or (vii) changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking.

Recent Developments

Recapitalization

          On October 13, 2009, the Company simultaneously consummated all of the following transactions in connection with a $400.0 million recapitalization of the Company, as described below:

• Grandunion Inc. (“Grandunion”) transferred 100% ownership in three drybulk carriers (which transaction included assets with a fair value of approximately $73.0 million and the assumption of a facility of $37.4 million, for a net value of $36.0 million) to the Company in exchange for 18,977,778 newly issued common shares of the Company. The details of the three new drybulk vessels and their related charters are set forth in the below table:

Name	Type	DWT	Charter-out rate per day (net)	Charter Term (years)
China	Capesize	135,364	$12,753	Through 3/17 (maximum option)
Australia	Capesize	172,972	$20,391	Through 12/11 (maximum option)
Brazil	Capesize	151,738	$28,985 1st/2nd year $26,180 balance years, all plus profit sharing above $26,600.*	2/15

                         *   Profit calculation: 85% of the Cape Spot 4 TCE Avg. minus $26,600.

• A voting agreement between Grandunion and Rocket Marine Inc., or Rocket Marine, was entered into for which Grandunion transferred 2,666,667 of the Company’s common shares to Rocket Marine, a company controlled by two of our former directors and principal shareholders, in exchange for Grandunion’s control over the voting rights relating to the shares owned by Rocket Marine and its affiliates. There are 17,563,544 common shares subject to the voting

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	agreement. The voting agreement is in place for as long as Rocket Marine owns the common shares. The voting agreement contains a lock-up period until December 31, 2011, which, in the case of transfer or sale by Rocket Marine, requires the approval of Grandunion.
•	The Company issued $145.0 million in aggregate principal amount of 7% senior unsecured convertible notes due 2015, referred to herein as the “7% Notes”. The 7% Notes are convertible into common shares at a conversion price of $0.75 per share, subject to adjustment for certain events, including certain distributions by the Company of cash, debt and other assets, spin offs and other events. The 7% Notes are convertible at any time and if fully converted would result in the issuance of approximately 193.3 million newly issued common shares. The Investment Bank of Greece owns $100,000 outstanding principal amount of the 7% Notes and the remainder is owned by Focus Maritime Corp., a company controlled by Mr. Zolotas, the Company’s President and Chief Executive Officer. The proceeds of the 7% Notes were used in part to repay, in an amount of $20.0 million, a portion of existing indebtedness and the remaining proceeds are expected to be used for general corporate purposes and to fund vessel acquisitions. In November 2009, $20.0 million of the 7% Notes were converted into approximately 26.7 million common shares.
•	The Company’s existing syndicate of lenders entered into a new $221.4 million facility agreement, dated October 13, 2009, referred to herein as the “Facility Agreement”, by and among the Company and the banks identified therein in order to refinance the Company’s existing revolving credit facility. The Company applied $20.0 million of the proceeds of the issuance of the 7% Notes to reduce the outstanding amount under the Facility Agreement to $201.4 million, and the Facility Agreement has been structured to provide favorable amortization, with $38.0 million payable in 19 quarterly installments of $2.0 million each, and a $163.4 million repayment due in October 2014, as well as providing for the waiver of all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months, to allow a sufficient period of time for new management to implement its business strategy. The remainder of the 7% Notes proceeds are expected to be used for general corporate purposes, to fund vessel acquisitions and to partially repay existing indebtedness. In connection with the execution of the Facility Agreement, Investment Bank of Greece received warrants to purchase up to 5 million common shares at an exercise price of $2.00 per share, with an expiration date of October 13, 2015.

          As a result of the above transactions (not including the disposition of the two container vessels described below), the Company’s 14-vessel fleet as of October 14, 2009 consisted of:

• four Panamax tankers;

• five medium range (MR) tankers;

• two container vessels (2,917 twenty-foot equivalent units, or TEUs); and

• three Capesize drybulk vessels (460,074 deadweight tons, or dwt).

As of January 21, 2010, after giving effect to the disposition of the two container vessels, five of the Company’s 12 vessels are secured on period charters. Charters for two of the Company’s products tanker vessels, as well as one Capesize vessel, currently have profit-sharing components.

Change of the Board and New Management

          The new management of the Company is led by Nicholas G. Fistes as Executive Director (Chairman), Michail S. Zolotas as Executive Director (Deputy Chairman), President and Chief Executive Officer, and Allan L. Shaw as Executive Director and Chief Financial Officer. The new management team intends to build the Company’s technical and commercial group and incorporate the existing team into their operations.

          Currently, the members of the Company’s Board of Directors are as follows:

• Mr. Nicholas G. Fistes — Executive Director (Chairman)

• Mr. Michail S. Zolotas — Executive Director (Deputy Chairman), President and Chief Executive Officer

• Mr. Allan L. Shaw — Executive Director and Chief Financial Officer

• Mr. Masaaki Kohsaka — Non-Executive Director

• Mr. Spyros Gianniotis — Non-Executive Director

• Mr. Apostolos I. Tsitsirakis — Non-Executive Director

• Mr. Panagiotis Skiadas — Non-Executive Director

          As a result of the recapitalization, the new members of management are currently implementing a business strategy to:

1. Aggressively grow the Company’s fleet by acquiring vessels across two major shipping markets (drybulk or product tankers) in order to build a core fleet of 20-30 owned vessels, in the near- and medium-term.

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2.	Optimize the appropriate revenue mix to maintain a portfolio of period or spot charters, to provide stability of future cash flows on wet and dry shipping markets.
3.	Create a diverse customer base with established reliable charterers in order to reduce counterparty risk.
4.	Integrate shared organization by bringing in quality in-house technical managers to ensure efficient operations with the view to reducing vessel operating expenses and maximizing fleet utilization.
5.	Focus on an opportunistic sale and purchase strategy to capitalize on dislocation within the wet and dry shipping markets.

Share-Based Compensation

          In connection with the recapitalization, the Company reviewed the restricted common share award agreements entered into under the Company’s 2005 equity incentive plan and resolved that all unvested restricted common shares previously granted shall become vested. The Company also caused 300,000 options to purchase common shares previously granted to the Company’s former Chief Executive Officer, pursuant to the Option Agreement dated July 23, 2008, to be immediately and fully vested and are to remain exercisable through July 23, 2018. As a result, all unrecognized compensation expense, totalling $0.4 million has been recorded on October 13, 2009.

New Charter Party Agreement

          On November 5, 2009, the Company announced a two-year time charter beginning December 23, 2009 through December 30, 2011 (assuming the maximum option is chosen) for the 1993-built, 172,972 dwt Capesize tanker Australia at a net of commissions rate of $20,391 per day.

Non-Binding Letter of Intent

          On November 13, 2009, Grandunion entered into a non-binding letter of intent with the Company to drop down Newlead Shipping S.A., or Newlead Shipping, and four drybulk and two product tanker vessels identified below in a transaction valued at approximately $180.0 million, of which approximately $20.0 million will be paid through the issuance of the Company’s common shares at a price of $2.25 per share. The balance of the purchase price will be paid through the assumption of existing liabilities. The transaction is subject to board approval and consents from existing creditors. As of the date of filing this Report on Form 6-K, the documentation for this transaction had not been executed and accordingly, it has not closed. No assurance can be provided that this transaction will be closed and if it is closed in the form contemplated.

          Newlead Shipping is an integrated technical and commercial management company, appropriately licensed and staffed, providing a broad spectrum of technical and commercial management to all markets within the maritime industry. Newlead Shipping has the following accreditations:

• ISO 9001:2000 from American Bureau of Shipping for a quality management system, by consistently providing a service that meets customer and applicable statutory and regulatory requirements, and enhancing customer satisfaction through, among other things, processes for continual improvement.

• ISO 14001:2004 from American Bureau of Shipping for environmental management, including policy and objectives targeting legal and other requirements.

• Safety, Quality and Environmental accreditation from American Bureau of Shipping.

          Newlead Shipping’s management has broad expertise, including specialized knowledge required for managing oil tankers, gas carriers, chemical carriers and bulkers. Senior personnel have a record of successfully performing and consist of a pool of dedicated senior engineers and top-class masters.

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Commercial and Other Details

										Charter
										Party
										Expected
								Charter	Charter Party	End Date
	Year				Rate		Charter Party	Party	Expected	(Including
Vessel	Built		DWT		(USD)	Commissions	Commencement	Duration	End Date	Max. Option)
Drybulk Vessels Capesize
Grand Ocean		1990		149,498	15,000 1st year; 16,000 2nd year; 16,000 3rd option year	3.75% + 0.25%	2/10/2009	2 years +/- 60 days	Min. 12/10/2010 to Max. 4/10/2011	4/10/2012
Grand Venetico		1990		134,982	16,500 1st year; 18,500 balance; 18,500 option six months	3.75% + 0.25%	3/1/2009	Abt. 2.5 years +/- 60 days	Min. 7/10/2011 to Max. 11/10/2011	5/10/2012
Panamaxes
Grand Victoria		2002		75,966	18,000	3.75% + 1.25% + 1.25%	11/22/2009	Abt. 11 to abt. 13 mos.	Min. 10/7/2010 to Max. 1/6/2011	1/6/2011
Grand Rodosi		1990		68,788	10,200 net; plus profit sharing 50/50*	0.25%	7/22/2009	Abt. 3 years +/- 60 days	Min. 5/23/2012 to Max. 9/20/2012	9/20/2012
Product Tankers Handy size
Hiona		2003		37,337	19,500 plus profit sharing	1.25% + 1.25%	4/18/2008	36 months +/- 30 days Charterer’s option	Min. 3/18/2011 to Max. 5/18/2011	5/18/2011
Hiotissa		2004		37,330	19,500 plus profit sharing	1.25% + 1.25%	5/6/2008	36 months +/- 30 days Charterer’s option	Min. 4/6/2011 to Max. 6/6/2011	6/6/2011

                         *   Profit calculation: 86% of Cape Spot 4 TCE Avg. minus $10,200.

Exit from Container Market

          In January 2010, the Company sold the MSC Seine and the Saronikos Bridge for an aggregate purchase price resulting in gross proceeds to the Company of $13.0 million, payable in cash. The Saronikos Bridge was delivered to her new owners on January 7, 2010 and the MSC Seine was delivered on January 20, 2010.

          Each of the MSC Seine and the Saronikos Bridge is a 2,917 TEU container vessel built in 1990. As a result of the sale and delivery of these vessels, the Company has exited the container market.

FLEET

          Not including the dropdown of six vessels described above, following the closing of the recapitalization completed on October 13, 2009 and the disposition of the two container vessels in January 2010, we operate a fleet of nine product tankers and three drybulk vessels. Currently, five of our 12 vessels are secured on period charters with established international charterers. The charters for the product tanker vessels have remaining periods ranging from seven to 11 months. Charters for two of our product tanker vessels and one of our drybulk vessels currently have profit-sharing components. It is anticipated that we will have 18 vessels, after giving effect to the dropdown of six vessels.

				Net Daily
				Charter
Vessel Name	Size	Year Built	Charter Expiration	Hire Rate
Product Tanker Vessels
Altius	73,400 dwt	2004	Spot		—
Fortius	73,400 dwt	2004	Spot		—
Nordanvind	38,701 dwt	2001	Spot		—
Ostria (ex Bora)	38,701 dwt	2000	Spot		—
High Land	41,450 dwt	1992	Spot		—
High Rider	41,502 dwt	1991	Spot		—
Stena Compass	72,750 dwt	2006	August 2010	$	18,232.50
Stena Compassion	72,750 dwt	2006	December 2010	$	18,232.50
Chinook	38,701 dwt	2001	Spot		—
Drybulk Vessels
China	135,364 dwt	1992	March 2017	$	12,753
Australia	172,972 dwt	1993	December 2011	$	20,391	(maximum option)
Brazil	151,738 dwt	1995	February 2015	$	28,985	1st/2nd yr.

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Common Shares Outstanding

          As of January 26, 2010, there were 79,453,821 common shares outstanding. This amount includes the issuance of approximately 26.7 million common shares that were issued upon the conversion in November 2009 of $20.0 million of the 7% Notes.

Name Change and Amended Bye-Laws

          On December 4, 2009, at a special general meeting, the shareholders of the Company approved a name change of the Company from “Aries Maritime Holdings Limited” to “NewLead Holdings Ltd.” The name change became effective upon the filing by the Company of a Certificate of Incorporation of Name Change with the Bermuda Registrar of Companies on December 21, 2009, at which time the Company changed its trading symbol on the NASDAQ Stock Market to “NEWL”. In addition, upon shareholder approval also received at such special general meeting, the Company adopted a change to its bye-laws to permit written resolutions to be approved by a majority of the shareholders rather than unanimously. The Amended and Restated Bye-Laws are included with this Report on Form 6-K as Exhibit 3.1.

Results of operations

          The following discussion solely reflects results from continuing operations, other than as described in note 13, “Discontinued Operations”, of the notes to our condensed consolidated financial statements, unless otherwise noted.

Factors Affecting Results of Operations

          The Company believes the principal factors that will affect its future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which its vessels engage in business. Please read “Risk Factors” included in the Company’s 2008 annual report on Form 20-F with the Securities and Exchange Commission for a discussion of certain risks inherent in its business.

          The Company believes that the important measures for analyzing trends in its results of operations consist of the following:

• Market exposure: The Company manages the size and composition of its fleet by chartering its owned vessels to international charterers. The Company aims at achieving an appropriate balance between wet and dry vessels to diversify its market risk.

• Available days: Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

• Operating days: Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

• Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.

• TCE rates: Time Charter Equivalent, or TCE, rates are defined as voyage and time charter revenues, less voyage expenses during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts.

Voyage and Time Charter

          Revenues are driven primarily by the number of vessels in the fleet, the number of days during which such vessels operate and the amount of daily charter hire rates that the vessels earn under charters, which, in turn, are affected by a number of factors, including:

• the duration of the charters;

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• the level of spot market rates at the time of charters;

• decisions relating to vessel acquisitions and disposals;

• the amount of time spent positioning vessels;

• the amount of time that vessels spend in dry-dock undergoing repairs and upgrades;

• the age, condition and specifications of the vessels; and

• the aggregate level of supply and demand in the drybulk shipping industry.

          Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term, which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand, and many other factors that might be beyond the control of management.

Three months ended September 30, 2009 compared to three months ended September 30, 2008

          The following table presents consolidated revenue and expense information for the three months ended September 30, 2009 and 2008. This information was derived from the unaudited condensed consolidated revenue and expense accounts of the Company for the respective periods.

	Three months			Three months
	ended			ended
	September 30, 2009			September 30, 2008
(Expressed in thousands of U.S. dollars)	(unaudited)			(unaudited)
Operating revenues	$	12,167		$	21,509
Commissions		(233	)		(225	)
Voyage expenses		(4,698	)		(3,139	)
Vessel operating expenses		(12,933	)		(8,932	)
General and administrative expenses		(4,650	)		(2,043	)
Depreciation and amortization expenses		(5,560	)		(6,574	)
Impairment loss		(91,601	)		—
Management fees		(265	)		(458	)
Net operating (loss)/ income		(107,773	)		138
Interest and finance expenses, net		(3,342	)		(4,227	)
Interest income		2			—
Other (expenses)/ income, net		(24	)		28
Change in fair value of derivatives		247			(793	)
Net loss from continuing operations		(110,890	)		(4,854	)
Net (loss)/ income from discontinued operations		(410	)		579
Net loss	$	(111,300	)	$	(4,275	)

Set forth below are selected historical and statistical data for the Company that it believes may be useful in better understanding its financial position and results of operations.

	Three months ended
	September 30,
	2009			2008
FLEET DATA
Available days(1)		803			1,012
Operating days(2)		621			872
Fleet utilization(3)		77.3	%		86.2	%
Equivalent vessels(4)		79.3	%		100	%
AVERAGE DAILY RESULTS
Time Charter Equivalents(5)	$	9,675		$	13,861

1) Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.

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2)	Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
3)	Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning. Given the significant number of dry-docking days in the third quarter, fleet utilization for the three months ended September 30, 2009 and 2008 would be 61.4% and 86.2%, respectively, after giving effect to dry-docking.
4)	Equivalent vessels data is the available days of the fleet divided by the number of the calendar days in the respective period.
5)	Time Charter Equivalent, or TCE, rates are defined as voyage and time charter revenues, less voyage expenses during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts.

Revenues

          Total revenues of $12.2 million from continuing operations were recorded during the three months ended September 30, 2009, compared to $21.5 million recorded during the equivalent period in 2008. For the three months ended September 30, 2009 and September 30, 2008, the Company’s TCE rates were $9,675 per day and $13,861 per day, respectively. The decreases in revenues and TCE rates were attributable primarily to the absence of a coherent chartering policy as well as sub par technical management. We were also adversely affected by the general economic environment and market for tankers that resulted in lower charter/spot rates as well as lower utilization. Furthermore, the increased schedule of out-of-service days attributable to dry-docking and repairs adversely impacted revenue. For example, the MSC Seine did not generate revenue for almost two months during the quarter and the Nordanvind has not been generating revenue for the whole of 2009, as the vessel required a major overhaul of repairs and dry-docking. Moreover, the Company had increased scheduled dry-dockings and repairs during the period. In total, eight out of 11 vessels operated in the spot market during the quarter.

          Fleet utilization from continuing operations prior to giving effect to dry-docking for the three months ended September 30, 2009 was 77.3%, compared to 86.2% for the three months ended September 30, 2008. Given the significant number of dry-docking days in the third quarter, fleet utilization for the three months ended September 30, 2009 and 2008 was 61.4% and 86.2%, respectively, after giving effect to dry-docking.

          Of the total revenue from continuing operations earned by our vessels during the three months ended September 30, 2009, 76.2% (equivalent period in 2008: 66.4% ) was earned by our product tankers and 23.8% (equivalent period in 2008: 33.6%) by our container vessels.

Commissions

          Chartering commissions increased by approximately 4.5% to $0.23 million during the three months ended September 30, 2009, compared to $0.22 million during the equivalent period in 2008.

Voyage Expenses

          Voyage expenses increased by approximately 51.6% to $4.7 million during the three months ended September 30, 2009, compared to $3.1 million during the equivalent period in 2008. The increase was primary attributable to bunker expenses totalling $3.9 million as more of our vessels traded in the spot market with low revenue spot daily rates, and the increase in off-hire days.

Vessel operating expenses

          Vessel operating expenses increased by approximately 44.9% to $12.9 million during the three months ended September 30, 2009, compared to $8.9 million during the equivalent period in 2008. During the three months ended September 30, 2008, we had fleet running costs partially reduced by the contribution of Magnus Carriers Corporation, a related party referred to herein as “Magnus Carriers”, under the budget variance sharing arrangement, under the ship management agreements between certain of our vessel-owning subsidiaries and Magnus Carriers. Magnus Carriers’ contribution to vessels operating expenses amounted to $1.7 million for the three months ended September 30, 2008. For the three months ended September 30, 2009, the reduction was minor and amounted to $0.03 million. This agreement has been terminated. Moreover, during the three months ended September 30, 2009 vessel operating expenses included a provision for claims of $3.6 million. There had been no provision for claims accounted

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for during the equivalent period in 2008. Excluding Magnus Carriers’ contribution and provision for claims, vessel operating expenses decreased by approximately 12.3% to $9.3 million during the three months ended September 30, 2009, compared to $10.6 million during the equivalent period in 2008. This decrease was mainly due to the high amount of repairs incurred during the three months ended September 30, 2008 for certain vessels (the High Land, High Rider, MSC Seine and Ostria) and also due to the dry-docking that the Saronikos Bridge went through during the same period. The aforementioned decrease was partially offset by the Nordanvind, which has been idle since December 2008 due to dry-docking and repair expenses.

          Of the total vessel operating expenses from continuing operations during the three months ended September 30, 2009, 83.2% was incurred by our product tankers and 16.8% by our container vessels, and during the equivalent period in 2008, 55.6% was incurred by our product tankers and 44.4% by our container vessels.

General and Administrative Expenses

          General and administrative expenses increased by approximately 135% to $4.7 million during the three months ended September 30, 2009, compared to $2.0 million during the equivalent period in 2008. This increase was primarily due to transaction costs associated with the recapitalization and preparing for the completion of the recapitalization (see note 14). Total transaction costs during the three months ended September 30, 2009 amounted to $2.6 million.

Depreciation and Amortization

          Depreciation and amortization decreased by approximately 15.2% to $5.6 million during the three months ended September 30, 2009, compared to $6.6 million during the equivalent period in 2008. This decrease was primarily due to the sale of three vessels in 2008 and one vessel in 2009.

Impairment Loss

          Pursuant to the standard requirements, we evaluated the carrying amounts of our long-lived assets in light of current market conditions. The total impairment loss for the three months ended September 30, 2009 amounted to $91.6 million. No impairment loss was recorded in the three months ended September 30, 2008. The significant factors and assumptions we used in undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, dry-docking costs, operating expenses and management fee estimates. Revenues assumptions were based on a number factors for the remaining life of the vessel, including: (a) contracted time charter rates up to the end of life of the current contract of each vessel; (b) historical average time charter rates; (c) current market conditions; and (d) the respective vessel’s age, as well as considerations such as scheduled and unscheduled off-hire revenues based on historical experience. Operating expenses, assumptions included an annual escalation factor, while estimated fair market values for each vessel were obtained by third-party valuations for which management assumes responsibility for all assumptions and judgements used. All estimates used and assumptions made were in accordance with the Company’s historical experience of the shipping industry.

Management Fees

          Management fees paid to related parties decreased by approximately 40% to $0.3 million for the three months ended September 30, 2009, compared to $0.5 million during the equivalent period in 2008. This decrease was primarily due to the termination of commercial ship management agreements with Magnus Carriers on May 1, 2009.

Interest and Finance Expense

          Total interest and finance expense decreased by approximately 21.4% to $3.3 million during the three months ended September 30, 2009, compared to $4.2 million during the equivalent period in 2008. Interest expense on loans decreased by approximately 11.8% to $3.0 million, compared to $3.4 million during the equivalent period in 2008. This decrease was primarily due to lower interest rates and the repayment of the loan due to the sale of three vessels in 2008 and one vessel in 2009. Interest and finance expenses for both three months ended September 30, 2009 and 2008 include amortization of deferred financing costs amounting to $0.2 million and $0.7 million, respectively.

Change in Fair Value of Derivatives

          The marking to market of our seven interest rate swaps in effect as of September 30, 2009, resulted in an unrealized gain of $0.2 million, compared to an unrealized loss during the equivalent period in 2008 of $0.8 million, due to the change in fair value over the period. The marking to market valuation of this set of seven interest rate swaps as of September 30, 2009 and September 30, 2008, resulted in a liability of $11.1 million and $12.5 million, respectively.

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Net loss

          Net loss from continuing operations amounted to $110.9 million during the three months ended September 30, 2009, compared to a net loss of $4.9 million during the equivalent period in 2008. This increase in net loss was primarily attributable to the impairment loss of $91.6 million that was recognized during the three months ended September 30, 2009, as well as lower charter rates applicable for our MR tankers, and the out-of-service days related to the MSC Seine and the Nordanvind. Moreover, this increase in net loss reflects the generally slower economic environment and not as favorable market conditions for our tankers that lead to low fleet utilization, high voyage expenses and claims. Excluding the impairment loss, claims ($3.6 million) and transaction costs ($2.6 million), net loss from continuing operations amounted to $13.1 million for the three months ended September 30, 2009, compared to $4.9 million for the three months ended September 30, 2008.

          Net loss from discontinued operations was $0.4 million during the three months ended September 30, 2009, compared to a net gain of $0.6 million during the equivalent period in 2008.

Nine months ended September 30, 2009 compared to nine months ended September 30, 2008

          The following table presents consolidated revenue and expense information for the nine months ended September 30, 2009 and 2008. This information was derived from the Company’s the unaudited condensed consolidated revenue and expense accounts for the respective periods.

	Nine months			Nine months
	ended			ended
	September 30, 2009			September 30, 2008
(Expressed in thousands of U.S. dollars)	(unaudited)			(unaudited)
Operating revenues	$	42,898		$	58,085
Commissions		(831	)		(432	)
Voyage expenses		(7,990	)		(5,404	)
Vessel operating expenses		(26,445	)		(21,419	)
General and administrative expenses		(7,772	)		(5,932	)
Depreciation and amortization expenses		(16,274	)		(19,145	)
Impairment loss		(91,601	)		—
Management fees		(931	)		(1,396	)
Net operating (loss)/ income		(108,946	)		4,357
Interest and finance expenses, net		(10,336	)		(11,904	)
Interest income		9			168
Other expenses, net		(34	)		(23	)
Change in fair value of derivatives		1,385			(761	)
Net loss from continuing operations		(117,922	)		(8,163	)
Net (loss)/ income from discontinued operations		(5,840	)		10,177
Net (loss)/ income	$	(123,762	)	$	2,014

Set forth below are selected historical and statistical data for the Company that it believes may be useful in better understanding its financial position and results of operations.

	Nine months ended
	September 30,
	2009			2008
FLEET DATA
Available days		2,727			2,965
Operating days		2,278			2,690
Fleet utilization(1)		83.5	%		90.7	%
Equivalent vessels		90.8	%		98.4	%
AVERAGE DAILY RESULTS
Time Charter Equivalents	$	13,064		$	16,149

(1) Given the significant number of dry-docking days in the third quarter, fleet utilization for the nine months ended September 30, 2009 and 2008 would be 75.9% and 89.3%, respectively, after giving effect to dry-docking.

Revenues

     Total revenues of $42.9 million from continuing operations were recorded during the nine months ended September 30, 2009, compared to $58.1 million recorded during the equivalent period in 2008. For the nine months ended September 30, 2009

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and September 30, 2008, the Company’s TCE rates were $13,064 per day and $16,149 per day, respectively. The decreases in revenues and TCE rates were attributable primarily to the absence of a coherent chartering policy as well as sub par technical management. We were also adversely affected by the general economic environment and market for tankers that resulted in lower charter/spot rates as well as lower utilization. Furthermore, the increased schedule of out-of-service days attributable to dry-docking and repairs adversely impacted revenue. For example, the MSC Seine did not generate revenue for almost two months during the third quarter and the Nordanvind has not been generating revenue for the whole of 2009, as the vessel required a major overhaul of repairs and dry-docking. Moreover, the Company had increased scheduled dry-dockings and repairs during the nine months. In total, as of September 30, 2009, eight out of 11 vessels operated in the spot market.

          Fleet utilization, prior to giving effect to dry-docking, for the nine months ended September 30, 2009 was 83.5%, compared to 90.7% for the nine months ended September 30, 2008. Given the significant number of dry-docking days during the nine months, fleet utilization for the nine months ended September 30, 2009 and 2008 would be 75.9% and 89.3%, respectively, after giving effect to dry-docking.

          Of the total revenue earned from continuing operations by our vessels during the nine months ended September 30, 2009, 74.2% (2008: 72.7%) was earned by our product tankers and 25.8% (2008: 27.3%) by our container vessels.

Commissions

          Chartering commissions increased by approximately 100% to $0.8 million during the nine months ended September 30, 2009, compared to $0.4 million during the equivalent period in 2008. The increase is primary attributable to a higher commission paid due to eight of our 11 vessels being on spot charters.

Voyage Expenses

          Voyage expenses increased by approximately 48.1% to $8.0 million during the nine months ended September 30, 2009, compared to $5.4 million during the equivalent period in 2008. The increase was primary attributable to bunker expenses totalling $6.3 million, as more of our vessels traded in the spot market with low revenue spot daily rates, and the increase in off-hire days.

Vessel operating expenses

          Vessel operating expenses increased by approximately 23.4% to $26.4 million during the nine months ended September 30, 2009, compared to $21.4 million during the equivalent period in 2008. During the nine months ended September 30, 2008, we had fleet running costs partially reduced by Magnus Carriers’ contribution under the budget variance sharing arrangement, under the ship management agreements between certain of our vessel-owning subsidiaries and Magnus Carriers. Magnus Carriers’ contribution to vessel operating expenses amounted to $1.7 million for the nine months ended September 30, 2008. For the nine months ended September 30, 2009, the reduction was minor and amounted to $0.4 million from continuing operations. This agreement has been terminated. Moreover, for the nine months ended September 30, 2009 vessel operating expenses included a provision for claims of $3.6 million. There has been no provision for claims accounted for during the equivalent period in 2008. Excluding Magnus Carriers’ contribution and provision for claims, vessel operating expenses remained approximately the same and amounted to $23.2 million during the nine months ended September 30, 2009, compared to $23.1 million during the equivalent period in 2008.

          Of the total vessel operating expenses during the nine months ended September 30, 2009, 80.5% were incurred by our product tankers and 19.5% by our container vessels, and for the nine months ended September 30, 2008, 64.5% were incurred by our product tankers and 35.5% by our container vessels.

General and Administrative Expenses

          General and administrative expenses increased by approximately 32.2% to $7.8 million during the nine months ended September 30, 2009, compared to $5.9 million during the equivalent period in 2008. This increase was primarily due to transaction costs associated with the recapitalization and preparing for the completion of the recapitalization (see note 14). Total transaction cost during the nine months ended September 30, 2009 amounted to $2.6 million.

Depreciation and Amortization

          Depreciation and amortization decreased by approximately 14.7% to $16.3 million during the nine months ended September 30, 2009, compared to $19.1 million during the equivalent period in 2008. This decrease was primarily due to the sale of three vessels in 2008 and one vessel in 2009.

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Impairment Loss

          Pursuant to the standard requirements, we evaluated the carrying amounts of our long-lived assets in light of current market conditions. The total impairment loss for the nine months ended September 30, 2009 amounted to $91.6 million. No impairment loss was recorded in the nine months ended September 30, 2008. The significant factors and assumptions we used in undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, dry-docking costs, operating expenses and management fee estimates. Revenues assumptions were based on a number factors for the remaining life of the vessel including: (a) contracted time charter rates up to the end of life of the current contract of each vessel; (b) historical average time charter rates; (c) current market conditions; and (d) the respective vessel’s age, as well as considerations such as scheduled and unscheduled off-hire revenues based on historical experience. Operating expenses, assumptions included an annual escalation factor, while estimated fair market values for each vessel were obtained by third-party valuations for which management assumes responsibility for all assumptions and judgements used. All estimates used and assumptions made were in accordance with the Company’s historical experience of the shipping industry.

Management Fees

          Management fees paid to related parties decreased by approximately 35.7% to $0.9 million during the nine months ended September 30, 2009, compared to $1.4 million during the equivalent period in 2008. This decrease was primarily due to the termination of commercial ship management agreements with Magnus Carriers on May 1, 2009.

Interest and Finance Expense

          Total interest and finance expense decreased by approximately 13.4% to $10.3 million during the nine months ended September 30, 2009, compared to $11.9 million during the equivalent period in 2008. Interest expense on loans decreased by approximately 6.9% to $9.5 million, compared to $10.2 million for the nine months ended September 30, 2008. This decrease was primarily due to lower interest rates (ranging from 1.5% to 0.276% per annum) and the repayment of the loan due to the sale of three vessels in 2008 and one vessel in 2009. Interest and finance expenses for both of the nine months ended September 30, 2009 and 2008 include amortization of deferred financing costs amounting to $0.6 million and $1.1 million, respectively.

Change in Fair Value of Derivatives

          The marking to market of our seven interest rate swaps that were in effect as of September 30, 2009 resulted in an unrealized gain of $1.4 million, compared to an unrealized loss for the nine months ended September 30, 2008 of $0.8 million, due to the change in fair value over the period. The marking to market valuation of this set of seven interest rate swaps as of September 30, 2009 and September 30, 2008 resulted in a liability of $11.1 million and $12.5 million, respectively.

Net Income / (loss)

          Net loss from continuing operations amounted to $117.9 million during the nine months ended September 30, 2009, compared to a net loss of $8.2 million during the equivalent period in 2008. This increase in net loss was primarily attributable to the impairment loss of $91.6 million that was recognized during the nine months ended September 30, 2009, as well as lower charter rates applicable for our MR tankers, and the out-of-service days related to the MSC Seine and Nordanvind. Moreover, this increase in net loss reflects a generally slower economic environment and not as favorable market conditions for our tankers that lead to low fleet utilization, high voyage expenses and claims. Excluding the impairment loss, claims ($3.6 million) and transaction costs, net loss from continuing operations amounted to $20.1 million for the nine months ended September 30, 2009 compared to $8.2 million for the nine months ended September 30, 2008.

          Net loss from discontinued operations was $5.8 million during the nine months ended September 30, 2009 compared to a net gain of $10.2 million during the equivalent period in 2008. This decrease was primarily attributable to the sale of the Ocean Hope amounting to a loss of $5.6 million during the nine months ended September 30, 2009.

Liquidity and Capital Resources

Overview

          We operate in a capital intensive industry. Our principal sources of liquidity are cash flows from operations, equity and debt. Our future liquidity requirements relate to: (i) our operating expenses; (ii) quarterly payments of interest and other debt-related expenses and the repayment of principal; (iii) maintenance of financial covenants under our fully revolving credit facility agreement; (iv) payments for dry-docking and special survey costs; and (v) maintenance of cash reserves to provide for contingencies.

          As of September 30, 2009 and December 31, 2008, we had a working capital deficit of $244.4 million and $231.7 million, respectively, which include our total outstanding borrowing of $221.4 million and $223.7 million, respectively, reflected as current portion of long-term debt.

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          As further explained below under “Indebtedness”, in connection with the recapitalization, the Company was provided a waiver of all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months to allow a sufficient period of time for new management to implement its business strategy.

          During the nine months ended September 30, 2009, we were in breach of certain financial covenants of our credit facility as such ratio is defined in the original facility agreement and the Fifth Supplemental Agreement. As part of the waiver received with the Fifth Supplemental Agreement, we were required, among other covenants, to reduce the outstanding borrowings under the original facility agreement from $223.7 million to $200.0 million. In June 2009, we sold one of our vessels, the Ocean Hope for net proceeds of $2.3 million and reduced our outstanding borrowings to $221.4 million.

          From the months following the sale of the Ocean Hope until the recapitalization, the Company was in negotiations with its lenders to enter into a new $221.4 million facility agreement to refinance the Company’s existing revolving credit facility. The execution of this agreement also coincided with the Company’s assumption of a $37.4 million credit facility in relation to the three vessels transferred to the Company as part of the $400.0 million recapitalization.

          On October 13, 2009, as previously discussed under “Recent Developments”, the following actions occurred in connection with the $400.0 million recapitalization:

• The Company’s existing syndicate of lenders entered into a new $221.4 million Facility Agreement to refinance the Company’s existing revolving credit facility. Upon its refinancing, the financial covenants in the Facility Agreement were waived (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months. The amount outstanding under the Facility Agreement is currently $191.4 million.

• The issuance of $145.0 million of the 7% Notes, that are convertible into common shares at a conversion price of $0.75 per common share. There are currently $125.0 million of 7% Notes outstanding.

• The Company assumed a $37.4 million credit facility in relation to the three vessels transferred to the Company as part of the recapitalization. Pursuant to a Share Purchase Agreement entered into on September 16, 2009, Grandunion, a company controlled by Michail S. Zolotas and Nicholas G. Fistes, acquired 18,977,778 newly issued common shares of the Company in exchange for three drybulk carriers. Of such shares, 2,666,667 were transferred to Rocket Marine, a company controlled by two former directors and principal shareholders in the Company, in exchange for Rocket Marine and its affiliates entering into a voting agreement with Grandunion. Subsequent to its assumption, this facility has been, and continues to be, periodically paid down and drawn upon to minimize the Company’s cost of capital. As of January 26, 2010, there was no outstanding balance under this facility.

The following table below summarizes the cash flows from our operations for each of the nine months ended September 30, 2009 and 2008:

	Nine months ended
	September 30,
	2009			2008
Net cash (used in)/ provided by operating activities	$	(3,945	)	$	1,520
Net cash provided by investing activities		2,216			61,093
Net cash used in financing activities		(2,280	)		(71,476	)
Net decrease in cash and cash equivalents		(4,009	)		(8,863	)
Cash and cash equivalents, beginning of the period		4,009			12,444
Cash and cash equivalents, end of period	$	—		$	3,581

Cash Flows

          For the nine months ended September 30, 2009, our net cash used in operating activities decreased 360% to $3.9 million, compared to net cash provided by operating activities of $1.5 million during the nine months ended September 30, 2008. This decrease was due primarily to $3.6 million in claims provided in the three months ended September 30, 2009 and the change in working capital.

          For the nine months ended September 30, 2009, our net cash provided by investing activities decreased 96.4% to $2.2 million, compared to $61.1 million during the nine months ended September 30, 2008. This decrease was due primarily to vessel disposals amounting to $59.6 million during the nine months ended September 30, 2008 and one vessel disposal for the nine months ended September 30, 2009.

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          For the nine months ended September 30, 2009, our net cash used in financing activities decreased 96.8% to $2.3 million, compared to $71.5 million during the nine months ended September 30, 2008. This decrease was due primarily to repayments under our credit facility amounting to $61.1 million for the nine months ended September 30, 2008 and $2.3 million for the nine months ended September 30, 2009.

Indebtedness

          As of January 26, 2010, we had total outstanding indebtedness of approximately $316.4 million, compared to $221.4 million, and $223.7 million as of September 30, 2009 and 2008, respectively.

          On October 13, 2009, the Company assumed a $37.4 million credit facility in relation to the three vessels transferred to it as part of the recapitalization. The $37.4 million credit facility is payable in twenty consecutive quarterly installments of $1.56 million and a $6.2 million repayment due in October 2014. Subsequent to its assumption, this facility has been, and continues to be, periodically paid down and drawn upon to minimize the Company’s cost of capital. As of January 26, 2010, there was no outstanding balance under this facility.

          On October 13, 2009, the Company’s existing syndicate of lenders entered into a new $221.4 million facility agreement, referred to herein as the “Facility Agreement”, by and among the Company and the banks identified therein in order to refinance the Company’s existing revolving credit facility. Prior to the refinancing discussed under “Recent Developments”, we had entered into a $360.0 million fully revolving credit facility in April 2006 with Bank of Scotland and Nordea Bank Finland as lead arrangers and Bank of Scotland as Agent. Upon its execution in 2006, we used the fully revolving credit facility to (i) refinance our old $140.0 million drawn term loan; (ii) refinance our old revolving acquisition facility, which was drawn to the extent of $43.8 million at December 31, 2005 and which was further drawn in February 2006 in the amount of $50.5 million to complete the purchase of the Stena Compass; and (iii) to complete the purchase of the Stena Compassion. During 2008, the Company was in breach of its covenants under the fully revolving credit facility. The Company then entered into a Fifth Supplemental Agreement, in connection with the temporary relaxation of the interest coverage covenant of the facility, with an increased margin of 1.75% above LIBOR applied during September 30, 2009 and until the refinancing on October 13, 2009. Although we paid an increased interest margin, rates overall have decreased. As of September 30, 2009, borrowings under our original fully revolving credit facility bore an annual effective interest rate, including the margin of 5.07%.

          The current Facility Agreement has been structured to provide favorable amortization, with $38.0 million payable in 19 quarterly instalments of $2.0 million each, and a $163.4 million repayment due in October 2014. Of the proceeds of the issuance of the 7% Notes, $20.0 million was applied to the Facility Agreement, such that there is currently $191.4 million outstanding under the Facility Agreement.

          Our obligations under the new Facility Agreement were secured by a first priority security interest, subject to permitted liens, in all vessels in our fleet and any other vessels we subsequently acquire. In addition, the lenders will have a first priority security interest in all earnings from and insurances on our vessels, all existing and future charters relating to our vessels, our ship management agreements and all equity interests in our subsidiaries. Our obligations under the new Facility Agreement are also guaranteed by all subsidiaries that have an ownership interest in any of our vessels.

          As explained further below, the new Facility Agreement bears an increased margin of 2.75% above LIBOR up and until the original maturity date, April 6, 2011.

          Under the new terms of the Facility Agreement, amounts drawn bear interest at an annual rate equal to LIBOR plus a margin equal to:

• 1.75% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is equal to or greater than and 50%;

• 2.75% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is equal to or greater than 27.5% but less than 50%; and

• 3.25% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is less than 27.5%.

          The new Facility Agreement requires us to adhere to certain financial covenants as of the end of each fiscal quarter, including the following:

• our shareholders’ equity as a percentage of our total assets, adjusting the book value of our fleet to its market value, must be no less than:

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(a) 25% from the financial quarter ending September 30, 2012 until June 30, 2013; and

(b) 30% from the financial quarter ending September 30, 2013 onwards.

• maintain, on a consolidated basis on each financial quarter, working capital of not less than zero dollars ($0);

• the ratio of EBITDA (earnings before interest, taxes, depreciation and amortization) to interest expense must be no less than;

(a) 2.00 to 1.00 from the financial quarter day ending September 30, 2012 until June 30, 2013; and

(b) 2.50 to 1.00 from the financial quarter day ending September 30, 2013 onwards.

          As a result to the recapitalization, our lenders provided us with a waiver of all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months to allow a sufficient period of time for new management to implement its business strategy.

          As of September 30, 2009, and until the recapitalization on October 13, 2009, we were in breach of the following covenants:

• An adjusted equity ratio of not less than 35%;

• An interest coverage ratio (as defined in the facility agreement) of not less than 3.00 to 1.00;

• The reduction of outstanding borrowings to $200.0 million in accordance with the Fifth Supplemental Agreement;

• A working capital balance, including the $221.4 million of debt reflected as current, of not less than $0; and

• The minimum liquidity requirement consisting of free cash and cash equivalents.

          In connection with the recapitalization, the Company issued $145.0 million in aggregate principal amount of 7% senior unsecured convertible notes due 2015. The 7% Notes are convertible into common shares at a conversion price of $0.75 per share, subject to adjustment for certain events, including certain distributions by the Company of cash, debt and other assets, spin offs and other events. The issuance of the 7% Notes was pursuant to the Indenture dated October 13, 2009 between the Company and Marfin Egnatia Bank S.A., and the Note Purchase Agreement, executed by each of Investment Bank of Greece and Focus Maritime Corp. as purchasers. Currently, Investment Bank of Greece retains $100,000 outstanding principal amount of the 7% Notes and the remainder is owned by Focus Maritime Corp., a company controlled by Michail S. Zolotas our President and Chief Executive Officer. All of the outstanding 7% Notes owned by Focus Maritime Corp. were pledged to, and their acquisition was financed by, Marfin Egnatia Bank S.A. The proceeds of the 7% Notes were used in part to repay, in an amount of $20.0 million, a portion of existing indebtedness and the remaining proceeds are expected to be used for general corporate purposes and to fund vessel acquisitions. The Note Purchase Agreement and the Indenture with respect to the 7% Notes contain certain covenants, including limitations on the incurrence of additional indebtedness, except in connection with approved vessel acquisitions, and limitations on mergers and consolidations. In connection with the issuance of the 7% Notes, the Company entered into a Registration Rights Agreement providing the holders of the 7% Notes with certain demand and other registration rights for the common shares underlying the 7% Notes. In November 2009, Focus Maritime Corp. converted $20.0 million of the 7% Notes into approximately 26.67 million new common shares. Accordingly, in the aggregate, $125.0 million of the 7% Notes remain outstanding.

          We use interest rate swaps to swap our floating rate interest payment obligations for fixed rate obligations. For additional information regarding our interest rate swaps, please read “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Exposure” below.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Exposure

          Prior to the refinancing of our credit facility, as discussed above under “Recent Developments”, our debt obligations

14

under the then-existing facility agreement bore interest at LIBOR plus a margin ranging from 0.276% to 1.5% per annum. With the recapitalization and refinancing of the Facility Agreement, all financial covenants (excluding working capital and minimum liquidity covenants) under the Facility Agreement have been waived for a period ranging from 30 to 36 months. However, increasing interest rates could adversely affect our future profitability.

          On July 5, 2006, we entered into interest rate swaps with five banks on identical terms. These five swaps have an effective date of July 3, 2006 and a maturity date of April 3, 2011. Under the terms of the swap agreements, we pay a fixed interest rate of 5.63% per annum on a total of $100.0 million of our long-term debt.

          On April 3, 2008, we entered into a floored swap transaction with one bank and a simultaneous swap and cap transaction with another bank. These two synthetic swaps have an effective date of April 3, 2008 and maturity dates of April 3, 2011 and April 4, 2011, respectively. Under the terms of the floored swap agreement, we pay a fixed interest rate of 4.285% per annum on a total of $23.3 million of our long term debt. Under the terms of the swap and cap transactions, we pay a fixed interest rate of 4.14% on a total of $23.3 million of our long-term debt and we have limited our interest rate exposure to 4.14% on an additional amount of $23.3 million.

          A 100 basis point increase in LIBOR would have resulted in an increase of approximately $0.2 million in our interest expense on the unhedged element of drawings under the terms of our original credit facility for the nine months ended September 30, 2009.

          In connection with the recapitalization, we entered into an interest rate swap with Marfin Egnatia Bank. This swap has an effective date of September 2, 2009 and a maturity date of September 2, 2014. Under the terms of the swap agreement, we pay a fixed interest rate of 4.08% per annum on a total of $37.4 million of our long-term debt.

Foreign Exchange Rate Exposure

          Our vessel-owning subsidiaries generate revenues in U.S. dollars but incur a portion of their vessel operating expenses, and we incur a portion of our general and administrative costs, in other currencies, primarily Euros.

          We monitor trends in foreign exchange rates closely and actively manage our exposure to foreign exchange rates. We maintain foreign currency accounts and buy foreign currency in anticipation of our future requirements in an effort to manage foreign exchange risk. During the nine months ended September 30, 2009, the value of the U.S. dollar reached highs of $1.50 and lows of $1.26 compared to the Euro, and as a result, an adverse or positive movement could increase or decrease operating and general and administrative expenses. During the three and nine months ended September 30, 2009, the effect was minimal.

Off-Balance Sheet Arrangements

          We do not have any transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

Commitments and Grants

          In connection with the recapitalization, the Company entered into an employment agreement with its Chief Financial Officer, for a term of three years, subject to a one year extension, that provides for an annual salary, along with discretionary and guaranteed bonus compensation for the first year. Pursuant to the agreement, the officer received (i) 2,000,000 restricted common shares that are subject to vesting and (ii) options to purchase 3,000,000 common shares, having an exercise price of $1.65, subject to vesting and having an expiration date of October 13, 2014. The agreement provides for certain payments and accelerated vesting of the equity compensation in certain circumstances, including change of control or termination without cause.

          In addition, for advisory services provided in connection with the recapitalization, in January 2010, the Company issued to a third party 2,500,000 common shares and a warrant to purchase 5,000,000 common shares. Furthermore, on November 13, 2009, the Company granted, in the aggregate, 180,000 restricted common shares (one time grant) and an annual cash compensation payment of $0.2 million, in the aggregate, to the independent directors, and on January 1, 2010, granted 80,000 common shares (the annual grant), respectively, to the independent directors.

Risk Factors

          The following risks relate principally to the industry in which we operate and our business in general. Other risks relate to the securities market and ownership of our common shares. If any of the circumstances or events described below actually arises

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or occurs, our business, results of operations, cash flows, financial condition and ability to pay dividends in the future could be materially adversely affected. In any such case, the market price of our common shares could decline, and you may lose all or part of your investment.

Industry Specific Risk Factors

Charter rates for product tankers and drybulk vessels have declined significantly and may decrease in the future, which may adversely affect our earnings

          The product tanker and drybulk vessel markets are cyclical with volatility in charter hire rates and industry profitability. The degree of charter hire rate volatility among different types of product tankers and drybulk vessels has varied widely and after reaching historical highs in mid-2008, charter hire rates for product tankers and drybulk vessels have declined significantly from historically high levels. If the shipping industry is depressed in the future when our charters expire, our revenues, earnings and available cash flow may be adversely affected. In addition, a decline in charter hire rates likely will cause the value of our vessels to decline. Two of our period charters (two product tankers) are scheduled to expire during 2010. In addition, seven of our product tankers are currently in the spot market. We cannot assure you that we will be able to successfully charter these vessels in the future or renew our existing charters at rates sufficient to allow us to operate our business profitably or meet our obligations. Our ability to re-charter these vessels on the expiration or termination of our current charters, the charter rates payable under any replacement charters and vessel values will depend upon, among other things, economic conditions in the product tanker markets at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for oil and oil products. The factors affecting the supply and demand for product tankers and drybulk vessels are outside of our control and are unpredictable. The nature, timing, direction and degree of changes in industry conditions are also unpredictable.

          The factors that influence the demand for vessel capacity include:

• demand for oil and oil products;

• supply of oil and oil products;

• regional availability of refining capacity;

• the globalization of manufacturing;

• global and regional economic and political conditions;

• developments in international trade;

• changes in seaborne and other transportation patterns, including changes in the distances over which cargoes are transported;

• environmental and other regulatory developments;

• currency exchange rates; and

• weather.

          The factors that influence the supply of vessel capacity include:

• the number of newbuilding deliveries;

• the scrapping rate of older vessels;

• the price of steel and vessel equipment;

• changes in environmental and other regulations that may limit the useful lives of vessels;

• the number of vessels that are out of service; and

• port or canal congestion.

          If the number of new vessels delivered exceeds the number of vessels being scrapped and lost, vessel capacity will increase. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline.

The downturns in the product tankers and drybulk vessels charter markets may have an adverse effect on our earnings, affect compliance with our loan covenants and our ability to pay dividends if reinstated in the future.

     Charter rates for product tankers have declined sharply since the highs of 2008. For example, the Baltic Clean Tankers

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Index (BCTI), a measure of international clean tanker routes and a selection of basket and individual TCEs, dropped from 969 points in 2008 to 449 points in 2009. The downturn resulted in lower operating revenues for the product tankers charter markets. According to industry sources, the products tanker market did not perform well during 2009, with chartering markets in the Mediterranean, United Kingdom Channel and Caribbean flirting with levels below operating costs throughout. The dirty products market has been especially downbeat, with earnings remaining below $10,000/day for much of 2009. The clean market initially offered some resistance to the slowdown in oil demand, but as the fleet has continued to grow, the availability of spot tonnage soon outstripped demand, despite up to 30% of the Large Range 2 (LR2) fleet being tied up for short-term floating storage over the summer. The decline in charter rates in the product tanker market has resulted in a commensurate decline in our tanker vessel values, which in turn affects our cash flows and liquidity.

     If the current low charter rates in the product tanker and drybulk vessels markets continue through any significant period in 2010, when time charters for our two vessels (two product tankers) that are employed on time charter expire, and we are consequently exposed to then-prevailing charter rates, our earnings may be adversely affected. If these trends continue, in order to remain viable, we may have to extend the period during which we suspend dividend payments and/or sell vessels in our fleet.

     Our impairment analysis as of September 30, 2009 and 2008 resulted in an impairment loss of $91,601 and $0, respectively. However, the current assumptions used and the estimates made are highly subjective, and could be negatively impacted by further significant deterioration in charter rates or vessel utilization over the remaining life of the vessels which could require the Company to record a material impairment charge in future periods.

A further economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations.

     We anticipate that a significant number of the port calls made by our vessels will continue to involve the loading or discharging of commodities in ports in the Asia Pacific region. As a result, negative changes in economic conditions in any Asia Pacific country, particularly in China, may exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations, as well as our future prospects. In recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product, which has had a significant impact on shipping demand. This rate of growth declined significantly in the second half of 2008 and it is likely that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economic growth in the near future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. In late 2008, China announced a $586.0 billion stimulus package aimed in part at increasing investment and consumer spending and maintaining export growth in response to the recent slowdown in its economic growth. Our business, financial condition and results of operations, as well as our future prospects, will likely be materially and adversely affected by a further economic downturn in any of these countries.

Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.

     The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development (OECD) in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. If the Chinese government does not continue to pursue a policy of economic reform, the level of imports to and exports from China could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could, adversely affect our business, operating results and financial condition.

The value of our vessels may fluctuate, which may adversely affect our liquidity.

     Vessel values can fluctuate substantially over time due to a number of different factors, including:

• general economic and market conditions affecting the shipping industry;

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• competition from other shipping companies;

• the types and sizes of available vessels;

• the availability of other modes of transportation;

• increases in the supply of vessel capacity;

• the cost of newbuildings;

• prevailing charter rates; and

• the cost of retrofitting or modifying second hand vessels as a result of charterer requirements, technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.

     In addition, as vessels grow older, they generally decline in value. Due to the cyclical nature of the product tanker and drybulk vessel markets, if for any reason we sell vessels at a time when prices have fallen, we could incur a loss and our business, results of operations, cash flows, financial condition and ability to pay dividends, if reinstated in the future could be adversely affected.

An over-supply of tanker capacity may lead to reductions in charter hire rates and profitability.

     The market supply of tankers is affected by a number of factors such as demand for energy resources, oil, and petroleum products, waiting days in ports, as well as strong overall economic growth in parts of the world economy including Asia. Furthermore, the extension of refinery capacity in India and the Middle East up to 2011 is expected to exceed the immediate consumption in these areas, and an increase in exports of refined oil products is expected as a result. Factors that tend to decrease tanker supply include the conversion of tankers to non-tanker purposes and the phasing out of single-hull tankers due to legislation and environmental concerns. We believe that the current order book represents a significant percentage of the existing fleet. An over-supply of tanker capacity may result in a reduction of charter hire rates. If a reduction in charter rates occurs, upon the expiration or termination of our vessels’ current charters, we may only be able to recharter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all, which could lead to a material adverse effect on our results of operations.

An over-supply of drybulk vessel capacity may lead to further reductions in charter hire rates and profitability.

     The market supply of drybulk vessels has been increasing, and the carrying capacity (measured in TEUs) on order is at an historically high level. This has led to an over-supply of drybulk vessel capacity, resulting in a reduction of charter hire rates and a decrease in the value of our drybulk vessels. The reduction in rates may, under certain circumstances, affect the ability of our customers who charter our drybulk vessels to make charter hire payments to us. This and other factors affecting the supply and demand for drybulk vessels and the supply and demand for drybulk vessels are outside our control and the nature, timing and degree of changes in the industry may affect the ability of our charterers to make charter hire payments to us.

Disruptions in world financial markets and the resulting governmental action in the United States and in other parts of the world could have a material adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common shares to further decline.

     The United States and other parts of the world are exhibiting deteriorating economic trends and have been in a recession. For example, the credit markets in the United States have experienced significant contraction, deleveraging and reduced liquidity, and the United States’ federal government and state governments have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The Securities and Exchange Commission, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.

     Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. The uncertainty surrounding the future of the credit markets in the United States and the rest of the world has resulted in reduced access to credit worldwide. As of January 26, 2010, we had total outstanding indebtedness of approximately $316.4 million.

     We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under our new Facility Agreement or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the

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concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, have caused the trading price of our common shares on the NASDAQ Global Market to decline and could cause the price of our common shares to continue to decline.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our business.

     Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008 and early 2009, the frequency of piracy incidents increased significantly, particularly in the Gulf of Aden off the coast of Somalia, with drybulk vessels and tankers particularly vulnerable to such attacks. For example, in April 2009, the Maersk Alabama, a cargo vessel not affiliated with us, was captured by pirates off the coast of Somalia and was released following military action by the U.S. Navy. In November 2008, the Sirius Star, a tanker vessel not affiliated with us, was also captured by pirates in the Indian Ocean while carrying crude oil estimated to be worth $100.0 million, and was released in January 2009 upon a ransom payment of $3.0 million. If these piracy attacks result in regions in which our vessels are deployed being characterized as “war risk” zones by insurers, as the Gulf of Aden temporarily was in May 2008, or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and ability to reinstate the payment of dividends.

Fuel, or bunker prices, may adversely affect profits.

     While we generally do not bear the cost of fuel, or bunkers, under our time charters, fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect our profitability at the time of charter negotiation or when our vessels trade in the spot market. Fuel is also a significant, if not the largest, expense in our shipping operations when vessels are under voyage charter. Increases in the price of fuel may adversely affect our profitability. 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. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

     Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, the International Convention for the Prevention of Pollution from Ships of 1975, the International Maritime Organization (IMO) International Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Clean Air Act, the U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition.

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We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

     The operation of our vessels is affected by the requirements set forth in the IMO International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this report, each of our vessels is ISM code-certified.

Our vessels may suffer damage due to the inherent operational risks of the seaborne transportation industry and we may experience unexpected dry-docking costs, which may adversely affect our business and financial condition.

     Our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. These hazards may 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. If our vessels suffer damage, they may need to be repaired at a dry-docking facility. The costs of dry-dock repairs are unpredictable and may be substantial. We may have to pay dry-docking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at dry-docking facilities is sometimes limited and not all dry-docking facilities are conveniently located. We may be unable to find space at a suitable dry-docking facility or our vessels may be forced to travel to a dry-docking facility that is not conveniently located to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space or to steam to more distant dry-docking facilities would decrease our earnings.

Our insurance may not be adequate to cover our losses that may result from our operations, which are subject to the inherent operational risks of the seaborne transportation industry.

     We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery insurance, protection and indemnity insurance, which includes pollution risks, crew insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations, cash flows and financial condition. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates in the future during adverse insurance market conditions.

     As a result of the September 11, 2001 attacks, the U.S. response to the attacks and the related concerns regarding terrorism, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. Accordingly, premiums payable for terrorist coverage have increased substantially and the level of terrorist coverage has been significantly reduced.

     In addition, while we carry loss of hire insurance to cover 100% of our fleet, we may not be able to maintain this level of coverage. Accordingly, any loss of a vessel or extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, results of operations, financial condition and our ability to pay dividends, if reinstated to our shareholders in the future.

Because we obtain some of our insurance through protection and indemnity associations, we may also be subject to calls in amounts based not only on our own claim records, but also on the claim records of other members of the protection and indemnity associations.

     We may be subject to calls in amounts based not only on our claim records but also on the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

     In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel that 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 vessels.

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Labor interruptions could disrupt our business.

     Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends, if reinstated in the future.

Maritime claimants could arrest our vessels, which would interrupt our business.

     Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our business or require us to pay large sums of money to have the arrest lifted, which would have a negative effect on our cash flows.

Governments could requisition our vessels during a period of war or emergency without adequate compensation.

     A government could requisition or seize our vessels. Under requisition for title, a government takes control of a vessel and becomes its owner. Under requisition for hire, a government takes control of a vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency. Although we would be entitled to compensation in the event of a requisition, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may negatively impact our business, financial condition and results of operations.

We operate our vessels worldwide and, as a result, our vessels are exposed to international risks that could reduce revenue or increase expenses.

     The international shipping industry is an inherently risky business involving global operations. Our vessels are at risk of damage or loss because of events such as mechanical failure, collision, human error, war, terrorism, piracy, cargo loss and bad weather. In addition, changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These sorts of events could interfere with shipping routes and result in market disruptions that may reduce our revenue or increase our expenses.

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Terrorist attacks and international hostilities can affect the seaborne transportation industry, which could adversely affect our business.

     We conduct most of our operations outside of the United States, and our business, results of operations, cash flows and financial condition may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political instability, terrorist or other attacks, war or international hostilities. Terrorist attacks such as the attacks on the United States on September 11, 2001, in London on July 7, 2005 and in Mumbai on November 26, 2008 and the continuing response of the United States and others 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 presence of the United States and other armed forces in Iraq and Afghanistan 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 additional financing on terms acceptable to us or at all. 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 and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

     Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, a very large crude carrier not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility and turmoil in the financial markets in the United States and globally. Any of these occurrences could have a material adverse impact on our revenues and costs.

Company Specific Risk Factors

Under the terms of our new credit facility, we are currently not in compliance with certain financial covenants that have been waived by the lenders until at least April 2012. Although we plan to regain compliance by such deadline, if we are unable to do so and are unable to negotiate a new waiver from our lenders, we will be in default under the credit facility. Such even could have a material adverse effect on our operations and our ability to raise new capital.

     On October 13, 2009, we entered into a new $221.4 million facility agreement with our existing syndicate of lenders (the “Facility Agreement”) to refinance our existing revolving credit facility. The Facility Agreement requires us to meet certain financial covenants that we are not currently in compliance with, but which have been waived by our lenders until April 2012 with respect to certain financial covenants and October 2012 with respect to others. We intend to regain compliance with all financial covenants by such deadlines. However, if we are unable to do so, our lenders may declare an event of default unless we are able to pledge additional collateral or repay our outstanding borrowings. If the lenders declare an event of default, it could have a material adverse effect on our operations and our ability to raise new capital.

We have incurred high levels of debt and with the refinancing of our credit facility and issuance of the 7% Notes, we are heavily leveraged. Defaults or other violations of the provisions of our various debt instruments could have a material adverse effect on our business.

     In addition to and in connection with the Facility Agreement, in October 2009 we issued $145.0 million of the 7% Notes. The 7% Notes are convertible into common shares at a conversion price of $0.75 per share, subject to adjustment for certain events, including certain distributions by us of cash, debt and other assets, spin offs and other events. If we are unable to service our debt, and our lenders or noteholders declare us in default thereunder, it could have a material adverse effect on our operations.

The market value of our vessels have declined and may further decrease, which could lead to the loss of our vessels and/or we may incur a loss if we sell vessels following a decline in their market value.

     The fair market values of our vessels have generally experienced high volatility and have recently declined significantly and resulted in an impairment charge of $91.6 million. If we sell one or more of our vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our consolidated financial statements, the sale may be less than the vessel’s carrying value on our consolidated financial statements, resulting in a loss and a reduction in earnings. Furthermore, if vessel values fall significantly, we may have to record an impairment adjustment in our consolidated financial statements, which could adversely affect our financial results.

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Our incurrence of a net loss during the nine months ended September 30, 2009 and our net working capital deficit raise substantial doubt about our ability to continue as a going concern.

     During the nine months ended September 30, 2009, we incurred losses of $123.8 million. As of September 30, 2009, we reported a working capital deficit of $244.4 million, which included $221.4 million of debt reflected as current. In addition, in connection with the audited financial statements included our Annual Report on Form 20-F, our independent registered public accounting firm issued an opinion with an explanatory paragraph that expressed substantial doubt about our ability to continue as a going concern. If we continue to incur net losses and a working capital deficit, it may negatively affect our ability to raise additional capital, and may have a material adverse effect on our operations.

For the nine months ended September 2009, we were dependent upon four significant charterers for the majority of our revenues. The charter agreements with three charterers have expired or been terminated and we will need to find new employment for the affected vessels in the currently depressed charter market, which may adversely affect our results of operations and cash flows.

     We have historically derived a significant part of our revenue from a small number of charterers. During 2009, approximately 76% of our revenue was derived from four charterers. The loss of charterers upon whom we have historically been dependent may adversely affect our results of operations, cash flows and financial condition. Further, after the sale of the Ocean Hope in June 2008 and the consummation of the transaction with Grandunion, we now operate a fleet of 14 vessels (excluding the dropdown of six vessels and the disposition of the two container vessels described above). Assuming that we sell one or more additional vessels in order to reduce the outstanding balance under our new Facility Agreement, we will operate a smaller fleet. As the size of our fleet decreases, we will become increasingly dependent upon a limited number of charterers for our revenues.

Our charterers may terminate or default on their charters, which could adversely affect our results of operations and cash flow.

     Our charterers may terminate earlier than the dates indicated in their charter agreements. The terms of our charters vary as to which events or occurrences will cause a charter to terminate or give the charterer the option to terminate the charter, but these generally include a total or constructive total loss of the related vessel, the requisition for hire of the related vessel or the failure of the related vessel to meet specified performance criteria. In addition, the ability of each of our charterers to perform its obligations under a charter will depend on a number of factors that are beyond our control. These factors may include general economic conditions, the condition of a specific shipping market sector, the charter rates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of a vessel may be considerable and may adversely affect our business, results of operations, cash flows and financial condition.

     We cannot predict whether our charterers will, upon the expiration of their charters, recharter our vessels on favorable terms or at all. If our charterers decide not to recharter our vessels, we may not be able to recharter them on terms similar to the terms of our current charters. In the future, we may also employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market.

     The time charters for five of our vessels currently provide for charter rates that are above current market rates. If we receive lower charter rates under replacement charters or are unable to recharter all of our vessels, our business, results of operations, cash flows and financial condition may be adversely affected.

     In addition, in depressed market conditions, our charterers may no longer need a vessel that is currently under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively impact 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 expect to enter into employment contracts with Nicholas G. Fistes our Chairman and Michail S. Zolotas, our Chief Executive Officer and President and we have entered into an employment agreement with Allan L. Shaw, our Chief Financial Officer. Our success will depend upon our ability to retain key members of our management team and to hire new members as may be necessary. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining replacement personnel could have a similar effect. We do not maintain “key man” life insurance on any of our officers.

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Members of our management team continue to own and operate Grandunion, a competitor, and may have conflicts of interest with respect to their fiduciary duties to both companies. Furthermore, they may not be able to devote sufficient time to our operations.

     Nicholas G. Fistes, our Chairman, and Michail S. Zolotas, our Deputy Chairman, Chief Executive Officer and President, continue to be sole stockholders and the chairman and chief executive officer, respectively, of Grandunion. Grandunion is a competitor of ours and as such, Mr. Fistes and Mr. Zolotas may have conflicts of interest with respect to their fiduciary duties to both our Company and Grandunion. Furthermore, if Mr. Zolotas or Mr. Fistes are unable to devote sufficient time to their management duties of our Company, it could have a material adverse effect on our operations.

Our board of directors has determined to suspend the payment of cash dividends in order to preserve capital and to allow management to focus on improving our operating results, and until conditions improve in the international shipping industry and credit markets, it is unlikely that we will reinstate the payment of dividends.

     On September 12, 2008, our board of directors determined to immediately suspend payment of our quarterly dividend. The decision followed our management’s strategic review of our business and reflected our focus on improving our long-term strength and operational results. We will make dividend payments to our shareholders only if our board of directors, acting in its sole discretion, determines that such payments would be in our best interest and in compliance with relevant legal and contractual requirements. The principal business factors that our board of directors expects to consider when determining the timing and amount of dividend payments will be our earnings, financial condition and cash requirements at the time. Currently, the principal contractual and legal restrictions on our ability to make dividend payments are those contained in our new Facility Agreement and those created by Bermuda law.

     Our new Facility Agreement prohibits us from paying a dividend if an event of default under the Facility Agreement is continuing or would result from the payment of the dividend. Our Facility Agreement further requires us to maintain financial ratios and minimum liquidity and working capital amounts. Our obligations pursuant to these and other terms of our Facility Agreement could prevent us from making dividend payments under certain circumstances.

     Under Bermuda law, we may not declare or pay dividends if there are reasonable grounds for believing that (1) we are, or would after the payment be, unable to pay our liabilities as they become due or (2) the realizable value of our assets would thereby be less than the sum of our liabilities, our issued share capital (the total par value of all outstanding shares) and share premium accounts (the aggregate amount paid for the subscription for our shares in excess of the aggregate par value of such shares). Consequently, events beyond our control, such as a reduction in the realizable value of our assets, could cause us to be unable to make dividend payments.

     We may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends in the future. We may also enter into new agreements or new legal provisions may be adopted that will restrict our ability to pay dividends in the future. As a result, we cannot assure you that we will be able to reinstate the payment of dividends.

We are dependent in part upon third-party managers for the management of our vessels.

     Currently, International Tanker Management Limited, or ITM, based in Dubai, performs technical management of five of our vessels, Ernst Jacob Ship Management GmbH, or Ernst Jacob, performs technical management of the Chinook, Stamford Navigation Inc., or Stamford, performs technical management of the Australia, and Newfront Shipping S.A., or Newfront, performs technical management for the China and the Brazil drybulk vessels. AMT Management Ltd., or AMT Management, our wholly-owned subsidiary, performs technical management for the Nordanvind. Currently, AMT Management performs the commercial management for our product tankers. Stamford performs commercial management of the Australia and Newfront performs commercial management for the China and Brazil. The Stena Compass and the Stena Compassion are employed under a bareboat charter. In addition, we are generally required to obtain approval from our lenders to change our ship managers.

     The loss of services of one or more of our managers or the failure of one or more of our managers to perform their obligations under the respective management agreements could materially and adversely affect our business, results of operations, cash flows and financial condition. Although we may have rights against ITM, Stamford, Newfront and/or Ernst Jacob if they default on their obligations to us, our shareholders will not directly share that recourse.

     The ability of our ship managers to continue providing services for our benefit will depend in part on their own financial strength. Circumstances beyond our control could impair the financial strength of our ship managers. Because our third-party ship managers are privately-held companies, it is unlikely that information about their financial strength would become public prior to any default by such ship manager under the management agreements. As a result, an investor in our shares might have little advance warning of problems affecting our ship managers, even though those problems could have a material adverse effect on us.

24

If we are unable to operate our vessels efficiently, we may be unsuccessful in competing in the highly competitive international tanker market.

     The operation of tanker vessels and transportation of crude and petroleum products is extremely competitive. Competition arises primarily from other tanker owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater resources. Competition for the transportation of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker and its operators to the charterers. We will have to compete with other tanker owners, including major oil companies as well as independent tanker companies. Due in part to the highly fragmented market, competitors with greater resources could enter the product tanker shipping markets and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer.

     Our market share may decrease in the future. We may not be able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength and capital resources than we do.

The operation of tankers involves certain unique operational risks.

     The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage, and a catastrophic spill could exceed the insurance coverage available. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tankers.

     If we are unable to maintain or safeguard our vessels adequately we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition and results of operations. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

We may not be able to grow or effectively manage our growth.

     A principal focus of our strategy is to grow by expanding our product tanker fleet as opportunities are identified. Our future growth will depend on a number of factors, some of which we can control and some of which we cannot. These factors include our ability to:

• identify vessels for acquisition;

• consummate acquisitions;

• integrate acquired vessels successfully with our existing operations;

• identify businesses engaged in managing, operating or owning vessels for acquisitions or joint ventures;

• hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet;

• identify additional new markets;

• improve our operating, financial and accounting systems and controls; and

• obtain required financing for our existing and new operations.

     A deficiency in any of these factors could adversely affect our ability to achieve anticipated growth in cash flows or realize other anticipated benefits. In addition, competition from other buyers could reduce our acquisition opportunities or cause us to pay a higher price than we might otherwise pay.

     The process of integrating acquired vessels into our operations may result in unforeseen operating difficulties, may absorb significant management attention and may require significant financial resources that would otherwise be available for the ongoing development and expansion of our existing operations. Future acquisitions could result in the incurrence of additional indebtedness and liabilities that could have a material adverse effect on our business, results of operations, cash flows and financial condition. Further, if we issue additional common shares, your interest in our Company will be diluted.

Capital expenditures and other costs necessary to operate and maintain our vessels may increase due to changes in governmental regulations, safety or other equipment standards.

     Changes in governmental regulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customer requirements or competition, may require us to make additional expenditures. In order to satisfy these requirements, we may, from time to time, be required to take our vessels out of service for extended periods of time, with corresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate some or all of our vessels profitably during the remainder of their economic lives.

25

If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business.

     In order to fund our capital expenditures, we may be required to incur borrowings or raise capital through the sale of debt or equity securities. Our ability to access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Currently, under our credit facility, we are restricted in incurring additional borrowings and in making capital expenditures for new vessel acquisitions. Our failure to obtain the funds for necessary future capital expenditures would limit our ability to continue to operate some of our vessels and could have a material adverse effect on our business, results of operations and financial condition.

Unless we set aside reserves or are able to borrow funds for vessel replacement, at the end of a vessel’s useful life our revenue will decline, which would adversely affect our business, results of operations and financial condition.

     Unless we maintain reserves or are able to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives, which we estimate to be 25 years. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations and financial condition, if any, in the future will be materially and adversely affected. Any reserves set aside for vessel replacement may not be available for dividends, if any, in the future.

Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and share price.

     The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:

• marine disaster;

• environmental accidents;

• cargo and property losses or damage;

• business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and

• piracy.

     Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator.

Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.

     We generate all our revenues in U.S. dollars, but a portion of our vessel operating expenses are in currencies other than U.S. dollars and we incur a portion of our general and administrative expenses in currencies other than the U.S. dollar. For the year ended December 31, 2008, we incurred 12% of our operating expenses in currencies other than the U.S. dollar. This difference could lead to fluctuations in our vessel operating expenses, which would affect our financial results. Expenses incurred in foreign currencies increase when the value of the U.S. dollar falls, which would reduce our profitability. For example, in the year ended December 31, 2008, the value of the U.S. dollar reached highs of $1.59 and lows of $1.25 compared to the Euro, and as a result, a 1% adverse movement in U.S. dollar exchange rates would have increased our vessel operating expenses.

Our incorporation under the laws of Bermuda may limit the ability of our shareholders to protect their interests.

     We are a Bermuda company. Our memorandum of association and bye-laws and the Companies Act 1981 of Bermuda, or the BCA, as amended, govern our corporate affairs. Investors may have more difficulty in protecting their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction. Under Bermuda law, a director generally owes a fiduciary duty only to the company, not to the company’s shareholders. Our shareholders may not have a direct cause of action against our directors. In addition, Bermuda law does not provide a mechanism for our shareholders to bring a class action lawsuit under Bermuda law. Further, our bye-laws provide for the indemnification of our directors or officers against any liability arising out of any act or omission, except for an act or omission constituting fraud or dishonesty. There is a statutory remedy under Section 111 of the BCA, which provides that a shareholder may seek redress in the courts as long as such shareholder can establish that our affairs are being conducted, or have been conducted, in a manner oppressive or prejudicial to the interests of some part of the shareholders, including such shareholder. However, the principles governing Section 111 have not been well developed.

26

If the recent volatility in LIBOR continues, it could affect our profitability, earnings and cash flow.

     LIBOR has recently been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the recent disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in LIBOR, if this volatility were to continue, it would affect the amount of interest payable on our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow. Recently, however, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. If we are required to agree to such a provision in future loan agreements, our lending costs could increase significantly, which would have an adverse effect on our profitability, earnings and cash flow.

It may not be possible for investors to enforce U.S. judgments against us.

     We and all our subsidiaries are incorporated in jurisdictions outside the U.S. and substantially all of our assets and those of our subsidiaries are located outside the U.S. In addition, most of our directors and officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to serve process within the U.S. upon us, our subsidiaries or our directors and officers or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our or the assets of our subsidiaries are located (1) would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us or our subsidiaries based on those laws.

     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. shareholders.

     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 applicable 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 method of operation, we do not believe that we have been, are or will be a PFIC. In this regard, we treat the gross income we derive or are deemed to derive from our chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our 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 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 would face adverse and special U.S. tax consequences. Among other things, the distributions a shareholder received with respect to our shares and the gain, if any, a shareholder derived from his sale or other disposition of our shares would be taxable as ordinary income (rather than as qualified dividend income or capital gain, as the case may be), would be treated as realized ratably over his holding period in our common shares, and would be subject to an additional interest charge. However, a U.S. shareholder may be able to make certain tax elections that would ameliorate these consequences.

We may have to pay tax on U.S.-source income, which would reduce our earnings.

     Under the United States Internal Revenue Code, referred to herein as the Code, 50% of the gross shipping income of a vessel-owning or chartering corporation, such as our Company and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S.-source shipping income and 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 and the related treasury regulations, referred to herein as “Treasury Regulations”.

27

     We expect that we and each of our subsidiaries qualifies for this statutory tax exemption, and we take this position for United States federal income tax 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 U.S.-source income.

     If we or our subsidiaries are not entitled to exemption under Section 883 of the Code for any taxable year, the imposition of a 4% U.S. federal income tax on our U.S.-source shipping income and that of our subsidiaries could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

Risks Relating to Our Common Shares

There may not be an active market for our common shares, which may cause our common shares to trade at a discount and make it difficult to sell the common shares you purchase.

     We cannot assure you that an active trading market for our common shares will be sustained. We cannot assure you of the price at which our common shares will trade in the public market in the future or that the price of our shares in the public market will reflect our actual financial performance. You may not be able to resell your common shares at or above their current market price. Additionally, a lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of our common shares and limit the number of investors who are able to buy the common shares.

     The product tanker markets have been highly unpredictable and volatile. The market price of our common shares may be similarly volatile.

Michail S. Zolotas, our Chief Executive Officer, President and Deputy Chairman, beneficially owns approximately 76% of our outstanding common shares and as a result, he is able to influence the outcome of shareholder votes.

     Michail S. Zolotas, our Chief Executive Officer, President and Deputy Chairman, beneficially owns approximately 76% of our outstanding common shares through his stock ownership directly and through Grandunion, as well as a voting agreement between Grandunion and Aries Energy Corporation. The ownership amount does not include beneficial ownership of the common shares underlying the 7% Notes. If Mr. Zolotas were to convert all of the 7% Notes owned by Focus Maritime Corp., he would beneficially own approximately 92% of our then-outstanding common shares. As a result of this share ownership and for so long as Mr. Zolotas owns a significant percentage of our outstanding common shares, he will be able to control or influence the outcome of any shareholder vote, including the election of directors, the adoption or amendment of provisions in our memorandum of association or bye-laws and possible mergers, amalgamations, corporate control contests and other significant corporate transactions. This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, merger, amalgamation, consolidation, takeover or other business combination. This concentration of ownership could also discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which could in turn have an adverse effect on the market price of our common shares. In addition, this concentration of ownership has had, and may continue to have, an adverse effect on the liquidity of our common shares.

Anti-takeover provisions in our organizational documents could have the effect of discouraging, delaying or preventing a merger, amalgamation or acquisition, which could adversely affect the market price of our common shares.

     Several provisions of our bye-laws could discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. These include provisions:

• authorizing our board of directors to issue “blank check” preference shares without shareholder approval;

• establishing a classified board of directors with staggered, three-year terms;

• prohibiting us 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 becomes an interested shareholder unless certain conditions are met;

• not permitting cumulative voting in the election of directors;

• authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of at least 80% of our outstanding common shares;

• limiting the persons who may call special meetings of shareholders to our board of directors, subject to certain rights guaranteed to shareholders under the BCA; and

• establishing advance notice requirements for nominations for election to our board of directors and for proposing matters that can be acted on by shareholders at our shareholder meetings.

     These provisions could have the effect of discouraging, delaying or preventing a merger, amalgamation or acquisition, which could adversely affect the market price of our common shares.

28

INDEX TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008		F-2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008 (unaudited)		F-3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (unaudited)		F-4
Notes to the Condensed Consolidated Financial Statements (unaudited)		F-5

F-1

NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts expressed in thousands of U.S. dollars except share amounts)

			(Unaudited)
			As of			As of
			September 30,			December 31,
	Notes		2009			2008
ASSETS
Current assets
Cash and cash equivalents			$	—		$	4,009
Restricted cash		4		3,543			8,510
Trade receivables, net				2,928			2,533
Other receivables				662			2,289
Inventories		5		3,015			1,224
Prepaid expenses				1,227			967
Due from managing agent				—			160
Due from related parties		12		78			49
Total current assets				11,453			19,741
Vessels and other fixed assets, net		6		185,521			296,463
Deferred charges, net				1,018			1,573
Total non-current assets				186,539			298,036
Total assets			$	197,992		$	317,777
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		7	$	221,430		$	223,710
Accounts payable, trade				7,204			3,601
Accrued liabilities				14,066			7,776
Deferred income				143			1,807
Derivative financial instruments		10		11,066			12,451
Deferred charter revenue				1,296			2,144
Due to managing agent				662			—
Total current liabilities				255,867			251,489
Deferred charter revenue				—			772
Total liabilities				255,867			252,261
Commitments and contingencies		11		—			—
Shareholders’ deficit
Preference Shares, $0.01 par value, 500 million shares authorized, none issued
Common Shares, $0.01 par value, 1 billion shares authorized, 29 million shares issued and outstanding at September 30, 2009 and December 31, 2008				290			290
Additional paid-in capital		9		114,158			113,787
Deficit		9		(172,323	)		(48,561	)
Total shareholders’ (deficit)/equity				(57,875	)		65,516
Total liabilities and shareholders’ (deficit)/equity			$	197,992		$	317,777

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-2

NEWLEAD HOLDINGS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(All amounts expressed in thousands of U.S. dollars, except share and per share amounts)

			Three months ended						Nine months ended
			September 30,						September 30,
	Notes		2009			2008			2009			2008
OPERATING REVENUES			$	12,167		$	21,509		$	42,898		$	58,085
EXPENSES:
Commissions		12		(233	)		(225	)		(831	)		(432	)
Voyage expenses				(4,698	)		(3,139	)		(7,990	)		(5,404	)
Vessel operating expenses		12		(12,933	)		(8,932	)		(26,445	)		(21,419	)
General & administrative expenses		8,12		(4,650	)		(2,043	)		(7,772	)		(5,932	)
Depreciation and amortization expenses		6		(5,560	)		(6,574	)		(16,274	)		(19,145	)
Impairment loss		2		(91,601	)		—			(91,601	)		—
Management fees				(265	)		(458	)		(931	)		(1,396	)
				(119,940	)		(21,371	)		(151,844	)		(53,728	)
Net operating (loss)/ income				(107,773	)		138			(108,946	)		4,357
OTHER INCOME/( EXPENSES), NET:
Interest & finance expense, net		7		(3,342	)		(4,227	)		(10,336	)		(11,904	)
Interest income				2			—			9			168
Other (expenses)/ income, net				(24	)		28			(34	)		(23	)
Change in fair value of derivatives		10		247			(793	)		1,385			(761	)
Total other expenses, net				(3,117	)		(4,992	)		(8,976	)		(12,520	)
Net loss from continuing operations				(110,890	)		(4,854	)		(117,922	)		(8,163	)
Net (loss)/ income from discontinued operations (includes $5,584 loss on disposal of vessel in 2009, and $13,569 gain on disposal of vessels in 2008)		13		(410	)		579			(5,840	)		10,177
Net (loss)/ income			$	(111,300	)	$	(4,275	)	$	(123,762	)	$	2,014
(Loss)/ earnings per share:
Basic and diluted
Continuing operations			$	(3.86	)	$	(0.17	)	$	(4.10	)	$	(0.29	)
Discontinued operations			$	(0.01	)	$	0.02		$	(0.20	)	$	0.36
Total			$	(3.87	)	$	(0.15	)	$	(4.30	)	$	0.07
Weighted average number of shares:
Basic				28,796,877			28,692,964			28,747,152			28,605,563
Diluted				28,796,877			28,699,128			28,747,152			28,611,728

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

NEWLEAD HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(All amounts expressed in thousands of U.S. dollars)

	Nine months ended
	September 30,
	2009			2008
Cash flows from operating activities:
Net (loss)/ income	$	(123,762	)	$	2,014
Adjustments to reconcile net (loss)/ income to net cash provided by operating activities:
Depreciation and amortization		16,910			23,391
Impairment loss		91,601			—
Provision for doubtful receivables		245			—
Amortization and write-off of deferred financing costs		555			1,142
Amortization of deferred charter revenue		(1,620	)		(7,546	)
Change in fair value of derivative financial instruments		(1,385	)		761
Dry-docking / special survey costs		(5,369	)		(2,042	)
Share-based compensation		371			885
Loss/ (gain) on sale of vessels		5,584			(13,569	)
Restricted cash		4,967			—
(Increase)/decrease in:
Trade receivables		(640	)		(400	)
Other receivables		1,627			(1,179	)
Inventories		(1,791	)		457
Prepaid expenses		(260	)		204
Due from management agents		822			(1,865	)
Due from/to related parties		(29	)		(1,276	)
Increase/(decrease) in:
Accounts payable, trade		3,603			(2,004	)
Accrued liabilities		6,290			4,052
Deferred income		(1,664	)		(1,505	)
Net cash (used in)/ provided by operating activities		(3,945	)		1,520
Cash flows from investing activities:
Other fixed asset acquisitions		(63	)		(17	)
Restricted cash		—			1,548
Vessels disposals		2,279			59,562
Net cash provided by investing activities		2,216			61,093
Cash flows from financing activities:
Principal repayments of long-term debt		(2,280	)		(61,090	)
Restricted cash		—			(7,528	)
Proceeds from issuance of capital shares		—			4
Dividends paid		—			(2,862	)
Net cash used in financing activities		(2,280	)		(71,476	)
Net decrease in cash and cash equivalents		(4,009	)		(8,863	)
Cash and cash equivalents
Beginning of year		4,009			12,444
End of period	$	—		$	3,581
Supplemental Cash Flow information:
Interest paid		11,218			10,376

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-4

NEWLEAD HOLDINGS LTD.
(All amounts expressed in thousands of U.S. dollars except where otherwise specified)
Notes to Condensed Consolidated Financial Statements

1. Organization and Basis of Presentation

     NewLead Holdings Ltd. (the “Company” or “NewLead”) was incorporated on January 12, 2005 under the name “Aries Maritime Holdings Limited”. The principal business of NewLead is the ownership and chartering of ocean-going vessels world-wide. The Company conducts its operations through its subsidiaries. The vessel-owning subsidiaries own products tankers and container vessels that transport a variety of refined petroleum products and containers world-wide. NewLead is currently the ultimate owner of all outstanding shares of the following subsidiaries:

	Country of		Date of Vessel
Company Name	Incorporation	Vessel Name	Acquisition
1. Land Marine S.A.	Marshall Islands	M/T High Land	March 7, 2003
2. Rider Marine S.A.	Marshall Islands	M/T High Rider	March 18, 2003
3. Ostria Waves Ltd.	Marshall Islands	M/T Ostria ex Bora	May 25, 2004
4. Altius Marine S.A.	Marshall Islands	M/T Altius	June 24, 2004
5. Fortius Marine S.A.	Marshall Islands	M/T Fortius	August 2, 2004
6. Vintage Marine S.A.	Marshall Islands	M/T Arius ex Citius***	August 5, 2004
7. Ermina Marine Ltd.	Marshall Islands	M/T Nordanvind	December 9, 2004
8. Chinook Waves Corporation	Marshall Islands	M/T Chinook	November 30, 2005
9. Compass Overseas Ltd.	Bermuda	M/T Stena Compass	February 14, 2006
10. Compassion Overseas Ltd.	Bermuda	M/T Stena Compassion	June 16, 2006
11. Santa Ana Waves Corporation	Marshall Islands	—	—
12. Makassar Marine Ltd.	Marshall Islands	M/V Saronikos Bridge ex CMA CGM Makassar	July 15, 2005
13. Seine Marine Ltd.	Marshall Islands	M/V MSC Seine ex CMA CGM Seine	June 24, 2005
14. Jubilee Shipholding S.A.	Marshall Islands	M/V Ocean Hope****	July 26, 2004
15. Olympic Galaxy Shipping Ltd.	Marshall Islands	M/V Energy 1 ex ANL Energy*	April 28, 2004
16. Dynamic Maritime Co.	Marshall Islands	M/V MSC Oslo ex SCI Tej**	June 1, 2004
17. AMT Management Ltd.	Marshall Islands	—	—
18. Aries Maritime (US) LLC	United States	—*****	—

*	M/V Energy 1 was sold on June 2, 2008.
**	M/V MSC Oslo was sold on April 30, 2008.
***	M/T Arius was sold on June 11, 2008.
****	M/V Ocean Hope was sold on June 10, 2009.
*****	Aries Maritime (US) LLC was incorporated on October 23, 2008 as a representative office in the United States,

     On June 8, 2005, NewLead closed its initial public offering of 12,240,000 common shares at an offering price of $12.50 per share. The net proceeds of the offering after expenses were $140.8 million.

     NewLead is an indirect subsidiary of Aries Energy Corporation, or Aries Energy. Aries Energy, an affiliate through its

F-5

wholly-owned subsidiary Rocket Marine Inc., currently owns approximately 23% of the Company’s outstanding common shares. Hereinafter, NewLead and its subsidiaries listed above will be referred to as “the Company”.

     On October 13, 2009, the Company announced an approximately $400.0 million recapitalization which resulted in Grandunion Inc. (“Grandunion”) acquiring control of the Company. Pursuant to the Stock Purchase Agreement entered into on September 16, 2009, a company controlled by Michail S. Zolotas and Nicholas G. Fistes, acquired 18,977,778 newly issued common shares of the Company in exchange for three drybulk carriers. See note 14 for further information concerning the change of control and recapitalization.

     During the three months ended September 30, 2009 and 2008, the Company incurred a net loss of $111.3 million and a net loss of $4.3 million, respectively, and for the nine months ended September 30, 2009 and 2008, the Company incurred a net loss of $123.8 million and a gain of $2.0 million, respectively. As of September 30, 2009, the Company reported working capital deficit of $244.4 million, which includes $221.4 million of debt reflected as current.

     During the nine months ended September 30, 2009 and for the year ended December 31, 2008, the Company was not in compliance with certain covenants of its loan facility (see note 7) and absent any further relaxation from the lenders, the lenders had the ability to demand repayment of outstanding borrowings. In pursuant to the September 16, 2009 announcement the lenders relaxed all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months (see note 14). On this basis, this debt is reflected as current in the accompanying balance sheets.

     While these condensed consolidated financial statements have been prepared using generally accepted accounting principles applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities during the normal course of operations, the conditions and events described above raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on management’s ability to continue to improve the performance of the Company, which includes achieving profitable operations in the future, and the continued support of its shareholders and its lenders. Management is addressing the going concern (see note 14). The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s inability to continue as a going concern. However, there is a material uncertainty related to events or conditions which may raise substantial doubt about the entity’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

2. Summary of Significant Accounting Policies

Principles of Consolidation:

     The accompanying condensed consolidated financial statements represent the consolidation of the accounts of the Company and its wholly-owned subsidiaries and are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. The subsidiaries are fully consolidated from the date on which control is transferred to the Company. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2008. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year.

     The condensed consolidated financial statements have been prepared to reflect the consolidation of the Company. The historical balance sheets and results of operations of the companies listed below have been reflected in the condensed consolidated balance sheets, condensed consolidated statements of operations and consolidated statements of cash flows for each period since their respective incorporation dates. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

     All intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates:

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from those estimates.

F-6

Accounting for Revenue:

     The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered using either time and bareboat charters, where a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate, or voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate. If a charter agreement exists, price is fixed, service is provided and collection of the related revenue is reasonably assured, revenue is recognized as it is earned rateably on a straight-line basis over the duration of the period of each time charter as adjusted for the off-hire days that the vessel spends undergoing repairs, maintenance and upgrade work depending on the condition and specification of the vessel and address commissions. 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 the discharge of the current cargo.

     Profit sharing represents the Company’s portion on the excess of the actual net daily charter rate earned by the Company’s charterers from the employment of the Company’s vessels over a predetermined base charter rate, as agreed between the Company and its charterers; such profit sharing is recognized in revenue when mutually settled.

     Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeded the stipulated time in the voyage charter and is recognized as incurred.

     Deferred income represents cash received on charter agreement prior to the balance sheet date and is related to revenue not meeting the criteria for recognition.

Impairment of Long-lived Assets:

     The standard requires that, long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the future net undiscounted cash flows from the assets are less than the carrying values of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value.

     During the third quarter of 2009, the Company concluded that events and circumstances had changed that may indicate the existence of potential impairment of its long-lived assets. As a result, the Company performed an interim impairment assessment of long-lived assets. The significant factors and assumptions the Company used in undiscounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, dry-docking costs, operating expenses and management fee estimates. Revenues assumptions were based on a number factors for the remaining life of the vessel (a) contracted time charter rates up to the end of life of the current contract of each vessel, (b) historical average time charter rates, (c) current market conditions and, the respective vessel’s ages as well as considerations such as scheduled and unscheduled off-hire revenues based on historical experience. Operating expenses assumptions included an annual escalation factor. All estimates used and assumptions made were in accordance with the Company’s historical experience of the shipping industry.

     The Company’s assessment included its evaluation of the estimated fair market values for each vessel obtained by third-party valuations for which management assumes responsibility for all assumptions and judgements compared to the carrying value. The significant factors the Company used in deriving the carrying value included: net book value of the vessels, unamortized special survey and dry-docking cost and deferred revenue.

     The Company’s impairment analysis as of September 30, 2009 and 2008 resulted in an impairment loss of $91,601 and $0, respectively. However, the current assumptions used and the estimates made are highly subjective, and could be negatively impacted by further significant deterioration in charter rates or vessel utilization over the remaining life of the vessels which could require the Company to record a material impairment charge in future periods.

3. Recent Accounting Pronouncements

Fair Value

     In September 2006, the Financial Accounting Standards Board (the “FASB”) issued guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. In February 2008, the FASB deferred the effective date to January 1, 2009 for all nonfinancial assets and liabilities, except for those that are recognized or disclosed at fair value on a recurring basis (that is, at least annually). The guidance was effective for the Company for the fiscal year beginning January 1, 2009 and did not have a material effect on its condensed consolidated financial statements.

     In April 2009, the FASB issued additional guidance for estimating fair value. The additional guidance addresses determining fair value when the volume and level of activity for an asset or liability have significantly decreased and identifying transactions that are not orderly. This additional guidance was effective for the Company and did not have a material impact on the condensed consolidated financial statements of the Company.

F-7

Accounting for Business Combinations

     The Company adopted new U.S. GAAP guidance related to business combinations beginning in its first quarter of fiscal year 2009. Earlier adoption was prohibited. The adoption of the new guidance did not have an immediate significant impact on its condensed consolidated financial statements; however, it will impact the accounting for any future business combinations. Under the new guidance, an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for income taxes. In addition, acquired-in process research and development is capitalized as an intangible asset and amortized over its estimated useful life.

Determination of the Useful Life of Intangible Assets

     The Company adopted new U.S. GAAP guidance concerning the determination of the useful life of intangible assets beginning in its first quarter of fiscal year 2009. The adoption of this guidance did not have a significant impact on the Company’s condensed consolidated financial statements. The new guidance amends the factors that are to be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The new guidance is intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows originally used to measure the fair value of the intangible asset under U.S. GAAP.

Interim Disclosure about Fair Value of Financial Instruments

     In April 2009, the FASB amended the Fair Value of Financial Instruments Subsection of the ASC to require an entity to provide disclosures about fair value of financial instruments in interim financial information (“Fair Value Disclosure Amendment”). The Fair Value Disclosure Amendment requires a publicly traded company to include disclosures about the fair value of its financial instruments whenever it issues summarized financial information for interim reporting periods. In addition, entities must disclose in the body or in the accompanying notes of its summarized financial information for interim reporting periods and in its financial statements for annual reporting periods, the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position. The Fair Value Disclosure Amendment became effective for the Company and its adoption did not have a significant effect on its financial position, results of operations, or cash flows.

Transfers of Financial Assets

     In June 2009, the FASB issued new guidance concerning the transfer of financial assets. This guidance amends the criteria for a transfer of a financial asset to be accounted for as a sale, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, changes the initial measurement of a transferor’s interest in transferred financial assets, eliminates the qualifying special-purpose entity concept and provides for new disclosures. This new guidance will be effective for the Company for transfers of financial assets beginning in its first quarter of fiscal 2011, with earlier adoption prohibited. The Company does not expect the impact of this guidance to be material to its condensed consolidated financial statements.

Determining the Primary Beneficiary of a Variable Interest Entity

     In June 2009, the FASB issued new guidance concerning the determination of the primary beneficiary of a variable interest entity (“VIE”). This new guidance amends current U.S. GAAP by: requiring ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE; amending the quantitative approach previously required for determining the primary beneficiary of the VIE; modifying the guidance used to determine whether an equity is a VIE; adding an additional reconsideration event (e.g. troubled debt restructurings) for determining whether an entity is a VIE; and requiring enhanced disclosures regarding an entity’s involvement with a VIE.

     This new guidance will be effective for the Company beginning in its first quarter of fiscal 2011, with earlier adoption prohibited. The Company does not expect the impact of this new guidance to be material to its condensed consolidated financial statements.

FASB Accounting Standards Codification

     In June 2009, the FASB issued new guidance concerning the organization of authoritative guidance under U.S. GAAP. This new guidance created the FASB Accounting Standards Codification (“Codification”). The Codification has become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The

F-8

Codification became effective for the Company in its third quarter of fiscal 2009. As the Codification is not intended to change or alter existing U.S. GAAP, it did not have any impact on the Company’s condensed consolidated financial statements. On its effective date, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative.

Measuring Liabilities at Fair Value

     In August 2009, the FASB released new guidance concerning measuring liabilities at fair value. The new guidance provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain valuation techniques. Additionally, it clarifies that a reporting entity is not required to adjust the fair value of a liability for the existence of a restriction that prevents the transfer of the liability. This new guidance is effective for the first reporting period after its issuance, however earlier application is permitted. The application of this new guidance is not expected to have a significant impact on the Company’s condensed consolidated financial statements.

4. Restricted Cash

	As of		As of
	September 30,		December 31,
	2009		2008
Retention account	$	—	$	2,054
Minimum Liquidity		3,532		6,436
Other		11		20
	$	3,543	$	8,510

Cash deposited in the retention account is made available for loan interest payments within three months of being deposited. During the three and nine months ended September 30, 2009, the Company was in breach of the minimum liquidity covenant (see note 7).

5. Inventories

	As of		As of
	September 30,		December 31,
	2009		2008
Lubricants	$	596	$	722
Bunkers		2,336		361
Provisions (Stores)		83		141
	$	3,015	$	1,224

6. Vessels and Other Fixed Assets, Net

	Other fixed		Cost of			Special
	assets		vessel			survey			Dry-docking			Total
Balance at December 31, 2007	$	183	$	479,172		$	7,856		$	17,321		$	504,532
Additions		27		—			1,019			1,140			2,186
Disposals — Discontinued operations (note 13)		—		(69,003	)		(822	)		(6,450	)		(76,275	)
Impairment loss (note 2)		—		(30,075	)		—			—			(30,075	)
Balance at December 31, 2008	$	210	$	380,094		$	8,053		$	12,011		$	400,368
Additions		63		—			1,131			4,238			5,432
Disposals — Discontinued operations (note 13)		—		(17,224	)		(15	)		—			(17,239	)
Impairment loss (note 2)		—		(91,601	)		—			—			(91,601	)
Balance at September 30, 2009	$	273	$	271,269		$	9,169		$	16,249		$	296,960

F-9

	Other fixed			Cost of			Special
	assets			vessel			survey			Dry-docking			Total
Accumulated Depreciation and Amortization
Balance at December 31, 2007	$	(60	)	$	(89,788	)	$	(4,249	)	$	(9,597	)	$	(103,694	)
Depreciation and Amortization of the year		(39	)		(25,437	)		(1,242	)		(3,775	)		(30,493	)
Disposals		—			25,753			570			3,959			30,282
Balance at December 31, 2008	$	(99	)	$	(89,472	)	$	(4,921	)	$	(9,413	)	$	(103,905	)
Depreciation and Amortization of the nine months		(174	)		(13,749	)		(1,041	)		(1,947	)		(16,911	)
Disposals		—			9,362			15			—			9,377
Balance at September 30, 2009	$	(273	)	$	(93,859	)	$	(5,947	)	$	(11,360	)	$	(111,439	)
Net book value — December 31, 2007	$	123		$	389,384		$	3,607		$	7,724		$	400,838
Net book value — December 31, 2008	$	111		$	290,622		$	3,132		$	2,598		$	296,463
Net book value — September 30, 2009	$	—		$	177,410		$	3,222		$	4,889		$	185,521

     On June 11, 2008, the Company sold the Arius to an unrelated party for net proceeds of $21.4 million. The gain on the sale of the vessel amounted to $8.6 million. The Company paid 1% of the purchase price as sales commission to Magnus Carriers Corporation (“Magnus Carriers”), a related company. The Company also paid a 1% commission to a brokerage firm of which one of the former Company’s directors is a shareholder (refer to note 12).

     On April 30, 2008 and June 2, 2008, the Company sold both the MSC Oslo and its sister ship, the Energy 1, to an unrelated party for net proceeds totalling $19.7 million and $18.5 million, respectively. The gain on the sale of the MSC Oslo amounted to $2.9 million and the gain on the sale of the Energy 1 amounted to $2.1 million. The Company paid 1% of the purchase price as sales commission to Magnus Carriers (refer to note 12).

     On June 10, 2009, the Company sold the Ocean Hope to an unrelated party for net proceeds of $2.3 million. The loss on the sale of the vessel amounted to $5.6 million. The Company paid 4% of the purchase price as sales commission to Braemar Seascope Limited, an unrelated company. The Company also paid a 1% commission to a brokerage firm of which one of the former Company’s directors is a shareholder (refer to note 12).

     The results of the above sold vessels until the date of their delivery to their new owners, have been reported as discontinued operations in the accompanying statements of operations and cash flows (see note 13).

7. Long-Term Debt

Senior secured credit agreement

     On April 3, 2006, the Company entered into a new $360.0 million revolving credit facility, for the purposes of (a) refinancing amounts drawn under the previous $140.0 million term loan facility and $150.0 million revolving credit facility, (b) financing of the acquisition of the Stena Compassion, and (c) general corporate purposes up to $5.0 million. The facility has a term of five years and is subject to nine semi-annual scheduled commitment reductions of $11.0 million each, commencing six months from signature of the facility, with the remaining commitment to be reduced to zero or repaid in full in one installment in April 2011.

     The facility is guaranteed by the vessel-owning subsidiaries and secured by first priority mortgages over the vessels, first priority assignment of earnings and insurances of the mortgaged vessels, assignment of time charter contracts in excess of 12 months and pledge of earnings and retention accounts.

     The facility contains various financial covenants, requiring the Company to maintain (a) minimum hull cover ratios, (b) minimum liquidity, (c) minimum equity ratio and interest cover ratio and, (d) positive working capital. The facility also contains restrictions as to changes in the management and ownership of the vessels, limitation on incurring additional indebtedness and requires the Company’s two principal beneficial equity holders to maintain a beneficial ownership of no less than 10% each in the issued common shares of the Company. In addition, the managers of the vessels are required to maintain a credit balance in an account with the lenders of at least $1.0 million.

     Interest on the facility is charged at LIBOR plus a margin equal to 1.125% if the total liabilities divided by the total assets, adjusting the book value of the fleet to its market value, is less than 50%; and 1.25% if equal to or greater than 50% but less than 60%; and 1.375% if equal to or greater than 60% but less than 65%; and 1.5% if equal to or greater than 65%. As explained further below, with effect from January 3, 2007, the Company paid an increased margin of 1.75% above LIBOR.

F-10

     The amounts shown as interest and finance expense in the statements of operations are analyzed as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2009		2008		2009		2008
Continuing Operations
Interest expense	$	3,044	$	3,427	$	9,480	$	10,166
Amortization of deferred charges		178		234		543		659
Deferred charges written off		—		446		12		483
Other fees		120		120		301		596
	$	3,342	$	4,227	$	10,336	$	11,904

The effective interest rate at September 30, 2009 was 5.07% p.a. (2008: 5.80% p.a.).

     Primarily due to vessel out-of-service time, the interest coverage ratio financial covenant contained in the debt agreement was not met during the three and nine months ended September 30, 2009 and 2008, and the lenders granted a further relaxation in the interest coverage ratio financial covenant from 3.00:1.00 to 2.25:1.00 for the periods ending December 31, 2007, March 31, 2008, June 30, 2008, with the ratio increasing to 2.75:1.00 for the period ending September 30, 2008 and returning to 3.00:1.00 for the period ending December 31, 2008. A relevant Fifth Supplemental Agreement was signed on June 11, 2008.

     The relaxation was subject to the following conditions:

• A reduction in the credit facility commitment level to $290.0 million with effect from April 3, 2008;

• A reduction of the outstanding borrowings under the credit facility from the level of $284.8 million to $200.0 million, by disposal of vessels by September 30, 2008, subject to legally binding sales contracts having been executed by June 30, 2008 which, on June 20, 2008, was extended to August 31, 2008;

• The Company’s continued payment of an increased margin of 1.75% above LIBOR until a compliance certificate is provided to its lenders advising the interest coverage ratio meets the required level of 3.00:1.00;

• The Company’s not paying dividends for the quarter ended December 31, 2007; and

• During the period of the interest coverage covenant relaxation any advance for new investments requires the consent of all of the lenders under the credit facility.

     On April 17, 2008, the lenders approved an amendment to the working capital ratio financial covenant to exclude from its calculation voluntary and mandatory prepayments.

     The conditions set by the Fifth Supplemental Agreement were not fully met. More specifically, the amended interest coverage financial covenant ratio was not met during the nine months ended September 30, 2009 and the Company failed to reduce the outstanding borrowings to $200.0 million. In addition, as of September 30, 2009 the Company was in breach of its equity ratio financial covenant as defined in the facility agreement. The lenders gave notices to the Company on October 27, 2008, December 24, 2008, February 6, 2009 and April 3, 2009 that certain events of default have occurred and are continuing and in which they advise that it is not their immediate intention to take enforcement action but they reserve their rights to do so.

     As of September 30, 2009, the Company was still in breach of the following covenants:

• An equity ratio of not less than 35%;

• An interest coverage ratio (as defined in the facility agreement) of not less than 3.00:1.00;

• The reduction of its outstanding borrowings to $200.0 million in accordance with the Fifth Supplemental Agreement;

• A working capital including the $221.4 million of debt reflected as current of not less than zero; and

• The minimum liquidity requirement consisting of free cash and cash equivalents.

F-11

     On October 13, 2009, Grandunion Inc. (“Grandunion”) acquired control of the Company pursuant to the Stock Purchase Agreement entered into on September 16, 2009, in which the Company’s existing syndicate of lenders entered into a new $221.4 million Facility Agreement to refinance the Company’s existing revolving credit facility. The Company also issued $145.0 million in aggregate principal amount of 7% senior unsecured convertible notes due 2015 (the “7% Notes”), convertible into common shares at a conversion price of $0.75 per share.

     The Company has applied $20.0 million of the proceeds from the 7% Notes to pay down the new credit facility, which has been structured to provide favorable amortization, with $38.0 million payable in 19 quarterly installments of $2.0 million each, and a $163.4 million repayment due at the end of the five-year term. This provided for the relaxation of all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months (see note 14).

     The remainder of the 7% Notes proceeds are expected to be used for general corporate purposes, to fund vessel acquisitions and to partially repay existing indebtedness. The Company also assumed a $37.4 million credit facility in relation to the three vessels transferred to the Company as part of the $400.0 million recapitalization (see note 14).

     As at September 30, 2009 repayments of the long-term debt under the existing credit facility, were due as follows:

2009	$	21,430
2011		200,000
	$	221,430

The above table represents contractual payments if the Company was not in default of its existing revolving credit facility. Given the fact that the Company was in default, the existing revolving credit facility has been designated as current on the condensed consolidated balance sheets.

8. Share-Based Compensation

     The Company’s 2005 Equity Incentive Plan (the “Plan”) is designed to provide certain key persons, on whose initiative and efforts the successful conduct of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (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.

     On March 28, 2007 and August 7, 2007, the Company made grants of restricted common shares of 120,000 shares and 80,000 shares to its three non-executive directors and its two executive directors, respectively. The fair value of each share on the grant dates was $7.80 and $9.90, respectively. As of December 31, 2007, the fair value of the non-vested shares granted, in the aggregate, amounted to $494 and was recognized as compensation cost in the statement of operations over the period to April 11, 2008.

     On May 29, 2009, the Company amended the Plan to: (a) increase the number of common shares reserved for issuance to 1,000,000 in order for the Company to best compensate its officers, directors, and executive, managerial, administrative and professional employees, (b) restrict the Plan so that no incentive stock options shall be granted under the Plan from and following May 29, 2009.

Restricted Common Shares

     In June 2008 and July 2008, the Company granted 20,000 and 325,000 restricted common shares, respectively. Of the 325,000 shares, 100,000 vested immediately and 225,000 shares vest annually on a pro rata basis over three years.

     The Company recognized as compensation expense for the three months ended September 30, 2009 and 2008, an amount of $63 and $91, respectively. For the nine months ended September 30, 2009 and 2008, the Company recognized as compensation expense an amount of $308 and $243, respectively. The unrecognized compensation expense of the restricted common shares amounting to $262 will be recognized as compensation expense on October 13, 2009 (see note 14).

Options to Purchase Common Shares

     In July 2008, the Company granted options to purchase 300,000 common shares, which vest annually on a pro rata basis over three years. The options expire on the 10th anniversary of the grant date.

F-12

     The Company recognized as compensation expense for the three months ended September 30, 2009 and 2008, an amount of $14 and $18, respectively. For the nine months ended September 30, 2009 and 2008, the Company recognized as compensation expense an amount of $63 and $18, respectively. The unrecognized portion of the expense amounting to $50 will be recognized as compensation cost in the statement of operations over the remaining vesting period until July 23, 2011. Pursuant to the October 13, 2009 agreement the Company accelerated the 300,000 options to purchase common shares of the Company to be immediately and fully vested, the expense will be accelerated and remain exercisable through July 23, 2018. (see note 14).

     The fair value of all share option awards has been calculated based on the Binomial lattice model method. The Company used this model given that the options to purchase common shares granted are exercisable at a specified time after vesting period (up to 10 years). The assumptions utilized in the Binomial lattice valuation model for the option to purchase common shares included a dividend yield of 5% and, an expected volatility of 43%. For the first two vesting dates, the risk-free interest rate was 3.8% and the fair value per share option amounted to $0.55 with an expected life of six years. For the third vesting date, the risk-free interest rate was 4.6% with an expected life of 10 years, while the fair value per share option amounted to $0.45. No options to purchase common shares were exercised during the nine months ended September 30, 2009.

9. Shareholders’ equity

     During the three and nine months ended September 30, 2009, the Company did not pay dividends as a result of the decision in September 2008 by the board of directors to suspend the payment of cash dividends.

     During the year ended December 31, 2008, the Company paid dividends of $0.10 per share ($2.9 million) to existing shareholders.

     On September 10, 2009, the Company increased the authorized share capital to one billion (1,000,000,000) common shares, par value $0.01 per share and five hundred million (500,000,000) preference shares, par value $0.01 per share.

10. Financial Instruments

     The principal financial assets of the Company consist of cash and cash equivalents, trade receivables and other assets. The principal financial liabilities of the Company consist of long-term bank loans, accounts payable accrued liabilities, derivative financial instruments and other liabilities.

Fair Values

     The carrying amounts of the following financial instruments approximate their fair values; cash and cash equivalents and restricted cash accounts, trade and other receivables, due from managing agent, due to related parties, derivative financial instruments and trade and other payables. The fair values of long-term loans approximate the recorded values, generally, due to their variable interest rates.

Interest Rate Risk

     Interest rate risk arises on bank borrowings. The Company monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favorable rates. The interest rates relating to the long-term loans are disclosed in note 7, Long-term Debt.

Concentration of Credit Risk

     The Company believes that no significant credit risk exists with respect to the Company’s cash due to the spread of this risk among various different banks and the high credit status of these counter-parties. The Company is also exposed to credit risk in the event of non-performance by counter-parties to derivative instruments. However, the Company limits this exposure by entering into transactions with counter-parties that have high credit ratings. Credit risk with respect to trade accounts receivable is reduced by the Company by chartering its vessels to established international charterers.

Interest Rate Swaps

     Outstanding swap agreements involve both the risk of a counterparty not performing under the terms of the contract and

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the risk associated with changes in market value. The Company monitors its positions, the credit ratings of counter-parties and the level of contracts it enters into with any one party. The counterparties to these contracts are major financial institutions. The Company has a policy of entering into contracts with counter-parties that meet stringent qualifications and, given the high level of credit quality of its derivative counterparties, the Company does not believe it is necessary to obtain collateral arrangements.

          The Company has entered into various interest rate swap agreements in order to hedge the interest expense arising from the Company’s long-term borrowings detailed in note 7. The interest rate swaps allow the Company to raise long-term borrowings at floating rates and swap them into effectively fixed rates. Under the interest rate swaps, the Company agrees with the counter-party to exchange, at specified intervals, the difference between a fixed rate and floating rate interest amount calculated by reference to the agreed notional amount.

The details of the Company’s swap agreements are as follows:

											Fair Value			Fair Value
											As of			As of
Counterparty			Termination		Notional					Floating	December 31,			September 30,
Interest rate swaps	Value date		date		amount		Fixed rate			rate	2008			2009
SMBC Bank		3/7/2006		4/4/2011		20,000		5.63	%	3-month LIBOR	$	(1,918	)	$	(1,676	)
Bank of Ireland		3/7/2006		4/4/2011		20,000		5.63	%	3-month LIBOR		(1,925	)		(1,672	)
HSH Nordbank		3/7/2006		4/4/2011		20,000		5.63	%	3-month LIBOR		(1,924	)		(1,674	)
Nordea Bank		3/7/2006		4/4/2011		20,000		5.63	%	3-month LIBOR		(1,923	)		(1,672	)
Bank of Scotland		3/7/2006		4/4/2011		20,000		5.63	%	3-month LIBOR		(1,941	)		(1,671	)
Nordea Bank		3/1/2006		3/4/2008		46,667		4.89	%	3-month LIBOR		—			—
Bank of Scotland		3/1/2006		3/4/2008		46,667		4.89	%	3-month LIBOR		—			—
Nordea Bank*		3/4/2008		4/4/2011		23,333		4.14	%	3-month LIBOR		(1,356	)		(1,315	)
Bank of Scotland**		3/4/2008		3/4/2011		46,667		4.285	%	3-month LIBOR		(1,464	)		(1,386	)
											$	(12,451	)	$	(11,066	)

* Synthetic swap including interest rate cap detailed as follows:

Counterparty	Value date		Termination date		Notional amount		Cap
Nordea		03/04/08		04/04/11	$	23,333		4.14	%

** Synthetic swap including interest rate floor detailed as follows:

Counterparty	Value date	Termination date	Notional amount		Floor
Bank of Scotland	03/04/08	03/04/11	$	23,333	4.285%

          The total fair value change of the interest rate swaps indicated above is shown in the condensed consolidated statements of operations. These amounts were a gain of $0.2 million and a loss of $0.8 million for the three months ended September 30, 2009 and 2008, respectively, and a gain of $1.4 million and a loss of $0.8 million for the nine months ended September 30, 2009 and 2008, respectively. These fair values are determined through Level 2 of the fair value hierarchy. The related asset or liability is shown under derivative financial instruments in the balance sheet.

          Effective January 1, 2008, the Company adopted fair value measurement. The definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements.

          The following tables present the Company’s liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

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Fair Value Hierarchy

			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2008
Assets
Vessel Valuations	$	39,500	$	—	$	39,500	$	—
Liabilities
Interest rate swap contracts	$	12,451	$	—	$	12,451	$	—
September 30, 2009
Assets
Vessel Valuations	$	128,400			$	$128,400	$	—
Liabilities
Interest rate swap contracts	$	11,066	$	—	$	11,066	$	—

          The Company’s derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company’s derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy.

          The Company’s assessment included its evaluation of the estimated fair market values for each vessel obtained by third-party valuations for which management assumes responsibility for all assumptions and judgements used, compared to the carrying value. Where possible, third-party valuations consider a number of factors that include a combination of last completed sales, present market candidates, buyers ideas and sellers ideas of similar vessels and other information they may possess. Based on this, third-party valuations make a professional assessment of what the vessel is worth at a given time assuming the vessels are in good working order and condition in hull and machinery to be expected of vessels of their age, size and type, that the vessel’s class is fully maintained and free from all conditions and in sound seagoing condition, and that the vessel is undamaged, fully equipped, freely transferable and charter free. Such instruments are typically classified within Level 2 of the fair value hierarchy.

11. Commitments and Contingent Liabilities

Rental agreement

          The Company has entered into two office rental agreements with a related party, a company with common ultimate beneficial shareholders, each at a monthly rental of €4,000 plus stamp duties, with duration until November 2015 and September 2016 respectively.

The committed rent payments as of September 30, 2009 are:

2009	$	39
2010		161
2011		169
2012		178
2013		187
2014 and thereafter		474
	$	1,208

Management agreements

Technical Ship Management Agreements

          Five vessel-owning subsidiaries have technical ship management agreements with International Tanker Management Limited (“ITM”) based in Dubai. ITM and the vessel-owning companies of the Altius, the Fortius, the High Land, the High Rider and the Ostria have entered into annual management agreements with ITM, which are cancellable by either party with two months notice. The agreed annual management fees for 2009 are $145 for two of the vessels and $175 for three of the vessels. The Chinook has a technical ship management agreement with Ernst Jacob Ship management GmbH (“Ernst Jacob”). The agreed annual management fee for 2009 is €149,650.

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Commercial Ship Management Agreements

          Magnus Carriers Corporation, a related company with common ultimate beneficial shareholders, provided the ship-owning companies of the Altius, the Fortius, the High Land, the High Rider, the Ostria and the Chinook with non-exclusive commercial management services through commercial management agreements entered into in October 2007. These agreements were cancelled by the Company effective May 1, 2009. See note 12 for the terms of the agreements.

Contingencies

          The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonably estimable, based upon facts known at the date the financial statements were prepared. For the three and nine months ended September 30, 2009 the Company has provided in respect of all claims an amount equal to $3.6 million. Other than those listed below, there are no material legal proceedings to which the Company is a party other than routine litigation incidental to the Company’s business:

• The charterers of the vessel Altius notified the Company in October 2008 of their intention to pursue the following claims and notified the appointment of an arbitrator in relation to them:

a) Damages suffered by sub-charterers of the vessel in respect of remaining on board cargo at New York in September 2007;

b) Damages suffered by sub-charterers of the vessel as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and

c) Damages suffered by sub-charterers of the vessel resulting from a grounding at Houston in October 2007.

• The charterers of the Fortius notified the Company in October 2008 of their intention to pursue the following claims, and notified the appointment of an arbitrator in relation to them:

a) Damages as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and

b) Damages resulting from the creation of Hydrogen Sulphide in the vessel’s tanks at two ports in the United States.

     All prior years contingencies were resolved in a settlement of $0.8 million, which was agreed to in March 2009, with ST Shipping, the charterers of the Arius, against an initial claim of $1.3 million arising under the charter party. The settlement amount has been accrued in the consolidated financial statements for the year ended December 31, 2008, and is included in the vessel operating expenses.

          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. The Company’s protection and indemnity (P&I) insurance coverage for pollution is $1.0 billion per vessel per incident.

12. Transactions Involving Related Parties

Amounts paid to Magnus Carriers Corporation

Management services and commissions

          Magnus Carriers, a related party with common ultimate beneficial shareholders, provided commercial management services to certain group vessel-owning companies at a commission of 1.25% of hires and freights earned by the vessels or fees of $7 per month per vessel where no 1.25% commission was payable. In addition, Magnus Carriers was entitled commission of 1% on the sale or purchase price in connection with a vessel sale or purchase. Until November 2008, Magnus Carriers also provided technical management services for certain vessel-owning companies.

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          During the three and nine months ended September 30, 2009, the Company paid to Magnus Carriers commissions and fees in respect of the commercial, technical management services and commission on the sale of vessels, amounting to $0.04 million and $0.4 million, respectively. For the three and nine months ended September 30, 2008 this amounted to $0.2 million and $1.5 million, respectively (figures include continuing and discontinued operations).

Contributions under management agreements

          During the three and nine months ended September 30, 2008, the Company received $0 and $1.6 million, respectively, from Magnus Carriers under the ship-management cost-sharing agreements for vessel operating expenses. The Company also received during the three and nine months ended September 30, 2008 an amount of $0 and $0.6 million, respectively, for special survey and dry-docking amortization (figures include continuing and discontinued operations). These agreements were terminated in 2008.

Crewing

          Part of the crewing for the Company was undertaken by Magnus Carriers, until May 2008, through a related entity, Poseidon Marine Agency. Manning fees paid for the three and nine months ended 2008 amounted to $0 and $0.01 million, respectively (figures include continuing and discontinued operations).

Rental of equipment

          The vessel owning companies of the MSC Oslo and the Saronikos Bridge entered into an agreement with Magnus Carriers each for the rent of a deck generator for its vessel. These agreements were terminated in 2008 and the vessel-owning companies purchased the deck generators from Magnus Carriers. Total fees paid to Magnus Carriers for the three and nine months ended September 30, 2008 amounted to $0.03 million and $0.12 million, respectively (figures include continuing and discontinued operations).

Amounts paid to other related parties

          During 2005 and 2007, the Company entered into two rental agreements for its office space in Athens, with a related party, a company with common ultimate beneficial shareholders. Rent paid amounted to $0.04 million for each of the three months ended September 30, 2009 and 2008, and $0.1 million for each of the nine months ended September 30, 2009 and 2008.

          During the nine months ended September 2009 and 2008, the Company paid a commission on the sale of the Ocean Hope of $0.02 million and the Arius of $0.2 million to a brokerage firm, respectively, of which one of the former Company’s directors is a shareholder.

          Also, during the three and nine months ended September 30, 2009, the Company paid $0.07 million in commissions to a brokerage firm for supplying charter agreements for the Altius and the Fortius, of which one of the former Company’s directors is a shareholder.

Amounts due (to)/ from related parties

Amounts due (to)/from related parties are as follows:

	As of		As of
	September 30,		December 31,
	2009		2008
Magnus Carriers Corporation	$	46	$	12
Other		32		37
	$	78	$	49

13. Discontinued operations

          During the nine months ended September 30, 2009, the Company sold one container vessel, the Ocean Hope, to an unrelated company (refer to note 6). As a result of its disposal, the Company would not have continuing involvement in the operation of this vessel following its disposal, and accordingly, the revenues and expenses of this vessel are reflected as discontinued operations in the Company’s condensed consolidated statements of operations for the months presented.

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The following table represents the revenues and net income from discontinued operations:

	Three months ended					Nine months ended
	September 30,					September 30,
	2009			2008		2009			2008
Operating Revenues	$	7		$	1,718	$	1,872		$	10,260
Net Income / (Loss) (includes $5,584 loss on sale of vessel in 2009, and $13,569 gain on sale of vessels in 2008)	$	(410	)	$	579	$	(5,840	)	$	10,177

14. Subsequent events

          The Company has evaluated subsequent events, that have occurred after the balance sheet date but before the issuance of these financial statements and performed, where it was necessary, the appropriate disclosures for those events. The date of the evaluation of subsequent events is the same as the date the financial statements are issued, January 26, 2010.

          (a) On October 13, 2009, the Company announced an approximately $400.0 million recapitalization that resulted in Grandunion acquiring control of the Company, pursuant to the Stock Purchase Agreement entered into on September 16, 2009. Grandunion, a company controlled by Michail S. Zolotas and Nicholas G. Fistes, acquired 18,977,778 newly issued common shares of the Company in exchange for three drybulk carriers. Of such shares, 2,666,667 were transferred to Rocket Marine Inc. (“Rocket Marine”), a company controlled by two former directors and principal shareholders in the Company, in exchange for Rocket Marine and its affiliates entering into a voting agreement with Grandunion. Under this voting agreement, Grandunion controls the voting rights relating to the shares owned by Rocket Marine and its affiliates. Grandunion currently owns approximately 21% of the Company and, as a result of the voting agreement, controls the vote of approximately 43% of the Company’s outstanding common shares.

          The Company has issued $145.0 million in aggregate principal amount of 7% senior unsecured convertible notes due 2015 (the “7% Notes”). The 7% Notes are convertible into common shares at a conversion price of $0.75 per share, subject to adjustment for certain events, including certain distributions by the Company of cash, debt and other assets, spin offs and other events. The issuance of the 7% Notes was pursuant to an Indenture dated October 13, 2009 between the Company and Marfin Egnatia Bank S.A., and a Note Purchase Agreement, executed by each of Investment Bank of Greece and Focus Maritime Corp. as purchasers. The 7% Notes are convertible at any time and if fully converted would result in the issuance of approximately 193.3 million newly issued common shares. Currently, Investment Bank of Greece retains $100,000 outstanding principal amount of the 7% Notes and the remainder is owned by Focus Maritime Corp., a company controlled by Mr. Zolotas, the Company’s President and Chief Executive Officer. All of the outstanding 7% notes owned by Focus Maritime Corp. were pledged to, and their acquisition was financed by, Marfin Egnatia Bank S.A. The proceeds of the 7% Notes are expected to be used for general corporate purposes, to fund vessel acquisitions and to partially repay existing indebtedness. The Note Purchase Agreement and the Indenture with respect to the 7% Notes contain certain covenants, including limitations on the incurrence of additional indebtedness, except in connection with approved vessel acquisitions, and limitations on mergers and consolidations. In connection with the issuance of the 7% Notes, the Company entered into a Registration Rights Agreement providing certain demand and other registration rights for the common shares underlying the 7% Notes. In November 2009, Focus Maritime Corp. converted $20.0 million of the 7% Notes into approximately 26.7 million new common shares. Accordingly, in the aggregate, $125.0 million of the 7% Notes remain outstanding. As a result of this issuance, Focus currently owns approximately 33% of the Company’s outstanding common shares.

          The Company’s existing syndicate of lenders entered into a new $221.4 million Facility Agreement with (i) Bank of Scotland plc, Nordea Bank Finland plc, London Branch, HSH Nordbank AG, The Governor and the Company of the Bank of Ireland, Sumitomo Mitsui Banking Corporation, Brussels Branch, Bayerische Hypo-und Vereinsbank AG, Commerzbank Aktiengesellschaft, General Electric Capital Corporation, Natixis and Swedbank AB (publ) as banks, (ii) The Governor and Company of The Bank of Ireland, HSH Nordbank AG and Sumitomo Mitsui Banking Corporation, Brussels Branch, as co-arrangers, (iii) Bank of Scotland Plc (Formerly HBOS Treasury Services Plc), Nordea Bank Finland Plc, London Branch, The Governor and Company of the Bank of Ireland, HSH Nordbank AG SMBC Capital Markets, Inc. as swap banks and (iv) Bank of Scotland Plc as agent, dated October 13, 2009, to refinance the Company’s existing revolving credit facility. In connection with the execution of the Facility Agreement, Investment Bank of Greece received warrants to purchase up to 5 million common shares at an exercise price of $2.00 per share, with an expiration date of October 13, 2015.

          The Company has applied $20.0 million of the bond proceeds to pay down the new credit facility, which has been structured to provide favorable amortization, with $38.0 million payable in 19 quarterly instalments of $2.0 million each, and a $163.4 million repayment due at the end of the five year term and also provided for the relaxation of all financial covenants (excluding working capital and minimum liquidity covenants) for a period ranging from 30 to 36 months. The remainder of the 7% Notes proceeds are expected to be used for general corporate purposes, to fund vessel acquisitions and to partially repay existing indebtedness.

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          The Company also assumed a $37.4 million credit facility in relation to the three vessels transferred to the Company as part of the capitalization. Subsequent to its assumption, this facility has been, and continues to be, periodically paid down and drawn upon to minimize the Company’s cost of capital. As of January 26, 2010, there was no outstanding balance under this facility.

          The new management of the Company is led by Nicholas G. Fistes as Executive Director (Chairman), Michail S. Zolotas as Executive Director (Deputy Chairman), President and Chief Executive Officer, and Allan L. Shaw as Executive Director and Chief Financial Officer. The new management team intends to build the technical and commercial group of the Company and incorporate the Company’s existing team into their operations.

The full board of directors is set forth below:

• Mr. Nicholas G. Fistes — Executive Director (Chairman)

• Mr. Michail S. Zolotas — Executive Director (Deputy Chairman), President and Chief Executive Officer

• Mr. Allan L. Shaw — Executive Director and Chief Financial Officer

• Mr. Masaaki Kohsaka — Non-Executive Director

• Mr. Spyros Gianniotis — Non-Executive Director

• Mr. Apostolos I. Tsitsirakis — Non-Executive Director

• Mr. Panagiotis Skiadas — Non-Executive Director

Post closing of the transaction, the Company’s 14-vessel fleet consisted of:

• four Panamax tankers

• five MR tankers

• two container vessels (2,917 TEU)

• three drybulk vessels totaling 460,074 dwt

          At such time, six of the Company’s 14 vessels were secured on period charters (currently, five of the Company’s 12 vessels). Charters for two of the Company’s products tanker vessels currently have profit-sharing components as well as one Capesize vessel.

          (b) Also, on October 13, 2009, in connection with the recapitalization the Company reviewed the restricted common share award agreements entered into under the Company’s 2005 equity incentive plan and resolved that all unvested restricted common shares previously granted shall become vested. The Company also caused 300,000 options to purchase common shares previously granted to the Company’s former Chief Executive Officer, pursuant to the Option Agreement dated July 23, 2008, to be immediately and fully vested and are to remain exercisable through July 23, 2018. As a result, all unrecognized compensation expense totalling $0.4 million, has been recorded on October 13, 2009.

          (c) On November 5, 2009, the Company announced a two-year time charter beginning December 23, 2009 through December 30, 2011 (assuming the maximum option is chosen) for the 1993-built, 172,972 dwt Capesize tanker Australia at a net of commissions rate of $20,391 per day.

          (d) On November 13, 2009, Grandunion entered into a non-binding letter of intent with the Company to drop down Newlead Shipping S.A. (“Newlead Shipping”) and four drybulk and two product tanker vessels identified below in a transaction valued at approximately $180.0 million, of which approximately $20.0 million will be paid through the issuance of the Company’s common shares at a price of $2.25 per share. The balance of the purchase price will be paid through the assumption of existing liabilities. The transaction is subject to board approval and consents from existing creditors. No assurance can be provided that this transaction will be closed and if it is closed in the form contemplated.

          Newlead Shipping is an integrated technical and commercial management company, appropriately licensed and staffed, providing a broad spectrum of technical and commercial management to all markets within the maritime industry. Newlead Shipping has the following accreditations:

• ISO 9001:2000 from American Bureau of Shipping for a quality management system, by consistently providing a service that meets customer and applicable statutory and regulatory requirements, and enhancing customer satisfaction through, among other things, processes for continual improvement.

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• ISO 14001:2004 from American Bureau of Shipping for environmental management, including policy and objectives targeting legal and other requirements.

• Safety, Quality and Environmental accreditation from American Bureau of Shipping.

          Newlead Shipping’s management has broad expertise, including specialized knowledge required for managing oil tankers, gas carriers, chemical carriers and bulkers. Senior personnel have a record of successfully performing and consist of a pool of dedicated senior engineers and top-class masters.

Commercial and Other Details – As per letter of Intent

										Charter
										Party
										Expected
								Charter	Charter Party	End Date
	Year				Rate		Charter Party	Party	Expected	(Including
Vessel	Built		DWT		(USD)	Commissions	Commencement	Duration	End Date	Max. Option)
Drybulk Vessels Capesize
Grand Ocean		1990		149,498	15,000 1st year;	3.75% + 0.25%	2/10/2009	2 years	Min. 12/10/2010 to	4/10/2012
					16,000 2nd year;			+/- 60 days	Max. 4/10/2011
					16,000 3rd option year
Grand Venetico		1990		134,982	16,500 1st year;	3.75% + 0.25%	3/1/2009	Abt. 2.5 years +/- 60 days	Min. 7/10/2011 to	5/10/2012
					18,500 balance;				Max. 11/10/2011
					18,500 option six months
Panamaxes
Grand Victoria		2002		75,966	18,000	3.75% + 1.25% +1.25%	11/22/2009	Abt. 11 to abt. 13 mos.	Min. 10/7/2010 to	1/6/2011
									Max. 1/6/2011
Grand Rodosi		1990		68,788	10,200 net; plus profit sharing 50/50	0.25%	7/22/2009	Abt. 3 years +/- 60 days	Min. 5/23/2012 to	9/20/2012
									Max. 9/20/2012
Product Tankers Handy size
Hiona		2003		37,337	19,500 plus profit sharing	1.25% + 1.25%	4/18/2008	36 months +/- 30 days	Min. 3/18/2011 to	5/18/2011
								Charterer’s option	Max. 5/18/2011
Hiotissa		2004		37,330	19,500 plus profit sharing	1.25% + 1.25%	5/6/2008	36 months +/- 30 days	Min. 4/6/2011 to	6/6/2011
								Charterer’s option	Max. 6/6/2011

          (e) In connection with the recapitalization, the Company entered into an employment agreement with its Chief Financial Officer, for a term of three years, subject to a one year extension, that provides for an annual salary, along with discretionary and guaranteed bonus compensation for the first year. Pursuant to the agreement, the officer received (i) 2,000,000 restricted common shares that are subject to vesting and (ii) options to purchase 3,000,000 common shares, having an exercise price of $1.65, subject to vesting and having an expiration date of October 13, 2014. The agreement provides for certain payments and accelerated vesting of the equity compensation in certain circumstances, including change of control or termination without cause.

          (f) On November 13, 2009, the Board of Directors made a one-time restricted stock grant in an aggregate amount of 180,000 restricted common shares to the independent directors of the Board of Directors. These restricted common shares vest 33% annually over the three year period ending January 1, 2013. The Board of Directors also made an annual cash compensation payment of $0.2 million in the aggregate, to the independent directors.

          (g) On December 4, 2009, at a special general meeting, the shareholders of the Company approved a name change of the Company from “Aries Maritime Holdings Limited” to “NewLead Holdings Ltd.” The name change became effective upon

F-20

the filing by the Company of a Certificate of Incorporation of Name Change with the Bermuda Registrar of Companies on December 21, 2009, at which time the Company changed its trading symbol on the NASDAQ Stock Market to “NEWL”. In addition, upon shareholder approval also received at such special general meeting, the Company adopted a change to its bye-laws to permit written resolutions to be approved by a majority of the shareholders rather than unanimously. The Amended and Restated Bye-Laws are included with this Report on Form 6-K as Exhibit 3.1.

          (h) On December 22, 2009, the Board of Directors approved the increase of the authorized shares available for issuance under the Company’s 2005 Stock Plan from 1,000,000 to 7,000,000.

          (i) For advisory services provided in connection with the recapitalization, in January 2010, the Company issued to a third party 2,500,000 common shares and warrants to purchase 5,000,000 common shares expiring on January 2, 2016.

          (j) On January 1, 2010, the Board of Directors made their annual restricted stock grants in an aggregate amount of 80,000 restricted common shares to the independent directors of the Board of Directors. These restricted common shares vest 100% on the first anniversary date of the grant.

          (k) In January 2010, the Company sold the MSC Seine and the Saronikos Bridge for an aggregate purchase price resulting in gross proceeds to the Company of $13.0 million, payable in cash. The Saronikos Bridge was delivered to her new owners on January 7, 2010 and the MSC Seine was delivered on January 20, 2010.

          Each of the MSC Seine and the Saronikos Bridge is a 2,917 TEU container vessel built in 1990. As a result of the sale and delivery of these vessels, the Company has exited the container market.

F-21

EXHIBIT INDEX

3.1	Amended and Restated Bye-Laws
10.1	Financial Agreement dated August 18, 2009 by and among Marfin Egnatia Bank S. A., Australia Holdings Ltd., China Holdings Ltd. and Brazil Holdings Ltd.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: January 27, 2010

NEWLEAD HOLDINGS LTD.
By:	/s/ Allan L. Shaw
Name:	Allan L. Shaw
Title:	Chief Financial Officer

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED BYE - LAWS

of

NEWLEAD HOLDINGS LTD.

I HEREBY CERTIFY that the within-written Bye-Laws are a true copy of the Bye-Laws of NEWLEAD HOLDINGS LTD. originally adopted on May 31, 2005, and amended and restated pursuant to Resolutions of the Board of Directors and the Shareholders on October 7, 2008 and August 26, 2009, and as amended and restated pursuant to Resolutions of the Board and approved by the requisite Shareholder vote at a Special Meeting of Shareholders held on December 4, 2009.

Director

TABLE OF CONTENTS

	Page
INTERPRETATION		1
1. DEFINITIONS		1
SHARES		2
2. POWER TO ISSUE SHARES		2
3. POWER OF THE COMPANY TO PURCHASE ITS SHARES		2
4. RIGHTS ATTACHING TO SHARES		3
5. CALLS ON SHARES		4
6. PROHIBITION ON FINANCIAL ASSISTANCE		5
7. FORFEITURE OF SHARES		5
8. SHARE CERTIFICATES		6
9. FRACTIONAL SHARES		6
REGISTRATION OF SHARES		6
10. REGISTER OF MEMBERS		6
11. REGISTERED HOLDER ABSOLUTE OWNER		6
12. TRANSFER OF REGISTERED SHARES		7
13. TRANSMISSION OF REGISTERED SHARES		7
ALTERATION OF SHARE CAPITAL		9
14. POWER TO ALTER CAPITAL		9
15. VARIATION OF RIGHTS ATTACHING TO SHARES		9
DIVIDENDS AND CAPITALISATION		9
16. DIVIDENDS		9
17. POWER TO SET ASIDE PROFITS		9
18. METHOD OF PAYMENT		10
19. CAPITALISATION		10
MEETINGS OF MEMBERS		11
20. ANNUAL GENERAL MEETINGS		11
21. SPECIAL GENERAL MEETINGS		11
22. REQUISITIONED GENERAL MEETINGS AND OTHER BUSINESS PROPOSED BY MEMBERS		11
23. NOTICE		12
24. GIVING NOTICE		12
25. POSTPONEMENT OF GENERAL MEETING		13
26. ATTENDANCE AND SECURITY AT GENERAL MEETINGS		13
27. QUORUM AT GENERAL MEETINGS		13
28. CHAIRMAN TO PRESIDE		14
29. VOTING ON RESOLUTIONS		14
30. POWER TO DEMAND A VOTE ON A POLL		15
31. VOTING BY JOINT HOLDERS OF SHARES		15
32. INSTRUMENT OF PROXY		16
33. REPRESENTATION OF CORPORATE MEMBER		16
34. ADJOURNMENT OF GENERAL MEETING		16
35. WRITTEN RESOLUTIONS		17
36. DIRECTORS ATTENDANCE AT GENERAL MEETINGS		18

ii 

	Page
DIRECTORS AND OFFICERS		18
37. ELECTION OF DIRECTORS		18
38. CLASSES OF DIRECTORS		18
39. TERM OF OFFICE OF DIRECTORS		18
40. ALTERNATE DIRECTORS		19
41. REMOVAL OF DIRECTORS		19
42. VACANCY IN THE OFFICE OF DIRECTOR		20
43. REMUNERATION OF DIRECTORS		20
44. DEFECT IN APPOINTMENT OF DIRECTOR		20
45. DIRECTORS TO MANAGE BUSINESS		20
46. POWERS OF THE BOARD OF DIRECTORS		20
47. REGISTER OF DIRECTORS AND OFFICERS		22
48. OFFICERS		22
49. APPOINTMENT OF OFFICERS		22
50. DUTIES OF OFFICERS		22
51. REMUNERATION OF OFFICERS		22
52. CONFLICTS OF INTEREST		22
53. INDEMNIFICATION AND EXCULPATION OF DIRECTORS AND OFFICERS		23
MEETINGS OF THE BOARD OF DIRECTORS		24
54. BOARD MEETINGS		24
55. NOTICE OF BOARD MEETINGS		24
56. PARTICIPATION IN MEETINGS BY TELEPHONE		24
57. QUORUM AT BOARD MEETINGS		24
58. BOARD TO CONTINUE IN THE EVENT OF VACANCY		24
59. CHAIRMAN TO PRESIDE		24
60. WRITTEN RESOLUTIONS		24
61. VALIDITY OF PRIOR ACTS OF THE BOARD		25
CORPORATE RECORDS		25
62. MINUTES		25
63. PLACE WHERE CORPORATE RECORDS KEPT		25
64. FORM AND USE OF SEAL		25
ACCOUNTS		25
65. BOOKS OF ACCOUNT		25
66. FINANCIAL YEAR END		26
AUDITS		26
67. ANNUAL AUDIT		26
68. APPOINTMENT OF AUDITORS		26
69. REMUNERATION OF AUDITORS		26
70. DUTIES OF AUDITORS		26
71. ACCESS TO RECORDS		26
72. FINANCIAL STATEMENTS		26
73. DISTRIBUTION OF AUDITORS REPORT		27
74. VACANCY IN THE OFFICE OF AUDITOR		27
BUSINESS COMBINATIONS		27
75. BUSINESS COMBINATIONS		27
VOLUNTARY WINDING-UP AND DISSOLUTION		32
76. WINDING-UP		32

iii 

	Page
CHANGES TO CONSTITUTION		32
77. CHANGES TO BYE-LAWS		32
78. DISCONTINUANCE		32

iv 

AMENDED AND RESTATED BYE-LAWS OF

NEWLEAD HOLDINGS LTD.

INTERPRETATION

1. DEFINITIONS

1.1 In these Bye-laws, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:

“Act” means the Companies Act 1981 as amended from time to time;

“Alternate Director” means an alternate director appointed in accordance with these Bye-laws;

“Auditor” includes an individual or partnership;

“Board” means the board of directors appointed or elected pursuant to these Bye-laws and acting by resolution in accordance with the Act and these Bye-laws or the directors present at a meeting of directors at which there is a quorum;

“Common Shares” means the shares described in Bye-law 4.1(i);

“Company” means the company for which these Bye-laws are approved and confirmed;

“Director” means a director of the Company and shall include an Alternate Director;

“Member” means the person registered in the Register of Members as the holder of shares in the Company and, when two or more persons are so registered as joint holders of shares, means the person whose name stands first in the Register of Members as one of such joint holders or all of such persons, as the context so requires;

“Notice” means the written notice as further provided in these Bye-laws unless otherwise specifically stated;

“Officer” means any person appointed by the Board to hold an office in the Company;

“Preference Shares” means the shares described in Bye-law 4.1(ii);

“Register of Directors and Officers” means the register of directors and officers referred to in these Bye-laws;

“Register of Members” means the register of members referred to in these Bye-laws;

“Resident Representative” means any person appointed to act as resident representative and includes any deputy or assistant resident representative; and

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“Secretary” means the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary.

1.2 In these Bye-laws, where not inconsistent with the context:

(a)	words denoting the plural number include the singular number and vice versa;
(b)	words denoting the masculine gender include the feminine and neuter genders;
(c)	words importing persons include companies, associations or bodies of persons whether corporate or not;
(d)	the words:-

(i)	“may” shall be construed as permissive; and
(ii)	“shall” shall be construed as imperative; and

(e) unless otherwise provided herein, words or expressions defined in the Act shall bear the same meaning in these Bye-laws.

1.3	In these Bye-laws expressions referring to writing or its cognates shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in visible form.
1.4	Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof.

SHARES

2. POWER TO ISSUE SHARES

2.1

Subject to these Bye-laws, to the requirements of any stock exchange on which the Company’s shares are listed and to any resolution of the Members to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, the Board shall have the power to issue any unissued shares of the Company on such terms and conditions as it may determine.

2.2

Without limitation to the provisions of Bye-law 4, subject to the provisions of the Act, any preference shares may be issued or converted into shares that (at a determinable date or at the option of the Company or the holder) are liable to be redeemed on such terms and in such manner as may be determined by the Board (before the issue or conversion).

3. POWER OF THE COMPANY TO PURCHASE ITS SHARES

3.1 The Company may purchase its own shares in accordance with the provisions of the Act on such terms as the Board shall think fit. The Board may exercise all the powers of the Company to purchase all or any part of its own shares in accordance with the Act.

3.2 The Board may, at its discretion and without the sanction of a resolution of Members, authorise the acquisition by the Company of its own shares, to be held as treasury shares, upon such terms as the Board may in its discretion determine, provided always that such acquisition is effected in accordance with the provisions of the Companies Act. The Company shall be entered in the Register of members as a shareholder in respect of the shares held by the Company as treasury shares and shall be a shareholder of the Company but subject always to the provisions of the Companies Act and for the avoidance of doubt the Company shall not exercise any rights and shall not enjoy or participate in any of the rights attaching to those shares save as expressly provided for in the Companies Act. Subject as otherwise provided in these Bye-laws in relation to shares in the Company generally, any shares of the Company held by the Company as treasury shares shall be at the disposal of the Board, which may hold all or a ny of such shares, dispose of or transfer all or any of such shares for cash or other consideration, or cancel all or any of such shares.

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4. RIGHTS ATTACHING TO SHARES

4.1	At the date these Bye-laws are adopted, the share capital of the Company shall be divided into two classes: (i) 1,000,000,000 common shares of par value US$0.01 each (the “Common Shares”) and (ii) 500,000,000 preference shares of par value US$0.01 each (the “Preference Shares”).
4.2	The holders of Common Shares shall, subject to the provisions of these Bye-laws (including, without limitation, the rights attaching to Preference Shares):

(a)	be entitled to one vote per share;
(b)	be entitled to such dividends as the Board may from time to time declare;
(c)	in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to share ratably in the surplus assets of the Company; and
(d)	generally be entitled to enjoy all of the rights attaching to shares.

4.3 The Board is authorised to provide for the issuance of the Preference Shares in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations, or restrictions thereof (and, for the avoidance of doubt, such matters and the issuance of such Preference Shares shall not be deemed to vary the rights attached to the Common Shares). The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

(a)	the number of shares constituting that series and the distinctive designation of that series;
(b)	the dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of the payment of dividends on shares of that series;
(c)	whether that series shall have voting rights, in addition to the voting rights provided by law, and if so, the terms of such voting rights;
(d)	whether that series shall have conversion or exchange privileges (including, without limitation, conversion into Common Shares), and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine;
(e)	whether or not the shares of that series shall be redeemable or repurchaseable, and, if so, the terms and conditions of such redemption or repurchase, including the manner of selecting shares for redemption or repurchase if less than all shares are to be redeemed or repurchased, the date or dates upon or after which they shall be redeemable or repurchaseable, and the amount per share payable in case

3

	of redemption or repurchase, which amount may vary under different conditions and at different redemption or repurchase dates;
(f)	whether that series shall have a sinking fund for the redemption or repurchase of shares of that series, and, if so, the terms and amount of such sinking fund;
(g)	the right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Company or any subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Company or any subsidiary of any issued shares of the Company;
(h)	the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series; and
(i)	any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series.

4.4

Any Preference Shares of any series which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes shall have the status of authorised and unissued Preference Shares of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preference Shares to be created by resolution or resolutions of the Board or as part of any other series of Preference Shares, all subject to the conditions and the restrictions on issuance set forth in the resolution or resolutions adopted by the Board providing for the issue of any series of Preference Shares.

4.5

At the discretion of the Board, whether or not in connection with the issuance and sale of any shares or other securities of the Company, the Company may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board, including, without limiting the generality of this authority, conditions that preclude or limit any person or persons owning or offering to acquire a specified number or percentage of the outstanding Common Shares, other shares, option rights, securities having conversion or option rights, or obligations of the Company or transferee of the person or persons from exercising, converting, transferring or receiving the shares, option rights, securities having conversion or option rights, or obligations.

5. CALLS ON SHARES

5.1 The Board may make such calls as it thinks fit upon the Members in respect of any monies (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members (and not made payable at fixed times by the terms and conditions of issue) and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may

4

	differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls.
5.2	Any sum which by the terms of allotment of a share becomes payable upon issue or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall for all the purposes of these Bye-laws be deemed to be a call duly made and payable, on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of these Bye-laws as to payment of interest, costs, charges and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
5.3	The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
5.4	The Company may accept from any Member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up.

6. FINANCIAL ASSISTANCE

The Company shall comply with the Act with respect to financial assistance for the purpose of the acquisition of its shares.

7. FORFEITURE OF SHARES

7.1 If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Member a notice in writing in the form, or as near thereto as circumstances admit, of the following:

NewLead Holdings Ltd. (the “Company”) Notice of Liability to Forfeiture for Non-Payment of Call

You have failed to pay the call of [amount of call] made on the [         ] day of [         ], 200[         ], in respect of the [number] share(s) [number in figures] standing in your name in the Register of Members of the Company, on the [          ] day of [         ], 200[         ], the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of [         ] per annum computed from the said [         ] day of [         ], 200[         ] at the registered office of the Company the share(s) will be liable to be forfeited.

                                                            
[Signature of Secretary] By Order of the Board

7.2 If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine.

5

7.3	A Member whose share or shares have been forfeited as aforesaid shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such share or shares at the time of the forfeiture and all interest due thereon.
7.4	The Board may accept the surrender of any shares, which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered share shall be treated as if it had been forfeited.

8. SHARE CERTIFICATES

8.1	Every Member shall be entitled to a certificate under the seal of the Company (or a facsimile thereof) specifying the number and, where appropriate, the class of shares held by such Member and whether the same are fully paid up and, if not, specifying the amount paid on such shares. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.
8.2	The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom the shares have been allotted.
8.3	If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.

9.

FRACTIONAL SHARES

The Company may issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding-up.

REGISTRATION OF SHARES

10. REGISTER OF MEMBERS

10.1

The Board shall cause to be kept in one or more books a Register of Members and shall enter therein the particulars required by the Act.

10.2

The Register of Members shall be open to inspection at the registered office of the Company on every business day, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each business day be allowed for inspection. The Register of Members may, after notice has been given in accordance with the Act, be closed for any time or times not exceeding in the whole thirty days in each year.

11.	REGISTERED HOLDER ABSOLUTE OWNER
	The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person.

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12. TRANSFER OF REGISTERED SHARES

12.1 An instrument of transfer shall be in writing in the form of the following, or as near thereto as circumstances admit, or in such other form as the Board may accept:

NewLead Holdings Ltd. (the “Company”) Transfer of a Share or Shares

FOR VALUE RECEIVED [amount], I, [name of transferor] hereby sell, assign and transfer unto [transferee] of [address], [number] of shares of the Company.

DATED this [         ] day of [         ], 200[         ]

Signed by:	In the presence of
Transferor	Witness
Transferee	Witness

12.2	Such instrument of transfer shall be signed by or on behalf of the transferor and transferee, provided that, in the case of a fully paid share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been transferred to the transferee in the Register of Members.
12.3	The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the shares to which it relates and by such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer.
12.4	The joint holders of any share may transfer such share to one or more of such joint holders, and the surviving holder or holders of any share previously held by them jointly with a deceased Member may transfer any such share to the executors or administrators of such deceased Member.
12.5	The Board may in its absolute discretion and without assigning any reason therefor refuse to register the transfer of a share, which is not fully paid. The Board shall refuse to register a transfer unless all applicable consents, authorisations and permissions of any governmental body or agency in Bermuda have been obtained. If the Board refuses to register a transfer of any share the Secretary shall, within three months after the date on which the transfer was lodged with the Company, send to the transferor and transferee notice of the refusal.
12.6	Shares may be transferred without a written instrument if transferred by an appointed agent or otherwise in accordance with the Act.

13. TRANSMISSION OF REGISTERED SHARES

13.1 In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased

7

Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member’s interest in the shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Member with other persons. Subject to the provisions of the Act, for the purpose of this Bye-law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Member.

13.2 Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:

NewLead Holdings Ltd. (the “Company”) Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member

I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased Member] to [number] share(s) standing in the Register of Members of the Company in the name of the said [name of deceased/bankrupt Member] instead of being registered myself/ourselves, elect to have [name of transferee] (the “Transferee”) registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof; and the Transferee does hereby agree to take the said share(s) subject to the same conditions.

DATED this [         ] day of [         ], 200[         ]

Signed by:	In the presence of
Transferor	Witness
Transferee	Witness

13.3

On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Member before such Member’s death or bankruptcy, as the case may be.

13.4

Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

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ALTERATION OF SHARE CAPITAL

14. POWER TO ALTER CAPITAL

14.1	The Company may if authorised by resolution of the Members increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act.
14.2	Where, on any alteration or reduction of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit.

15. VARIATION OF RIGHTS ATTACHING TO SHARES

If, at any time, the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate general meeting of the holders of the shares of the class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

DIVIDENDS AND CAPITALISATION

16. DIVIDENDS

16.1	The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend to be paid to the Members, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. No unpaid dividend shall bear interest as against the Company.
16.2	The Board may fix any date as the record date for determining the Members entitled to receive any dividend.
16.3	The Company may pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.
16.4	The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.

17.	POWER TO SET ASIDE PROFITS
	The Board may, before declaring a dividend, set aside out of the surplus or profits of the Company, such sum as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other purpose.

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18. METHOD OF PAYMENT

18.1	Any dividend or other monies payable in respect of a share may be paid by cheque or warrant sent through the post directed to the registered address of the Members (in the case of joint Members, the senior joint holder, seniority being determined by the order in which the names stand in the Register of Members) or person entitled thereto, or by direct transfer to such bank account as such Member or person entitled thereto may direct. Every such cheque shall be made payable to the order of the person to whom it is sent or to such persons as the Member may direct, and payment of the cheque or warrant shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby. If two or more persons are registered as joint holders of any shares any one can give an effectual receipt for any dividend paid in respect of such shares.
18.2	The Board may deduct from the dividends or distributions payable to any Member all monies due from such Member to the Company on account of calls or otherwise.
18.3	Any dividend and or other monies payable in respect of a share which has remained unclaimed for 7 years from the date when it became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. The payment of any unclaimed dividend or other moneys payable in respect of a share may (but need not) be paid by the Company into an account separate from the Company’s own account. Such payment shall not constitute the Company a trustee in respect thereof.
18.4	The Company shall be entitled to cease sending dividend warrants and cheques by post or otherwise to a Member if those instruments have been returned undelivered to, or left uncashed by, that Member on at least two consecutive occasions, or, following one such occasion, reasonable enquiries have failed to establish the Member’s new address. The entitlement conferred on the Company by this Bye-law 18.4 in respect of any Member shall cease if the Member claims a dividend or cashes a dividend warrant or cheque.

19. CAPITALISATION

19.1 The Board may resolve to capitalise any sum for the time being standing to the credit of any of the Company’s share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares pro-rata (except in connection with the conversion of shares of one class to shares of another class) to the Members.

19.2 The Board may resolve to capitalise any sum for the time being standing to the credit of a reserve account or sums otherwise available for dividend or distribution by applying such amounts in paying up in full partly paid or nil paid shares of those Members who would have been entitled to such sums if they were distributed by way of dividend or distribution.

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MEETINGS OF MEMBERS

20.	ANNUAL GENERAL MEETINGS
	The annual general meeting of the Company shall be held in each year (other than the year of incorporation) at such time and place the Board shall appoint.

21.	SPECIAL GENERAL MEETINGS
	The Board may convene a special general meeting of the Company whenever in their judgment such a meeting is necessary.

22. REQUISITIONED GENERAL MEETINGS AND OTHER BUSINESS PROPOSED BY MEMBERS

22.1	Other than as required by the Act, no persons other than the Board are permitted to call a special general meeting. However, and notwithstanding any other provisions of these Bye-laws, the Board shall, on the requisition of Members holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up share capital of the Company as at the date of the deposit carries the right to vote at general meetings of the Company, forthwith proceed to convene a special general meeting of the Company and the provisions of the Act shall apply.
22.2	In addition to any rights of Members under the Act, other business may be proposed to be brought before any annual general meeting of the Company by any person who: (i) is a Member of record of the Company on the date of the giving of the notice provided for in this Bye-law and on the record date for the determination of Members entitled to receive notice of and vote at such meeting; and (ii) complies with the notice procedures set forth in this Bye-law.
22.3	In addition to any other applicable requirements, for any business to be proposed by a Member pursuant to Bye-law 22.2, other than business specifically in the notice of the meeting or business brought at the discretion of the Board, such Member must have given timely notice thereof in proper written form to the Secretary.
22.4	To be timely, a notice given to the Secretary pursuant to Bye-law 22.3 must be delivered to or mailed and received at the registered office and the principal executive offices of the Company as set forth in the Company’s filings with the U.S. Securities and Exchange Commission not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding annual general meeting; provided, however, that in the event that the annual general meeting is called for a date that is not within thirty (30) days before or after such anniversary date, in order to be timely, notice must be given not later than ten (10) days following the earlier of the date on which notice of the annual general meeting was posted to Members or the date on which public disclosure of the date of the annual general meeting was made.
22.5	To be in proper written form, a notice given to the Secretary pursuant to Bye-law 22.3 must set forth as to each matter such Member proposes to bring before the general meeting (i) a brief description of the business desired to be brought before the general meeting and the reasons for conducting such business at the general meeting, (ii) the name and record address of such Member, (iii) the class or series and number of shares of

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the Company which are registered in the name of or owned beneficially by such Member, (iv) a description of all arrangements or understandings between such Member and any other person or persons (including their names) in connection with the proposal of such business by such Member and any material interest of such Member in such business, and (v) a representation that such Member intends to appear in person or by proxy at the general meeting to bring such business before the general meeting.

23. NOTICE

23.1	Notice of every annual general meeting and special general meeting, other than any meeting the giving of notice of which is otherwise prescribed by law, stating the date, time, place and purpose thereof, and in the case of special general meetings, the name of the person or persons at whose direction the notice is being issued, shall be given personally or sent in accordance with Bye-law 24.1 at least fifteen (15) but not more than sixty (60) days before such meeting, to each Member entitled to attend and vote thereat and to each Member of record who, by reason of any action proposed at such meeting would be entitled to have his shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect. The Board may fix a time not more than sixty (60) nor less than fifteen (15) days prior to the date of any annual general meeting or special general meeting as the time as of which Members entitled to notice of and to vote at such a meeting shall be determined, and all persons at such time who were Members of record holding shares entitled to vote on matters to be considered at such meeting and no others shall be entitled to notice of and to vote at such meeting.
23.2	A general meeting of the Company shall, notwithstanding that it is called on shorter notice than that specified in these Bye-laws, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving a right to attend and vote thereat in the case of a special general meeting.
23.3	The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

24. GIVING NOTICE

24.1	A notice may be given by the Company to any Member either by delivering it to such Member in person or by sending it to such Member’s address in the Register of Members or to such other address given for the purpose. For the purposes of this Bye-law, a notice may be sent by letter mail, courier service, cable, telex, telecopier, facsimile, electronic mail or other mode of representing words in a legible form.
24.2	Any notice required to be given to a Member shall, with respect to any shares held jointly by two or more persons, be given to whichever of such persons is named first in the Register of Members and notice so given shall be sufficient notice to all the holders of such shares.
24.3	Save as provided by Bye-law 24.4, any notice shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in

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	proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted, at the time when it was posted, delivered to the courier or to the cable company or transmitted by telex, facsimile, electronic mail, or such other method as the case may be.
24.4	Mail notice shall be deemed to have been served seven days after the date on which it is deposited, with postage prepaid, in the mail of any member state of the European Union, the United States, or Bermuda.
24.5	The Company shall be under no obligation to send a notice or other document to the address shown for any particular Member in the Register of Members if the Board considers that the legal or practical problems under the laws of, or the requirements of any regulatory body or stock exchange in, the territory in which that address is situated are such that it is necessary or expedient not to send the notice or document concerned to such Member at such address and may require a Member with such an address to provide the Company with an alternative acceptable address for delivery of notices by the Company.

25.

POSTPONEMENT OF GENERAL MEETING

The Chairman or the President may, and the Secretary on instruction from the Chairman or the President shall, postpone any general meeting called in accordance with the provisions of these Bye-laws (other than a meeting requisitioned under these Bye-laws) provided that notice of postponement is given to each Member before the time for such meeting. Fresh notice of the date, time and place for the postponed meeting shall be given to the Members in accordance with the provisions of these Bye-laws.

26. ATTENDANCE AND SECURITY AT GENERAL MEETINGS

26.1

Members may participate in any general meeting by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

26.2

The Board may, and at any general meeting, the chairman of such meeting may make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of a general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into the meeting place. The Board and, at any general meeting, the chairman of such meetings are entitled to refuse entry to a person who refuses to comply with any such arrangements, requirements or restrictions.

27. QUORUM AT GENERAL MEETINGS

27.1	At any general meeting of the Company two or more persons present in person at the start of the meeting and representing in person or by proxy in excess of 33.33% of the total issued voting shares in the Company shall form a quorum for the transaction of business.
27.2	If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meeting shall be deemed

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cancelled and, in any other case, the meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Secretary may determine. If the meeting shall be adjourned to the same day one week later or the Secretary shall determine that the meeting is adjourned to a specific date, time and place, it is not necessary to give notice of the adjourned meeting other than by announcement at the meeting being adjourned. If the Secretary shall determine that the meeting be adjourned to an unspecified date, time or place, fresh notice of the resumption of the meeting shall be given to each Member entitled to attend and vote thereat in accordance with the provisions of these Bye-laws.

28.

CHAIRMAN TO PRESIDE

Unless otherwise agreed by a majority of those attending and entitled to vote thereat, the Chairman, if there be one, and if not the President, shall act as chairman at all meetings of the Members at which such person is present. In their absence, the Deputy Chairman, if present, shall act as chairman and in the absence of all of them a chairman shall be appointed or elected by those present at the meeting and entitled to vote. Subject to applicable law, the chairman of the meeting may, if the facts warrant, determine and declare than any business was not properly brought before such meeting and such business will not be transacted.

29. VOTING ON RESOLUTIONS

29.1	Subject to the provisions of the Act and these Bye-laws, any question proposed for the consideration of the Members at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with the provisions of these Bye-laws and in the case of an equality of votes the resolution shall fail.
29.2	No Member shall be entitled to vote at a general meeting unless such Member has paid all the calls on all shares held by such Member.
29.3	At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to any rights or restrictions for the time being lawfully attached to any class of shares and subject to the provisions of these Bye-laws, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to one vote and shall cast such vote by raising his or her hand.
29.4	At any general meeting if an amendment shall be proposed to any resolution under consideration and the chairman of the meeting shall rule on whether the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.
29.5	At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to the provisions of these Bye-laws, be conclusive evidence of that fact.

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30. POWER TO DEMAND A VOTE ON A POLL

30.1 Notwithstanding the foregoing, a poll may be demanded by any of the following persons:

(a) the chairman of such meeting; or

(b)	at least three Members present in person or represented by proxy; or
(c)	any Member or Members present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all the Members having the right to vote at such meeting; or
(d)	any Member or Members present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all such shares conferring such right.

30.2	Where a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of shares, every person present at such meeting shall have one vote for each share of which such person is the holder or for which such person holds a proxy and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Members are present by telephone, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands. A person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.
30.3	A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith and a poll demanded on any other question shall be taken in such manner and at such time and place at such meeting as the chairman (or acting chairman) of the meeting may direct and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.
30.4	Where a vote is taken by poll, each person present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialed or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. At the conclusion of the poll, the ballot papers shall be examined and counted by a committee of not less than two Members or proxy holders appointed by the chairman for the purpose and the result of the poll shall be declared by the chairman.

31. VOTING BY JOINT HOLDERS OF SHARES

In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

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32. INSTRUMENT OF PROXY

32.1 A Member may appoint a proxy by (a) an instrument appointing a proxy in writing in substantially the following form or such other form as the Board may determine from time to time:

Proxy

NewLead Holdings Ltd. (the “Company”)

I/We, [insert names here], being a Member of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Members to be held on the [         ] day of [         ], 200[         ] and at any adjournment thereof. (Any restrictions on voting to be inserted here.)

Signed this [     ] day of [     ], 200[     ]                                          Member(s)

or (b) such telephonic, electronic or other means as may be approved by the Board from time to time.

32.2	The appointment of a proxy must be received by the Company at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the appointment proposes to vote, and an appointment of proxy which is not received in the manner so permitted shall be invalid.
32.3	A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf.
32.4	The decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.

33. REPRESENTATION OF CORPORATE MEMBER

33.1

A corporation which is a Member may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting of the Members and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual Member, and that Member shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.

33.2

Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation, which is a Member.

34. ADJOURNMENT OF GENERAL MEETING

34.1	The chairman of any general meeting at which a quorum is present may with the consent of a majority in number of those present, (and shall if so directed by a majority in number of those present), adjourn the meeting.
34.2	In addition, the chairman may adjourn the meeting to another time and place without such consent or direction if it appears to him that:

(a) it is likely to be impracticable to hold or continue that meeting because of the number of Members wishing to attend who are not present; or

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(b)	the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or
(c)	an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.

34.3 Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat in accordance with the provisions of these Bye-laws.

35. WRITTEN RESOLUTIONS

35.1	Subject to the following, anything which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the Members may, without a meeting and without any previous notice being required, be done by resolution in writing in accordance with the provisions of section 77A of the Act.
35.2	A resolution in writing may be signed by, or in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, all the Members, or all the Members of the relevant class thereof, in as many counterparts as may be necessary.
35.3	A resolution in writing made in accordance with this Bye-law is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be, and any reference in any Bye-law to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.
35.4	A resolution in writing made in accordance with this Bye-law shall constitute minutes for the purposes of the Act.
35.5	This Bye-law shall not apply to:

(a)	a resolution passed to remove an auditor from office before the expiration of his term of office; or
(b)	a resolution passed for the purpose of removing a Director before the expiration of his term of office.

35.6 For the purposes of this Bye-law, the date of the resolution is the date when the resolution is signed by, or in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, the last Member to sign and any reference in any Bye-law to the date of passing of a resolution is, in relation to a resolution made in accordance with this Bye-law, a reference to such date.

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36. DIRECTORS ATTENDANCE AT GENERAL MEETINGS

The Directors of the Company shall be entitled to receive notice of, attend and be heard at any general meeting.

DIRECTORS AND OFFICERS

37. ELECTION OF DIRECTORS

37.1	The affairs, business and property of the Company shall be managed by the Board, which shall consist of such number of directors, not less than three, as shall be fixed by a vote of not less than 662/3% of the entire Board from time to time.
37.2	Only persons who are proposed or nominated in accordance with this Bye-law shall be eligible for election as Directors. Any Member or the Board may propose any person for election as a Director. Where any person, other than a person proposed for election as a Director by the Board, is to be proposed for election as a Director, written notice must be given to the Company of the intention to propose him and of his willingness to serve as a Director. Where a Director is to be elected at an annual general meeting, that notice must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting prior to the giving of the notice or, in the event the annual general meeting is called for a date that is not 30 days before or after such anniversary the notice must be given not later than 10 days following the earlier of the date on which notice of the annual general meeting was posted to Members or the date on which public disclosure of the date of the annual general meeting was made. Where a Director is to be elected at a special general meeting, that notice must be given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to Members or the date on which public disclosure of the date of the special general meeting was made.
37.3	Where the number of persons validly proposed for re-election or election as a Director is greater than the number of Directors to be elected, the persons receiving the most votes (up to the number of Directors to be elected) shall be elected as Directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such Directors.
37.4	At any general meeting the Members may authorise the Board to fill any vacancy in their number left unfilled at a general meeting.

38. CLASSES OF DIRECTORS

The Directors shall be divided into three classes designated Class I, Class II and Class III. Each class of Directors shall consist, as nearly as possible, of one third of the total number of Directors constituting the entire Board.

39. TERM OF OFFICE OF DIRECTORS

At the first general meeting which is held after the date of adoption of these Bye-laws for the purpose of electing Directors, the Class I Directors shall be elected for a three year term of office, the Class II Directors shall be elected for a two year term of office and the Class III Directors shall be elected for a one year term of office. At each succeeding annual general meeting,

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successors to the class of Directors whose term expires at that annual general meeting shall be elected for a three year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any Director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the other Directors of that class, but in no case shall a decrease in the number of Directors shorten the term of any Director then in office. A Director shall hold office until the annual general meeting for the year in which his term expires, subject to his office being vacated pursuant to Bye-law 42.

40. ALTERNATE DIRECTORS

40.1	Subject to Bye-law 37.2, at any general meeting of the Company, the Members may elect a person or persons to act as a Director in the alternative to any one or more Directors of the Company or may authorise the Board to appoint such Alternate Directors.
40.2	Additionally, unless the Members otherwise resolve, any Director may appoint a person or persons to act as a Director in the alternative to himself by notice in writing deposited with the Secretary. Any person so elected or appointed shall have all the rights and powers of the Director or Directors for whom such person is appointed in the alternative provided that such person shall not be counted more than once in determining whether or not a quorum is present.
40.3	An Alternate Director shall be entitled to receive notice of all meetings of the Board and to attend and vote at any such meeting at which a Director for whom such Alternate Director was appointed in the alternative is not personally present and generally to perform at such meeting all the functions of such Director for whom such Alternate Director was appointed.
40.4	An Alternate Director shall cease to be such if the Director for whom such Alternate Director was appointed ceases for any reason to be a Director but may be re-appointed by the Board as an alternate to the person appointed to fill the vacancy in accordance with these Bye-laws.

41. REMOVAL OF DIRECTORS

41.1	The Members entitled to vote for the election of Directors may, by a resolution approved by the affirmative vote of the holders of at least 80% of the Common Shares issued and outstanding passed at any special general meeting convened and held in accordance with these Bye-laws, remove a Director, only for cause, provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director’s removal.
41.2	For the purpose of Bye-law 41.1, “cause” means (a) conviction of a felony, indictable offence or similar criminal offence or (b) willful misconduct that results in material injury (monetary or otherwise) to the Company or any of its subsidiaries.
41.3	If a Director is removed from the Board under the provisions of this Bye-law the Members may fill the vacancy at the meeting at which such Director is removed. In the absence of such election or appointment, the Board may fill the vacancy.

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42. VACANCY IN THE OFFICE OF DIRECTOR

42.1 The office of Director shall be vacated if the Director:

(a)	is removed from office pursuant to these Bye-laws or is prohibited from being a Director by law;
(b)	is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;
(c)	is or becomes of unsound mind or dies; or
(d)	resigns his office by notice in writing to the Company.

42.2 The Members in general meeting or the Board shall have the power to appoint any person as a Director to fill a vacancy on the Board occurring as a result of the death, disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board and to appoint an Alternate Director to any Director so appointed.

43. REMUNERATION OF DIRECTORS

The remuneration (if any) of the Directors shall be determined by the Board and shall be deemed to accrue from day to day. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from the meetings of the Board, any committee appointed by the Board, general meetings of the Company, or in connection with the business of the Company or their duties as Directors generally.

44. DEFECT IN APPOINTMENT OF DIRECTOR

All acts done in good faith by the Board or by a committee of the Board or by any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.

45. DIRECTORS TO MANAGE BUSINESS

45.1

The business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by statute or by these Bye-laws, required to be exercised by the Company in general meeting subject, nevertheless, to these Bye-laws, the provisions of any statute and to such directions as may be prescribed by the Company in general meeting.

45.2

Subject to these Bye-laws, the Board may delegate to any company, firm, person, or body of persons any power of the Board (including the power to sub-delegate).

46. POWERS OF THE BOARD OF DIRECTORS

46.1 Without limiting the powers of the Board set out in Bye-law 45, the Board may:

(a) appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;

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(b)	exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;
(c)	appoint one or more Directors to the office of managing director or chief executive officer of the Company, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company;
(d)	appoint a person to act as manager of the Company’s day-to-day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business;
(e)	by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney. Such attorney may, if so authorised under the seal of the Company, execute any deed or instrument under such attorney’s personal seal with the same effect as the affixation of the seal of the Company;
(f)	procure that the Company pays all expenses incurred in promoting and incorporating the Company;
(g)	delegate any of its powers (including the power to sub-delegate) to a committee appointed by the Board which may consist partly or entirely of non-Directors, provided that every such committee shall conform to such directions as the Board shall impose on them and provided further that the meetings and proceedings of any such committee shall be governed by the provisions of these Bye-laws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superceded by directions imposed by the Board;
(h)	present any petition and make any application in connection with the liquidation or reorganisation of the Company;
(i)	in connection with the issue of any share, pay such commission and brokerage as may be permitted by law; and
(j)	authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any agreement, document or instrument on behalf of the Company.

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47. REGISTER OF DIRECTORS AND OFFICERS

The Board shall cause to be kept in one or more books at the registered office of the Company a Register of Directors and Officers and shall enter therein the particulars required by the Act.

48. OFFICERS

The Officers shall consist of a Chairman, a Deputy Chairman, a President, a Chief Financial Officer, a Secretary and such additional Officers as the Board may determine all of whom shall be deemed to be Officers for the purposes of these Bye-laws.

49. APPOINTMENT OF OFFICERS

The Board shall appoint a Chairman and Deputy Chairman who shall be Directors. The President, the Chief Financial Officer and the Secretary (and additional Officers, if any) shall be appointed by the Board from time to time.

50. DUTIES OF OFFICERS

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.

51. REMUNERATION OF OFFICERS

The Officers shall receive such remuneration as the Board may determine.

52. CONFLICTS OF INTEREST

52.1	Any Director, or any Director’s firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company and such Director or such Director’s firm, partner or company shall be entitled to remuneration as if such Director were not a Director. Nothing herein contained shall authorise a Director or Director’s firm, partner or company to act as Auditor to the Company.
52.2	A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest as required by the Act.
52.3	Following a declaration being made pursuant to this Bye-law, and unless disqualified by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum for such meeting; provided, however, that to be approved by the Company, in addition to being approved by a majority of the Board any such contract or proposed contract or arrangement must also be approved by all of the disinterested, independent members of the Board. For the purposes of this Bye-law 52.3, a disinterested, independent member of the Board shall be a Director who qualifies as independent under the criteria set forth in Rule 4200 of the NASD Marketplace Rules or a similar rule of the principal stock exchange or stock market on which the Company’s shares may be listed or included at the time and who does not have a conflict of interest in respect of such contract or proposed contract or arrangement.

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53. INDEMNIFICATION AND EXCULPATION OF DIRECTORS AND OFFICERS

53.1	The Directors, Secretary, and other Officers (such term to include any person appointed to any committee by the Board) for the time being acting in relation to any of the affairs of the Company and the liquidator or trustees (if any) for the time being acting in relation to any of the affairs of the Company and every one of them, and their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto including, in defending or appearing or giving evidence in any proceedings (such term to include, for the purposes of this Bye-law 53, threatened proceedings, investigations and enquiries, whether by a regulatory authority, prosecutions authority or otherwise), whether civil or criminal, including where allegations of fraud and dishonesty are made against such person, PROVIDED THAT this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of the said persons. Each Member agrees to waive any claim or right of action such Member might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for the Company, PROVIDED THAT such waiver shall not extend to any matter in respect of any fraud or dishonesty which may attach to such Director or Officer.
53.2	The Company shall pay to or on behalf of any such Director, Secretary or other Officer referred to in Bye-law 53.1 any and all costs and expenses associated in defending or appearing or giving evidence in the proceedings referred to in Bye-law 53.1 (including without limitation independent representation and counseling by an attorney or other professional selected by such person) as and when such costs and expenses are incurred, provided that in the event of a finding of fraud or dishonesty (such fraud or dishonesty having been established in a final judgment or decree not subject to appeal), such person shall reimburse to the Company all funds paid by the Company in respect of costs and expenses of defending such proceedings.
53.3	The Company may purchase and maintain insurance for the benefit of any Director or Officer of the Company against any liability incurred by him under the Act in his capacity as a Director or Officer of the Company or indemnifying such Director or Officer in respect of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any subsidiary thereof.

23

MEETINGS OF THE BOARD OF DIRECTORS

54. BOARD MEETINGS

The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit. A resolution put to the vote at a meeting of the Board shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.

55. NOTICE OF BOARD MEETINGS

Any two Directors may, and the Secretary on the requisition of any two Directors shall, at any time summon a meeting of the Board. Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally (in person or by telephone) or otherwise communicated or sent to such Director by post, cable, telex, telecopier, facsimile, electronic mail or other mode of representing words in a legible form at such Director’s last known address or any other address given by such Director to the Company for this purpose.

56. PARTICIPATION IN MEETINGS BY TELEPHONE

Directors may participate in any meeting of the Board by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

57. QUORUM AT BOARD MEETINGS

The quorum necessary for the transaction of business at a meeting of the Board shall be two Directors.

58. BOARD TO CONTINUE IN THE EVENT OF VACANCY

The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bye-laws as the quorum necessary for the transaction of business at meetings of the Board, the continuing Directors or Director may act for the purpose of (i) summoning a general meeting of the Company; or (ii) preserving the assets of the Company.

59. CHAIRMAN TO PRESIDE

Unless otherwise agreed by a majority of the Directors attending, the Chairman, if there be one, and if not, the President shall act as chairman at all meetings of the Board at which such person is present. In their absence the Deputy Chairman, if present, shall act as chairman and in the absence of all of them a chairman shall be appointed or elected by the Directors present at the meeting.

60. WRITTEN RESOLUTIONS

A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a meeting of the Board duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution. For the purposes of this Bye-law only, “Director” shall not include an Alternate Director.

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61. VALIDITY OF PRIOR ACTS OF THE BOARD

No regulation or alteration to these Bye-laws made by the Company in general meeting shall invalidate any prior act of the Board, which would have been valid, if that regulation or alteration had not been made.

CORPORATE RECORDS

62. MINUTES

62.1 The Board shall cause minutes to be duly entered in books provided for the purpose:

(a)	of all elections and appointments of Officers;
(b)	of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and
(c)	of all resolutions and proceedings of general meetings of the Members, meetings of the Board, and meetings of committees appointed by the Board.

63. PLACE WHERE CORPORATE RECORDS KEPT

Minutes prepared in accordance with the Act and these Bye-laws shall be kept by the Secretary at the registered office of the Company.

64. FORM AND USE OF SEAL

64.1

The seal of the Company shall be in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Bermuda.

64.2

The seal of the Company shall not be affixed to any instrument except attested by the signature of a Director and the Secretary or any two Directors, or any person appointed by the Board for that purpose, provided that any Director, Officer or Resident Representative, may affix the seal of the Company attested by such Director, Officer or Resident Representative’s signature to any authenticated copies of these Bye-laws, the incorporating documents of the Company, the minutes of any meetings or any other documents required to be authenticated by such Director, Officer or Resident Representative.

ACCOUNTS

65. BOOKS OF ACCOUNT

65.1 The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

(a)	all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;
(b)	all sales and purchases of goods by the Company; and
(c)	all assets and liabilities of the Company.

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65.2 Such records of account shall be kept at the registered office of the Company, or subject to the provisions of the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.

66. FINANCIAL YEAR END

The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be 31st December in each year.

AUDITS

67. ANNUAL AUDIT

Subject to any rights to waive laying of accounts or appointment of an Auditor pursuant to the Act, the accounts of the Company shall be audited at least once in every year.

68. APPOINTMENT OF AUDITORS

68.1	Subject to the provisions of the Act, at the annual general meeting or at a subsequent special general meeting in each year, the Members shall appoint an independent Auditor to audit the accounts of the Company.
68.2	The Auditor may be a Member but no Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.

69. REMUNERATION OF AUDITORS

The remuneration of the Auditor shall be fixed by the Company in general meeting or in such manner as the Members may determine.

70. DUTIES OF AUDITORS

70.1	The financial statements provided for by these Bye-laws shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards.
70.2	The generally accepted auditing standards referred to in this Bye-law may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be provided for in the Act. If so, the financial statements and the report of the Auditor shall identify the generally accepted auditing standards used.

71. ACCESS TO RECORDS

The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers of the Company for any information in their possession relating to the books or affairs of the Company.

72. FINANCIAL STATEMENTS

Subject to any rights to waive laying of accounts pursuant to the provisions of the Act, financial statements as required by the Act shall be laid before the Members in general meeting.

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73. DISTRIBUTION OF AUDITORS REPORT

The report of the Auditor shall be submitted to the Members in general meeting.

74. VACANCY IN THE OFFICE OF AUDITOR

If the office of Auditor becomes vacant by the resignation or death or the Auditor, or by the Auditor becoming incapable of acting by reason of illness or other disability at a time when the Auditor’s services are required, the vacancy thereby created shall be filled in accordance with the Act.

BUSINESS COMBINATIONS

75. BUSINESS COMBINATIONS

75.1 (a) In addition to any other approval that may be required by applicable law, any Business Combination with any Interested Shareholder within a period of three years following the time of the transaction in which the person became an Interested Shareholder must be approved by the Board and authorised at an annual or special general meeting, by the affirmative vote of at least 80% of the issued and outstanding voting shares of the Company that are not owned by the Interested Shareholder, unless:

(1)

prior to the time that the person became an Interested Shareholder, the Board approved either the Business Combination or the transaction which resulted in the person becoming an Interested Shareholder; or

(2)

upon consummation of the transaction which resulted in the person becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the issued and outstanding voting shares of the Company at the time the transaction commenced, excluding for purposes of determining the number of shares issued and outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee share plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer.

(b) The restrictions contained in this Bye-law 75.1 shall not apply if:

(1)

a Member becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the Member ceases to be an Interested Shareholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Company and such Member, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or

(2)

the Business Combination is proposed prior to the consummation or abandonment of, and subsequent to the earlier of the public announcement or the notice required hereunder of, a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an

27

Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office (but not less than one) who were Directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such Directors by resolution of the Board approved by a majority of such Directors. The proposed transactions referred to in the preceding sentence are limited to:

(i)	a merger, amalgamation or consolidation of the Company (except for an amalgamation in respect of which, pursuant to the Act, no vote of the shareholders of the Company is required);
(ii)	a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect majority-owned subsidiary of the Company (other than to any direct or indirect wholly-owned subsidiary or to the Company) having an aggregate market value equal to 50% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company; or
(iii)	a proposed tender or exchange offer for 50% or more of the issued and outstanding voting shares of the Company.

The Company shall give not less than 20 days notice to all Interested Shareholders prior to the consummation of any of the transactions described in subparagraphs (i) or (ii) of the second sentence of this paragraph (2).

(c) For the purpose of this Bye-law 75 only, the term:

(1) “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person. (2) “associate,” when used to indicate a relationship with any person, means: (i) any company, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person;

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(3) “Business Combination,” when used in reference to the Company and any Interested Shareholder of the Company, means:

(i)	any merger, amalgamation or consolidation of the Company or any direct or indirect majority-owned subsidiary of the Company with (A) the Interested Shareholder or any of its affiliates, or (B) with any other company, partnership, unincorporated association or other entity if the merger, amalgamation or consolidation is caused by the Interested Shareholder.
(ii)	any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a shareholder of the Company, to or with the Interested Shareholder, whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect majority-owned subsidiary of the Company which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company;
(iii)	any transaction which results in the issuance or transfer by the Company or by any direct or indirect majority-owned subsidiary of the Company of any shares of the Company, or any share of such subsidiary, to the Interested Shareholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such subsidiary, which securities were issued and outstanding prior to the time that the Interested Shareholder became such; (B) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such subsidiary, which security is distributed, pro rata to all holders of a class or series of shares subsequent to the time the Interested Shareholder became such; (C) pursuant to an exchange offer by the Company to purchase shares made on the same terms to all holders of such shares; or (D) any issuance or transfer of shares by the Company; provided however, that in no case under items (B)-(D) of this subparagraph shall there be an increase in the Interested Shareholder’s proportionate share of the any class or series of shares;
(iv)	any transaction involving the Company or any direct or indirect majority-owned subsidiary of the Company which has the effect, directly or indirectly, of increasing the proportionate share of any class or series of shares, or securities convertible into any class or series of shares of the Company, or shares of any such subsidiary, or securities convertible into such shares, which is owned by the Interested Shareholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any repurchase or redemption of any shares not caused, directly or indirectly, by the Interested Shareholder; or

29

(v) any receipt by the Interested Shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of the Company), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) of this paragraph) provided by or through the Company or any direct or indirect majority-owned subsidiary of the Company;

(4) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the issued and outstanding voting shares of any company, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; provided that notwithstanding the foregoing, such presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity;

(5) “Interested Shareholder” means any person (other than the Company and any direct or indirect majority-owned subsidiary of the Company) that (i) is the owner of 15% or more of the issued and outstanding voting shares of the Company, (ii) is an affiliate or associate of the Company and was the owner of 15% or more of the issued and outstanding voting shares of the Company at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder or (iii) is an affiliate or associate of any person listed in (i) or (ii) above; provided, however, that the term “Interested Shareholder” shall not include (i) Rocket Marine, Inc. (“Rocket Marine”) and its affiliates and associates for so long as Rocket Marine either alone or together with its affiliates and associates owns 15% or more of the issued and outstanding voting shares of the Company, unless, following the consummation of the transactions contemplated in connection with the initial public offering of shares of the Company (including its acquisition of vessels), Rocket Marine, its affiliates and associates, acquire additional voting shares of the Company, representing in the aggregate 8% or more of the issued and outstanding voting shares of the Company or (ii) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Company; provided that such person referred to in this subparagraph (ii) shall be an Interested Shareholder if thereafter such person acquires additional voting shares of the Company, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting shares of the Company deemed to be issued and outstanding shall include voting shares deemed to be owned by the person through application of paragraph (8) below, but shall not include

30

any other unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;

(6)	“person” means any individual, company, partnership, unincorporated association or other entity;
(7)	“voting shares” means, with respect to any company, shares of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a company, any equity interest entitled to vote generally in the election of the governing body of such entity;
(8)	“owner,” including the terms “own” and “owned,” when used with respect to any shares, means a person that individually or with or through any of its affiliates or associates:

(i)	beneficially owns such shares, directly or indirectly; or
(ii)	has (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered shares are accepted for purchase or exchange; or (B) the right to vote such shares pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any shares because of such person’s right to vote such shares if the agreement, arrangement or understanding to vote such shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or
(iii)	has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subparagraph (ii) of this paragraph), or disposing of such shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares.

(d) Notwithstanding any other provisions of these Bye-laws (and notwithstanding the fact that some lesser percentage may be specified by law or these Bye-laws), the affirmative vote of the holders of 80% or more of the issued and outstanding shares of the Company entitled to vote generally in the election of Directors (voting for this purpose as one class) shall be required to amend, alter, change or repeal this Bye-law 75.

75.2 In respect of any Business Combination to which the restrictions contained in Bye-law 75.1 do not apply but which the Act requires to be approved by the Members, the

31

necessary general meeting quorum and Members’ approval shall be as set out in Bye-laws 27 and 29 respectively.

75.3 The Board shall ensure that the Bye-laws or other constitutional documents of each subsidiary of the Company shall contain any provisions necessary to ensure that the intent of Bye-law 75.1, as it relates to the actions of subsidiaries of the company, is achieved.

VOLUNTARY WINDING-UP AND DISSOLUTION

76. WINDING-UP

If the Company shall be wound up the liquidator may, with the sanction of a resolution of the Members, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in the trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any shares or other securities or assets whereon there is any liability.

CHANGES TO CONSTITUTION

77. CHANGES TO BYE-LAWS

77.1

Subject to Bye-law 77.2, no Bye-law shall be rescinded, altered or amended and no new Bye-law shall be made until the same has been approved by a resolution of the Board and by a resolution of Members.

77.2

Bye-laws 22, 37, 38, 39, 41, 75, and 77 shall not be rescinded, altered or amended and no new Bye-law shall be made which would have the effect of rescinding, altering or amending the provisions of such Bye-laws, until the same has been approved by a resolution of the Board and by a resolution of the Members including the affirmative vote of not less than 80% per cent of the votes attaching to all shares issued and outstanding.

78. DISCONTINUANCE

The Board may exercise all the powers of the Company to discontinue the Company to a jurisdiction outside Bermuda pursuant to the Act.

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EX-10.1

Exhibit 10.1

Dated 18 August 2009

MARFIN EGNATIA BANK Societe Anonyme
as Lender

-and-

AUSTRALIA HOLDINGS LTD.
CHINA HOLDINGS LTD.
and
BRAZIL HOLDINGS LTD.
as joint and several Borrowers

FINANCIAL AGREEMENT
reducing revolving credit facility not exceeding in aggregate
US$37,400,000 regarding m/vs “GRAND MIRSINIDI” (tbr “AUSTRALIA”)
“YIOSONAS” (tbr “CHINA”) and “GRAND NIKE” (tbr “BRAZIL”)

INDEX

1. PURPOSE	1
2. DEFINITIONS	1
3. THE FACILITY — THE BORROWERS JOINT AND SEVERAL LIABILITY	19
4. AVAILABILITY — DESIGNATED TRANSACTIONS	20
5. NOTICE OF DRAWDOWN	21
6. INTEREST PERIODS	23
7. INTEREST	24
8. DEFAULT INTEREST	24
9. SUBSTITUTE BASIS	25
10. PREPAYMENT	26
11. REDUCTION — REPAYMENT	30
12. APPLICATION	30
13. EVIDENCE OF DEBT	31
14. PAYMENTS	31
15. CHANGE OF CIRCUMSTANCES	32
16. REPRESENTATIONS AND WARRANTIES	34
17. SECURITIES	39
18. CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT	39
19. FINANCIAL AND GENERAL UNDERTAKINGS	44
20. INSURANCE UNDERTAKINGS	47
21. OPERATIONAL UNDERTAKINGS	50
22. RETENTION ACCOUNT AND EARNINGS ACCOUNTS	55
23. SECURITY MARGIN	56
24. EVENTS OF DEFAULT	57
25. SET-OFF	60
26. FEES	60
27. EXPENSES	61
28. INDEMNITY	61
29. ENVIRONMENTAL INDEMNITY	61
30. STAMP DUTIES	62
31. DETERMINATIONS	62
32. NO WAIVER	62
33. PARTIAL INVALIDITY	62
34. TRANSFER, ASSIGNMENT, PARTICIPATION, CHANGE OF LENDING BRANCH	62
35. NON-IMMUNITY	63
36. NOTICES	64
37 SUPPLEMENTAL	65
38. LAW AND JURISDICTION	65
39. THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS	66
SCHEDULE 1 — FORM OF NOTICE OF DRAWDOWN	68
SCHEDULE 2 — FORM OF ACKNOWLEDGEMENT	70

THIS AGREEMENT is made the 18^th day of August 2009

BETWEEN

1)	MARFIN EGNATIA BANK Societe Anonyme as lender; and
2)	AUSTRALIA HOLDINGS LTD., CHINA HOLDINGS LTD. and BRAZIL HOLDINGS LTD. as joint and several borrowers.
1.	PURPOSE
A.	This Agreement sets out the terms and conditions on which the Lender has agreed to make available to the Borrowers as joint and several borrowers a reducing revolving credit facility, not exceeding at any time the aggregate amount of Thirty Seven million Four hundred thousand Dollars ($37,400,000 in multiple Advances in the following amounts and for the following purposes:

(i)	an Advance (hereinafter called the “Brazil Advance”) of up to Eight million Four hundred Fifty thousand Dollars ($8,450,000) for the purpose of initially assisting the Brazil Owner in financing or refinancing part of the acquisition cost of the Brazil Ship pursuant to the relevant MOA;
(ii)	an Advance (hereinafter called the “Australia Advance”) of up to Twenty million Five hundred thousand Dollars ($20,500,000) for the purpose of initially assisting the Australia Owner in financing or refinancing part of the acquisition cost of the Australia Ship pursuant to the relevant MOA;
(iii)	an Advance (hereinafter called the “China Advance”) of up to Eight million Four hundred Fifty thousand Dollars ($8,450,000) for the purpose of assisting the China Owner in financing or refinancing part of the acquisition cost of the China Ship pursuant to the relevant MOA; and
(iv)	Advances (hereinafter called together the “Working Capital Advances” and singly each a “Working Capital Advance”) in amounts approved by the Lender for the purpose of providing the Borrowers or any of them with working capital.

B.	The Borrowers and the Lender have agreed to enter into Designated Transactions with the Lender pursuant to separate Confirmations.
2.	DEFINITIONS
2.1	In this Agreement the following terms shall have the following meanings, unless the context otherwise requires:
	“Accounts” means collectively the Earnings Accounts and the Retention Account and, in the singular, means any of them;

1

“Accounts’ Charges” means collectively the Earnings Account Charges and the Retention Account Charge and, in the singular, means any of them;

“Acquisition” means the acquisition by the Grandunion Guarantor of the Acquisition Shares of the Aries Maritime Guarantor on the terms of the Acquisition Documents;

“Acquisition Date” means the date on which the Aries Maritime Guarantor shall issue and sell to the Grandunion Guarantor and the Grandunion Guarantor shall purchase from the Aries Maritime Guarantor the Acquisition Shares;

“Acquisition Documents” means the LOI and any other document designated as an “Acquisition Document” by, inter alios, the Lender in connection with, inter alia, the Acquisition as the same may from time to time be amended, varied or supplemented and, in the singular, means any of them;

“Acquisition Shares” means 15,977,778 newly issued common shares, par value $0.01 per share of the Aries Maritime Guarantor and/or such other shares of the Aries Maritime Guarantor, which shall be acquired by the Grandunion Guarantor pursuant to the Acquisition Documents;

“Advance” means the principal amount of each borrowing by the Borrowers under this Agreement (including for the avoidance of doubt each of the Australia Advance, the China Advance, the Brazil Advance and the Working Capital Advances) or, if the context may require, so much thereof as shall for the time being be outstanding to the Lender hereunder or, as the case may be, the principal amount of that portion of each borrowing by the Borrowers under this Agreement for which the Borrowers select an Interest Period of a particular duration and, in the plural, means all of them;

“Applicable Accounting Principles” means those accounting principles, standards and practices on which preparation of the Financial Statements is based, which are International Financial Reporting Standards (IFRS) and principles and practices adopted by each Corporate Guarantor and its Subsidiaries at the date hereof or at any time hereafter and notified to and accepted by the Lender;

“Applicable Limit” means the maximum amount of the Facility available for drawing hereunder at any relevant time being on the date hereof Thirty Seven million Four hundred thousand Dollars ($37,400,000) and being reduced on each of the twenty (20) Reduction Dates by the relevant Reduction Instalment referred to in Clause 11.1 and as it may be further reduced in accordance with Clauses 10.1 and/or 10.3 and/or 10.5 and/or 11.1 and/or 11.2 and/or any other provision of this Agreement;

“Applicable Margin” means three point five per cent (3.5% ) per annum;

“Approved Brokers” means the insurance brokers appointed by the Borrowers with the Lender’s prior approval;

2

“Aries Maritime Guarantee” means the guarantee and indemnity in respect of the Borrowers’ obligations under this Agreement and the other Finance Documents executed or, as the context may require, to be executed by the Aries Maritime Guarantor in favour of the Lender in form and substance satisfactory to the Lender in its sole discretion as the same may from time to time be amended, varied or supplemented;

“Aries Maritime Guarantor” means Aries Maritime Transport Limited, a company organized and existing under the laws of Bermuda, having its registered office at Canon’s Court, 22 Victoria Street, Hamilton, Bermuda;

“Auditors” means any first class firm of international accountants to be approved by the Lender;

“Australia Advance” shall have the meaning ascribed to it in Clause 1(A)(ii);

“Australia Charter” means the time charter as summarized in a recapitulation dated 28 May 2009 in respect of the Australia Ship made, or as the context may require, to be made between the Australia Owner as owner and the Australia Charterer as charterer for a period of about eleven (11) to about thirteen (13) months (about means plus/minus fifteen (15) days) and at a rate of Twenty Eight thousand Two hundred Fifty ($28,250) per day pro rata, as the same may from time to time be amended, varied or supplemented, with the Lender’s prior written consent;

“Australia Charterer” means TMT Bulk Corp. of Panama;

“Australia Earnings Account” means the interest bearing deposit account opened by the Australia Owner with the Lender numbered 0315610426 into which all the Earnings of the Australia Ship are to be paid, in accordance with Clause 21.2, such account to include any substitute account or sub-account or revised account or revised designation or number whatsoever and any deposit account to which monies from the Australia Earnings Account may from time to time be paid on a time deposit basis;

“Australia Owner” means Australia Holdings Ltd., a corporation organised and existing under the laws of the Republic of Liberia, having its registered office at 80, Broad Street, Monrovia, Republic of Liberia;

“Australia Seller” means Grand Mirsinidi Inc., a corporation organized and existing under the laws of the Republic of Liberia, having its registered office at 80, Broad Street, Monrovia, Liberia;

“Australia Ship” means the m.v. “GRAND MIRSINIDI”, a bulk carrier vessel, with gross tonnage of 91,188 tons and net tonnage of 52,901 tons, presently registered in the ownership of the Australia Seller under Liberian flag, to be acquired by the Australia Owner and registered in its ownership on the relevant Delivery Date under the same flag, under the name “AUSTRALIA”;

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“Availability Period” means in respect of each Advance, the period commencing from the date of this Agreement and ending on the relevant Termination Date;

“Balloon Payment” means a payment in the amount of Six million Two hundred thousand Dollars ($6,200,000) to be made by the Borrowers to the Lender on the twentieth (20^th) Reduction Date;

“Banking Day” means a day on which banks and financial markets are open for business in Athens, New York and London and any other financial centre which the Lender may deem appropriate for the operation of the provisions of this Agreement;

“Borrowers” means together the Australia Owner, the China Owner and the Brazil Owner and, in the singular, means any of them;

“Brazil Advance” shall have the meaning ascribed to it in Clause 1(A)(i);

“Brazil Charter” means the time charter dated 20 May 2008 as amended by addenda dated 23 December 2008 and 7 January 2009 in respect of the Brazil Ship made between the Brazil Seller as owner and the Brazil Charterer as charterer and novated or to be novated by an addendum or a novation agreement made, or as the context may require, or to be made by the Brazil Seller, the Brazil Charterer and the Brazil Owner as owner, for a period of about six (6) years (plus/minus sixty (60) days) and at a minimum daily hire rate of Thirty One thousand Dollars ($31,000) pro rata gross for the first and second year and Twenty eight thousand Dollars ($28,000) pro rata gross thereafter, subject to the condition in the addendum dated 7 January 2009, as the same may be amended, varied or supplemented, with the Lender’s prior written consent;

“Brazil Charterer” means TMT Bulk Corp. of Taiwan, Republic of China;

“Brazil Earnings Account” means the interest bearing deposit account opened by the Brazil Owner with the Lender numbered 0315613422 into which all the Earnings of the Brazil Ship are to be paid, in accordance with Clause 21.2, such account to include any substitute account or sub-account or revised account or revised designation or number whatsoever and any deposit account to which monies from the Brazil Earnings Account may from time to time be paid on a time deposit basis;

“Brazil Owner” means Brazil Holdings Ltd., a corporation and existing under the laws of the Republic of Liberia, having its registered office at 80, Broad Street, Monrovia, Liberia;

“Brazil Seller” means Grand Nike Pte. Ltd., a company duly formed and existing under the laws of Singapore;

“Brazil Ship” means the m.v. “GRAND NIKE”, a bulk carrier vessel, with gross tonnage of 77,135 tons and net tonnage of 48,543 tons, presently registered in the ownership of the Brazil Seller under Singapore flag, to be acquired by the Brazil Owner and registered in its ownership on the relevant Delivery Date under Liberian flag, under the name “BRAZIL”;

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“Charters” means together the Australia Charter, the China Charter and the Brazil Charter and, in the singular, means any of them;

“Charter Assignment” means in relation to each Ship, the first priority deed of assignment of the Charter in respect of that Ship made or, as the context may require, to be made between the Owner thereof and the Lender in form and substance satisfactory to the Lender in its sole discretion as the same may from time to time hereafter be amended, varied or supplemented and, in the plural, means all of them;

“Charterers” means together the Australia Charterer, the China Charterer and the Brazil Charterer and, in the singular, means any of them;

“China Advance” shall have the meaning ascribed to it in Clause 1(A)(iii);

“China Earnings Account” means the interest bearing deposit account opened by the China Owner with the Lender numbered 0315612427 into which all the Earnings of the China Ship are to be paid, in accordance with Clause 21.2, such account to include any substitute account or sub-account or revised account or revised designation or number whatsoever and any deposit account to which monies from the China Earnings Account may from time to time be paid on a time deposit basis;

“China Owner” means China Holdings Ltd., a corporation organised and existing under the laws of the Republic of Liberia, having its registered office at 80, Broad Street Monrovia, Liberia;

“China Seller” means Yiosonas Maritime S.A. a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands;

“China Ship” means the m.v. “YIOSONAS”, a bulk carrier vessel, with gross tonnage of 73,115 tons and net tonnage of 47,445 tons, presently registered in the ownership of the China Seller under Liberian flag, to be acquired by the China Owner and registered in its ownership on the relevant Delivery Date under the same flag, under the name “CHINA”;

“China Charter” means the time charter dated 18 November 2005 as amended by an addendum no. 1 dated 10 March 2006, an addendum no. 2 dated 25 March 2006, an addendum no. 3 dated 2 August 2007 and an addendum no. 4 dated 1 October 2007 in respect of the China Ship made between the China Charterer as charterer and LEON SHIPHOLDING CORP. of the Marshall Islands (“LEON”), and novated or to be novated by addenda or novation agreements made, or as the context may require, or to be made by LEON, the China Charterer and the China Owner as owner, for a period of minimum nine (9) years and seven (7) months up to ten (10) years and six (6) months in China Charterer’s option and at a daily hire rate of Thirteen thousand Two hundred Fifty Dollars ($13,250) including overtime as the same may be amended, varied or supplemented, with the Lender’s prior written consent; and

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“China Charterer” means DEIULEMAR SHIPPING SOCIETA’ CON UNICO SOCIO S.P.A. of Perugia, Italy;

“Classification Society” means, in respect of each Ship, Bureau Veritas, or such other classification society member of the IACS, as may be approved in writing by the Lender;

“Commitment Letter” means the letter dated 12 August 2009, issued by the Lender addressed to the Borrowers and the Grandunion Guarantor and accepted by the Grandunion Guarantor for and on behalf of itself, the Borrowers and the Personal Guarantor on 17 August 2009;

“Compulsory Acquisition” means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of a 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;

“Confirmation” in relation to any continuing Designated Transaction, has the meaning given to it in the Master Agreement;

“Control” means in relation to a body corporate:

(a) the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

(i)	cast, or control the casting of, more than fifty per cent (50%) of the maximum number of votes that might be cast at a general meeting of such body corporate; or
(ii)	appoint or remove all, or the majority, of the directors or other equivalent officers of such body corporate; or
(ii)	give directions with respect to the operating and financial polices of such body corporate with which the directors or other equivalent officers of such body corporate are obliged to comply; and/or

(b) the holding beneficially of more than fifty per cent (50%) of the issued share capital of such body corporate (excluding any part of that issued capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital),

and “Controlled” shall be construed accordingly;

“Corporate Guarantee” means, from the date of this Agreement until the date on which the conditions set forth in Clause 18.4 shall have been satisfied, the Grandunion Guarantee and thereafter the Aries Maritime Guarantee and, in the plural, means both of them;

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“Corporate Guarantor” means:

(a)	for the period commencing on the date of execution of this Agreement until the date on which the conditions referred to in Clause 18.4 shall have been satisfied: the Grandunion Guarantor; and
(b)	for period commencing on the date on which the conditions referred to in Clause 18.4 shall have been satisfied and at any time thereafter throughout the Security Period: the Aries Maritime Guarantor;

“Default Rate” means the interest rate referred to in Clause 8.1;

“Delivery Date” means, in relation to each Ship, the date on which that Ship is delivered by the relevant Seller to the relevant Owner pursuant to the relevant MOA;

“Designated Transaction” means a Transaction which fulfils the following requirements:

(a)	it is entered into by the Borrowers pursuant to the Master Agreement with the Lender; and
(b)	its purpose is the hedging of the Borrowers’ exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Facility (or any part thereof) for a period expiring no later than the final Reduction Date;

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

“Drawdown” means the making of an Advance by the Lender to the Borrowers;

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

“Early Termination Date”, in relation to any continuing Designated Transaction, shall have the meaning given to it in the Master Agreement;

“Earnings” means in relation to each Ship all freight, hire, passage monies and any other amounts whatsoever which may at any time be earned by or become payable to or for the account of the Owner of that Ship or its agents arising out of or as a result of the ownership, possession, management and/or operation of that Ship by the Owner thereof or its agents or under any charter (including, without limitation, each Charter), contract or carriage or other contract (including a salvage or towage contract) for the use, operation or management of that Ship, all payments for any variation of any such contract and all damages for any breach of any such contract, all general average and salvage remuneration and all compensation for requisition for hire;

“Earnings Account Charge” means in relation to each Earnings Account the first priority assignment, pledge and charge granted or, as the context may require, to be granted by the relevant Borrower to the Lender on any monies standing the credit of that Earnings Account

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in form and substance satisfactory to the Lender as the same may from time to time hereafter be amended, varied or supplemented and, in the plural, means all of them;

“Earnings Account” means in relation to:

(a)	the Australia Ship, the Australia Earnings Account;
(b)	the China Ship, the China Earnings Account;
(c)	the Brazil Ship, the Brazil Earnings Account;

and, in the plural, means all of them;

“Encumbrance” means a mortgage, pledge, lien, charge (whether fixed or floating), assignment, hypothecation, security interest, title retention, preferential right or trust arrangement and any other security agreement or arrangement whether now existing or arising in the future on the assets or revenue of the Borrowers or any of them or any other Security Party other than a pledge or lien arising by operation of law;

“Environmental Approvals” means any permit, licence, approval, ruling, certification, exemption or other authorisation relating to the Ships or any of them required under applicable Environmental Laws;

“Environmental Claim” means:

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

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

“Environmental Incident” means:

(a)

any release of Environmentally Sensitive Material from a Relevant Ship; or

(b)

any incident in which Environmentally Sensitive Material is released from a vessel other than a Relevant Ship and which involves a collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Relevant Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Relevant Ship and/or any owner

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

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

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

“Event of Default” means any event referred to in Clause 24;

“Excess Risks” means in relation to each Ship the proportion of claims for general average and salvage charges and under the ordinary running-down clause, which is not recoverable in consequence of the value at which that Ship is assessed for the purpose of such claims exceeding her insured value;

“Facility” means a reducing revolving credit facility in an amount of up to Thirty Seven million Four hundred thousand Dollars ($37,400,000) to be made available to the Borrowers by the Lender in multiple Advances pursuant to the terms of Clause 1(A) and Clause 3 or, if the context may so require, so much thereof as shall for the time being be outstanding to the Lender hereunder;

“Finance Documents” means:

(a)	this Agreement;
(b)	the Master Agreement;
(c)	the Security Documents; and
(d)	any other document (whether creating an Encumbrance or not) which is executed at any time by any Security Party or any other person as security for, or to establish any form of subordination or priorities’ arrangement in relation to any amount payable to the Lender under this Agreement and/or the Master Agreement or any of the documents referred to in this definition or in any other Clause of this Agreement;

“Financial Statements” means the audited by the Auditors or unaudited annual or quarterly financial statements of the Group, referred to in Clause 19.1 comprising in each case of a statement of income, balance sheet, cash flow statement and relative notes;

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“Flag State” means in relation to each Ship: the Republic of Liberia or in each case any other flag state which shall be acceptable to the Lender in its sole discretion;

“General Assignment” means in relation to each Ship the first priority deed of assignment relative to the Insurances, the Earnings and the Requisition Compensation of that Ship made or, as the context may require, to be made by and between the Owner of that Ship and the Lender in form and substance satisfactory to the Lender as the same may from time to time hereafter be amended, varied or supplemented;

“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 or tribunal 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;

“Grandunion Guarantee” means the guarantee and indemnity in respect of the Borrowers’ obligations under this Agreement and the other Finance Documents executed or, as the context may require, to be executed by the Grandunion Guarantor in favour of the Lender in form and substance satisfactory to the Lender in its sole discretion as the same may from time to time be amended, varied or supplemented;

“Grandunion Guarantor” means Grandunion Inc., a corporation organized and existing under the laws of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands;

“Group” means the relevant Corporate Guarantor and its Subsidiaries (whether direct or indirect and including without limitation the Borrowers and the relevant Managing Subsidiary) from time to time during the Security Period and “members of the Group” shall be construed accordingly;

“Guarantees” means together the relevant Corporate Guarantee and the Personal Guarantee and, in the singular, means any them;

“Guarantors” means together the relevant Corporate Guarantor and the Personal Guarantor and, in the singular, means any of them;

“Indebtedness” means any and all moneys, liabilities and obligations (whether actual or contingent, whether existing or hereafter arising, whether or not for the payment of money, and including, without limitation, the Master Agreement Liabilities and any obligation or liability to pay damages) which are now or which may at any time and from time to time hereafter be due, owing, payable or incurred or expressed to be due, owing, payable or incurred from the Borrowers or any of them (whether as principal, surety or otherwise) to the Lender under this Agreement, the Master Agreement and the other Finance Documents;

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“Insurance Documents” means all slips, cover notes, contracts, policies, certificates of entry or other insurance documents evidencing or constituting the Insurances from time to time in effect;

“Insurances” means, collectively in relation to each Ship, all policies and contracts of insurance (which expression includes all entries of that Ship in a protection and indemnity or mutual hull or war risks association) or such other arrangements by way of insurance which are from time to time taken out or entered into in respect of or in connection with that Ship and its Earnings pursuant to this Agreement and including all benefits thereof including all claims of whatsoever nature and return of premiums;

“Insurers” means the underwriters, insurance companies, mutual insurance associations with or by which the Insurances are effected;

“Interest Determination Date” means the Banking Day which is two (2) Banking Days prior to the commencement of an Interest Period;

“Interest Payment Date” means each day on which interest is payable in accordance with Clause 7, provided that if any such day is not a Banking Day, the relevant Interest Payment Date shall be the next succeeding day which is a Banking Day, unless such next succeeding Banking Day falls into another calendar month, in which event, the relevant Interest Payment Date shall be the immediately preceding Banking Day;

“Interest Period” means each of the successive periods determined in accordance with Clause 6 of this Agreement during which the Facility or any part thereof is outstanding and for which an Interest Rate in respect thereof is to be established hereunder;

“Interest Rate” means for each Advance (save as provided in Clause 9) the rate of interest applicable to that Advance (or any part thereof) during each Interest Period in respect thereof which is/are conclusively certified by the Lender to the Borrowers to be the aggregate of (a) the Applicable Margin and (b) LIBOR or the Lender’s cost of funding the relevant Advance, for Interest Periods of longer than six (6) months;

“ISM Code” means, in relation to its application to the relevant Manager, the Borrowers, each Ship and her operation:

(a)	‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
(b)	all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM)

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Code by Administrations produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” includes, in relation to each Ship:

(a)	the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to that Ship within the periods specified by the ISM Code; and
(b)	all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and
(c)	any other documents which are prepared or which are otherwise relevant to establish and maintain compliance of such Ship or the compliance of the relevant Owner and/or the relevant Manager with the ISM Code which the Lender may require;

“ISM SMS” means, in relation to each Ship, the safety management system for that Ship which is required to be developed, implemented and maintained by each Owner under the ISM Code;

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

“ISPS Code Documentation” includes in relation to each Ship:

(a)	the International Ship Security Certificate issued pursuant to the ISPS Code in relation to that Ship within the periods specified by the ISPS Code; and
(b)	all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Lender may require;

“Lender” means Marfin Egnatia Bank Societe Anonyme, a company duly incorporated under the laws of the Republic of Greece, having its registered office at 20 Mitropoleos and Komninon, 546 24 Thessaloniki, Greece and acting in this case through its office at 91 Akti Miaouli, 185 38 Piraeus, Greece and shall include its successors and assigns;

“Letter of Undertaking” means a letter of undertaking executed or, as the context may require, to be executed by the Borrowers in favour of the Lender, in such terms as the Lender may approve or require;

“LIBOR” means, for an Interest Period:

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(a)

the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on the appropriate page of the Reuters Monitor Money Rates Service at or about 11.00 a.m. (London time) on the Interest Determination Date for that Interest Period (or on such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for Dollars); or

(b)

if no rate is quoted on the appropriate page of the Reuters Monitor Money Rates Service, the rate per annum determined by the Lender to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent) of the rates per annum at which deposits in Dollars are offered to the Lender by leading banks in the London Interbank Market at the Lender’s request at or about 11.00 a.m. (London time) on the Interest Determination Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Banking Day of it;

“Loan Account” means collectively the account or accounts maintained by the Lender referred to in Clause 13;

“LOI” means the non-binding letter of intent dated 24 June 2009 as amended by an Amendment No.1 dated 22 July 2009, both entered into between the Grandunion Guarantor and the Aries Maritime Guarantor setting out the proposed main terms and conditions of the Acquisition;

“Major Casualty” means, in relation to each Ship, any casualty to such Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds Three hundred thousand Dollars ($300,000) or the equivalent thereof in any other currency;

“Management Agreement” means, in relation to each Ship, the management agreement made or to be made between the Owner thereof and the relevant Manager, in form and substance satisfactory to the Lender and as the same may from time to time be amended, varied or supplemented with the Lender’s prior written consent;

“Managers” means together the relevant Managing Subsidiary and/or any other company approved by the Lender as manager of the Ships or any of them and, in the singular, means any of them;

“Manager’s Undertaking” means, in relation to each Ship, a letter of undertaking including, where appropriate, an assignment of any obligatory insurances executed or, as the context may require, to be executed by each Manager in favour of the Lender, in such terms as the Lender may approve or require and, in the plural, means all of them;

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“Managing Subsidiary” means:

(a)

for the period commencing on the date of execution of this Agreement and ending on the date on which the conditions set forth in Clause 18.4 shall have been satisfied: (a) in respect of the Australia Ship: Stamford Navigation Inc., of the Republic of Liberia, a Subsidiary of the Grandunion Guarantor and (b) in respect of the China Ship and the Brazil Ship: Newfront Shipping S.A., of Panama, a Subsidiary of the Grandunion Guarantor; and

(b)

for the period commencing on the date on which the conditions set forth in Clause 18.4 shall have been satisfied and at any time thereafter throughout the Security Period: AMT Management Ltd. of the Republic of the Marshall Islands, a Subsidiary of the Aries Maritime Guarantor;

“Market Value” means in respect of each Ship, the value thereof determined in accordance with the provisions of Clause 21.26;

“Master Agreement” means the master swap agreement (on the 2002 ISDA Master Agreement (Multicurrency-Crossborder) form) and Schedule thereto both made or as the context may require to be made between the Borrowers and the Lender and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged thereunder;

“Master Agreement Assignment” means in relation to the Master Agreement, the assignment of that Master Agreement in favour of the Lender, executed or, as the context requires, to be executed by the Borrowers in form and substance satisfactory to the Lender in its sole discretion as security for the Indebtedness, as the same may from time to time be amended, varied or supplemented;

“Master Agreement Liabilities” means at any relevant time all liabilities actual or contingent, present or future of the Borrowers to the Lender under the Master Agreement;

“Maximum Permitted Swap Exposure” an amount not exceeding the lesser of Three million Seven hundred Forty thousand Dollars ($3,740,000) and ten per cent (10%) of the outstanding principal amount of the Facility;

“MOA” means:

(a)

in relation to the Australia Ship: the memorandum of agreement dated 7 April 2009 as amended by Addendum No, 1 dated 7 April 2007 and by Addendum No. 2 dated 14 August 2009 and made between the Australia Seller and the Australia Owner, nominated by Port Line Marine Limited of the Marshall Islands as buyer in relation to the sale and purchase of the Australia Ship, as the same may be further amended, varied or supplemented with the Lender’s prior written consent;

(b)

in relation to the Brazil Ship: the memorandum of agreement dated 5 August 2009 and made between the Brazil Seller and the Brazil Owner in relation to the sale and

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	purchase of the Brazil Ship, as the same may be further amended, varied or supplemented with the Lender’s prior written consent; and
(c)	in relation to the China Ship: the memorandum of agreement dated 5 August 2009 and made between the China Seller and the China Owner in relation to the sale and purchase of the China Ship, as the same may be further amended, varied or supplemented with the Lender’s prior written consent,

and, in the plural, means all of them;

“Mortgage” means in relation to each Ship, the first preferred Liberian mortgage granted or, as the context may require, to be granted by the Owner of that Ship to the Lender to secure the due payment of the Indebtedness in form and substance satisfactory to the Lender as the same may from time to time hereafter be amended, varied or supplemented, and, in the plural, means all of them;

“Nasdaq” means the National Association of Securities Dealers Automated Quotation;

“Nomination Date” means the Banking Day which is three (3) Banking Days prior to the commencement of an Interest Period;

“Notice of Drawdown” means each written notice given by the Borrowers to the Lender pursuant to Clause 5.1.4 substantially in the form set out in Schedule 1 hereto;

“Owner” means:

(a)	in relation to the Australia Ship: the Australia Owner;
(b)	in relation to the Brazil Ship: the Brazil Owner; and
(c)	in relation to the China Ship: the China Owner,

and, in the plural, means all of them;

“Permitted Liens” means any supplier’s, carrier’s, workman’s or similar lien arising in the ordinary course of business automatically by statute or by operation of law and not by way of contract in respect of amounts not yet due and payable but excluding any lien arising from any default or omission of the Security Parties or any of them;

“Personal Guarantee” means a guarantee in respect of the Borrowers’ obligations, under this Agreement and the other Finance Documents, executed or, as the context may require, to be executed by the Personal Guarantor in favour of the Lender, in form and substance satisfactory to the Lender, in its sole discretion as same may from time to time be amended, varied or supplemented;

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“Personal Guarantor” means the individual acceptable to the Lender in its sole discretion who shall execute the Personal Guarantee;

“Protection and Indemnity risks” means the usual risks covered by a protection and indemnity association that is a member of the International Group of Protection and Indemnity Associations, including the proportion not otherwise recoverable in case of collision under the ordinary running-down clause;

“Purchase Advances” means collectively the Australia Advance, the Brazil Advance and the China Advance and, in the singular, means any of them;

“Purchase Documents” means, in relation to each Ship, the relevant MOA and all contracts, bills of sale, export licenses (if appropriate) and other documents whatsoever made or to be made whereby the relevant Seller contracted to sell that Ship to the relevant Owner and the relevant Owner contracted to purchase and will acquire title for such Ship from the relevant Seller;

“Reduction Date” means the date falling three (3) months from the earlier of (i) the Drawdown Date of the Purchase Advance last to occur and (ii) the Termination Date in relation to the Purchase Advances and each of the nineteen (19) dates falling at successive quarterly intervals thereafter throughout the Security Period, on each of which dates the amount of the Facility available hereunder shall be reduced in accordance with Clause 11.1 provided that if any such day is not a Banking Day the relevant Reduction Date shall be the next succeeding day which is a Banking Day unless such next succeeding Banking Day falls in another calendar month in which event the relevant Reduction Date shall be the immediately preceding Banking Day;

“Reduction Instalments” means, collectively the twenty (20) consecutive quarterly instalments, each such instalment being in the amount of One million Five hundred Sixty thousand Dollars ($1,560,000), the first such instalment being due and payable on the first Reduction Date and each subsequent instalment being due and payable on each Reduction Date falling at successive quarterly intervals thereafter; provided that if the Facility drawn down is less than Thirty Seven million Four hundred thousand Dollars ($37,400,000) then the Reduction Instalments and the Balloon Payment shall be reduced proportionately;

“Relevant Ship” means each Ship and any other ship from time to time owned, managed or crewed by, or demise or bareboat chartered to an Owner or any other member of the Group;

“Retention Account” means the account numbered 0315615423 opened in the joint names of the Borrowers with the Lender pursuant to Clause 22.1 such account to include any substitute account or sub-account or revised account or revised designation or number whatsoever, and any deposit account to which monies from the Retention Account may from time to time be paid on a time deposit basis;

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“Retention Account Charge” means the first priority assignment, pledge and charge granted or, as the context may require, to be granted by the Borrowers to the Lender on the Retention Account in form and substance satisfactory to the Lender as the same may from time to time be amended, varied or supplemented;

“Requisition Compensation” means all compensation payable by reason of any Compulsory Acquisition of a Ship other than requisition for hire;

“Security Documents” means collectively the Mortgages, the General Assignments, the Charter Assignments, the Guarantees, the Manager’s Undertakings, the Master Agreement Assignment and the Accounts’ Charges and where the context so admits this Agreement and any other agreement or document that may be executed at any time by the Borrowers, the other Security Parties or any other person as security for the due payment of the Indebtedness;

“Security Parties” means each party to the Finance Documents (other than the Lender and the Charterers) and, in the singular, means any of them;

“Security Period” means the period during which the Finance Documents remain in effect and ending when the Indebtedness is paid in full;

“Sellers” means, together, the Australia Seller, the Brazil Seller and the China Seller and, in the singular, means any of them;

“Ships” means together the Australia Ship, the Brazil Ship and the China Ship and, in the singular, means any of them;

“Subject Documents” means all of the Finance Documents, the Purchase Documents, the Acquisition Documents, the Charters and the Management Agreements (none to be amended, varied, supplemented or modified without the consent of the Lender), and together with any other instrument, document or memorandum, scheduled to any of the documents referred to above, and any notice, consent to acknowledgement referred to in or required pursuant to any of the documents referred to above and any document, instrument or memorandum which secures any of the obligations of the Borrowers under any of the Finance Documents or under any other Subject Document;

“Subsidiary” of a person means: (a) any other person directly or indirectly Controlled by that person; or (b) any other person whose dividends or distributions on ordinary voting share capital that person is entitled to receive more than fifty per cent (50%); or (c) any entity (whether or not so Controlled) treated as a Subsidiary in the financial statements of that person from time to time;

“Swap Exposure” means, as at any relevant date the amount certified by the Lender (whose certificate shall in the absence of manifest error be conclusive and binding on the Borrowers) to be the aggregate net amount in Dollars which would be payable by the Borrowers to the Lender under (and calculated in accordance with) section 6(e) (Payments

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on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions;

“Taxes” means all present and future taxes, levies, imposts, duties, charges, fees, deductions and withholdings, and any restrictions or conditions resulting in a charge (other than taxes on the overall net income of the Lender) and “Tax” and “Taxation” shall be construed accordingly;

“Termination Date” means (i) for each Purchase Advance 30 October 2009 and (ii) for each Working Capital Advance the date falling one (1) month prior to the last Reduction Date or in each case such later date(s) as the Lender may approve in writing;

“Total Loss” means in relation to each Ship:

(a)	the actual or constructive or compromised or arranged or agreed total loss of such Ship; or
(b)	Compulsory Acquisition of such Ship; or
(c)	the capture, seizure, arrest, detention or confiscation of such Ship by any Government Entity or by a person acting or purporting to act on behalf of any Government Entity where such Ship is not released or discharged within thirty (30) days or such lesser period provided in the War Risks Insurances;

	“Transaction” has the meaning given to it in the Master Agreement;
	“War Risks” includes all risks referred to in the Institute Time Clauses (Hulls) (1/10/83) and (1/11/95) including, but not limited to, the risk of mines, blocking and trapping, missing vessel, confiscation and all risks excluded by Clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or Clause 24 of the Institute Time Clauses (Hulls) (1/11/1995); and
	“Working Capital Advance” shall have the meaning ascribed to it in Clause 1(A)(IV).
2.2	In this Agreement clause headings are for ease of reference only and shall be disregarded in the construction of this Agreement.
2.3	In this Agreement unless the context otherwise requires:

2.3.1	words importing the singular number shall include the plural and vice versa;
2.3.2	fees, costs and expenses shall be exclusive of any value added tax or similar tax (if any) which shall accordingly be payable in addition;
2.3.3	any reference to a document or instrument is a reference to that document or instrument as the same may have been, or may from time to time be amended or supplemented;

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2.3.4	the liquidation, winding-up or dissolution of a company or body corporate or the appointment of a receiver, administrative receiver, manager or administrator of or in relation to a company or corporation or any of its assets shall be construed so as to include any equivalent or analogous proceedings under the laws of the jurisdiction in which it is incorporated or any jurisdiction in which it carries on business or has assets or liabilities;
2.3.5	references to persons include any individual, partnership, firm, trust, body corporate, government, governmental body, authority, agency, unincorporated body of persons or association;
2.3.6	a reference to any enactment or statutory provision include any enactment or statutory provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same and shall include any orders, regulations, codes of practice, instruments or other subordinated legislation made under the relevant enactment or statutory provision; and
2.3.7	the words “herein”, “hereto” and “hereunder” refer to this Agreement as a whole and not to the particular Clause or Schedule in which the words may be used.

3.	THE FACILITY — THE BORROWERS JOINT AND SEVERAL LIABILITY
3.1	The Lender hereby agrees to make available to the Borrowers subject to the terms and the conditions hereof the Facility for the purposes stated in Clause 1(A) in an aggregate amount not exceeding at any relevant time the Thirty Seven million Four hundred thousand Dollars ($37,400,000) provided however that (i) each Advance shall be made available for drawing until the Termination Date in respect thereof and otherwise upon the terms and subject to the conditions of this Agreement (ii) no Working Capital Advance shall be drawn down unless the Purchase Advances have been previously drawn down and (iii) to the extent that the Borrowers prepay any sums initially borrowed in respect of the Facility they shall be entitled to reborrow the amount so prepaid up to the Applicable Limit prevailing at the relevant time.
3.2	The Borrowers undertake to use the proceeds of each Advance in accordance with and for the purposes referred to in Clause 1(A); the Lender (although entitled) shall not be obliged to monitor the application of such proceeds.
3.3	All the liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several so that each Borrower shall be jointly and severally responsible with the other Borrowers for all liabilities and obligations of the Borrowers under this Agreement and so that such liabilities and obligations shall not be impaired by:

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(a)	any failure of this Agreement to be legal, valid, binding and enforceable in relation to any of the Borrowers whether as a result of lack of corporate capacity, due authorisation, effective execution or otherwise;
(b)	any giving of time, forbearance, indulgence, waiver or discharge in relation to any of the Borrowers or to any other party to the Security Documents; or
(c)	any other matter or event whatsoever which might have the effect of impairing all or any of the liabilities and obligations of any of the Borrowers.

3.4	Each of the Borrowers declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and none of the Borrowers shall in any circumstances be construed to be a surety for the obligations of the other Borrowers hereunder.
3.5	Until all sums owing to the Lender by the Borrowers under this Agreement, the Master Agreement and the other Finance Documents have been paid in full none of the Borrowers (hereinafter called a “Creditor Borrower”) will without the prior written consent of the Lender ask, demand, sue for, take or receive from any of the other Borrowers or any other member of the Group (hereinafter called a “Debtor Borrower”) by set-off or any other manner the whole or any part of all present and future sums, liabilities and obligations payable or owing by the Debtor Borrower to the Creditor Borrower whether actual or contingent jointly or severally or otherwise howsoever (such sums being hereinafter called the “Subordinated Liabilities”) so long as any Senior Liabilities are outstanding to the Lender (for which purpose “Senior Liabilities” shall mean all present and future sums, liabilities and obligations whatsoever payable or owing by the Borrowers (or any of them) pursuant to the Finance Documents or any of them or otherwise whatsoever, whether actual or contingent jointly or severally or otherwise howsoever).
4.	AVAILABILITY — DESIGNATED TRANSACTIONS
4.1	Subject as herein provided, the Facility is available to the Borrowers to be drawn down during the Availability Period. Any part of a Facility which remains undrawn at the close of business in Athens on the latest Termination Date shall be automatically cancelled.
4.2	Any Designated Transaction shall be entered into on the basis of the Master Agreement and shall be concluded with the Lender.
4.3	No Designated Transaction may be entered into by the Borrowers if a material adverse change occurs in the financial condition or operation of any one or more of the Security Parties or any other member of the Group and/or if any other Event of Default occurs or an event which with the giving of notice or passage of time or the combination of both or the fulfillment of any other condition, may become an Event of Default having occurred.
4.4	Notwithstanding any provision of this Agreement and/or the Master Agreement to the contrary, if for any reason a Designated Transaction has been entered into but the Facility

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	is not drawn under this Agreement then, subject to Clause 4.5, the Lender shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrowers where it would otherwise be required whether under the Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by such Designated Transaction and/or the Master Agreement and/or to obtain or re-establish any hedge or related trading position in any manner and with any person the Lender in its absolute discretion may determine.
4.5	If a Designated Transaction has been entered into but the Facility is not drawn down under this Agreement and the Lender in its absolute discretion agrees, following a written request of the Borrowers, that the Borrowers may be permitted to maintain all or part of a Designated Transaction, the Borrowers shall, within fifteen (15) days of being notified by the Lender of such requirement, provide the Lender with, or procure the provision to the Lender of, such additional security as shall in the opinion of the Lender be adequate to secure the performance of such Designated Transaction, which additional security shall take such form and be constituted by such documentation, as the Lender in its absolute discretion may approve or require.
4.6	The Borrowers shall on the first written demand of the Lender indemnify the Lender in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by the Lender as a consequence of or in relation to the effecting of any matter or transactions referred to in Clauses 4.4 and 4.5.
4.7	Without prejudice to or limitation of the obligations of the Borrowers under Clause 4.6, in the event that the Lender exercises any of its rights under Clauses 4.4 or 4.5 and such exercise results in all or part of a Designated Transaction being terminated such termination shall be treated under the Master Agreement in the same manner as if it were a Terminated Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an Event of Default (as so defined in that section 14) by the Borrowers and, accordingly, the Lender shall be permitted to recover from the Borrowers a payment for early termination calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.
4.8	In the event that the Lender fails to enter into a Designated Transaction with the Borrowers, the Lender shall not be liable to the Borrowers to enter into such Designated Transaction nor to compensate the Borrowers for such failure.
5.	NOTICE OF DRAWDOWN
5.1	Subject to:

5.1.1 the receipt by the Lender of the documents specified in Clause 18 in form and substance satisfactory to the Lender and its legal advisers before the relevant Drawdown Date; and

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5.1.2	no Event of Default or an event which with the giving of notice or passage of time or satisfaction of any other condition or any combination of the foregoing, may become an Event of Default having occurred; and
5.1.3	the representations and warranties set out in Clause 16 (updated mutatis mutandis to the relevant Drawdown Date) being true and correct; and
5.1.4	the receipt by the Lender of a Notice of Drawdown in the form set out in Schedule 1 hereto not later than 11.00 a.m. (London time) two (2) Banking Days prior to the relevant Drawdown Date setting out the date of the proposed Advance,

	each Advance shall be made available to the Borrowers in accordance with and on the terms and conditions of this Agreement.
5.2	Unless otherwise expressly agreed between the Borrowers and the Lender no Working Capital Advance shall be made:

5.2.1	if the Purchase Advances have not been drawn down first or are no longer available for drawing;
5.2.2	if by being drawn down it would increase the Facility to a sum in excess of the Applicable Limit prevailing at the relevant time; and
5.2.3	in an amount of less than One million Dollars ($1,000,000).

5.3	Without prejudice to the generality of the foregoing provisions of this Clause 5 the Lender shall not be obliged to make available any Advance if, following its drawing, the covenant contained in Clause 23 (Security Margin) would cease to be complied with.
5.4	Each Notice of Drawdown shall be irrevocable and the Borrowers shall be bound to borrow in accordance with such notice.
5.5	On payment of the amount drawn down in respect of each Advance the Borrowers shall sign an Acknowledgement in the form set out in Schedule 2 hereto.
5.6	If the Borrowers give a Notice of Drawdown pursuant to Clause 5.1.4 and the Lender makes arrangements on the basis of such notice to acquire Dollars in the London Interbank Market to fund an Advance or any part thereof and the Borrowers are not permitted or otherwise fail to borrow in accordance with such Notice of Drawdown (either on account of any condition precedent not being fulfilled or otherwise) the Borrowers shall indemnify the Lender against any damages, losses or expenses which the Lender may incur (either directly or indirectly) as a consequence of the failure by the Borrowers to borrow in accordance with such Notice of Drawdown.
5.7	The Borrowers may, at any time during the Availability Period, cancel the Facility or, as the case may be, any part thereof which remains undrawn in whole or in part (but if in part in a

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	minimum of One hundred thousand Dollars ($100,000) or a multiple thereof upon giving the Lender three (3) Banking Days’ notice in writing to that effect. Such notice once given shall be irrevocable and upon such cancellation taking effect the Facility shall be reduced accordingly. Notwithstanding any such cancellation pursuant to this Clause 5.7 the Borrowers shall continue to be liable for any and all amounts due to the Lender under this Agreement including without limitation any amounts due to the Lender under Clauses 7, 9, 15. 27 and 28.
6.	INTEREST PERIODS
6.1	Subject to Clause 6.2, the Interest Periods applicable to each Advance shall (subject to market availability) be periods of a duration of three (3) or six (6) months (or such other periods as the Lender and the Borrowers may agree) as selected by the Borrowers by written notice to be received by the Lender not later than 11.00 a.m. (London time) on the relevant Nomination Date;
6.2	Notwithstanding the provisions of Clause 6.1:

6.2.1	the initial Interest Period in respect of the Advance first to occur shall commence on the Drawdown Date thereof and shall end on the expiry date thereof and the initial Interest Period in respect of any subsequent Advance shall commence on the Drawdown Date thereof and shall end on the last day of the then current Interest Period in respect of the Advance first to occur and upon expiration of the first Interest Period in respect of the Advance first to occur, all Advances shall be consolidated into and shall be treated in all respects as a single Advance and each subsequent Interest Period for such consolidated single Advance shall commence on the expiry of the preceding Interest Period in respect thereof;
6.2.2	if any Interest Period would otherwise end on a day which is not a Banking Day, that Interest Period shall be extended to the next succeeding day which is a Banking Day unless such next succeeding Banking Day falls in another calendar month in which event that Interest Period shall end upon the immediately preceding Banking Day;
6.2.3	if any Interest Period commences on the last Banking Day in a calendar month or if there is no numerically corresponding day in the month in which that Interest Period ends, that Interest Period shall end on the last Banking Day in that later month;
6.2.4	where any Reduction Date occurs other than at the end of an Interest Period there shall in respect of that part of the Facility equivalent to the amount of the Reduction Instalment by which the Applicable Limit is to be reduced on such Reduction Date, be a separate Interest Period expiring on such Reduction Date and the Interest Rate relating to such part shall be fixed separately;
6.2.5	no Interest Period shall extend beyond the final Reduction Date;

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6.2.6	save as provided in Clause 6.2.1, if the Borrowers fail to select an Interest Period in accordance with the above, such Interest Period shall be of three (3) months duration or of such other duration as the Lender in its sole discretion may select; and
6.2.7	save as provided in Clauses 6.2.1 and 6.2.4 the Borrowers shall not select more than one (1) Interest Period at any one time.

7.	INTEREST
7.1	Subject to the terms of this Agreement the Borrowers shall pay to the Lender interest in respect of each Advance (or the relevant part thereof) accruing at the Interest Rate for each Interest Period relating thereto in arrears on the last day of each Interest Period, provided that where such Interest Period is of a duration longer than three (3) months, accrued interest in respect of such Advance (or such part thereof) shall be paid every three (3) months during such Interest Period and on the last day of such Interest Period.
7.2	Interest shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) day year.
7.3	The Interest Rate applicable for each Interest Period shall be calculated and determined by the Lender on each Interest Determination Date and each such determination of an Interest Rate hereunder shall be promptly notified by the Lender to the Borrowers at the beginning of each Interest Period in respect thereof.
7.4	The Lender’s certificate as to the Interest Rate applicable shall be final and (except in the case of manifest error) binding on the Borrowers and the other Security Parties.
8.	DEFAULT INTEREST
8.1	In the event of a failure by the Borrowers to pay any amount on the date on which such amount is due and payable pursuant to this Agreement and/or the Master Agreement and/or the other Finance Documents and irrespective of any notice by the Lender or any other person to the Borrowers in respect of such failure, the Borrowers shall pay interest on such amount on demand from the date of such default up to the date of actual payment (as well after as before judgment) at the per annum rate which is the aggregate of (a) two point five per cent (2.5%) and (b) the Applicable Margin and (c) the rate at which the Lender in accordance with its normal practice is offered deposits in Dollars in the London Interbank Market for such period as the Lender may select at or about 11.00 a.m. (London time) on the Banking Day immediately following that on which the Lender becomes aware of the default and, so long as the default continues, such rate shall be recalculated on the same basis thereafter.
8.2	Any interest which shall have accrued under Clause 8.1 in respect of an unpaid amount shall be due and payable at the end of the period by reference to which it is calculated or such other date or dates as the Lender may specify by written notice to the Borrowers.

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8.3	Clause 7.2 shall apply to the calculation of interest on amounts in default.
9.	SUBSTITUTE BASIS
9.1	If the Lender determines (which determination shall be conclusive) that:

9.1.1	at 11.00 a.m. (London time) on any Interest Determination Date the Lender was not being offered by banks in the London Interbank Market deposits in Dollars in the required amount and for the required period; or
9.1.2	LIBOR would not adequately reflect the cost of the Lender of making, funding or maintaining the Facility or any part thereof for the duration of the next succeeding Interest Period; or
9.1.3	by reason of circumstances affecting the London Interbank Market such deposits are not available to the Lender in such market; or
9.1.4	adequate and reasonable means do not or will not exist for the Lender to ascertain the Interest Rate applicable to the next succeeding Interest Period; or
9.1.5	Dollars will or may not continue to be freely transferable;

	then, and in any such case the Lender shall give notice of any such event to the Borrowers and in case any of the above occurs on the Interest Determination Date prior to a Drawdown Date the Borrowers’ right to borrow an Advance which remains available for borrowing shall be suspended during the continuation of such circumstances.
9.2	If, however, any of the events described in Clause 9.1 occurs on any other Interest Determination Date relative to an Advance or any part thereof, then the duration of the relevant Interest Period(s) shall be up to one (1) month and during such Interest Period the Interest Rate applicable to such Advance or the relevant part thereof shall be the rate per annum determined by the Lender rounded upwards to the nearest whole multiple of one sixteenth per cent (1/16th%) to be the aggregate of the Applicable Margin and the cost (expressed as a percentage rate per annum) to the Lender of funding the amount of such Advance or any part thereof during such Interest Period(s).
9.3	During such Interest Period(s) the Borrowers and the Lender shall negotiate in good faith in order to agree an Interest Rate or Rates and Interest Period or Periods satisfactory to the Borrowers and the Lender to be substituted for those which but for the occurrence of any such event as specified in this Clause would have applied. If the Borrowers and the Lender are unable to agree on such an Interest Rate(s) and Interest Period(s) by the day which is two (2) Banking Days before the end of the Interest Period referred to above, the Borrowers shall repay the Facility together with accrued interest thereon at the Interest Rate set out above together with all other amounts due under this Agreement relative to the Facility but

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	without any prepayment fee, on the last day of such Interest Period, whereupon both Facility shall be cancelled and no further Advances shall be made hereunder.
10.	PREPAYMENT
10.1	If, at any time during the Security Period, a Ship is sold or becomes a Total Loss or the Mortgage on that Ship is discharged, on the Total Loss Reduction Date or on the Disposal Reduction Date or on the date of discharge of Mortgage on that Ship (as the case may be), the Borrowers shall prepay such part of the Facility as is equal to the higher of (i) the Relevant Amount and (ii) such amount in Dollars as shall ensure that, following the relevant prepayment, the Security Margin referred to in Clause 23 is maintained.
	Defined terms
	For the purposes of this Clause 10.1:

(a)

“Applicable Fraction” means, in relation to a Ship, a fraction having a numerator of an amount equal to the Market Value of such Ship (as most recently determined in accordance with clause 21.26) and a denominator of an amount equal to the aggregate Market Values of all of the Ships mortgaged at the relevant time in favour of the Lender (as most recently determined in accordance with clause 21.26), in each case as at the Disposal Reduction Date or Total Loss Reduction Date or the date of discharge of Mortgage on that Ship (as the case may be);

(b)

“Disposal Reduction Date” means:

(i)	in relation to a Ship which has become a Total Loss, its Total Loss Reduction Date; or
(ii)	in relation to a Ship which is sold in accordance with the provisions of the relevant Security Documents, the date of completion of such sale by the transfer of title to such Ship to the purchaser in exchange for payment of the relevant purchase price; or
(iii)	in relation to a Ship the Mortgage on which is discharged following the request of the Borrowers and the consent of the Lender in accordance with this Clause 10.1, the date of discharge of such Mortgage by the Lender;

(c)	“Relevant Amount” means, in relation to a Ship which has become a Total Loss or is sold or the Mortgage of which is discharged in accordance with this Clause 10.1, the amount in Dollars which is equal to the amount of the Applicable Fraction multiplied by the amount of the Facility outstanding as of the Disposal Reduction Date for such Ship; and
(d)	“Total Loss Reduction Date” means, in relation to a Ship which has become a Total Loss, the date which is the earlier of:

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(i)	the date falling one hundred and eighty (180) days after that on which such Ship becomes a Total Loss; and
(ii)	the date upon which insurance proceeds are or Requisition Compensation is received in respect of such Total Loss by the relevant Owner (or the Lender pursuant to the relevant General Assignment or Mortgage).

	Subject to no Event of Default or any event which with the giving of notice or passage of time or satisfaction of any other condition or any combination of the foregoing may become an Event of Default being in occurrence or continuing at the time a prepayment is made under this Clause 10.1, any balance arising from the sale or Total Loss or discharge of Mortgage proceeds of a Ship, after the prepayment required by this Clause 10.1 has been made shall be released to the Borrowers or to such other person as the Borrowers may direct.
	PROVIDED HOWEVER THAT if at any time during the Security Period there is only one Ship subject to a Mortgage and the Mortgage on that Ship is discharged following the Borrowers’ request or that Ship is sold (in both cases with the Lender’s prior written consent) or becomes a Total Loss, on the Disposal Reduction Date or the Total Loss Reduction Date or on the date of discharge of the Mortgage on that Ship (as the case may be), the Borrowers shall mandatorily prepay the full amount of the Indebtedness to the Lender.
10.2	For the purposes of this Clause 10.1, a Total Loss shall be deemed to have occurred:

(a)	in the case of an actual total loss of a Ship on the actual date and at the time that Ship was lost or if such date is not known, the date on which such Ship was last reported;
(b)	in the case of a constructive total loss of a Ship upon the date and at the time notice of abandonment of such Ship is given to the Insurers of that Ship for the time being (provided a claim for such total loss is admitted by the Insurers) or, if the Insurers do not admit such a claim, or, in the event that such notice of abandonment is not given by the owner thereof to the Insurers of that Ship, on the date and at the time on which the incident which may result, in that Ship being subsequently determined to be a constructive total loss has occurred;
(c)	in the case of a compromised or arranged total loss of a Ship, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the Insurers of that Ship;
(d)	in the case of Compulsory Acquisition of a Ship, on the date upon which the relevant Compulsory Acquisition occurs; and
(e)	in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Ship (other than where the same amounts to Compulsory Acquisition of such Ship) by any Government Entity, or by persons purporting to act

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on behalf of any Government Entity, which deprives the owner thereof of the use of that Ship for more than thirty (30) days, upon the expiry of the period of thirty (30) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred.

10.3	Unless an Event of Default shall have occurred (whereupon all moneys received by the Lender pursuant to Clause 10.1 shall be applied in accordance with the provisions of Clause 12) any and all amounts prepaid pursuant to Clause 10.1 shall be applied at the option of the Lender towards prepayment of the Balloon Payment and the Reduction Instalments in inverse order of maturity or, in any other manner to be determined by the Lender in its sole discretion; provided however that unless the Lender otherwise expressly agrees in writing, upon application of any sums so prepaid towards prepayment of the Facility, the Applicable Limit shall be reduced by the amounts so prepaid and applied.
10.4	By giving not less than fifteen (15) Banking Days’ prior written notice to the Lender the Borrowers may prepay all or any part of the Facility (but if in part the amount to be prepaid shall be One hundred thousand Dollars ($100,000) or a multiple thereof) at the end of the then current Interest Period. The Borrowers shall obtain any consent or approval from the relevant authorities that may be necessary to make any such prepayment of the Facility or any part thereof and if it fails to obtain and/or comply with the terms of such consent or approval and in consequence thereof the Lender has to repay the amount prepaid or the Lender incurs any penalty or loss then the Borrowers shall indemnify the Lender forthwith against all amounts so repaid and/or against all such penalties and losses incurred.
10.5	Unless the Lender otherwise expressly agrees in writing, all prepayments under Clause 10.4 shall be applied towards prepayment of the Balloon Payment and the Reduction Instalments in inverse order of maturity or, in any other manner to be determined by the Lender, in its sole discretion provided however that if any amounts so prepaid are reborrowed in accordance with Clause 10.8, the obligation of the Borrowers to pay the Balloon Payment and any Reduction Instalments prepaid in accordance with this Clause 10.5 shall be reinstated.
10.6	Save as otherwise herein expressly provided, any prepayment of the Facility or any part thereof made or deemed to be made under this Agreement shall, if made otherwise than at the end of an Interest Period relative to the amounts prepaid, be made together with accrued interest thereon and such additional amount (if any) as the Lender may certify as necessary to compensate the Lender for any costs incurred or to be incurred by it as a result of such prepayment.
10.7	Any notice of prepayment given by the Borrowers under this Agreement shall be irrevocable and the Borrowers shall be bound to prepay in accordance with each such notice.
10.8	Subject to the other provisions of this Agreement (including, without limitation, Clauses 9.1, 10.3. 11.1, 11.2, 15.1 and 24) any prepayment made under this Agreement and applied against the Facility or any part thereof may be reborrowed hereunder.

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10.9	The Borrowers may not prepay all or any part of the Facility except in accordance with the express terms of this Agreement.
10.10	Subject to Clause 10.12, on or prior to any repayment or prepayment of the Facility or any part thereof under this Clause 10 or Clause 9 or Clause 15 or any other provision of this Agreement, the Borrowers shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions as applicable so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Facility as reducing from time to time thereafter pursuant to Clause 11.1.
10.11	If a Designated Transaction is terminated in circumstances where the Lender would be obliged to pay an amount to the Borrowers under the Master Agreement, the Borrowers hereby agree that such payment shall be applied towards prepayment of the Facility in such manner as the Lender shall determine in sole discretion and authorise the Lender to apply such amount for such purpose.
10.12	If less than the full amount of the Facility remains outstanding following a prepayment under this Agreement and the Lender in its absolute discretion agrees, following a written request of the Borrowers, that the Borrowers may be permitted to maintain all or part of a Designated Transaction in an amount not wholly matched with or linked to all or part of the Facility, the Borrowers shall, within fifteen (15) days of being notified by the Lender of such requirement, provide the Lender with, or procure the provision to the Lender of, such additional security as shall in the opinion of the Lender be adequate to secure the performance of such Designated Transaction, which additional security shall take such form and be constituted by such documentation, as the Lender in its absolute discretion may approve or require.
10.13	Notwithstanding any provision of the Master Agreement to the contrary and the Borrowers’ obligations under Clause 10.10, in the case of a prepayment of all or part of the Facility (including, without limitation, following the occurrence of a Total Loss or upon a sale of the Ship or the discharge of the Mortgage in accordance with Clause 10.1 or under any other provision of this Agreement) then, subject to Clause 10.12, the Lender shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrowers, where it would otherwise be required whether under the Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by any Designated Transaction and/or the Master Agreement and/or to obtain or re-establish any hedge or related trading position in any manner and with any person the Lender in its absolute discretion may determine and both the Lender’s and the Borrowers’ continuing obligations under any Designated Transaction and/or the Master Agreement shall, unless agreed otherwise by the Lender, be calculated so far as the Lender considers it practicable by reference to the amended repayment schedule for the Facility taking into account the fact that less than the full amount of the Facility remains outstanding.
10.14	The Borrowers shall on the first written demand of the Lender indemnify the Lender in respect of all losses, costs and expenses (including, but not limited to, legal costs and

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	expenses) incurred or sustained by the Lender as a consequence of or in relation to the effecting of any matter or transactions referred to in Clauses 10.10, 10.12 and 10.13.
10.15	Without prejudice to or limitation of the obligations of the Borrowers under Clause 10.14, in the event that the Lender exercises any of its rights under Clauses 10.10 or 10.12 or 10.13 and such exercise results in all or part of a Designated Transaction being terminated such termination shall be treated under the Master Agreement in the same manner as if it were a Terminated Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an Event of Default (as so defined in that section 14) by the Borrowers and, accordingly, the Lender shall be permitted to recover from the Borrowers a payment for early termination calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.
10.16	In case of prepayments made due to a refinancing of a Ship by a bank or financial institution other than the Lender, the Borrowers shall pay to the Lender a prepayment fee equal to Two per cent (2%) of the aggregate outstanding amount of the Facility.
11.	REDUCTION — REPAYMENT
11.1	The Facility shall be reduced by the Borrowers by (a) the twenty (20) Reduction Instalments, each such Reduction Instalment being due and payable on the Reduction Date numerically corresponding to it and, on which such Reduction Instalment shall be due and payable hereunder and (b) the Balloon Payment being due and payable on the twentieth (20th) Reduction Date. On the final Reduction Date the Borrowers shall also pay to the Lender any other outstanding amounts of the Facility.
11.2	The Borrowers accept and agree that on each Reduction Date, the maximum amount of the Facility shall be reduced to the Applicable Limit available on such Reduction Date and in case that on any Reduction Date the aggregate outstanding principal amount of all Advances drawn down and outstanding on such Reduction Date, the Borrowers covenant to pay to the Lender on such Reduction Date such part of the Facility as shall be required in order to reduce the Facility to the Applicable Limit available on such Reduction Date.
11.3	Each Reduction Instalment and the Balloon Payment shall be paid in Dollars.
12.	APPLICATION
	All moneys received by the Lender under or pursuant to any of the Agreement and/or the other Finance Documents and expressed to be applicable in accordance with the provisions of this Clause 12 shall be held by the Lender, to be applied in the following manner:

(a) first, in or towards payment of all sums other than principal of or interest on the Facility which may be owing to the Lender under this Agreement and the other Finance Documents or any of them;

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(b)	second, in or towards payment of the amounts owing (whether actually or contingently) to the Lender under the Master Agreement (calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);
(c)	third, in or towards payment to the Lender of any default interest and/or overdue principal payments payable to the Lender under the Finance Documents;
(d)	fourth, in or towards payment to the Lender of any interest owing in respect of the Facility or any part thereof;
(e)	fifth, in or towards payment to the Lender of principal owing in respect of the Facility;
(f)	sixth, in or towards payment to the Lender of any amount due to it in accordance with the provisions of Clauses 10.6 and 28 by reason of any such payment in respect of the Facility not being effected on the last day of an Interest Period in respect of the total amount of the Facility;
(g)	seventh, at any time on or after the occurrence of an Event of Default in retention of a sum equal to the total of any and all other amounts which (in the reasonable opinion of the Lender) although not then due to the Lender under this Agreement and the other Finance Documents will become so due to the Lender, such sums thereafter to be applied by the Lender from time to time in accordance with this Clause 12; and
(h)	eighth, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be entitled to receive such surplus.

13.	EVIDENCE OF DEBT
13.1	The Lender shall maintain in accordance with its usual practice one or more Loan Accounts in the name of the Borrowers evidencing the Indebtedness.
13.2	In any legal action or proceedings arising out of or in connection with this Agreement and/or the other Finance Documents the entries made in the Loan Account(s) maintained pursuant to Clause 13.1 shall be conclusive evidence (save in the case of manifest error) of the existence and amounts of the liabilities of the Borrowers therein recorded.
14.	PAYMENTS
14.1	All amounts payable under this Agreement and/or the other Finance Documents by the Borrowers, including amounts payable under this Clause 14, shall be paid in full to the Lender without set-off or counterclaim or retention and free and clear of and without any deduction or withholding for or on account of any Taxes.

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14.2	In the event the Borrowers are required by law to make any such deduction or withholding from any payment hereunder then the Borrowers shall forthwith pay to the Lender such additional amount as will result in the immediate receipt by the Lender (as the case may be) of the full amount which would have been received hereunder had no such deduction or withholding been made, but if the Lender shall be or become entitled to any Tax credit or relief in respect of any Tax which is deducted from any payment by the Borrowers and if the Lender in its sole determination actually receives a benefit from such Tax credit or relief in its country of domicile, incorporation or residence, the Lender shall, subject to any laws or regulations applicable thereto, pay to the Borrowers after such benefit is effectively received by the Lender such amounts (which shall be conclusively certified by the Lender) as shall ensure that the net amount actually retained by the Lender is equal to the amount which would have been retained if there had been no such deduction; the Borrowers shall immediately forward to the Lender official receipt of the relevant taxation or other authority or other evidence acceptable to the Lender of the amount deducted or withheld as aforesaid, provided that in the event that it shall be illegal for the Borrowers to pay such additional amount as is referred to in this Clause 14.2 then the Indebtedness shall be repayable by the Borrowers to the Lender on demand.
14.3	All payments to be made by the Borrowers under this Agreement and/or the other Finance Documents shall be made in Dollars in immediately available and freely transferable and convertible funds not later than 11.00 a.m. London time on the date upon which the relevant payment is due to the Lender at such account as the Lender may from time to time nominate by written notice to the Borrowers.
14.4	The Borrowers undertake to indemnify the Lender against any loss incurred by the Lender as a result of any judgment or order being given or made for the payment of any amount due under this Agreement, the Master Agreement and/or the other Finance Documents and such judgment or order being expressed in a currency other than the currency in which the payment was due under this Agreement, the Master Agreement and/or the other Finance Documents and as a result of any variation having occurred in rates of exchange between the date on which the currency is converted for the purpose of such judgment or order and the date of actual payment thereof. This indemnity shall constitute a separate and independent liability of the Borrowers and shall continue in force and effect notwithstanding any such judgment or order as aforesaid.
15.	CHANGE OF CIRCUMSTANCES
15.1	If:

15.1.1 any law, regulation, treaty or official directive (whether or not having the force of law) or the interpretation thereof by any authority charged with the administration thereof:

(a) subjects the Lender to any Tax with respect to payments of principal of or interest on the Facility or any other amount payable hereunder; or

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(b)	changes the basis of Taxation of payments to the Lender of principal of or interest on the Facility or of any other amount payable hereunder (other than a change in the rate of Tax on the overall net income of the Lender); or
(c)	imposes, modifies or deems applicable any reserve and/or special deposit requirements against or in respect of assets or liabilities of, or deposits with or for the account of, or loans or credit extended by any office of the Lender; or
(d)	imposes on the Lender any other condition affecting this Agreement, the Facility or any part thereof or its funding; or

15.1.2 the Lender complies with any request, law, regulation (including any which relates to capital adequacy or liquidity control or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement (including without limitation, those resulting from the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (“Basel ll”) or any other law or regulation which implements Basel II) or directive from any applicable fiscal or monetary authority (whether or not having the force of law) and as a result of any of the foregoing either directly or indirectly:

(a) the cost to the Lender of making, funding or maintaining the Facility or any part thereof is increased; or

(b) the amount of principal, interest or other amount payable to the Lender or the effective return to the Lender hereunder is reduced; or

(c) the Lender makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount receivable by it from the Borrowers hereunder,

then and in each such case upon demand from time to time the Borrowers shall pay to the Lender such amount as shall compensate the Lender for such increased cost, reduction, payment or foregone interest or other return. If the Lender is entitled to make a claim pursuant to this Clause it shall notify the Borrowers of the event by reason of which it is so entitled and shall submit to the Borrowers a certificate setting out details of the event giving rise to such compensation, the amount thereof and the manner in which it has been calculated and in the absence of manifest error such certificate shall be conclusive.

On receipt of such certificate the Borrowers shall have the option to prepay within ninety (90) days the Facility together with all interest accrued thereof and all costs and other amounts (including amounts payable referred to above and any amount payable under Clause 10.6) payable to the Lender hereunder. If the Borrowers decide to exercise such option they shall give written notice to the Lender and prepay the amount due to the Lender

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within ninety (90) days of the receipt of the certificate referred to above. The Lender’s duties and liabilities hereunder shall be cancelled on the giving of such notice.

15.2	Notwithstanding anything to the contrary herein contained, if any change in law, regulation or treaty or in the interpretation or application thereof by any authority charged with the administration thereof shall make it unlawful for the Lender to make, fund or maintain the Facility or any part thereof, the Lender may by written notice thereof to the Borrowers declare that the Lender’s duty to provide the Borrowers with the Facility shall be terminated forthwith whereupon the Borrowers will prepay forthwith (or if permitted by law on the next following Interest Payment Date) the Facility together with all interest accrued thereon and all other amounts payable to the Lender hereunder including the amounts due under Clause 10.6. The Lender’s duties and liabilities hereunder shall be cancelled on the giving of such notice.
15.3	If any of the events referred to in Clause 15.1 or Clause 15.2 shall occur, but without prejudice to the liability of the Borrowers to prepay the Facility, the Borrowers and the Lender concerned shall negotiate in good faith with a view to agreeing terms for making the Facility available from another jurisdiction, or funding the Facility from alternative sources or otherwise restructuring the Facility on a basis which is not unlawful.
16.	REPRESENTATIONS AND WARRANTIES
16.1	The Borrowers hereby represent and warrant to the Lender that:

16.1.1	each Security Party is a company or corporation duly formed and validly existing under the laws of the country of its incorporation and has the power and authority to own its assets and carry on business in each jurisdiction in which it owns assets or carries on business;
16.1.2	each Security Party has power to enter into this Agreement and the other Subject Documents to which it is a party and to perform and discharge its/his/her duties and liabilities hereunder and thereunder and (in the case of the Borrowers) to borrow hereunder and to enter into Designated Transactions and each Security Party has taken all necessary action (whether corporate or otherwise) required to authorise the execution, delivery and performance of this Agreement and the other Subject Documents and the borrowings to be made hereunder;
16.1.3	the execution, delivery and performance of this Agreement and the other Subject Documents will not contravene or exceed the powers granted to each Security Party or by, or any provision of, any law or regulation in any jurisdiction to which the Security Parties or any of them are/is subject, any order or decree of any governmental agency or court of or in any jurisdiction to which the Security Parties or any of them are/is subject, the certificates of incorporation, the other constitutional documents of the Security Parties or any of them or any mortgage, deed, contract or agreement to which the Security Parties or any of them is/are a party and which is binding upon the Security Parties’ assets, and will not cause any

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Encumbrance to arise over or attach to all or any part of any Security Party’s revenues or assets nor require any Security Party to create any such Encumbrance;

16.1.4 all consents, licences, approvals, registrations, authorisations or declarations (including, without limitation, all foreign exchange control approvals) in any jurisdiction to which the Security Parties or any of them is/are subject required to enable the Borrowers to borrow hereunder and to enter into Designated Transactions and the Borrowers and the other Security Parties lawfully to enter into and perform and discharge their respective duties and liabilities under this Agreement and the other Subject Documents to which each of them is a party and to ensure that the duties and liabilities of each of the Borrowers and the other Security Parties hereunder and thereunder are legal, valid and enforceable in accordance with the terms of this Agreement and the other Subject Documents to which each of them is a party and to make this Agreement and the other Subject Documents admissible in evidence in such aforesaid jurisdictions have been obtained or made and are in full force and effect;

16.1.5 this Agreement and each of the other Subject Documents to which each Security Party is a party constitute the legal, valid, binding and unconditional duties and liabilities of each Security Party as is a party thereto, enforceable against such Security Party in accordance with the terms hereof or thereof;

16.1.6 no Security Party has failed to pay when due any material amount or to perform any material duty under the provisions of any agreement relating to indebtedness in excess in aggregate of Five hundred thousand Dollars ($500,000) to which it is a party or by which it may be bound and no event has occurred and is continuing which constitutes, or which with the giving of notice or lapse of time or both would constitute, a material breach or default by such Security Party under any such agreement;

16.1.7 no litigation or administrative proceedings in any court, arbitration tribunal or governmental authority are pending or, to the knowledge of the Borrowers or any of them, threatened against any Security Party or any of its assets which might materially adversely affect such Security Party’s ability to perform and discharge its duties and liabilities hereunder and under the other Subject Documents to which it/he/she is a party thereto;

16.1.8 the Financial Statements are complete and correct and present fairly the position of the members of the Group and the results of the operations of the members of the Group ended on such date, and have been prepared in accordance with the Applicable Accounting Principles consistently applied and give a true and fair view of the financial condition, assets and liabilities of the members of the Group therein stated at the date to which such Financial Statements have been prepared and since that date there has been no adverse change in the financial conditions of the

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business, assets or operation of the members of the Group therein stated or the Group taken as a whole (as the case may be);

16.1.9	the information provided to the Lender in relation to this transaction is true and correct in all material respects and does not omit any information necessary to make any of the information so provided not misleading;
16.1.10	the copy of each Subject Document delivered by the Borrowers to the Lender is a true and complete copy thereof;
16.1.11	none of the parties to the Subject Documents is in default thereunder;
16.1.12	none of the Security Parties is in default under any agreement to which it/he is a party or by which it may be bound and no litigation, arbitration, tax claim, administrative proceeding or investigation is current or pending or (to its knowledge) threatened;
16.1.13	the financial condition of the Borrowers and the other Security Parties has not suffered any material deterioration since that condition was last disclosed to the Lender;
16.1.14	all the obligations and liabilities of the Borrowers hereunder rank and will rank at least pari passu in right of payments with all other unsubordinated indebtedness of the Borrowers or any of them;
16.1.15	save as disclosed to the Lender in writing none of the Borrowers and the relevant Corporate Guarantor has incurred any indebtedness or authorised or accepted any capital commitments (other than that normally associated with the day to day operation or trading of the Ships, where appropriate);
16.1.16	no Taxes are imposed by deduction withholding or otherwise or any other payment to be made by any Security Party under this Agreement and/or any other of the Subject Documents or are imposed on or by virtue of the execution or delivery of the Agreement and/or any other of the Subject Documents or any document or instrument to be executed or delivered hereunder or thereunder and all relevant tax returns have been filed;
16.1.17	the choice of law agreed to govern this Agreement and/or any other Subject Document and the submission to the jurisdiction of the courts agreed in each of the Subject Documents are or will be on execution of the respective Subject Documents valid and binding on the Borrowers and any other Security Party which is a party thereto;
16.1.18	there are and will be no commissions, rebates, premiums or other payment by or to an account of any one or more of the Borrowers, the other Security Parties, the shareholder(s) of the Security Parties and the Sellers in connection with the

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Purchase Documents other than disclosed to the Lender by the Borrowers in writing;

16.1.19	no Encumbrance exists on any Security Party’s assets except as permitted by this Agreement;
16.1.20	the giving of the relevant Corporate Guarantee is to the commercial benefit of the relevant Corporate Guarantor in that at the time of giving such Corporate Guarantee, such Corporate Guarantor will belong to the same group of companies as the Borrowers and shall have a financial interest in the Facility being extended to the Borrowers and by giving its Corporate Guarantee, such Corporate Guarantor it will further its own business interests within the scope of its constitutional documents;
16.1.21	the giving of the Personal Guarantee by the Personal Guarantor is to the commercial benefit of the Personal Guarantor;
16.1.22	each of the Subject Documents is in full force and effect and constitute the valid binding and enforceable obligations of the Borrower which is a party thereto and the other parties to it and there has been no breach of the terms or the obligations of any party to it thereunder and no person has disputed or repudiated or disclaimed any liability under it or indicated that it does not consider itself bound by or does not intend to comply with any of the terms of any such documents;
16.1.23	the Borrowers and the relevant Corporate Guarantor have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject and none of the Borrowers and the relevant Corporate Guarantor has an office in England or in the United States of America;
16.1.25	no member of the Group is overdue in the payment of any amount in respect of Tax; and
16.1.26	the Aries Maritime Guarantor is a company whose shares are listed in Nasdaq and has fully complied with its obligations arising in respect of the Acquisition and such listing.
16.2	The Borrowers hereby further jointly and severally represent and warrant to the Lender that the following matters will be true on the Delivery Date in respect of each Ship (each hereinafter referred to in this Clause 16.2 as the “relevant Ship” and the Owner thereof being hereinafter referred to in this Clause 16.2 as the “relevant Owner”) and thereafter they shall remain true throughout the Security Period:
16.2.1	the relevant Ship will have unconditionally been delivered by the relevant Seller to and accepted by the relevant Owner pursuant to the relevant MOA and the full amount of the purchase price payable in respect thereof will have been duly paid to the relevant Seller;

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16.2.2	the relevant Owner will be the legal and beneficial owner of the relevant Ship under the laws of the relevant Flag State;
16.2.3	the relevant Ship will be in the absolute and unencumbered ownership of the relevant Owner save as contemplated by this Agreement and the other Finance Documents;
16.2.4	the relevant Ship will maintain the highest class with her Classification Society free of all recommendations and qualifications of her Classification Society or other conditions or notations affecting class;
16.2.5	the relevant Ship will be operationally seaworthy;
16.2.6	except for the registration of each Mortgage at the appropriate Registry of ships it is not necessary or advisable to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement and the other Subject Documents, that any of them be filed, recorded or enrolled with any governmental authority or agency or that they be stamped with any stamp, registration or similar transaction tax in the United Kingdom or in the Republic of Greece or in the Republic of the Marshall Islands or in the Republic of Liberia or in Bermuda or in any other country where any Security Party carries on business;
16.2.7	the relevant Ship will comply with all relevant laws, regulations and requirements (statutory or otherwise), including without limitation, the ISM Code, the ISPS Code, the ISM Code Documentation, the ISPS Code Documentation as are applicable to (i) ships registered under the law of the flag it will be flying and (ii) engaged in the same or a similar service as such Ship is or is to be engaged;
16.2.8	the Mortgage in respect of the relevant Ship will have been duly recorded against such Ship as a valid first priority ship mortgage in accordance with the laws of her flag;
16.2.9	the relevant Ship will be insured in accordance with the provisions of this Agreement in respect of Insurances;
16.2.10	the relevant Ship will be managed by the relevant Manager under the terms of the Management Agreement, relating thereto;
16.2.11	the relevant Owner and the relevant Manager shall have complied with the provisions of all Environmental Laws in respect of each Ship;
16.2.12	the relevant Owner and the relevant Manager shall have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals in respect of the relevant Ship as appropriate;

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16.2.13	none of the Borrowers and/or the relevant Manager shall have received notice of any Environmental Claim that alleges that any of the Owners and/or the relevant Manager is not in compliance with any Environmental Law or any Environmental Approval in respect of the relevant Ship;
16.2.14	there shall be no Environmental Claim pending against the relevant Owner, the relevant Manager or the relevant Ship; and
16.2.15	no Environmental Incident shall have occurred which could or might give rise to any Environmental Claim against the relevant Owner, the relevant Manager and the relevant Ship.
16.3	The representations and warranties of the Borrowers set out in Clauses 16.1 and 16.2 above shall survive the execution of this Agreement and shall be deemed to be repeated on each Drawdown Date and on each Interest Payment Date with respect to the facts and circumstances existing at each such time as if made at such time.
17.	SECURITIES
17.1	The Borrowers hereby agree that the Security Documents shall secure with first priority, the due payment of the Indebtedness provided however that unless an Event of Default has occurred and is continuing, the Lender shall release the Grandunion Guarantor and the Personal Guarantor from their respective obligations under the Grandunion Guarantee and the Personal Guarantee upon satisfaction of the conditions set forth in Clause 18.4.
17.2	It is declared and agreed in relation to the security created by the Security Documents that:
17.2.1	it shall be held by the Lender as a continuing security for the payment of the Indebtedness;
17.2.2	the security so created shall not be satisfied or discharged by intermediate payment or satisfaction of any part of the amount secured thereunder;
17.2.3	the security so created shall be in addition to and shall not in any way be prejudiced or affected by any collateral or other security now or hereafter held by the Lender for all or any part of the amounts thereby secured; and
17.2.4	every power and right given to the Lender hereunder shall be in addition to and not in limitation of any and every other power or right of the Lender under the Security Documents and may be exercised from time to time in such order and as often as the Lender may consider appropriate.
18.	CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
18.1	Notwithstanding the provisions of Clause 5, the agreement of the Lender to permit the Drawdown of any Advance hereunder is subject to the condition that the Lender shall have

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received not later than the Drawdown Date in respect of such Advance the following documents or evidence in form and substance satisfactory to the Lender and its legal advisers:

18.1.1	a certificate as to the shareholding of each Security Party, signed by the secretary or a director of that Security Party, stating the full names of the persons or persons legally and beneficially entitled as shareholders/stockholders of the entire issued and outstanding shares/stock of that Security Party and a copy, certified as a true copy by the secretary of each Security Party of the resolutions of the board of directors and of the shareholders of each Security Party authorising the transaction contemplated hereby and authorising a person or persons to sign or execute on behalf of each Security Party this Agreement, each Notice of Drawdown (as in the form of Schedule 1 thereof), each Acknowledgement (as in the form of Schedule 2 hereof) and the other Finance Documents as is a party thereto;
18.1.2	the originals of any power or powers of attorney granted pursuant to Clause 18.1.1;
18.1.3	specimen signatures, duly authenticated of the person or persons referred to in Clause 18.1.1;
18.1.4	certificates or other evidence satisfactory to the Lender in its sole discretion of the existence and good standing of each Security Party, dated not more than fifteen (15) days before the date of this Agreement;
18.1.5	copies, duly certified as a true copy by the respective secretaries of each Security Party of the certificate of incorporation and the other constitutional documents of each Security Party;
18.1.6	evidence that each Account has been duly opened by the relevant Borrower(s) as appropriate and all mandate forms, signature cards and authorities have been duly delivered and that each of such accounts is free of all liens or charges other than the liens and charges in favour of the Lender referred to herein;
18.1.7	certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action (including but without limitation governmental approval, consents, licences, authorisations, validations or exemptions which the Lender or its legal advisers may require) by or of parties with respect to this Agreement and the other Finance Documents;

18.1.8	the Grandunion Guarantee duly executed by the Grandunion Guarantor;
18.1.9	the Personal Guarantee duly executed by the Personal Guarantor;
18.1.10	the Accounts’ Charges duly executed by each of the Borrowers, as appropriate;

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18.1.11	evidence that the fees payable to the Lender in accordance with Clause 26 have been duly paid;
18.1.12	the Master Agreement duly executed between the Borrowers and the Lender;
18.1.13	the Master Agreement Assignment duly executed by the Borrowers;
18.1.14	evidence that an amount of Twenty Five thousand Euros (€ 25,000) has been paid to the Lender’s Greek and English law legal advisors in respect of their fees in connection with this Agreement and the other Finance Documents;
18.1.15	letter from HFW Nominees Limited to the Lender confirming acceptance of their appointment as agents for service of process in England under Clause 38.4;
18.1.16	a letter from Mr. George Livanos to the Lender confirming acceptance of his appointment as agent for service of process in Greece under Clause 38.5.
18.1.17	the opinion letters from Marshall Islands, Liberia and such other legal counsels as the Lender may require, all acceptable to the Lender, in relation to this Agreement and the other Finance Documents referred to in this Clause 18.1, and in form and substance satisfactory to the Lender;
18.1.18	copies of such of the Acquisition Documents as shall have been executed by the relevant Drawdown Date certified as true and complete copies thereof by the Borrowers’ legal counsel;
18.1.19	the Letter of Undertaking duly executed by the Borrowers;
18.1.20	such documents or evidence relating to the verification of identify and knowledge of the Lender’s customers with all necessary “know your customer” and money laundering requirements as the Lender may require;
18.1.21	execution and, where appropriate, registration of loan documentation and drawdown of a loan to be provided by the Lender to Grand Rodosi Inc. of the Republic of Liberia and Grand Anemi Limited of the Republic of Malta in accordance with the terms of a commitment letter issued by the Lender on 17 August 2009 and duly accepted by the aforesaid companies on 18 August 2009; and
18.1.22	such further documents and evidence in connection with the matters referred to in this Clause 18.1 as the Lender may hereafter request.
18.2	In addition to the conditions referred to in Clause 18.1 all of which must have been fulfilled to the satisfaction of the Lender at the times and in the manner referred to therein, the obligation of the Lender to permit the drawdown of any Advance relating to the financing or the refinancing of the acquisition cost of a Ship pursuant to the relevant Purchase Documents (hereinafter the “relevant Ship”) is also subject to the condition that the Lender

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shall have received the following documents or evidence in respect of that Ship in form and substance satisfactory to the Lender and its legal advisers on or prior to the Drawdown Date of that Advance:

18.2.1	copy of the MOA and the other Purchase Documents in respect of the relevant Ship, certified as true and complete copies thereof by the Borrowers’ legal counsel;
18.2.2	the Mortgage over the relevant Ship duly executed by the Owner thereof and notarised or legalised as appropriate and duly recorded at the appropriate registry of ships;
18.2.3	the General Assignment and the Charter Assignment in respect of the relevant Ship duly executed by the parties thereto;
18.2.4	the notices of assignment of the Insurances and of the Earnings in respect of the relevant Ship duly signed by the relevant Owner thereof;
18.2.5	the notices of assignment of the Earnings and of the Charter in respect of the relevant Ship duly signed by the Owner thereof and acknowledged by the relevant Charterer;
18.2.6	if required by the Lender, a survey report for the relevant Ship issued by a surveyor appointed by and/or acceptable to the Lender at the expense of the relevant Owner certifying the condition of such Ship;
18.2.7	evidence that save for the Encumbrances created by the relevant Finance Documents there is no Encumbrance whatsoever on the relevant Ship except in favour of the Lender;
18.2.8	evidence that the relevant Ship is insured in accordance with the provisions of this Agreement, such evidence to be certified by an insurance expert appointed by or acceptable to the Lender at the expense of the Borrowers;
18.2.9	evidence that the relevant Ship is classed at the highest classification status with the relevant Classification Society, free of overdue recommendations or other conditions or notations affecting her class;
18.2.10	market valuations on the basis specified in Clause 21.26 issued by reputable sale and purchase brokers appointed by or acceptable to the Lender, at the expense of the Borrowers, certifying the Market Value of the relevant Ship;
18.2.11	certified copies of the classification and international safety and trading certificates of the relevant Ship issued by the Classification Society of the relevant Ship free of recommendations or other conditions or notations affecting her class;

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18.2.12	a confirmation of class issued by the Classification Society of the relevant Ship stating that such Ship is free of overdue recommendations or other conditions or notations affecting its class;
18.2.13	evidence that the relevant Ship will be registered in the ownership of the relevant Owner under the laws of the relevant Flag State, free from registered Encumbrances other than the Mortgage registered thereon;
18.2.14	copies of the Management Agreements and of the Charters certified as true and complete copies thereof by the Borrowers’ legal counsel;
18.2.15	copies of the ISM Code Documentation and the ISPS Code Documentation in relation to the relevant Ship, the relevant Owner and the relevant Manager;
18.2.16	the Manager’s Undertaking in respect of the relevant Ship duly executed by the relevant Manager;
18.2.17	the opinion letters from Marshall Islands, Liberia and such other legal counsels as the Lender may require, all acceptable to the Lender, in relation to the Finance Documents referred to in this Clause 18.2, in form and substance satisfactory to the Lender; and
18.2.18	such further documents and evidence as the Lender may hereafter request.
18.3	If the Lender, at its discretion, permits an Advance or any part thereof to be borrowed before certain of the conditions referred to in Clauses 18.1 and/or 18.2 (as the case may be) are satisfied, the Borrowers shall ensure that those conditions are satisfied within five (5) Banking Days after the relevant Drawdown Date (or such longer period as the Lender specifies).
18.4	The Lender shall not be obliged to grant its consent to the change of the shareholder of the Borrowers contemplated by the Acquisition unless and until the Lender shall have received on or prior to the Acquisition Date the following documents or evidence in form and substance satisfactory to the Lender and its legal advisors:
18.4.1	each of the matters specified in any Acquisition Document as conditions precedent to the Acquisition shall have been satisfied (or waived by the Grandunion Guarantor with the Lender’s prior written consent);
18.4.2	copies of any and all Acquisition Documents (unless already delivered to the Lender pursuant to Clause 18.1.18;
18.4.3	the documents specified in Clauses 18.1.1 to 18.1.5 (inclusive) in respect of the Aries Maritime Guarantor;
18.4.4	the Aries Maritime Guarantee duly executed by the Aries Maritime Guarantor;

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18.4.5	Manager’s Undertakings duly executed by the relevant Managing Subsidiary of the Aries Maritime Guarantor and any other relevant Manager which shall manage one or more ships after the Acquisition; and
18.4.6	the opinion letters from Bermuda and such other legal counsels as the Lender may require, all acceptable to the Lender in relation to the Aries Maritime Guarantee, the Manager’s Undertakings, the Acquisition Documents and such other matters as the Lender may require in its absolute discretion.

19.	FINANCIAL AND GENERAL UNDERTAKINGS
	The Borrowers hereby jointly and severally undertake with the Lender that throughout the Security Period the Borrowers shall (and shall procure that each other relevant Security Party shall) comply with the following provisions of this Clause 19, except as the Lender may otherwise permit:
19.1	to supply the Lender with two (2) copies of (i) the annual Financial Statements of the Group audited by the Auditors as soon as available but in any event not later than one hundred and eighty (180) days after the end of the relevant period to which they relate starting with the 2008 Financial Statements and (ii) the quarterly unaudited Financial Statements of the Group as soon as available but in any event not later than ninety (90) days after the end of the relevant quarterly period starting with the accounts for the quarterly period ending 30 September 2009 and (iii) such other information with regard to the business, properties or condition, financial or otherwise, of each member of the Group as the Lender may from time to time reasonably request;
19.2	to procure that the Financial Statements to be delivered from time to time in accordance with Clause 19.1 shall be prepared in accordance with the Applicable Accounting Principles;
19.3	to obtain promptly at any time and from time to time such registrations, licenses, consents and approvals as may be required in respect of this Agreement and the other Subject Documents under any applicable law or regulation to enable them to perform and discharge their duties and liabilities hereunder and thereunder and promptly supply the Lender with copies thereof;
19.4	to ensure that at all times the claims of the Lender against each Security Party under this Agreement and the other Finance Documents rank at least pari passu with the claims of all its other unsecured creditors save those whose claims are preferred by any bankruptcy, insolvency or other similar laws of general application;
19.5	to deliver to the Lender translations into English (certified by an authorised translator) of any documents which have to be delivered to the Lender under the terms of this Agreement or the other Finance Documents, the originals of which are not in the English language;

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19.6	not to make any loans or advances to, or any investments in, any person, firm, corporation or joint venture (or to any officer, director, stockholder, employee or customer of any such person);
19.7	not to borrow any money or permit any such borrowing to continue or incur any indebtedness whatsoever other than the Facility, the Swap Exposure or other than by way of subordinated shareholders’ loans or enter into any agreement for payment on deferred terms (otherwise than on customary suppliers’ credit terms) or any equipment lease or contract hire agreement other than in the ordinary course of business;
19.8	not to assume, guarantee or otherwise undertake the liability of any person, firm or company (otherwise than pursuant to the terms hereof and in the ordinary course of operation or trading of the Ships);
19.9	not to authorise or accept any capital commitments (save and except in connection with the ordinary course of operation or trading of the Ships);
19.10	not to declare or pay any dividends or repay any shareholders’ loans or make any distributions to their shareholders in any form whatsoever;
19.11	not to and procure that the relevant Manager and the relevant Corporate Guarantor shall not change the nature of their business or commence any business other than the ownership and operation of ships;
19.12	not to (save and except as provided in this Agreement or otherwise in favour of the Lender), create or permit to exist any Encumbrance whatsoever on the Ships or any of them or on any of the other property or assets, real or personal of any Borrower whether now owned or hereafter acquired, other than a Permitted Lien without the prior written consent of the Lender;
19.13	without prejudice to the obligations of the Borrowers under Clause 19.14, promptly after the happening of an Event of Default or an event which with the giving of notice or passage of time or satisfaction of any other condition or any combination of the foregoing, may become an Event of Default having occurred, to notify the Lender of such event and of the steps (if any) which are being taken to nullify or mitigate its effect;
19.14	from time to time (but not more than once every six (6) months) on request by the Lender, to deliver to it a certificate signed by a director or officer of the Borrowers confirming that, save as may be notified in detail in such certificate, no Event of Default or an event which with the giving of notice or passage of time or satisfaction of any other condition or any combination of the foregoing, may become an Event of Default having occurred and is then subsisting to be accompanied by such evidence as to the information and matters contained in such certificate as the Lender may from time to time reasonably require;
19.15	to ensure and procure that each Security Party shall maintain its corporate existence under the laws of the country of its incorporation and shall comply with all relevant legislation and

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laws and regulations (including following the Acquisition to the laws and regulations relating to the listing of the shares of the Aries Maritime Guarantor in Nasdaq) applicable to it;

19.16	to ensure and procure that following the Acquisition no change in the Chief Executive Officer and/or the Chairman of the Aries Maritime Guarantor shall occur without the prior written consent of the Lender;
19.17	to pay and to ensure and procure that the other Security Parties shall pay all Taxes, assessments and other governmental charges when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail and ensure and procure that all relevant tax returns of the Borrowers and the other Security Parties shall be properly and timely filed;
19.18	not to convey, assign, transfer, sell or otherwise or dispose of the Ships or any of them or any of the other property, assets or rights owned by the Borrowers whether present or future, without the prior written consent of the Lender;
19.19	to send (or procure that it is sent) to the Lender as soon as the same is instituted (or, to the knowledge of the Borrowers or any of them threatened), details of any litigation, arbitration or administrative proceedings against or involving the Borrowers (or any of them) and/or the other Security Parties (or any of them) or the Ships (or any of them) , which is likely to have a material adverse effect on the Borrowers (or any of them), the other Security Parties (or any of them) or the operation of the Ships (or any of them);
19.20	to comply (and ensure that each other Security Party will comply) with all laws regulations treaties and conventions applicable to the Borrowers, the other Security Parties and the Ships and to carry on the Ships all certificates and other documents which may from time to time be required to evidence such compliance;
19.21	not to and ensure and procure that the relevant Corporate Guarantor and the relevant Manager(s) shall not dissolve, merge into or consolidate with any other company or person and procure that no change in the management or the legal or beneficial ownership of the Borrowers, the relevant Corporate Guarantor, the relevant Manager(s) and the Ships shall be effected;
19.22	to ensure and procure that (i) from the date of this Agreement and until the Acquisition Date each Borrower shall be a wholly owned Subsidiary of the Grandunion Guarantor and (ii) from the Acquisition Date and thereafter throughout the Security Period each Borrower will be a Subsidiary of the Aries Maritime Guarantor;
19.23	to ensure and procure that no change of Control in the relevant Corporate Guarantor shall occur without the Lender’s prior written consent;

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19.24	to execute and procure the execution by each other Security Party of any further document or documents required by the Lender in order to perfect or complete the security created by the Finance Documents;
19.25	to use the proceeds of the Facility for the Borrowers’ benefit and under their full responsibility and exclusively for the purposes specified in this Agreement;
19.26	to ensure and procure that all times throughout the Security Period the Borrowers and/or the relevant Corporate Guarantor shall maintain with the Lender to the credit of any account held with the Lender (including the Earnings Accounts but excluding the Retention Account) free deposits having minimum average quarterly balances of an amount equal to the amounts due to the Lender for the relevant quarterly period;
19.27	to ensure and procure that on the Acquisition Date the Grandunion Guarantee shall be substituted with the Aries Maritime Guarantee;
19.28	to ensure and procure that the Swap Exposure shall not exceed the Maximum Permitted Swap Exposure; and
19.29	to deliver to the Lender such documents and evidence as the Lender shall from time to time require relating to the verification of identity and knowledge of the Lender’s customers and the compliance by the Lender with all necessary “know your customer” or similar checks, always on the basis of applicable laws and regulations or the Lender’s own internal guidelines, in each case as such laws, regulations or internal guidelines apply from time to time.

20.	INSURANCE UNDERTAKINGS
	The Borrowers hereby jointly and severally undertake with the Lender that throughout the Security Period the Borrowers shall (at the expense of the Borrowers and upon such terms, in such amounts and with such Insurers as shall from time to time be approved in writing by the Lender) comply with the following provisions of this Clause 20, except as the Lender may otherwise permit:

20.1

to insure and keep insured the Ships in Dollars or such other currency as may be approved in writing by the Lender, in the full insurable value of the Ships but in no event for an aggregate amount which is less than the higher of (i) the aggregate Market Values of the Ships subject to a Mortgage and (ii) one hundred and thirty per cent (130%) of the aggregate amount of the Facility and the Maximum Permitted Swap Exposure against fire, marine and other risks (including Excess Risks) and War Risks covered by hull and machinery policies;

20.2

to enter each Ship in the name of the relevant Owner for her full value and tonnage in a protection and indemnity association approved by the Lender with unlimited liability if available otherwise for the highest possible standard cover for the time being

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$1,000,000,000 for oil pollution and for excess oil spillage and pollution liability insurance for the highest possible standard cover against all Protection and Indemnity Risks;

20.3	if any Ship enters the territorial waters of the United States of America for any reason whatsoever, to take out such additional insurance to cover such risks as may be necessary in order to obtain a Certificate of Financial Responsibility from the United States Coastguard;
20.4	upon the Lender’s request, the effect loss of hire and/or Earnings, Insurance on any or all of the Ships (as may be required by the Lender) in respect of charterparties which exceed twelve (12) months duration and otherwise on such terms and in such amounts as the Lender may instruct the Borrowers as being necessary or appropriate provided such cover is available in the market;