Exhibit 10.7

 

 

 

 

AMENDMENT NO. 4

TO

CREDIT AGREEMENT PROVIDING FOR A
SENIOR SECURED TERM LOAN
OF $38,500,000

Dated August 26, 2014,

LCI SHIPHOLDINGS, INC.
as Borrower,

AND

The Banks and Financial Institutions listed on Schedule I thereto,

as Lenders,

AND

DVB BANK SE

as Mandated Lead Arranger, Facility Agent and as Security Trustee

AND

INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor

Dated as of April 20, 2015

 

--------------------------------------------------------------------------------

 

AMENDMENT NO. 4 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 4 TO CREDIT AGREEMENT (this "Amendment") is dated as of April
20, 2015, by and among (1) LCI SHIPHOLDINGS, INC., a corporation existing under
the laws of the Republic of the Marshall Islands, as borrower (the "Borrower"),
(2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing
under the laws of the State of Delaware, as guarantor (the "Guarantor"), (3) DVB
Bank SE and the other banks and financial institutions listed on Schedule I to
the Facility Agreement (as defined below), as lenders (together with any bank or
financial institution which becomes a Lender pursuant to Section 12 of the
Facility Agreement, as defined below, the "Lenders" and each a "Lender"), and
(4) DVB BANK SE, ("DVB"), as facility agent (in such capacity including any
successor thereto, the "Facility Agent"), as security trustee for the Lenders
(in such capacity, the "Security Trustee" and, together with the Facility Agent,
the "Agents"), and amends and is supplemental to the Senior Secured Term Loan
Credit Agreement dated as of August 26, 2014, by and among Waterman Steamship
Corporation, as original borrower ("Waterman Steamship"), the Guarantor, the
Lenders and the Agents, as amended by an Amendment No. 1 dated as of October 28,
2014, by and among Waterman Steamship, the Guarantor, the Lenders and the
Agents, an Amendment No. 2 dated as of November 24, 2014, by and among Waterman
Steamship, the Guarantor, the Lenders and the Agents, an Omnibus Assignment and
Assumption Agreement dated as of December 29, 2014, by and among Waterman
Steamship, as assignor, the Borrower, as assignee, the Guarantor, the Lenders
and the Agents, pursuant to which the Borrower became the borrower under said
Senior Secured Term Loan Credit Agreement, and an Amendment No. 3 dated as of
March 30, 2015 entered into by and among the Borrower, the Guarantor, the
Lenders and the Agents (collectively, the "Original  Agreement").

WITNESSETH THAT:

WHEREAS, the Security Parties and the Creditors have agreed, inter alia, to
amend the Original Agreement, whereby the Original Agreement (other than the
Exhibits and the Schedules) shall with effect from the date hereof be replaced
in its entirety by that certain Senior Secured Term Loan Credit Agreement
attached hereto as Exhibit A (the "Facility Agreement").

NOW, THEREFORE, in consideration of the premises and such other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the parties, it is hereby agreed as follows:

1.

Definitions. Unless otherwise defined herein, words and expressions defined in
the Original Agreement have the same meanings when used herein.

2.

Representations and Warranties. Each of the Security Parties hereby reaffirms,
as of the date hereof, each and every representation and warranty made thereby
in the Original Agreement and the Note (updated mutatis mutandis) and that the
copies of its resolutions, Certificate of Incorporation and By-laws or similar
constituent documents thereof attached to its Officer's Certificate delivered in
connection with, inter alia, its entering into the Original Agreement have not
been amended or rescinded and remain in full force and effect as of the date
hereof.

--------------------------------------------------------------------------------

 

 

3.

No Defaults. Each of the Security Parties hereby represents and warrants that as
of the date hereof there exists no Event of Default or any condition which has
not been disclosed to the Facility Agent in writing that, with the giving of
notice or passage of time, or both, would constitute an Event of Default.

4.

Performance of Covenants. Each of the Security Parties hereby reaffirms that it
has duly performed and observed the covenants and undertakings set forth in the
Original Agreement, the Note and the Security Documents on its part to be
performed, and covenants and undertakes to continue duly to perform and observe
such covenants and undertakings, other than as waived hereby, so long as the
Facility Agreement, as may be amended or supplemented from time to time, shall
remain in effect.

5.

Amendments to the Original Agreement. Subject to the terms and conditions of
this Amendment,

a)

The Original Agreement (other than the Exhibits and the Schedules) is hereby
amended in its entirety to read as set forth in the Facility Agreement.

b)

Exhibit G-1 to the Facility Agreement is hereby deleted in its entirety;

c)

a new Exhibit G-3 (GLOVISS COUNTESS Mortgage) is hereby added to the Facility
Agreement in the form as attached hereto as Exhibit B; and

d)

a new Exhibit N (Pari Passu Intercreditor Agreement) is hereby added to the
Facility Agreement in the form as attached hereto as Exhibit C

6.

Conditions Precedent to the Effectiveness of this Amendment. The effectiveness
of this Amendment shall be expressly subject to the following conditions
precedent:

a)

This Amendment. The Borrower and the Guarantor shall have duly executed and
delivered this Amendment to the Facility Agent.

b)

Interest, Fees and Expenses Paid. The Facility Agent shall have received payment
in full of all interest, fees and expenses due under or in connection to the
Facility Agreement.

c)

GLOVIS COUNTESS Credit Facility. The GLOVIS COUNTESS Credit Facility (as defined
in the Facility Agreement) shall have become effective.

d)

Legal Opinions. The Facility Agent shall have received such legal opinions as it
shall reasonably require.

7.

Other Documents. By the execution and delivery of this Amendment, the Security
Parties and the Lenders hereby consent and agree that all references in the Note
and the Transaction Documents to the Original Agreement shall be deemed to refer
to the Original Agreement as amended hereby. By the execution and delivery of
this Amendment, each of the Security Parties hereby consents and agrees that
each of the Note and any other documents that have been executed in connection
with the Original Agreement and each of the Security Parties' obligations under
the Original Agreement shall remain in full force and effect notwithstanding the
amendments contemplated hereby.

--------------------------------------------------------------------------------

 

 

8.

Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of laws thereof other than Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York.

9.

Counterparts. This Amendment may be executed in as many counterparts as may be
deemed necessary or convenient, and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed to be an original
but all such counterparts shall constitute but one and the same agreement.

10.

Headings; Amendment. In this Amendment, section headings are inserted for
convenience of reference only and shall be ignored in the interpretation of this
Amendment. This Amendment cannot be amended other than by written agreement
signed by the parties hereto.

[Signature Page Follows]

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment by
its duly authorized representative on the day and year first above written,

 

 

LCI SHIPHOLDINGS, INC.,

as Borrower

 

By /s/ D.B. Drake

Name: David B. Drake

Title: Vice President and Treasurer

 

 

INTERNATIONAL SHIPHOLDING CORPORATION,

as Guarantor

 

By /s/ D.B. Drake

Name: David B. Drake

Title: Vice President and Treasurer

 

 

DVB BANK SE,

as Facility Agent, Security Trustee and Lender

 

By: /s/ Thibaud Ollivier

Name: Thibuad Ollivier

Title: Senior Vice President

 

By: /s/ Kartal Cona

Name: Kartal Cona

Title: Vice President

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

CREDIT AGREEMENT PROVIDING FOR A
SENIOR SECURED TERM LOAN
OF UP TO US$38,500,000

WATERMAN STEAMSHIP CORPORATION,
as Borrower,

AND

The Banks and Financial Institutions listed on Schedule I hereto,

as Lenders,

AND

DVB BANK SE,

as Mandated Lead Arranger, Facility Agent and Security Trustee,

AND

INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor

August 26, 2014

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

 

1

DEFINITIONS

 

 

 

1.1

Specific Definitions

 

1

 

1.2

Computation of Time Periods; Other Definitional Provisions

 

20

 

1.3

Accounting Terms

 

20

 

1.4

Certain Matters Regarding Materiality

 

20

2

REPRESENTATIONS AND WARRANTIES

 

20

 

2.1

Representations and Warranties

 

20

3

THE FACILITY

 

24

 

3.1

Purposes

 

24

 

3.2

Receipt of Funds

 

25

 

3.3

Drawdown Notice

 

25

 

3.4

Effect of Drawdown Notice

 

25

4

CONDITIONS PRECEDENT

 

25

 

4.1

Conditions Precedent to this Agreement

 

25

 

4.2

Breakfunding Costs

 

30

 

4.3

Satisfaction after Drawdown

 

30

5

REPAYMENT AND PREPAYMENT

 

30

 

5.1

Repayment

 

30

 

5.2

Voluntary Prepayment; No Re-borrowing

 

30

 

5.3

Mandatory Prepayment

 

30

 

5.4

Interest and Costs with Prepayments/Application of Prepayments

 

30

 

5.5

Borrower’s Obligation Absolute

 

30

6

INTEREST AND RATE

 

31

 

6.1

Payment of Interest; Interest Rate

 

31

 

6.2

Maximum Interest

 

31

7

PAYMENTS

 

31

 

7.1

Time and Place of Payments, No Set Off

 

31

 

7.2

Taxes

 

31

 

7.3

Sharing of Setoffs

 

32

 

7.4

Computations; Banking Days

 

33

8

EVENTS OF DEFAULT

 

33

 

8.1

Events of Default

 

33

 

8.2

Application of Moneys

 

36

9

COVENANTS

 

36

 

9.1

Affirmative Covenants

 

36

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

 

 

9.2

Negative Covenants

 

42

 

9.3

Financial Covenants

 

45

 

9.4

Asset Maintenance

 

46

 

9.5

Borrower Restructuring

 

46

10

ACCOUNTS

 

48

 

10.1

General

 

48

 

10.2

Payment of Earnings

 

48

 

10.3

Monthly Retentions

 

48

 

10.4

Debt Service Letter of Credit. 

 

49

 

10.5

Shortfall in Earnings

 

49

 

10.6

Transfers from Retention Account; Application of Retentions

 

49

 

10.7

Location of Accounts 

 

50

 

10.8

Debits for Expenses

 

50

 

10.9

Borrower's Obligations Unaffected

 

50

11

GUARANTEE

 

50

 

11.1

The Guarantee

 

50

 

11.2

Obligations Unconditional

 

51

 

11.3

Reinstatement

 

51

 

11.4

Subrogation 

 

51

 

11.5

Remedies

 

52

 

11.6

Joint, Several and Solidary Liability

 

52

 

11.7

Continuing Guarantee

 

52

12

ASSIGNMENT

 

52

 

12.1

Generally

 

52

 

12.2

Assignment by Security Parties

 

52

 

12.3

Assignment by Lender

 

55

13

ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

 

56

 

13.1

Illegality

 

56

 

13.2

Increased Costs

 

56

 

13.3

Lender's Certificate Conclusive

 

57

 

13.4

Compensation for Losses

 

57

14

CURRENCY INDEMNITY

 

57

 

14.1

Currency Conversion

 

57

 

14.2

Change in Exchange Rate

 

57

 

14.3

Additional Debt Due

 

57

 

14.4

Rate of Exchange

 

58

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

 

 

 

 

 

15

FEES AND EXPENSES

 

58

 

15.1

Fees

 

58

 

15.2

Expenses

 

58

16

APPLICABLE LAW, JURISDICTION AND WAIVER

 

58

 

16.1

Applicable Law

 

58

 

16.2

Jurisdiction

 

58

 

16.3

Waiver of Immunity

 

58

 

16.4

Waiver of Jury Trial

 

59

17

THE AGENTS

 

59

 

17.1

Appointment of Facility Agent

 

59

 

17.2

Appointment of Security Trustee

 

59

 

17.3

Distribution of Payments

 

59

 

17.4

Holder of Interest in Note

 

60

 

17.5

No Duty to Examine, Etc

 

60

 

17.6

Agents as Lenders

 

60

 

17.7

Acts of the Agent

 

60

 

17.8

Certain Amendments

 

60

 

17.9

Assumption regarding Event of Default

 

61

 

17.10

Limitations of Liability

 

61

 

17.11

Indemnification of the Facility Agent and Security Trustee

 

61

 

17.12

Consultation with Counsel

 

62

 

17.13

Resignation

 

62

 

17.14

Representations of Lenders

 

62

 

17.15

Notification of Event of Default

 

62

 

17.16

Reversal of Redistribution

 

62

 

17.17

Parallel Debt

 

62

18

NOTICES AND DEMANDS

 

63

 

18.1

Notices

 

63

19

MISCELLANEOUS

 

64

 

19.1

Right of Set-off

 

64

 

19.2

Time of Essence

 

64

 

19.3

Unenforceable, etc., Provisions - Effect

 

65

 

19.4

References

 

65

 

19.5

Further Assurances

 

65

 

19.6

Prior Agreements, Merger

 

65

 

19.7

Entire Agreement; Amendments

 

65

 

19.8

Indemnification

 

65

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

 

 

 

 

 

 

19.9

USA PATRIOT Act Notice; OFAC and Bank Secrecy Act

 

66

 

19.10

Remedies Cumulative and Not Exclusive; No Waiver

 

66

 

19.11

Counterparts; Electronic Delivery

 

66

 

19.12

Headings

 

67

 

19.13

Disclosure

 

67

 

19.14

Pari Passu Intercreditor Agreement

 

67

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

SCHEDULES

 

 

 

 

I.

 

The Lenders and the Commitments

II.

 

Approved Ship Brokers

III.

 

Liens

IV.

 

Indebtedness

V.

 

Initial Charter Party Agreement

 

EXHIBITS

 

A

 

Form of Promissory Note

B

 

Form of Drawdown Notice

C

 

Form of Compliance Certificate

D

 

Form of Assignment and Assumption Agreement

E

 

Form of Earnings and Charterparties Assignment

F

 

Form of Insurances Assignment

G-1

 

[Intentionally Omitted]

G-2

 

Form of Marshall Islands First Priority Continuation Mortgage

G-3

 

Form of GLOVIS COUNTESS Mortgage

H-1

 

Classification Society Instruction Letter

H-2

 

Classification Society Undertaking

I-1

 

Form of Earnings Account Pledge

I-2

 

Form of Retention Account Pledge

J

 

Form of Manager's Undertaking

K

 

Form of Asset Maintenance Compliance Certificate

L

 

Form of Omnibus Assignment and Assumption Agreement

M

 

Form of Loan Administration Form

N

 

Form of Pari Passu Intercreditor Agreement

 

 

--------------------------------------------------------------------------------

 

SENIOR SECURED TERM LOAN CREDIT AGREEMENT

 

 

THIS SENIOR SECURED TERM LOAN CREDIT AGREEMENT (this "Agreement") is made as of
the 26th day of August, 2014, by and among (1) WATERMAN STEAMSHIP CORPORATION, a
corporation incorporated and existing under the laws of the State of New York
("Waterman Steamship"), as borrower (the "Initial Borrower"), (2) INTERNATIONAL
SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, as guarantor (the "Guarantor"), (3) the banks and
financial institutions listed on Schedule I, as lenders (together with any bank
or financial institution which becomes a Lender pursuant to Section 12, the
"Lenders" and each a "Lender"), (4) DVB BANK SE, as facility agent (in such
capacity including any successor thereto, the "Facility Agent"), and as security
trustee for the Lenders (in such capacity, the "Security Trustee" and, together
with the Facility Agent, the "Agents") and (5) DVB BANK SE, as mandated lead
arranger (in such capacity, the "Mandated Lead Arranger").

 

 

WITNESSETH THAT:

 

 

WHEREAS, at the request of the Borrower, each of the Agents has agreed to serve
in such capacity under the terms of this Agreement and the Lenders have agreed
to provide to the Borrower a senior secured term loan facility in the amount of
up to Thirty Eight Million Five Hundred Thousand Dollars ($38,500,000);

 

NOW, THEREFORE, in consideration of the premises set forth above, the covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as set forth below:

 

1.DEFINITIONS

 

1.1Specific Definitions. In this Agreement the words and expressions specified
below shall, except where the context otherwise requires, have the meanings
attributed to them below:

 

“Acceptable Accounting Firm”

 

shall mean PricewaterhouseCoopers LLP, or such other Securities and Exchange
Commission recognized accounting firm as shall be approved by the Facility
Agent, such approval not to be unreasonably withheld;

“Account Bank”

 

shall mean PricewaterhouseCoopers LLP, or such other Securities and Exchange
Commission recognized accounting firm as shall be approved by the Facility
Agent, such approval not to be unreasonably withheld;

“Account Pledge”

 

shall mean the German law-governed pledge of the Earnings Account and the
Retention Account to be executed by the Borrower in favor of the Security
Trustee pursuant to Section 4.1(s)(iii) substantially in the form set out in
Exhibit 1-1 or 1-2;

“Advance”

 

shall mean the amount of the Facility advanced to the Borrower pursuant to
Section 3.1;

“Affiliate”

 

shall mean with respect to any Person, any other Person who directly or
indirectly controls, is controlled by or under common control with such Person.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") as applied
to any Person means the possession directly or indirectly of the power to direct
or cause the direction of the management and policies of that Person whether
through ownership of voting securities or by contract or otherwise;

--------------------------------------------------------------------------------

 

“Agents”

 

shall have meaning ascribed thereto in the preamble;

 

 

 

“Agreement”

 

shall mean this Agreement, as the same shall be amended, restated, modified
or     supplemented from time to time;

 

 

 

“Applicable Rate”

 

shall mean the rate of interest applicable to the Facility per annum, which is
equal to 250 basis points (the margin) plus the rate notified to the Borrower on
the Drawdown Date plus Mandatory Costs (if applicable);

 

 

 

“Approved Charter”

 

shall mean the Initial Charter Party Agreement and any other charter party to be
entered with an internationally recognized PCTC operator acceptable to the
Facility Agent (such consent not to be unreasonably withheld); provided, that
such other charter party has charter hire rates that are comparable to the then
current market charter hire rates for similar vessels and having other
prevailing market terms;

 

 

 

“Approves Jurisdiction”

 

shall mean the United States, the Republic of Marshall Islands or such other
jurisdiction acceptable to the Facility Agent (such acceptance not to be
unreasonably withheld);

 

 

 

“Approved Ship Broker”

 

shall mean any of the ship brokers listed on Schedule II;

 

 

 

“Asset Maintenance Compliance Certificate”

 

shall mean a certificate certifying as of the last day of the second and fourth
quarter  of the Borrower's fiscal year the compliance by the Borrower with the
covenants contained in Section 9.4 and showing the calculations thereof in
reasonable detail, delivered by the chief financial officer of the Guarantor to
the Facility Agent from time to time pursuant to Section 9.1(d)(iii) in the form
set out in Exhibit K or in such other form as the Facility Agent may agree;

 

 

 

“Assigned Moneys”

 

shall mean any and all sums assigned to the Security Trustee pursuant to (i) in
relation to the Vessel, the Earnings and Charterparties Assignment and the
Insurances Assignment or (ii) in relation to the GLOVIS COUNTESS, the GLOVIS
COUNTESS Assignments;

 

 

 

“Assignment and Assumption Agreements”

 

shall mean any Assignment and Assumption Agreement(s) executed pursuant to
Section 12.3 substantially in the form set out in Exhibit D;

 

 

 

“Assignment Notices”

 

shall mean (A) in relation to the Vessel, (a) the notice with respect to the
Earnings and Charterparties Assignment substantially in the form set out in
Exhibit 1 thereto, and (b) the notice with respect to the Insurances Assignment
substantially in the form set out in Exhibit 3 thereto or (B) in relation to the
GLOVIS COUNTESS, (a) the notice with respect to the GLOVIS COUNTESS Earnings and
Charterparties Assignment substantially in the form set out in Exhibit 1
thereto, and (b) the notice with respect to the GLOVIS COUNTESS Insurances
Assignment substantially in the form set out in Exhibit 3 thereto;

 

2

--------------------------------------------------------------------------------

 

“Assignments”

 

shall mean the Earnings and Charterparties Assignment and the Insurances
Assignment;

 

 

 

“Attributable Principal Amount”

 

shall mean (a) in the case of Synthetic Leases, an amount determined by
capitalization of the remaining lease payments thereunder as if it were a
Capital Lease determined in accordance with GAAP, and (b) in the case of asset
securitization programs, the outstanding principal amount of such financing,
after taking into account reserve amounts and making appropriate adjustments,
determined by the Facility Agent in its reasonable judgment;

 

 

 

“Availability Period”

 

shall mean the period of time beginning on the Closing Date and ending on the
earlier of (a) the date on which the Advance is made pursuant to Section 3 and
(b) September 30, 2014;

 

 

 

“Banking Day(s)”

 

shall mean any day that is not a Saturday, Sunday or other day on which (a)
banks in London, England, Frankfurt, Germany, or New York, New York are
authorized or required by law to remain closed, or (b) banks are not generally
open for dealing in dollar deposits in the London interbank market;

 

 

 

“Blocked Person”

 

shall mean any of the following currently or in the future: (i) an individual,
entity or vessel named on a Blocked Persons List, or any entity owned or
controlled by, directly or indirectly, such individual, entity or vessel, or
(ii) (A) an agency or instrumentality of, or an entity owned or controlled by,
or acting on behalf of or at the direction of, directly or indirectly, the
government of any country or territory that is the subject of Sanctions
(including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea,
Sudan and Syria) (each, a "Sanctioned Country"), (B) an entity located, resident
in or organized under the laws of a Sanctioned Country, or (C) a national or
permanent resident of a Sanctioned Country, or a person located or residing in a
Sanctioned Country, to the extent such agency, instrumentality, entity, or
person is targeted by Sanctions, or (iii) without duplication of any Person set
forth in clause (i) or (ii), any Person located or residing in, organized under
the laws of, or operating in a Sanctioned Country;

 

 

 

“Blocked Person List”

 

shall mean the "Specially Designated Nationals List and Blocked Persons List"
maintained by OFAC and any other similar or equivalent published list of
individuals or entities maintained by a Governmental Authority, as the same may
be amended, supplemented or substituted from time to time;

 

 

 

“Borrower”

 

shall mean (i) prior to the Vessel Transfer, the Initial Borrower, (ii) upon the
Vessel Transfer pursuant to Section 12.2(b), the Ultimate Borrower or (iii) upon
the Second Vessel Transfer, the EGS Borrower;

 

 

 

“Capital Expenditures”

 

shall mean with respect to the Guarantor and the Subsidiaries, on a consolidated
basis, for any period (without duplication), any expenditure for fixed assets or
that is properly chargeable to capital account in accordance with GAAP;

3

--------------------------------------------------------------------------------

 

“Capital Lease”

 

shall mean, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is or
should be accounted for as a capital lease on the balance sheet of that Person;

 

 

 

“Cash Equivalents”

 

means, as at any date of determination, any of the following: (a) marketable
securities (i) issued or directly and unconditionally guaranteed as to interest
and principal by the United States government, or (ii) issued by any agency of
the United States the obligations of which are backed by the full faith and
credit of the United States, in each case maturing within one (1) year after
such date; (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one (1) year after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's; (c) commercial paper maturing no more
than one (1) year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-I from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within one
(1) year after such date and issued or accepted by (x) any Lender, (y) any
foreign lending institution so long as it holds Indebtedness of the Guarantor or
its Subsidiaries or (z) by any commercial bank organized under the laws of the
United States or any state thereof or the District of Columbia that (i) is at
least "adequately capitalized" (as defined in the regulations of its primary
federal or other applicable banking regulator), and (ii) has Tier 1 capital (as
defined in such regulations, or the equivalent foreign regulations, if
applicable) of not less than $100,000,000; (e) shares of any money market mutual
fund that (i) has substantially all of its assets invested continuously in the
types of investments referred to in clauses (a) and (b) above, (ii) has net
assets of not less than $500,000,000, and (iii) has the highest rating
obtainable from either S&P or Moody's; (f) overnight repurchase investments and
overnight Eurodollar sweep investments; and (g) corporate bonds maturing within
one (1) year after such date and having a rating of at least A- from S&P or at
least A3 from Moody's; provided that, for purposes of this Agreement, such
corporate bonds shall be valued at a margin of 90% thereof;

 

 

 

“Change Of Control”

 

shall mean (a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than the existing owners, becoming the beneficial owner
(as defined in Rules I3d-3 under the Exchange Act), directly or indirectly, of
more than 30% of the total voting power of the Guarantor or (b) the Guarantor
ceases to own directly 100% of the Borrower or (c) the Board of Directors of the
Guarantor ceases to consist of a majority of the directors existing on the date
hereof or directors nominated by at least two-thirds (2/3) of the then existing
directors;

 

4

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“Classification Society”

 

shall mean American Bureau of Shipping or any other member of the International
Association of Classification Societies reasonably acceptable to the Lenders
(with whom the Vessel is entered and who periodic surveys and/or inspections of
the Vessel)

 

 

 

"Closing Date"

 

shall mean the day and year first written above;

 

 

 

"Code"

 

shall mean the internal Revenue Code of 1986, as amended, and any successor
statute and regulation promulgated thereunder;

 

 

 

“Collateral”

 

shall mean, all property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired in which the Security
Trustee or any Lender has been granted a security interest pursuant to any
Transaction Document;

 

 

 

“Commercial Manager”

 

shall mean Borrower or such other manager acceptable to the Facility Agent;

 

 

 

“Commodity Exchange Act”

 

shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from
time to time, and any successor statute;

 

 

 

“Commitment(s)”

 

shall mean in relation to a Lender, the portion of the Facility set out opposite
its name in Schedule I hereto or, as the case may be, in any relevant Assignment
and Assumption Agreement, as changed from time to time pursuant to the terms of
this Agreement;

 

 

 

“Compliance Certificate”

 

shall mean a certificate certifying the compliance by each of the Security
Parties with all of its covenants contained herein and showing the calculations
thereof in reasonable detail, delivered by the chief financial officer of the
Guarantor to the Facility Agent from time to time pursuant to Section 9.1(d) in
the form set out in Exhibit C or in such other form as the Facility Agent may
agree;

 

5

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“Consolidated EBITDA”

 

shall mean, for any period, with respect to the Guarantor and its Subsidiaries,
the sum of (without duplication) (a) Consolidated Net Income; (b) all
Consolidated Interest Expense of the Guarantor and its Subsidiaries; (c) income
taxes of the Guarantor and its Subsidiaries; (d) depreciation and amortization
of the Guarantor and its Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period; and (e) the unamortized balance of the
gain with respect to the sale of the Vessel pursuant to the sale/leaseback
transaction that occurred on February 22, 2012, for the four rolling quarters
commencing with the quarter ending September 30, 2014 and ending with the
quarter ending June 30, 2015; provided, that if any Subsidiary is not
wholly-owned by the Guarantor, Consolidated EBITDA shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal to (i)
the amount of Consolidated Net Income attributable to such Subsidiary multiplied
by (ii) the percentage ownership interest in the income of such Subsidiary not
owned by the Guarantor on the last day of such period; provided, further, that,
for the period of four fiscal quarters commencing with the quarter ending
September 30, 2014 and ending with the quarter ending June 30, 2015, all
non-cash gains and/or losses from dispositions of any assets allowed under the
Regions Credit Agreement or consented to by the Required Lenders thereunder
shall be excluded in the calculation of Consolidated EBITDA; provided, however,
that if any acquisition or disposition of assets permitted to be made under this
Agreement (other than non-material acquisitions or dispositions in the ordinary
course of business, each with a total value of less than $2,000,000) occurs
during such period of determination, Consolidated EBITDA for such period shall
be calculated on a pro forma basis to give effect to such acquisition or
disposition as if each such acquisition or disposition has been consummated on
the first day of such period; provided, further that Consolidated EBITDA based
on any such acquisition shall only be based on contracted cash flow;

 

 

 

“Consolidated EBITDAR”

 

shall mean, with respect to the Guarantor and its Subsidiaries, on a
consolidated basis, for any period (without duplication) the sum of (i)
Consolidated EBITDA for such period and (ii) Consolidated Lease Expense for such
period;

 

 

 

“Consolidated Fixed Charge Coverage Ratio”

 

shall mean, as of any date of determination, the ratio of (a) Consolidated
EBITDAR for the period of the four fiscal quarters of the Guarantor most
recently ended, minus taxes paid in cash during such period, minus maintenance
Capital Expenditures for such period to (b) Consolidated Fixed Charges for the
period of the four fiscal quarters of the Guarantor most recently ended;
provided that maintenance Capital Expenditures shall be calculated at 50% of
consolidated depreciation expense

 

 

 

--------------------------------------------------------------------------------

 

“Consolidated Fixed Charges”

 

means with respect to the Guarantor and the Subsidiaries, on a consolidated
basis, for any period (without duplication), the sum of (i) Consolidated
Interest Expense for such period; (ii) Consolidated Lease Expense for such
period; (iii) scheduled principal payments for any outstanding Indebtedness
during the applicable period, and (iv) the amount of cash dividends and other
distributions made by the Guarantor during such period (other than dividends
paid on common stock of the Guarantor in such period in an amount up to
$10,000,000). For purposes of this definition, "scheduled principal payments"
(a) shall be determined without giving effect to any reduction of such scheduled
payments resulting from the application of any voluntary or mandatory
prepayments made during the applicable period, (b) shall be deemed to include
the Attributable Principal Amount in respect of asset securitization programs
and Synthetic Leases and (c) shall not include any voluntary prepayments or
mandatory prepayments required pursuant to Section 2.11 of the Regions Credit
Agreement

 

6

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“Consolidated Interest Expense”

 

shall mean, with respect to the Guarantor and the Subsidiaries, on a
consolidated basis, for any period (without duplication), interest expense,
whether paid or accrued (including the interest component of asset
securitization programs and Synthetic Leases), on all Indebtedness of the
Guarantor and its Subsidiaries for such period, net of interest income, all
determined in accordance with GAAP;

“Consolidated Lease Expense”

 

shall mean with respect to the Guarantor and its Subsidiaries, on a consolidated
basis, for any period (without duplication), all amounts payable under any
leases (whether Capital Leases or operating leases) and time charter agreements
which may be classified as operating lease expenses, charter hire expenses or
rent as determined in accordance with GAAP during the period in question;

“Consolidated Lease Adjusted Indebtedness”

 

shall mean the sum of (i) all Indebtedness of the Guarantor and its Subsidiaries
(other than obligations under any Swap Contract) determined on a consolidated
basis in accordance with GAAP and (ii) the product of 6 times the Consolidated
Lease Expense of the Guarantor and its Subsidiaries for the past 12 months
determined on a consolidated basis in accordance with GAAP;

“Consolidated Leverage Ratio”

 

shall mean, as of any date of determination, the ratio of (a) Consolidated Lease
Adjusted Indebtedness as of such date to (b) Consolidated EBITDAR for the period
consisting of the four fiscal quarters of the Guarantor most recently ended.

“Consolidated Net Income”

 

shall mean, for any period, the consolidated net income of the Guarantor and its
Subsidiaries for such period, as shown on the consolidated financial statements
of the Guarantor and its Subsidiaries delivered in accordance with Section
9.1(d).

“Consolidated Tangible Net Worth”

 

shall mean, with respect to the Guarantor and its Subsidiaries, at any date for
which a determination is to be made (determined on a consolidated basis without
duplication in accordance with GAAP) (a) total stockholders' equity minus (b)
goodwill;

“Creditor(s)”

 

shall mean, together, the Mandated Lead Arrangers, the Agents and the Lenders,
each a "Creditor";

“Debt Service”

 

shall mean the scheduled principal amortization payments, the scheduled interest
payments and payment of any fees payable under the Transaction Documents;

“Default”

 

shall mean any event that would, with the giving of notice or passage of time,
or both, be an Event of Default:

“Default  Rate”

 

shall mean rate per annum equal to two percent(2%) over the Applicable Rate;

 

7

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"DOC"

 

shall mean a document of compliance issued to an Operator in accordance with
rule 13 of the ISM Code;

"Dollars" and the sign "$"

 

shall mean the legal currency, at any relevant time hereunder, of the United
States of America and, in relation to all payments hereunder, in same day funds
settled through the New York Clearing House Interbank Payments System (or such
other Dollar funds as may be determined by the Facility Agent to be customary
for the settlement in New York City of banking transactions of the type herein
involved);

"Drawdown Date"

 

shall mean the date, being a Banking Day, upon which the Borrower has requested
that the Facility be made available to the Borrower, and the Facility is made
available to the Borrower, as provided in Section 3;

"Drawdown Notice"

 

shall have the meaning ascribed thereto in Section 3.3;

“Earnings”

 

means, in relation to the Vessel, all moneys whatsoever which are now, or later
become, payable (actually or contingently) to the Borrower or the Security
Trustee (net of charter commissions payable in respect of the Vessel) and which
arise out of the use or operation of the Vessel, including (but not limited to):

 

 

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

 

 

(i) all freight, hire and passage moneys;

 

 

(ii) compensation payable to the Borrower or the Security Trustee in the event
of requisition of the Vessel for hire;

 

 

(iii) remuneration for salvage and towage services;

 

 

(iv) demurrage and detention moneys;

 

 

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

 

 

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

 

 

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

“Earnings Account”

 

shall mean (i) prior to the Vessel Transfer, the bank account no. 2910053679
maintained in the name of the Initial Borrower or (ii) upon the Vessel Transfer
or the Second Vessel Transfer, the bank account no. 2910053652 maintained in the
name of the Ultimate Borrower or the EGS Borrower, as applicable, and in each
case, with the Account Bank

 

8

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"Earnings and Charterparties Assignment"

 

shall mean the first priority assignment of Earnings, charterparties and
requisition compensation in respect of (i) the Earnings of the Vessel from any
and all sources (including requisition compensation) and (ii) any charter or
other contract relating to the Vessel, to be executed by the Borrower in favor
of the Security Trustee pursuant to Section 4.1(s)(i), substantially in the form
set out in Exhibit E;

"EGS Borrower"

 

shall mean East Gulf Shipholding, Inc., a Marshall Islands corporation;

"EGS Borrower Restructuring"

 

shall mean, collectively, the transactions contemplated by Section 9.5 hereof
and Section 9.5 of the GLOVIS COUNTESS Credit Facility;

"Environmental Affiliate(s)"

 

shall mean, with respect to a Security Party, any Person or entity, the
liability of which for Environmental Claims any Security Party may have assumed
by contract or operation of law;

"Environmental Approval(s)"

 

shall have the meaning ascribed thereto in Section 2.1(q);

"Environmental Claim(s)"

 

shall have the meaning ascribed thereto in Section 2.1(q);

"Environmental Law(s)"

 

shall have the meaning ascribed thereto in Section 2.1(q);

"ERISA"

 

shall mean the Employee Retirement Income Security Act of 1974, as amended, and
any successor statute and regulation promulgated thereunder;

"ERISA Affiliate"

 

shall mean a trade or business (whether or not incorporated) which is under
common control with any Security Party or any of their respective subsidiaries
within the meaning of Sections 414(b), (c), (m) or (o) of the Code or which
would be considered a member of a "controlled group" with any Security Party or
any of their respective subsidiaries under Section 4001 of ERISA;

"ERISA Funding Event"

 

shall mean (i) any failure by any Plan to satisfy the minimum funding standards
(for purposes of Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (ii) the filing pursuant to Section 412 of the Code or Section 303
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (iii) the failure by any Security Party, any of their
respective subsidiaries or any ERISA Affiliate to make any required contribution
to a Multiemployer Plan; (iv) a determination that any Plan is, or is expected
to be, in "at risk" status (within the meaning of Section 430(i) of the Code);
(v) the incurrence by any Security Party, any of their respective subsidiaries
or any ERISA Affiliate of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; (vi) the receipt by any
Security Party, any of their respective subsidiaries or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from any Security Party,
any of their respective subsidiaries or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent within the meaning of
Section 4245 of ERISA, in reorganization within the meaning of Section 4241 of
ERISA, or in endangered or critical status within the meaning of Section 432 of
the Code or Section 305 of ERISA; (vii) any "reportable event", as defined in
Section 4043 of ERISA with respect to a Plan (other than an event for which the
30-day notice period to the PBGC is waived); or (viii) the existence with
respect to any Plan of a "prohibited transaction" for purposes of Section 406 of
ERISA or Section 4975 of the Code;

 

9

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“ERISA Termination Event”

 

shall mean (i) the imposition of any lien under Section 430(k) of the Code or
any other lien in favor of the PBGC or any Plan or Multiemployer Plan on any
asset of any Security Party, any of their respective subsidiaries or any ERISA
Affiliate in connection with any Plan or Multiemployer Plan; (ii) the receipt by
any Security Party, any of their respective subsidiaries or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Multiemployer Plan or to appoint a trustee to administer
any Plan or Multiemployer Plan under Section 4042 of ERISA; (iii) the filing of
a notice of intent to terminate a Plan under Section 4041 of ERISA or the
treatment of a Multiemployer Plan amendment as a termination under Section 4041A
of ERISA; (iv) the institution of proceeding to terminate a Plan or a
Multiemployer Plan; (v) the incurrence by any Security Party, any of their
respective subsidiaries or any ERISA Affiliate of any liability under Title IV
of ERISA with respect to the termination of any Plan or Multiemployer Plan; or
(vi) the occurrence of any other event or condition which might constitutes
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan;

"Event(s) of Default"

 

shall mean any of the events set out in Section 8.1;

"Excess Cash Flow"

 

shall mean the aggregate amount of the Earnings of the Vessel during each fiscal
quarter of the Borrower's fiscal year minus during each such period:

 

 

(a)  any voyage expenses of the Vessel payable by the Borrower;

 

 

(b)  operating expenses (including expenses related to special survey,
dry-docking, crew costs, insurance, maintenance, stores, lube oils, etc.) of the
Vessel and corporate overhead of the Borrower relating to the Vessel in
accordance with the operating expenditure budget delivered pursuant to Section
9.1(d)(vii) up to an aggregate amount of S7,500 per day;

 

 

(c.)  scheduled payments of principal and interest under this Agreement; and

 

 

(d)  any other amounts payable hereunder or under the other Transaction
Documents, including any fees and expenses;

 

10

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"Exchange Act"

 

shall mean the Securities and Exchange Act of 1934, as amended;

"Facility"

 

shall mean the facility to be made available by the Lenders to the Borrower
hereunder pursuant to Section 3 in the maximum principal amount equal to the
lesser of (i) Thirty Eight Million Five Hundred Thousand Dollars ($38,500,000)
and (ii) seventy percent (70%) of the Fair Market Value of the Vessel, or the
balance thereof from time to time outstanding;

"Facility Agent"

 

shall have the meaning ascribed thereto in the preamble;

"Fair Market Value"

 

shall mean, at any time and from time to time, a desk-top charter-free appraisal
on an "as is", "willing seller, willing buyer" basis of the Vessel from one
independent ship broker selected by the Facility Agent (which shall be one of
Maritime Strategies International Ltd., Hesnes Shipping AS, Fearnley's A/S and
H. Clarkson & Company unless the Facility Agent advises the Borrower otherwise
in its sole discretion) or at the Borrower's option, the average of two (2)
appraisals from one ship broker selected by the Facility Agent above and one
Approved Ship Broker selected by the Borrower and appointed by the Facility
Agent; provided, that if the higher of the two valuations exceeds the lower of
the two valuations by more than 10%, Fair Market Value will be the average of
three (3) such appraisals by adding another appraisal from one Approved Ship
Broker selected by the Facility Agent;

"FATCA"

 

shall mean Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof;

"Fee Letter"

 

shall mean the fee letter of even date herewith among the Borrower and the
Facility Agent;

"Final Payment Date"

 

shall mean the sixth (6th) anniversary of the Drawdown Date;

"Foreign Plan"

 

shall mean an employee benefit plan, program, policy, scheme or arrangement that
is not subject to U.S. law and is maintained or contributed to by any Security
Party or any of their respective subsidiaries or for which any Security Party or
any of their respective subsidiaries has or could have any liability;

"Foreign Termination Event"

 

shall mean the occurrence of an event with respect to the funding or maintenance
of a Foreign Plan, that could reasonably be expected to result in a lien on, or
seizure of, any collateral hereunder;

"Foreign Underfunding Event"

 

shall mean the excess, if any, of the accrued benefit obligations of a Foreign
Plan (based on those assumptions used to fund that Foreign Plan or, if that
Foreign Plan is unfunded, based on those assumptions used for financial
accounting statement purposes or, if accrued benefit obligations are not
calculated for financial accounting purposes, based on such reasonable
assumptions as may be approved by the applicable Security Party's independent
auditors for these purposes) over the sum of (i) the assets of such Foreign Plan
and (ii) the liability related to such Foreign Plan accrued for financial
accounting statement purposes;

 

11

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“GAAP”

 

shall have the meaning ascribed thereto in Section 1.3;

“GLOVIS COUNTESS”

 

shall mean that certain pure car truck carrier GLOVIS COUNTESS with IMO No.
9476721;

“GLOVIS COUNTESS Assignments”

 

shall mean the GLOVIS COUNTESS Earnings and Charterparties Assignment and the
GLOVIS COUNTESS Insurances Assignment;

“GLOVIS COUNTESS Credit Facility”

 

shall mean the credit facility contemplated by that certain credit agreement
providing for a senior secured term loan of up to $32,000,000, dated April 10,
2015, between East Gulf Shipholding, Inc., as borrower, International
Shipholding Corporation, as guarantor, and DVB Bank SE, as facility agent and
security trustee and as lender, as amended, amended and restated, supplemented
or otherwise modified from time to time;

“GREEN BAY-$32M Credit Facility Mortgage”

 

shall mean the "GREEN BAY Mortgage" as defined in the GLOVIS COUNTESS Credit
Facility;

“GLOVIS COUNTESS-$32M Credit Facility Mortgage”

 

shall mean the "Mortgage" as defined in the GLOVIS COUNTESS Credit Facility;

“GLOVIS COUNTESS Earnings and Charterparties Assignment”

 

shall mean the assignment of Earnings, charterparties and requisition
compensation in respect of (i) the Earnings of the GLOVIS COUNTESS from any and
all sources (including requisition compensation) and (ii) any charter or other
contract relating to the GLOVIS COUNTESS, substantially in the form set out in
Exhibit E;

“GLOVIS COUNTESS Insurances Assignment”

 

shall mean the assignment in respect of the insurances over the GLOVIS COUNTESS,
substantially in the form set out in Exhibit F;

“GLOVIS COUNTESS Mortgage”

 

shall mean the preferred Marshall Islands mortgage over the GLOVIS COUNTESS,
securing the Facility, substantially in the form attached hereto as Exhibit G-3;

“Guaranteed Obligations”

 

shall have the meaning ascribed thereto in Section 11.1;

“Guarantor”

 

shall have the meaning ascribed thereto in the preamble;

--------------------------------------------------------------------------------

 

“Indebtedness”

 

shall mean, with respect to any Person at any date of determination(without
duplication), (i) all indebtedness of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person in respect of letters
of credit or other similar instruments (including reimbursement obligations with
respect thereto), (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery thereof or the completion of such services, except trade payables, (v)
all obligations on account of principal of such Person as lessee under
capitalized leases, (vi) all indebtedness of other Persons secured by a lien on
any asset of such Person, whether or not such indebtedness is assumed by such
Person; provided that the amount of such indebtedness shall be the lesser of (a)
the fair market value of such asset at such date of determination and (b) the
amount of such indebtedness, and (vii) all indebtedness of other Persons
guaranteed by such Person to the extent guaranteed; the amount of Indebtedness
of any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided that the amount outstanding at any time of any
indebtedness issued with original issue discount is the face amount of such
indebtedness less the remaining unamortized portion of the original issue
discount of such indebtedness at such time as determined in conformity with
GAAP; and provided further that Indebtedness shall not include any liability for
current or deferred federal, state, local or other taxes, or any current trade
payables;

12

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"Indemnitee"

 

shall have the meaning ascribed thereto in Section 19.8;

"ING Credit Agreement"

 

shall mean the facility agreement, dated as of August 2, 2010, providing for a
senior secured term loan of up to $55,200,000 between the EGS Borrower, as
borrower, and ING Bank N.V., as facility agent and security trustee and lender,
as such agreement is amended, amended and restated, supplemented or otherwise
modified from time to time;

"Initial Charter Party Agreement"

 

shall mean the time charter agreement set forth on Schedule V;

"Initial Charterer"

 

shall mean Nippon Yusen Kaisha;

"Initial Payment Date"

 

shall mean the date that is three (3) months after the Drawdown Date;

"Insurances Assignment"

 

shall mean the first priority assignment in respect of the insurances over the
Vessel, to be executed by the Borrower in favor of the Security Trustee pursuant
to Section 4.1(s)(ii), substantially in the form set out in Exhibit F;

"Interest Expense"

 

shall mean, with respect to the Guarantor and the Subsidiaries, on a
consolidated basis, for any period (without duplication), interest expense,
whether paid or accrued (including the interest component of capitalized
leases), on all Indebtedness of the Guarantor and the Subsidiaries for such
period, net of interest income, all determined in accordance with GAAP;

 

13

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“ISM Code”

 

shall mean the International Safety Management Code for the Safe Operating of
Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18)
of the International Maritime Organization and incorporated into the Safety of
Life at Sea Convention and includes any amendments or extensions thereto and any
regulation issued pursuant thereto;

“ISPS Code”

 

shall mean the International Ship and Port Facility Security Code adopted by the
International Maritime Organization at a conference in December, 2002 and
amending the Safety of Life at Sea Convention and includes any amendments or
extensions thereto and any regulation issued pursuant thereto;

“ISSC”

 

shall mean the International Ship Security Certificate issued pursuant to the
ISPS Code;

“LCI Shipholdings”

 

shall mean LCI Shipholdings, Inc., a corporation existing under the laws of the
Marshall Islands;

“Lenders”

 

shall have the meaning ascribed thereto in the preamble;

“Letter of Credit Bank”

 

BB&T Bank or another financial institution acceptable to the Facility Agent;

“Liquidity”

 

means the sum of Revolver Undrawn Availability plus Unrestricted Cash;

“Loan Administration Form”

 

shall mean the DVB loan administration form as attached in Exhibit M;

“Majority Lenders”

 

at any time shall mean Lenders holding an aggregate of more than 66.67% of the
Facility then outstanding;

“Manager’s Undertaking”

 

shall mean letters of undertaking to the Facility Agent to be issued by any
party that is or becomes the Commercial Manager (unless the Borrower is the
Commercial Manager) or the Technical Manager, substantially in the form set out
in Exhibit J or in such form acceptable to the Facility Agent, pursuant to which
such manager shall subordinate its rights to those of the Creditors;

"Mandated Lead Arranger"

 

shall have the meaning ascribed thereto in the preamble;

"Mandatory Costs"

 

shall mean in relation to the Facility or an unpaid sum the rate per annum
notified by any Lender to the Facility Agent to be the cost to that Lender of
compliance with all reserve asset, liquidity or cash margin or similar
requirement of any Federal Reserve Bank, any other central bank or European
Central Bank or the Financial Services Authority or similar institution whose
requirements such Lender complies with;

 

14

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"Maritime Administration Approval"

 

shall mean pre-approval from the United States Maritime Administration, in form
and substance satisfactory to the Lenders, for the possible transfer of the
Vessel upon the exercise of the Security Trustee's rights under the US Mortgage
to a party not qualified to own and document a vessel under United States flag
and/or the re-documentation of the Vessel under foreign flag;

"Material Adverse Effect"

 

shall mean a material adverse effect on the ability or prospective ability of
the Borrower and/or the Guarantor to meet any of their respective obligations
with regard to (i) the Facility and the financing arrangements established in
connection therewith or (ii) any of their respective Indebtedness or other
obligations that, considered as a whole, are material to the Borrower and/or the
Guarantor;

"Materials of Environmental Concern"

 

shall have the meaning ascribed thereto in Section 2.1(q);

"MI Continuation Mortgage"

 

shall mean the first priority Marshall Islands continuation mortgage
substantially in the form attached hereto as Exhibit G-2;

"Mortgage"

 

shall mean (i) prior to the Vessel Transfer, the US Mortgage or (ii) upon the
Vessel Transfer pursuant to Section 12.2(b) or the Second Vessel Transfer
pursuant to Section 12.2(c), the MI Continuation Mortgage (or an assignment)
executed in connection therewith;

"MTSA"

 

shall mean the Maritime & Transportation Security Act, 2002, as amended, inter
alia, by Public Law 107-295;

"Multiemployer Plan"

 

shall mean, at any time, a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which any Security Party, any of their respective
Subsidiaries or any ERISA Affiliate has any liability or obligation to
contribute or has within any of the six preceding plan years had any liability
or obligation to contribute;

"Note"

 

shall mean the promissory note to be executed by the Borrower to the order of
the Facility Agent pursuant to Section 4.1(c), to evidence the Facility
substantially in the form set out in Exhibit A;

"OFAC"

 

shall have the meaning ascribed thereto in Section 19.9;

"Omnibus Assignment and Assumption Agreement"

 

shall mean the omnibus assignment and assumption agreement substantially in the
form set out in Exhibit L;

"Operator"

 

shall mean the Person who is concerned with the operation of the Vessel and
falls within the definition of "Company" set out in rule 1.1.2 of the ISM Code;

"Other EGS Vessels"

 

shall mean (i) the 23,054 gross registered tons and 11,349 net registered tons
currently named "EGS CREST", IMO Number 9576727 and (ii) the 23,054 gross
registered tons and ,349 net registered tons currently named "EGS WAVE", IMO
Number 9576741;

 

15

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"Parallel Debt"

 

shall have the meaning ascribed to it in Section 17.17(a);

"Pari Passu Intercreditor Agreement"

shall mean the intercreditor agreement substantially in the form set out in
Exhibit N;

"PATRIOT Act"

 

shall have the meaning ascribed to it in Section 19.9;

"Payment Dates"

 

shall mean the Initial Payment Date and the dates falling at three (3) month
intervals thereafter, the last of which is the Final Payment Date;

"PBGC"

 

shall mean the Pension Benefit Guaranty Corporation or any successor entity
thereto;

“Person”

 

shall mean any individual, sole proprietorship, corporation, partnership
(general or limited), limited liability company, business trust, bank, trust
company, joint venture, association, joint stock company, trust or other
unincorporated organization, whether or not a legal entity, or any government or
agency or political subdivision thereof;

“Plan”

 

shall mean any employee benefit plan (other than a Multiemployer Plan subject to
the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect to which any Security Party, any of their respective
subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA;

“Prepayment Premium”

 

shall mean, with respect to prepayments made (i) on or prior to the first
anniversary of the Drawdown Date, an amount equal to three percent (3%) of the
amount to be prepaid, (ii) after the first anniversary of the Drawdown Date but
on or prior to the second anniversary of the Drawdown Date, an amount equal to
two percent (2%) of the amount to be prepaid, (iii) after the second anniversary
of the Drawdown Date but on or prior to the third anniversary of the Drawdown
Date, an amount equal to one percent (1%) of the amount to be prepaid or (iv)
after the third anniversary of the Drawdown Date, zero;

“Principal Obligations”

 

shall mean, in relation to the Borrower or the Guarantor all monetary
obligations (other than its Parallel Debt) which now or at any time hereafter
may be or become due, owing or incurred by the Borrower or the Guarantor to any
Creditor, whether due or not, whether contingent or not and whether alone or
jointly with others, as principal, surety or otherwise, under or in connection
with or pursuant to the Transaction Documents, as such obligations may be
extended, restated, prolonged, amended, renewed or novated from time to time;

“Proceeding”

 

shall have the meaning ascribed thereto in Section 8.1(i);

“Regions Credit Agreement”

 

shall mean that certain credit agreement, dated as of September 24, 2013,
between, among others, the Guarantor as a borrower and Regions Bank as
administrative agent and collateral agent, as such agreement is amended, amended
and restated, supplemented or otherwise modified from time to time;

 

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“Required Percentage”

 

shall mean (i) on or prior to the second anniversary of the Drawdown Date, one
hundred thirty percent (130%), (ii) after the second anniversary of the Drawdown
Date but on or prior to the fourth anniversary of the Drawdown Date, one hundred
thirty five percent (135%), (iii) after the fourth anniversary of the Drawdown
Date but on or prior to the fifth anniversary of the Drawdown Date, one hundred
forty five percent (145%) and (iv) after the fifth anniversary of the Drawdown
Date, one hundred sixty percent (160%);

“Retention Account”

 

shall mean (i) prior to the Vessel Transfer, the bank account no. 2910053687
maintained in the name of the Initial Borrower, (ii) upon the Vessel Transfer or
the Second Vessel Transfer, the bank account no. 2910053660 maintained in the
name of the Ultimate Borrower or the EGS Borrower, as applicable, and in each
case, with the Account Bank;

“Revolver Undrawn Availability”

 

shall mean, at any time, the maximum amount of revolving loans that could be
incurred by the borrowers under the Regions Credit Agreement (but not to exceed
the unutilized revolving commitments of the lenders thereof at such time) such
that the Guarantor would remain in compliance with the financial covenants set
forth in sections 8.8(a)(i) and 8.8(a)(vi) thereof, determined on a pro forma
basis, after giving effect to such revolving loans thereunder;

“Sanctions”

 

shall mean any trade, economic or financial sanctions, laws, regulations,
embargoes or restrictive measures (i) enacted, enforced or imposed by the United
States, including without limitation, the Trading With The Enemy Act, the
International Emergency, Economic Powers Act, the Iran Sanctions Act of 1996, as
amended, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of
2010, the National Defense Authorization Act of 2012 (including the Iran Freedom
Counter-Proliferation Act), the Iran Threat Reduction and Syria Human Rights Act
of 2012, all as amended; any executive order, directive, or regulation pursuant
to the authority of any of the foregoing, including the regulations of the U.S.
Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as amended,
or any orders or licenses issued or administered thereunder by OFAC (including
the Specially Designated Nationals List), and (ii) any non-U.S. economic or
financial sanctions, regulations, trade embargoes or other restrictive measures
promulgated or administered by the United Nations Security Council, the European
Union or its Member States (including, without limitation, the United Kingdom
and France), or the respective governmental institutions and agencies of any of
the foregoing, including without limitation, OFAC, the United States Department
of State, and Her Majesty's Treasury ("HMT"), or other relevant sanctions
authority (all of the foregoing collectively referred to as the "Sanctions
Authorities") that are applicable to (A) a Security Party or any Affiliate
thereof in the operation of its business or (B) a Lender and have been
designated as "Sanctions" by the Facility Agent (acting on the request of such
Lender) but only to the extent that compliance with such sanctions, regulations,
trade embargoes or other restrictive measures so designated does not conflict
with any of the provisions listed in (i) and (ii)(A) hereof;

 

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“Second Vessel Transfer”

 

shall mean the transfer of the ownership of the Vessel by LC1 Shipholdings to
the EGS Borrower;

“Security Document(s)”

 

shall mean the Mortgage, the GLOVIS COUNTESS Mortgage, the Assignments, the
GLOV1S COUNTESS Assignments, the Account Pledges, the Pari Passu lntercreditor
Agreement, the Debt Service Letter of Credit and any other documents that may be
executed as security for the Facility and the Borrower's obligations in
connection therewith or to establish any form of subordination or priorities
arrangement in relation therewith;

“Security Party”

 

shall mean each of the Borrower and the Guarantor;

“Security Trustee”

 

shall have the meaning ascribed thereto in the preamble;

“SMC”

 

shall mean the safety management certificate issued in respect of the Vessel in
accordance with rule 13 of the ISM code;

“subsidiary”

 

shall mean, with respect to any Person, any business entity of which more than
50% of the outstanding voting stock or other equity interest is owned directly
or indirectly by such Person and/or one or more other subsidiaries of such
Person;

“Subsidiary”

 

shall mean with respect to any Person, any subsidiary of such Person or if the
context requires, any subsidiary of the Guarantor;

“Swap Contract”

 

shall mean (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transaction,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement;

 

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“Synthetic Lease”

 

shall mean (a) a so-called synthetic, off-balance sheet or tax retention lease,
or (b) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment);

“Taxes”

 

shall mean any present or future income or other taxes, levies, duties, charges,
fees, deductions or withholdings of any nature now or hereafter imposed, levied,
collected, withheld or assessed by any taxing authority whatsoever, except for
(i) taxes on or measured by the overall net income of each Lender imposed by its
jurisdiction of incorporation or applicable lending office, the United States of
America, the State or City of New York or any governmental subdivision or taxing
authority of any thereof or by any other taxing authority having jurisdiction
over such Lender (unless such jurisdiction is asserted by reason of the
activities of the Borrower or any of the Subsidiaries) ), (ii) taxes imposed
under FATCA, or (iii) any Taxes that are attributable solely to the failure of
any Lender to comply with Section 7.2(c);

“Technical Manager”

 

shall mean LMS Shipmanagement, Inc. (which may subcontract the services to
Wallem Shipmanagement Limited) or such other manager acceptable to the Facility
Agent;

“Total Loss”

 

shall have the meaning ascribed thereto in the Mortgage;

“Transaction Documents”

 

shall mean each of this Agreement, the Note, the Security Documents and the Fee
Letter;

“Ultimate Borrower”

 

shall mean LCI Shipholdings;

“Unrestricted Cash”

 

shall mean all unencumbered (other than security interests in favor of the
Security Trustee securing the Facility) cash and Cash Equivalents of the
Guarantor and its Subsidiaries at such time.

“US Mortgage”

 

shall mean the United States first preferred ship mortgage substantially in the
form of Exhibit G-1;

“Vessel”

 

shall mean that certain pure car truck carrier GREEN BAY with IMO No. 9339818;

“Vessel Transfer”

 

shall mean the transfer of the ownership of the Vessel by "Waterman Steamship to
LCI Shipholdings and the reflagging of the Vessel in the Republic of the
Marshall Islands;

“Waterman Steamship”

 

shall have the meaning ascribed thereto in the preamble; and

“Withdrawal Liability(ies)”

 

shall mean liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part 1 of Subtitle E of Title IV of ERISA.

 

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1.2Computation of Time Periods; Other Definitional Provisions. In this
Agreement, the Note

and the other Transaction Documents, in the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding"; words
importing either gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections), exhibits, annexes or schedules are to
this Agreement, the Note or such Transaction Document, as applicable; references
to agreements and other contractual instruments (including this Agreement, the
Note and the Transaction Documents) shall be deemed to include all subsequent
amendments, amendments and restatements, supplements, extensions, replacements
and other modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other modifications by the
terms of this Agreement, the Note or any Transaction Document); references to
any matter that is "approved" or requires "approval" of a party shall mean
approval given in the sole and absolute discretion of such party unless
otherwise specified.

1.3Accounting Terms. Unless otherwise specified herein, all accounting terms
used in this

Agreement, the Note and in the Transaction Documents shall be interpreted, and
all financial statements and certificates and reports as to financial matters
required to be delivered to the Facility Agent or to the Lenders under this
Agreement shall be prepared, in accordance with generally accepted accounting
principles for the United States ("GAAP"), as amended from time to time
including amendments to GAAP made as a result of the conformity of GAAP to
International Financial Reporting Standards; provided, however, that for
purposes of determining the Guarantor's ratios and financial covenants set forth
in Section 9.3, GAAP shall be GAAP in effect as at June 30, 2014.

1.4Certain Matters Regarding Materiality. To the extent that any representation,
warranty,

covenant or other undertaking of any of the Security Parties in this Agreement
is qualified by reference to those which are not reasonably expected to result
in a "Material Adverse Effect" or language of similar import, no inference shall
be drawn therefrom that any Agent or Lender has knowledge or approves of any
noncompliance by such Security Party with any governmental rule.

2.REPRESENTATIONS AND WARRANTIES

2.1Representations and Warranties. In order to induce the Creditors to enter
into this

Agreement and to make the Facility available, each Security Party hereby
represents and warrants to the Creditors (which representations and warranties
shall survive the execution and delivery of this Agreement and the Note and the
drawdown of the Facility) that:

(a) Due Organization and Power. Each Security Party is validly existing in good
standing under the laws of its jurisdiction of incorporation, has full power to
carry on its business as now being conducted and to enter into and perform its
obligations under this Agreement, the Note and the Transaction Documents to
which it is a party, and is in compliance with all statutory, regulatory and
other requirements relative to such business and such agreements;

(b) Authorization and Consents. All necessary corporate action has been taken to
authorize, and all necessary consents and authorities have been obtained and
remain in full force and effect to permit, each Security Party to enter into and
perform its obligations under this Agreement, the Note and the Transaction
Documents and, in the case of the Borrower to borrow, service and repay the
Facility and, as of the date of this Agreement, no further consents or
authorities are necessary for the service and repayment of the Facility or any
part thereof;

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(c) Binding Obligations. This Agreement, the Note and the Transaction Documents
constitute or will, when executed and delivered, constitute the legal, valid and
binding obligations of each Security Party that is a party thereto enforceable
against such Security Party in accordance with their respective terms, except to
the extent that such enforcement may be limited by equitable principles,
principles of public policy or applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors' rights;

(d) No Violation. The execution and delivery of, and the performance of the
provisions of, this Agreement, the Note, the Fee Letter and the other
Transaction Documents to which it is to be a party by each Security Party do not
contravene any applicable law or regulation existing at the date hereof or any
contractual restriction (including, after giving effect to the consent agreement
referred to in Section 4.1(dd), the Regions Credit Agreement and the ING Credit
Agreement) binding on such Security Party or the certificate of incorporation or
by-laws (or equivalent instruments) thereof and that the proceeds of the
Facility shall be used by the Borrower exclusively for its own account and for
the purpose set forth in Section 3.1(a);

(e) Filings; Stamp Taxes. Other than the recording of the Mortgage with (x)
prior to the Vessel Transfer, the appropriate authorities for the United States
and (y) upon the Vessel Transfer and the Second Vessel Transfer, the appropriate
authorities for the Republic of the Marshall Islands, and the filing of Uniform
Commercial Code Financing Statements with (x) prior to the Vessel Transfer, the
Department of State of the State of New York and (y) upon the Vessel Transfer,
the Recorder of Deeds of the District of Columbia in respect of the Assignments,
and the payment of filing or recording fees consequent thereto, it is not
necessary for the legality, validity, enforceability or admissibility into
evidence of this Agreement, the Note or the Transaction Documents that any of
them or any document relating thereto be registered, filed, recorded or enrolled
with any court or authority in any relevant jurisdiction or that any stamp,
registration or similar Taxes be paid on or in relation to this Agreement, the
Note or any of the Transaction Documents;

(f) Litigation. No action, suit or proceeding is pending or threatened against
any Security Party before any court, board of arbitration or administrative
agency which could or might have a Material Adverse Effect;

(g) No Default. No Security Party is in default under any agreement by which it
is bound, or is in default in respect of any financial commitment or obligation,
in each case, exceeding $5,000,000 individually or $20,000,000 in the aggregate;

(h) Vessel. The Vessel is:

i.  in the sole and absolute ownership of the Borrower and duly registered in
the Borrower's name (x) prior to the Vessel Transfer, under the United States
flag and (y) upon the Vessel Transfer or the Second Vessel Transfer, under the
Marshall Islands flag, unencumbered, save and except for the Mortgage (and upon
the consummation of the EGS Borrower Restructuring, the GREEN BAY-$32M Credit
Facility Mortgage) and as permitted thereby;

ii. classed in the highest classification and rating for vessels of the same age
and type with its Classification Society without any outstanding
recommendations;

iii. operationally seaworthy and in every way fit for its intended service; and

iv. insured in accordance with the provisions of the Mortgage and the
requirements thereof in respect of such insurances will have been complied with;

(i)Insurance. Each of the Security Parties has insured its properties and assets
against such risks and in such amounts as are customary for companies engaged in
similar businesses;

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(j) Financial Information. Except as otherwise disclosed in writing to the
Facility Agent on or prior to the date hereof, all financial statements,
information and other data furnished by any Security Party to the Facility Agent
are complete and correct, such financial statements have been prepared in
accordance with GAAP and accurately and fairly present the financial condition
of the parties covered thereby as of the respective dates thereof and the
results of the operations thereof for the period or respective periods covered
by such financial statements, and since the date of the Guarantor's financial
statements most recently delivered to the Facility Agent, there has been no
Material Adverse Effect as to any of such parties and none thereof has any
contingent obligations, liabilities for taxes or other outstanding financial
obligations except as disclosed in such statements, information and data;

(k) Tax Returns. Each Security Party has filed all material tax returns required
to be filed thereby and has paid all taxes payable thereby which have become
due, other than those not yet delinquent or the nonpayment of which would not
have a Material Adverse Effect and except for those taxes being contested in
good faith and by appropriate proceedings or other acts and for which adequate
reserves shall have been set aside on its books;

(l)ERISA. The execution and delivery of this Agreement and the consummation of
the

transactions hereunder will not involve any "prohibited transaction" for
purposes of ERISA or Section 4975 of the Code and no condition exists or event
or transaction has occurred in connection with any Plan or Multiemployer Plan
maintained or contributed to, or required to be maintained or contributed to, by
any Security Party, any of their respective subsidiaries or any ERISA Affiliate
resulting from the failure of any thereof to comply with ERISA which is
reasonably likely to result in any Security Party, any of their respective
subsidiaries or any ERISA Affiliate incurring any liability, fine or penalty
which individually or in the aggregate could have a Material Adverse Effect. No
ERISA Funding Event, ERISA Termination Event, Foreign Termination Event or
Foreign Underfunding Event exists or has occurred, or is reasonably expected to
exist or occur, that, when taken together with all other ERISA Funding Events,
ERISA Termination Events, Foreign Termination Events and Foreign Underfunding
Events that exist or have occurred, or which could reasonably be expected to
exist or occur, could reasonably be expected to result in liability to the
Security Parties, their respective subsidiaries and ERISA Affiliates in the
aggregate in excess of $1,000,000;

(m) Chief Executive Office. The chief executive office and chief place of
business of each Security Party and the office in which the records relating to
the earnings and other receivables of each Security Party are kept is, and will
continue to be, located at 11 North Water Street, Suite 18290, Mobile, Alabama
36602, USA until such time as each Security Party relocates its offices to New
Orleans, Louisiana with prior written notice to the Facility Agent, which is
anticipated to occur in the first half of 2016;

(n) Foreign Trade Control Regulations. (i) None of the Security Parties nor any
of their respective Subsidiaries, nor any director, officer, employee, agent,
Affiliate or representative of a Security Party, is an individual or entity
("Person") that is, or is owned or controlled by a Person that is a Blocked
Person or otherwise the subject of any Sanctions.

(ii)The Borrower will not, directly or indirectly, use the proceeds of the
Facility, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person:

(A) to fund or facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or

(B) in any other manner that will result in a violation of Sanctions by any
Person.

(iii)For the past 5 years, the Borrower has not knowingly engaged in, is not
now knowingly engaged in, and will not knowingly engage in, any dealings
or transactions with any Person, or in any country or territory, that at the
time of the dealing or transaction is or was the subject of the Sanctions.

 

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 (iv)None of the transactions contemplated herein will violate Sanctions.

(o) Money Laundering. (i) The operations of the Borrower are and have been
conducted at all times in compliance with all applicable financial recordkeeping
and reporting requirements, including those of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended
by the PATRIOT Act, and the applicable anti-money laundering statutes of
jurisdictions where the Borrower conducts business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
-Anti-Money Laundering Laws"), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving
the Borrower with respect to the Anti-Money Laundering Laws is pending or, to
the best knowledge of the Borrower, threatened.

(ii) The Borrower requires the Facility for use in connection with its lawful
organizational purpose and for no other purposes and the Borrower has not
contravened any Anti-Money Laundering Laws. The Borrower represents that it is
the ultimate beneficiary of the Facility to be made to it as contemplated in
this Agreement and will promptly notify the Lenders (by written notice to the
Facility Agent) if it ceases to be the ultimate beneficiary. Such written notice
shall disclose the name and the address of the new ultimate beneficiary.

(p) Equity Ownership. The Borrower is owned directly one hundred percent (100%)
by the Guarantor;

(q) Environmental Matters and Claims. (a) Except as heretofore disclosed in
writing to the Facility Agent (i) each of the Borrower and its Affiliates (which
for purposes of this Section 2.1(q) shall be deemed to include the Guarantor and
its Affiliates) will, when required to operate their business as then being
conducted, be in compliance with all applicable United States federal and state,
local, foreign and international laws, regulations, conventions and agreements
relating to pollution prevention or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, navigable waters, waters of the contiguous zone, ocean waters and
international waters), including, without limitation, laws, regulations,
conventions and agreements relating to (1) emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental Concern"), or
(2) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
("Environmental Laws"); (ii) each of the Borrower and its Affiliates will, when
required, have all permits, licenses, approvals, rulings, variances, exemptions,
clearances, consents or other authorizations required under applicable
Environmental Laws ("Environmental Approvals") and will, when required, be in
compliance with all Environmental Approvals required to operate their business
as then being conducted; (iii) the Borrower has not nor has any Affiliate
thereof received any notice of any claim, action, cause of action, investigation
or demand by any person, entity, enterprise or government, or any political
subdivision, intergovernmental body or agency, department or instrumentality
thereof, alleging potential liability for, or a requirement to incur, material
investigator costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any Materials
of Environmental Concern at any location, whether or not owned by such person,
or (2) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Security Parties in respect thereof have been paid in full or which are
fully covered by insurance (including permitted deductibles)); and (iv) there
are no circumstances that may prevent or interfere with

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such full compliance in the future; and (b) except as heretofore disclosed in
writing to the Facility Agent there is no Environmental Claim pending or
threatened against the Borrower or any Affiliate thereof and there are no past
or present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge or disposal of
any Materials of Environmental Concern, that could form the basis of any
Environmental Claim against such persons the adverse disposition of which may
result in a Material Adverse Effect;

(r) Compliance with ISM Code, 1SPS Code and MTSA. The Vessel and the Operator
comply with the requirements of the ISM Code, the ISPS Code and the MTSA
including, but not limited to, the maintenance and renewal of valid certificates
pursuant thereto;

(s) Threatened Withdrawal of DOC or SMC. There is no threatened or actual
withdrawal of the Operator's DOC or SMC in respect of the Vessel;

(t) Liens. Other than as disclosed in Schedule III, there are no liens of any
kind on any property owned by any Security Party other than those liens created
pursuant to this Agreement or the other Transaction Documents or permitted
thereby;

(u) Indebtedness. Other than as disclosed in Schedule IV, none of the Security
Parties has any Indebtedness;

(v) Payment Free of Taxes. All payments made or to be made by the Security
Parties under or pursuant to this Agreement, the Note and the other Transaction
Documents shall be made free and clear of, and without deduction or withholding
for an account of, any Taxes;

(w) No Proceedings to Dissolve. There are no proceedings or actions pending or
contemplated by any Security Party or, to the best knowledge of any Security
Party, contemplated by any third party, to dissolve or terminate any Security
Party;

(x) Solvency. In the case of each of the Security Parties, (a) the sum of its
assets, at a fair valuation, does and will exceed its liabilities, including, to
the extent they are reportable as such in accordance with GAAP, contingent
liabilities, (b) the present fair market salable value of its assets is not and
shall not be less than the amount that will be required to pay its probable
liability on its then existing debts, including, to the extent they are
reportable as such in accordance with GAAP, contingent liabilities, as they
mature, (c) it does not and will not have unreasonably small working capital
with which to continue its business and (d) it has not incurred, does not intend
to incur and does not believe it will incur debts beyond its ability to pay such
debts as they mature;

(y) Compliance with Laws. Each of the Security Parties is in compliance with all
applicable laws, except where any failure to comply with any such applicable
laws would not, alone or in the aggregate, have a Material Adverse Effect; and

(z) GLOVIS COUNTESS Credit Facility. All of the representations and warranties
contained in Section 2 of the GLOVIS COUNTESS Credit Facility are true and
correct; and

(aa)Survival. All representations, covenants and warranties made herein and in
any certificate or other document delivered pursuant hereto or in connection
herewith shall survive the making of the Facility and the issuance of the Note.

3.THE FACILITY

3.1 Purposes. (a) The Lenders shall, during the Availability Period, make the
Facility available to the Borrower for the purpose of partially financing the
acquisition costs of the Vessel.

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(b) Making of the Facility. Each of the Lenders, relying upon each of
the representations and warranties set out in Section 2, hereby severally and
not jointly agrees with the Borrower that, subject to and upon the terms of this
Agreement, it will, not later than 11:00 a.m. New York City time on the Drawdown
Date, make its portion of the Facility, in Federal or other funds, immediately
available in New York City to the Facility Agent at its address set forth on
Schedule 1 or to such account of the Facility Agent most recently designated by
it for such purpose by notice to the Lenders. Unless the Facility Agent
determines that any applicable condition specified in Sections 4.1 or 4.2 has
not been satisfied, the Facility Agent will make the funds so received from the
Lenders available to the Borrower at the aforesaid address, subject to the
receipt of the funds by the Facility Agent as provided in the immediately
preceding sentence, not later than 2:30 P.M. (New York City time) on the
Drawdown Dates, and in any event as soon as practicable after receipt. The
Facility will be made available in one (1) drawing.

3.2 Receipt of Funds. Unless the Facility Agent shall have received notice from
a Lender prior to the Drawdown Date that such Lender will not make available to
the Facility Agent such Lender's share of the Advance, the Facility Agent may
assume that such Lender has made such share available to the Facility Agent on
the Drawdown Date in accordance with this Section 3.2 and the Facility Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such share available to the Facility Agent, such Lender and the
Borrower (but without duplication) severally agree to repay to the Facility
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Facility Agent, at (i) in
the case of the Borrower, a rate per annum equal to the Applicable Rate and (ii)
in the case of such Lender, the actual costs of funds incurred by the Facility
Agent for such funds. If such Lender shall repay to the Facility Agent such
corresponding amount, such amount so repaid shall constitute such Lender's share
of the Advance for purposes of this Agreement as of the Drawdown Date. Nothing
in this Section 3.2 shall be deemed to relieve any Lender of its obligation to
make its share of the Advance to the extent provided in this Agreement. In the
event that the Borrower is required to repay the Advance to the Facility Agent
pursuant to this Section 3.2 as between the Borrower and the defaulting Lender,
the liability for any break funding costs as described in Section 4.3 shall be
borne by the defaulting Lender. If the defaulting Lender has not paid any such
break funding costs upon demand by the Facility Agent therefor, the Borrower
shall pay such break funding costs upon demand by the Facility Agent and the
Borrower shall be entitled to recover any such payment for break funding costs
made by the Borrower from the defaulting Lender.

3.3 Drawdown Notice. The Borrower shall, by 10:00 a.m. New York City time on a
day which is at least three (3) Banking Days (or fewer Banking Days if agreed by
the Lenders) before the Drawdown Date serve a notice (a "Drawdown Notice"),
substantially in the form of Exhibit B, on the Facility Agent, which notice
shall (a) be in writing addressed to the Facility Agent, (b) be effective on
receipt by the Facility Agent, (c) specify the amount of the Facility to be
drawn, (d) specify the Banking Day on which the Facility is to be drawn, (e)
specify the disbursement instructions, and (f) be irrevocable.

3.4 Effect of Drawdown Notice. Delivery of the Drawdown Notice shall be deemed
to constitute a warranty by the Borrower (a) that the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
on and as of the date of the Drawdown Notice and will be true and correct on and
as of the Drawdown Date as if made on such date, and (b) that no Event of
Default nor any event which with the giving of notice or lapse of time or both
would constitute an Event of Default has occurred and is continuing.

4.CONDITIONS PRECEDENT

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4.1Conditions Precedent to this Agreement. The obligation of the Lenders to make
the Facility available to the Borrower under this Agreement shall be expressly
subject to the following conditions precedent:

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(a)Corporate Authority. The Facility Agent shall have received the following
documents in form and substance satisfactory to the Facility Agent and its legal
advisers:

copies, certified as true and complete by an officer of each of the Security
Parties, of the resolutions of its board of directors and, with respect to both
the Initial Borrower and the Ultimate Borrower, shareholders evidencing approval
of the Transaction Documents to which each is a party and authorizing an
appropriate officer or officers or attorney-in-fact or attorneys-in-fact to
execute the same on its behalf, including the execution of the Drawdown Notice;

(ii)

copies, certified as true and complete by an officer of each of the Security
Parties (and the Ultimate Borrower), of the certificate or articles of
incorporation and bylaws or similar constituent document thereof;

(iii)

copies, certified as true and complete by an officer of each of the Security
Parties (and the Ultimate Borrower), of the names and true signatures of the
officers of such Security Parties authorized to sign each Transaction Document
to which it is or is to be a party and the other documents to be delivered
hereunder and thereunder;

(iv)

certificate of the jurisdiction of each Security Party (and the Ultimate
Borrower) as to the good standing thereof;

(v)

the capital and shareholding structure of the Borrower (and the Ultimate
Borrower) certified to be true and complete by an officer of the Borrower (and
the Ultimate Borrower);

(vi)

a certificate signed by the Chairman, President, Executive Vice President,
Treasurer, Comptroller, Controller or chief financial officer of each of the
Security Parties to the effect that (A) no Default or Event of Default shall
have occurred and be continuing and (B) the representations and warranties of
such Security Party contained in this Agreement are true and correct as of the
date of such certificate.

(b)The Agreement. Each of the Security Parties shall have duly executed and
delivered this Agreement to the Facility Agent.

(c)The Note. The Borrower shall have duly executed and delivered the Note to the
Facility Agent.

(d)The Creditors. The Facility Agent shall have received executed counterparts
of this Agreement from each of the Lenders.

(e)Fees. The Creditors shall have received payment in full of all fees and
expenses due to each thereof pursuant to the terms hereof on the date when due
including, without limitation, all fees and expenses due under Section 15 and
the Fee Letter.

(f)Environmental Claims. The Lenders shall be satisfied that none of the
Security Parties is subject to any Environmental Claim which could reasonably be
expected to have a Material Adverse Effect.

(g)Legal Opinions. The Facility Agent, on behalf of the Agents and the Lenders,
shall have received opinions addressed to the Facility Agent from (i) Jones
Walker, L.L.P., special counsel to the Security Parties, and (ii) Seward &
Kissel LLP, special counsel to the Agents and the Lenders, in each case in such
form as the Facility Agent may require, as well as such other legal opinions as
the Lenders shall have required as to all or any matters under the laws of the
State of Delaware, the State of New York and the

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United States of America, covering certain of the representations and warranties
and conditions which are the subjects of Sections 2 and 4, respectively.

(h) Officer's Certificate. The Facility Agent shall have received a certificate
signed by the President or other duly authorized executive officer of the
Borrower certifying that under applicable law existing on the date hereof, the
Borrower shall not be compelled by law to withhold or deduct any Taxes from any
amounts to become payable to the Facility Agent for the account of the Creditors
hereunder.

(i) Initial Charter Party Agreement. The Borrower shall have delivered to the
Facility Agent a copy, certified as true and complete by an officer of the
Borrower, of the Initial Charter Party Agreement.

Accounts. The Borrower shall have established (i) the Earnings Accounts and the
Retention Accounts in the name of the Initial Borrower and (ii) the Earnings
Accounts and the Retention Accounts in the name of the Ultimate Borrower, in
each case, with DVB Bank SE (Frankfurt).

(k)UCC Filings. The Facility Agent shall have received evidence that Uniform
Commercial

Code Financing Statements have been filed in the State of New York and in such
other jurisdictions as the Facility Agent may reasonably require.

(1)Financial Statements. Each of the Security Parties shall deliver to the
Facility Agent

consolidated financial statements for the period ending March 31, 2014 or for
any other period requested by the Facility Agent prior to the Closing Date.

(m)Licenses, Consents and Approvals. The Facility Agent shall have received
satisfactory

evidence that all necessary licenses, consents and approvals in connection with
the transactions contemplated by this Agreement, the Note, the Security
Documents and the Fee Letter have been obtained.

(n)Know Your Customer Requirements. The Facility Agent shall have
received documentation, with respect to the Security Parties and the Ultimate
Borrower, to its satisfaction in connection with its know your customer
requirements, including but not limited to:

(i)

completed bank account opening mandates with telephone and fax indemnities to
include a list of all account holders' authorized signatories and specimens of
their signatures;

(ii)

certified list of directors, including titles, business and residential
addresses and dates of birth;

(iii)

certified true copy of photo identification (i.e. passport or driving license)
and evidence of residential address for all authorized signatories;

(iv)

with respect to the Borrower, certificate of ultimate beneficial ownership,
certified by the respective secretary or assistant secretary of such entity; and

(v)

non-resident declaration forms, if applicable.

(o)Loan Administration Form. The Facility Agent shall have received a duly
executed Loan Administration Form.

(p)Debt Service Letter of Credit. The Facility Agent shall have received the
Debt Service Letter of Credit.

(q)Maritime Administration Approval. The Borrower shall have obtained
Maritime Administration Approval in form and substance satisfactory to the
Lenders.

 

(r)Vessel Documents. The Facility Agent shall have received: 

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(i)

the latest survey report in respect of the Vessel;

(ii)

the classification certificate of the Vessel and the trading certificate of the
Vessel from the Classification Society with which such Vessel is classed at
least ten (10) days prior to the Drawdown Date, unless otherwise agreed by the
Facility Agent;

(iii)

the relevant pages of the Trim & Stability booklet, including (x) a copy of the
approval page displaying the name of the Vessel and the stamp of class, (y) a
copy of the page giving the description of the Vessel and (z) the page stating
the Vessel's LDT;

(iv)

the chartering description (e.g. Q88 for tankers or Form C for LPG); and

(v)

evidence satisfactory that the Vessel is:

a. in the sole and absolute ownership of such Borrower and duly registered in
such Borrower's name under the United States flag free of all liens and
encumbrances of record other than the Mortgage;

b. insured in accordance with the provisions of the Mortgage and all
requirements of the Mortgage in respect of such insurance have been fulfilled
(including, but not limited to, letters of undertaking from the insurance
brokers, including confirmation notices of assignment, notices of cancellation
and loss payable clauses acceptable to the Lenders); the main terms of such
insurances (including the copies or drafts of the relevant insurance documents)
to be provided to the Facility Agent at least 10 days prior to the Drawdown
Date;

c. classed in the highest classification and rating for vessels of the same age
and type with its Classification Society without any outstanding recommendations
and requirements; and

d. operationally seaworthy and in every way fit for its intended service.

 

(s)  Security Documents. The Borrower shall have executed and delivered to the
Facility Agent:

(i) the Earnings and Charterparties Assignment;

(ii) the Insurances Assignment;

(iii) the Account Pledges relating to the Earnings Account and the Retention
Account;

(iv) the Assignment Notice and the acknowledgement thereof in respect of (i)
through (iii) above (including the executed and countersigned notice and
acknowledgment of assignment of earnings and time charter and subordination
agreement from the Initial Charterer);

(v)the Mortgage relating to its Vessel;

(vi) Manager's Undertaking from each of the Commercial Manager (unless the
Borrower is the Commercial Manager) and the Technical Manager (or any
subcontractor thereof), including, where applicable, an assignment of the
interests of such manager in the insurances and subordination undertakings;

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(vii)

evidence that the Borrower has sent an instruction letter to the Classification
Society as required under Section 9.1(z) and that the Classification Society has
executed the undertaking as required thereby; and

(viii)

an irrevocable power of attorney granted by the Borrower to the Security Trustee
which, upon the occurrence and during the continuance of an Event of Default,
enables the Security Trustee to make all necessary decisions in relation to the
Vessel and obliges the master of the Vessel to adhere to the Security Trustee's
instructions.

(t) Registration of the Mortgage. The Facility Agent shall have received
satisfactory evidence that the Mortgage has been duly registered under the laws
of the United States of America and constitutes a first priority mortgage lien
under the laws of the United States.

(u) Vessel Appraisals. The Facility Agent shall have received appraisals, in
form and substance satisfactory to the Facility Agent, as to the Fair Market
Value of the Vessel (to be dated not earlier than one month prior to the
Drawdown Date).

(v) ISM DOC. The Facility Agent shall have received a copy of the Operator's DOC
and satisfactory evidence of compliance with the ISM, IPS Codes and/or IAPPC, to
the extent applicable.

(w) Evidence of Current COFR. The Facility Agent shall have received a copy of
the current Certificate of Financial Responsibility pursuant to the Oil
Pollution Act 1990 for the Vessel.

(x) Insurance Report. The Facility Agent shall have received a detailed report
from a firm of independent marine insurance consultants appointed by the
Facility Agent in respect of the insurances on the Vessel, in form and substance
satisfactory to the Facility Agent; the cost of such report to be for the
account of the Borrower.

(y) Drawdown Notice. The Facility Agent having received the Drawdown Notice in
accordance with the terms of Section 3.3.

(z) Representations and Warranties True. The representations stated in Section 2
being true and correct as if made on that date.

(aa)No Default. No Default or Event of Default having occurred and being
continuing or would result from the making of the requested Advance.

(bb)No Material Adverse Effect. Since December 31, 2013, there having been

(i)

no material adverse change in the consolidated financial strength of the
Borrower and the Guarantor;

(ii)

no material adverse global economic or political development; and

(iii)

no material adverse development in the international money and capital
markets; which, in the reasonable opinion of the Lenders, might prejudice the
successful and timely closing of the Facility or the successful and timely
performance of any of the material obligations under this Agreement.

(cc)Miscellaneous. The Facility Agent shall be satisfied with any other
document, authorization, opinion or assurance it may require

(dd)Regions Consent. The Facility Agent shall have received a consent agreement
executed by the administrative agent, the collateral agent, the "Required
Lenders" and the loan parties under the Regions

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Credit Agreement together with the related UCC financing statement amendment, in
each case, in form and substance satisfactory to it.

4.2Breakfunding Costs. In the event that, on the date specified for the making
of the Advance in the Drawdown Notice, the Lenders shall not be obliged under
this Agreement to make the requested Advance available, the Borrower shall
indemnify and hold the Lenders fully harmless against any losses which the
Lenders (or any thereof) may sustain as a result of borrowing or agreeing to
borrow funds to meet the drawdown requirement of the Drawdown Notice and the
certificate of the relevant Lender or Lenders shall, absent manifest error, be
conclusive and binding on the Borrower as to the extent of any such losses.

4.3Satisfaction after Drawdown. Without prejudice to any of the other terms and
conditions of this Agreement, in the event all of the Lenders elect, in their
sole discretion, to make the Facility available to the Borrower prior to the
satisfaction of all or any of the conditions referred to in Sections 4.1 and
4.2, the Borrower hereby covenants and undertakes to satisfy or procure the
satisfaction of such condition or conditions within seven (7) days after the
Drawdown Date (or such longer period as the Majority Lenders, in their sole
discretion, may agree).

5.REPAYMENT AND PREPAYMENT

5.1Repayment.Subject to the provisions of this Section 5 regarding application
of prepayments, the Borrower shall repay the principal of the Facility in twenty
four (24) consecutive quarterly installments beginning on the Initial Payment
Date and ending on the Final Payment Date, each of the twenty four (24)
installments being in an amount equal to $740,384.62 (accompanied by, in the
case of the last such installment, a balloon payment in the amount of
$20,730,769.23 or the full amount of the Facility then outstanding and all
interest, fees or other moneys payable under any Transaction Document).

5.2Voluntary Prepayment; No Re-borrowing. The Borrower may prepay, upon five
(5) Banking Days written notice, the Facility or any portion thereof, provided
that if such prepayment is made on a day other than a Payment Date, such
prepayment shall be made together with the costs and expenses provided for in
Section 13.4. Each prepayment shall be in a minimum amount of Two Million
Dollars ($2,000,000) and any multiple thereof, or the full amount of the
Facility then outstanding. No part of the Facility once repaid or prepaid will
be available for re-borrowing.

5.3Mandatory Prepayment. Upon (i) the sale of the Vessel or (ii) the earlier of
(x) ninety (90) days after the Total Loss (as such term is defined in the
Mortgage) of the Vessel or (y) the date on which the insurance proceeds in
respect of such loss are received by the Borrower or the Security Trustee as
assignee thereof, the Facility shall be repaid in full together with, in the
event of a Sale under Subsection (i) hereof only, the Prepayment Premium, as
applicable, and the costs and expenses provided for in Section 13.4.

5.4Interest and Costs with Prepayments/Application of Prepayments.

(a) Any prepayment of the Facility made hereunder (including, without
limitation, those made pursuant to Sections 5 and 9) shall be subject to the
condition that on the date of prepayment all accrued interest to the date of
such prepayment shall be paid in full with respect to the Facility or portions
thereof being prepaid, together with the Prepayment Premium, as applicable, and
any and all costs or expenses incurred by any Lender in connection with any
breaking of funding (as certified by such Lender, which certification shall,
absent any manifest error, be conclusive and binding on the Borrower).

(b) All prepayments of the Facility under Section 5.2 shall be applied towards
the installments of the Facility in the inverse order of their due dates for
payment.

5.5Borrower's Obligation Absolute. The Borrower's obligation to pay each
Creditor hereunder and under the Note shall be absolute, unconditional and
irrevocable and shall be paid strictly in accordance with the terms hereof and
thereof, under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or may have had
against the Creditors.

 

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6.INTEREST AND RATE

6.1Payment of Interest; Interest Rate. (a) The Borrower hereby promises to pay
to the Lenders

interest on the unpaid principal amount of the Facility for the period
commencing on the Drawdown Date until but not including the stated maturity
thereof (whether by acceleration or otherwise) or the date of prepayment thereof
at the Applicable Rate. The Facility Agent shall promptly notify the Borrower
and the Lenders in writing of the Applicable Rate as and when determined. Each
such determination, absent manifest error, shall be conclusive and binding upon
the Borrower. Accrued interest on the Facility shall be payable in arrears on
each Payment Date.

(b) Notwithstanding the foregoing, the Borrower agrees that after the occurrence
and during the continuance of an Event of Default, the Facility shall bear
interest at the Default Rate. In addition, the Borrower hereby promises to pay
interest (to the extent that the payment of such interest shall be legally
enforceable) on any overdue interest, and on any other amount payable by the
Borrower hereunder which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period commencing on the due
date thereof until but not including the date the same is paid in full at the
Default Rate.

(c) Interest payable at the Default Rate shall be payable from time to time on
demand of the Facility Agent.

6.2Maximum Interest. Anything in this Agreement or the Note to the contrary
notwithstanding,

the interest rate on the Facility shall in no event be in excess of the maximum
rate permitted by applicable law.

7. PAYMENTS

7.1Time and Place of Payments, No Set Off. All payments to be made hereunder by
the

Borrower shall be made to the Facility Agent, not later than 3 p.m. New York
time (any payment received after 3 p.m. New York time shall be deemed to have
been paid on the next Banking Day) on the due date of such payment, to HSBC Bank
USA, New York (Account No. 000.129.879, ABA No. 021001088, SWIFT ID No. MRMDUS33
for the credit to DVB Bank SE, Frankfurt, Reference: FP 3044858) or to such
other account of the Facility Agent as the Facility Agent may direct, without
set-off or counterclaim and free from, clear of, and without deduction or
withholding for, any Taxes.

7.2Taxes. (a) If the Borrower shall at any time be compelled by law to withhold
or deduct any

Taxes from any amounts payable to the Lenders hereunder, then the Borrower shall
pay such additional amounts in Dollars as may be necessary in order that the net
amounts received after withholding or deduction shall equal the amounts which
would have been received if such withholding or deduction were not required and,
in the event any withholding or deduction is made, whether for Taxes or
otherwise, the Borrower shall promptly send to the Facility Agent such
documentary evidence with respect to such withholding or deduction including
documentary evidence satisfactory to the Facility Agent that the tax has been
paid to the appropriate taxation authority as may be required from time to time
by the Lenders.

(b)If any Lender obtains the benefit of a credit against the liability thereof
for federal

income taxes imposed by any taxing authority for all or part of the Taxes as to
which the Borrower have paid additional amounts as aforesaid (and each Lender
agrees to use commercially reasonable efforts to obtain the benefit of any such
credit which may be available to it, provided that (i) it has knowledge that
such credit is in fact available to it and (ii) it is able to attribute such
credit to this Facility), then such

 

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Lender shall reimburse the Borrower for the amount of the credit so obtained.
The decision as to whether or not to seek such a benefit is in the sole
discretion of the Lenders.

(c) On or prior to the date hereof (or in the case of a transferee Lender, the
date that it becomes a party to this Agreement), and thereafter when reasonably
requested by a Security Party, each Lender or transferee that is organized under
the laws of a jurisdiction outside the United States (a "Non-U.S. Lender") shall
deliver to the Borrower and the Facility Agent two properly completed and duly
executed copies of (as applicable) IRS Form W-8BEN-E, W-8ECI or W-8IMY or, upon
request of a Security Party or the Facility Agent, any subsequent versions
thereof or successors thereto, in each case claiming a reduced rate (which may
be zero) of U.S. federal withholding tax under Sections 1441 and 1442 of the
Code with respect to payments of interest hereunder as such Non-U.S. Lender may
properly claim. In addition, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code,
such Non-U.S. Lender shall, on or prior to the date hereof (or in the case of a
transferee Lender, the date that it becomes a party to this Agreement), and
thereafter when reasonably requested by the Borrower, provide to the Facility
Agent in addition to the IRS Form W-8 required above a certificate representing
that such Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of such Borrower and is not a controlled foreign
corporation related to such Borrower (within the meaning of Section 864(d)(4) of
the Code), and such Non-U.S. Lender agrees that it shall promptly notify the
Facility Agent in the event any representation in such certificate is no longer
accurate.

(d) Without limiting the generality of the foregoing, if a payment made to a
Lender under this Agreement or any of the other Transaction Documents would be
subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Borrower and the Facility Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower
or the Facility Agent such documentation prescribed by applicable law (including
as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower or the Facility Agent as may
be necessary for the Borrower and the Facility Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender's obligations under FATCA or to determine the amount to deduct and
withhold from such payment. Solely for purposes of this clause (k), "FATCA"
shall include any amendments made to FATCA after the date of this Agreement. In
addition, each Lender shall indemnify the Facility Agent and the Borrower for
any withholding Tax or other penalties imposed in connection with any "withhold
able payment," as defined in Section 1473 of the Internal Revenue Code, made to
a Lender that is not a U.S. Person that has failed to comply with the reporting
requirements or otherwise qualify for an exemption under FATCA.

(e) Nothing contained in this Section 7.2 shall require the Facility Agent or
Lender (or any transferee Lender) to make available any of its tax returns or
any other information that it deems to be confidential or proprietary.

7.3Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise
of a right of

banker's lien, setoff or counterclaim or pursuant to a secured claim under
Section 506 of the Federal Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim, exercised or received by such Lender
under any applicable bankruptcy, insolvency or other similar law or otherwise,
or by any other means, obtain payment (voluntary or involuntary) in respect of
the Facility as a result of which its funded Commitment shall be proportionately
less than the funded Commitment of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
funded Commitment of such other Lender so that the aggregate funded Commitment
of each Lender shall be in the same proportion to the aggregate funded
Commitments then outstanding as its funded Commitment prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all funded Commitments

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outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 7.3 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. Any Lender holding a
participation in a funded Commitment deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing to such Lender by reason thereof as fully as
if such Lender had made an advance in the amount of such participation. The
Borrower expressly consents to the foregoing arrangement.

7.4Computations; Banking Days. (a) All computations of interest and fees shall
be made by

the Facility Agent or the Lenders, as the case may be, on the basis of a 360-day
year, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which interest or fees are
payable. Each determination by the Facility Agent or the Lenders of an interest
rate or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.

(b) Whenever any payment hereunder or under the Note shall be stated to be due
on a day other than a Banking Day, such payment shall be due and payable on the
next succeeding Banking Day unless the next succeeding Banking Day falls in the
following calendar month, in which case it shall be payable on the immediately
preceding Banking Day.

8.EVENTS OF DEFAULT

8.1Events of Default. In the event that any of the following events shall occur
and be

continuing:

(a) Principal Payments. Any principal of the Facility is not paid on the due
date therefor; or

(b) Interest and Other Payments. Any interest on the Facility or any other
amount becoming payable under this Agreement or any other Transaction Document
is not paid within three (3) Banking Days from the date when due; or

(c) Representations, etc. Any representation, warranty or other statement made
by any of the Security Parties in this Agreement, any of the other Transactions
Documents or in any other instrument, document or other agreement delivered in
connection herewith proves to have been untrue or misleading in any material
respect as at the date as of which it was made or confirmed; or

(d) Impossibility, Illegality. It becomes impossible or unlawful for any of the
Security Parties to fulfill any of the covenants and obligations contained
herein or in any Transaction Document, or for any of the Lenders to exercise any
of the rights vested in any of them hereunder or under the other Transaction
Documents; or

(e) Mortgage. There is any default under the Mortgage; or

(f) Certain Covenants. Any Security Party defaults in the performance or
observance of any covenant contained in Section 9.1(b), 9.1(d), 9.1(f), 9.1(m),
9.1(n), 9.1(o), 9.1(r), 9.1(v), 9.2 (other than clauses (j), (1) and (m)
thereof), 9.3, 9.4 and 9.5; or

(g) Covenants. One or more of the Security Parties default in the performance of
any term, covenant or agreement contained in this Agreement or in the other
Transaction Documents, or in any other instrument, document or other agreement
delivered in connection herewith or therewith, in each case other than an Event
of Default referred to elsewhere in this Section 8.1, and such default continues
unremedied for a period of ten (10) days after written notice thereof has been
given to the relevant Security Party or Parties by the Facility Agent at the
request of any Lender; or

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(h) Indebtedness and Other Obligations. Any Security Party or any of its
Subsidiaries defaults in the payment when due (subject to any applicable grace
period) of any Indebtedness or of any other indebtedness, in either case, in an
outstanding principal amount equal to or exceeding Five Million Dollars
($5,000,000) individually or Twenty Million Dollars ($20,000,000) in the
aggregate or such Indebtedness or other indebtedness is, or by reason of such
default is subject to being, accelerated or any party becomes entitled to
enforce the security for any such Indebtedness or other indebtedness and such
party shall take steps to enforce the same, unless such default or enforcement
is being contested in good faith and by appropriate proceedings or other acts
and such Security Party has set aside on its books adequate reserves with
respect thereto; or

(i) Bankruptcy. Any Security Party commences any proceedings relating to any
substantial portion of its property under any reorganization, arrangement or
readjustment of debt, dissolution, winding up, adjustment, composition,
bankruptcy or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect (a "Proceeding"), or there is commenced against any thereof
any Proceeding and such Proceeding remains undismissed or unstayed for a period
of sixty (60) days; or any receiver, trustee, liquidator or sequestrator of, or
for, any thereof or any substantial portion of the property of any thereof is
appointed and is not discharged within a period of sixty (60) days; or any
thereof by any act indicates consent to or approval of or acquiescence in any
Proceeding or to the appointment of any receiver, trustee, liquidator or
sequestrator of, or for, itself or any substantial portion of its property; or

(j) Judgments. Any judgment or order is made the effect whereof would be to
render invalid this Agreement or any other Transaction Document or any material
provision thereof or any Security Party asserts that any such agreement or
provision thereof is invalid; or judgments or orders for the payment of money
(not paid or fully covered by insurance, subject to applicable deductibles) in
excess of $2,500,000 in the aggregate for the Guarantor or its Subsidiaries (or
its equivalent in any other currency) shall be rendered against the Guarantor
and/or any of its Subsidiaries and such judgments or orders shall continue
unsatisfied and unstayed for a period of thirty (30) days; or

(k) Inability to Pay Debts. Any Security Party is unable to pay or admits its
inability to pay its debts as they fall due or a moratorium shall be declared in
respect of any Indebtedness of any thereof; or

(I)Termination of Operations; Sale of Assets. Except as expressly permitted
under this

Agreement or as contemplated by the EGS Borrower Restructuring any Security
Party ceases its operations or sells or otherwise disposes of all or
substantially all of its assets or all or substantially all of the assets of any
Security Party are seized or otherwise appropriated; or

(m) Change in Financial Position. Any change in the operations or the financial
position of any Security Party which, in the reasonable opinion of the Majority
Lenders, could reasonably be expected to have a Material Adverse Effect; or

(n) Cross-Default. Any Security Party defaults under any material contract or
agreement to which it is a party or by which it is bound including, but not
limited to, the Initial Charter Party Agreements or any Approved Charter; or

(o) ERISA Debt. An ERISA Funding Event, ERISA Termination Event, Foreign
Termination Event or Foreign Underfunding Event shall exist or occur that, in
the reasonable opinion of the Majority Lenders, when taken together with all
other ERISA Funding Events, ERISA Termination Events, Foreign Termination Events
and Foreign Underfunding Events that exist or have occurred, or could reasonably
be expected to exist or occur, result in liability to the Security Parties,
their respective subsidiaries and ERISA Affiliates in the aggregate in excess of
$1,000,000; or

(p) Change of Control. A Change of Control has occurred; or

 

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(q) Instability of a Flag State. There exists instability in the jurisdiction
where the Vessel is flagged, which, in the reasonable opinion of the Majority
Lenders, could reasonably be expected to have a Material Adverse Effect; or

(r) Class Certification Withdrawal. There occurs a withdrawal of the Vessel's
rating by its Classification Society; or

(s) Arrest and/or Detention of the Vessel. There occurs any capture, seizure,
arrest, detention or confiscation of the Vessel by any government or by persons
acting or purporting to act on behalf of any government unless the Vessel is
released and restored to the Borrower from such capture, seizure, arrest,
detention or confiscation within fourteen (14) days after the occurrence
thereof; or

(t) Vessel Transfer. The Vessel Transfer does not occur prior to October 31,
2014 pursuant to the terms and subject to the conditions of Section 12.2 and the
Omnibus Assignment and Assumption Agreement, unless the amount available to be
drawn under the Debt Service Letter of Credit is sufficient to cover the Debt
Service due on the next Payment Date; or

(u) Cancellation of Approved Charter. An Approved Charter with a duration of
more than 12 months is terminated, unless the Borrower continues to pay the Debt
Service; or

(v) Off Charter. The Vessel is off charter (other than for scheduled drydockings
of the Vessel) for a continuous period of 14 days at any time, or 56 days in
total in any 12-month period, unless the Borrower continues to pay the Debt
Service; or

(w) Material Adverse Effect. There occurs any event or condition that could
reasonably be expected to have a Material Adverse Effect;

(x) EGS Borrower Restructuring. The EGS Borrower Restructuring shall not have
been consummated in a manner reasonably satisfactory to the Facility Agent
within ninety (90) days following the Closing Date (as defined in the GLOVISS
COUNTESS Credit Facility); or

(y) GLOVIS COUNTESS Credit Facility Default. Any "Event of Default" occurs under
and as defined in the GLOVIS COUNTESS Credit Facility;

then, the Lenders' obligation to make the Facility available shall cease and the
Facility Agent on behalf of the Lenders may, with the Majority Lenders' consent
and shall, upon the Majority Lenders' instruction, by notice to the Borrower,
declare the entire Facility, accrued interest and any other sums payable by the
Borrower hereunder, under the Note and under the other Transaction Documents due
and payable whereupon the same shall forthwith be due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; provided that upon the happening of an event specified in
subclauses (i) or (k) of this Section 8.1, the Facility, accrued interest and
any other sums payable by the Borrower hereunder, under the Note and under the
other Transaction Documents shall be immediately due and payable without
declaration, presentment, demand, protest or other notice to the Borrower all of
which are expressly waived. In such event, the Creditors, or any thereof, may
proceed to protect and enforce their respective rights by action at law, suit in
equity or in admiralty or other appropriate proceeding, whether for specific
performance of any covenant contained in this Agreement or in the Note or in any
other Transaction Document or in aid of the exercise of any power granted herein
or therein, or the Lenders or the Facility Agent may proceed to enforce the
payment of the Note when due or to enforce any other legal or equitable right of
the Lenders, or proceed to take any action authorized or permitted by Applicable
Law for the collection of all sums due, or so declared due, including, without
limitation, the right to appropriate and hold or apply (directly, by way of
set-off or otherwise) to the payment of the obligations of the Borrower to any
of the Creditors hereunder, under the Note and/or under the other Transaction
Documents (whether or not then due) all moneys and other amounts of the Borrower
then or thereafter in possession of any Creditor, the balance of any deposit
account

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(demand or time, matured or unmatured) of the Borrower then or thereafter with
any Creditor and every other claim of the Borrower then or thereafter against
any of the Creditors.

8.2Application of Moneys. Except as otherwise provided in any other Transaction
Document,

all moneys received by the Creditors under or pursuant to this Agreement, the
Note or any of the Security Documents after the happening of any Event of
Default (unless cured to the satisfaction of the Majority Lenders) shall be
applied by the Facility Agent in the following manner:

( I)first, in or towards the payment or reimbursement of any expenses or

liabilities incurred by any of the Creditors in connection with the
ascertainment, protection or enforcement of its rights and remedies hereunder,
under the Note and under the other Transaction Documents;

(2) second, in or towards payment of any interest owing in respect of the
Facility;

(3) third, in or towards repayment of the principal of the Facility;

(4) fourth, in or towards payment of all other sums which may be owing to any of
the Creditors under this Agreement, under the Note and under the other
Transaction Documents;

(5) fifth, the surplus (if any) shall be paid to the Borrower or to whomsoever
else may be entitled thereto.

9.COVENANTS

9.1Affirmative Covenants. Each of the Security Parties hereby covenants and
undertakes with

the Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Agreement, the Note or any of the
other Transaction Documents, it will:

(a) Performance of Agreements. Duly perform and observe, and procure the
observance and performance by all other parties thereto (other than the Lenders)
of, the terms of this Agreement, the Note and the other Transaction Documents;

(b) Notice of Default, etc. Promptly upon obtaining knowledge thereof, inform
the Facility Agent of the occurrence of (a) any Event of Default or of any event
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default, (b) any litigation or governmental proceeding pending or
threatened against any Security Party which could reasonably be expected to have
a Material Adverse Effect, (c) the withdrawal of the Vessel's rating by its
Classification Society or the issuance by the Classification Society of any
recommendation or notation affecting class and (d) any other event or condition
which is reasonably likely to have a Material Adverse Effect, in each case
promptly, and in any event within three (3) Banking Days after becoming aware of
the occurrence thereof;

(c) Obtain Consents. Without prejudice to Section 2.1 and this Section 9.1,
obtain every consent and do all other acts and things which may from time to
time be necessary or advisable for the continued due performance of all its and
the other Security Parties' respective obligations under this Agreement, under
the Note and under the other Transaction Documents;

(d) Financial Information. Deliver to the Facility Agent with sufficient copies
for the Lenders to be distributed to the Lenders by the Facility Agent promptly
upon the receipt thereof:

(i)as soon as available, but not later than one hundred fifty (150) days after
the end of each fiscal year of the Guarantor, complete copies of the
consolidated financial

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reports of the Guarantor and its Subsidiaries together with a separate financial
report of the Borrower (together with a Compliance Certificate that includes,
inter alia, a reconciliation of all of the differences between GAAP as at June
30, 2014 and GAAP as at the time of delivery), all in reasonable detail which
shall include at least the consolidated balance sheet of the Guarantor and its
Subsidiaries and the profit and loss accounts and balance sheet of each
Subsidiary, including the Borrower, as a separate column, as of the end of such
year and the related statements of income for such year as well as the related
statement of sources and uses of funds, cash flow and changes in the capital for
such year for the Guarantor and its Subsidiaries, each as prepared in accordance
with GAAP, all in reasonable detail, which shall be prepared by an Acceptable
Accounting Firm and, with respect to the Guarantor, be audited reports;

(ii)

as soon as available, but not later than ninety (90) days after the end of each
of the first three fiscal quarters of the Guarantor, a quarterly interim balance
sheets and profit and loss statements of the Guarantor and its Subsidiaries and
the related profit and loss statements as well as the related statement of
sources and uses of funds, cash flow and changes in the capital for such year
for the Guarantor and its Subsidiaries (together with a Compliance Certificate
that includes, inter alia, a reconciliation of all of the differences between
GAAP as at June 30, 2014 and GAAP as at the time of delivery), all in reasonable
detail, unaudited, but certified to be true and complete by the chief financial
officer of the Guarantor;

(iii)

as soon as available, but not later than the end of each of the second and
fourth fiscal quarters of the Guarantor, an Asset Maintenance Compliance
Certificate in reasonable detail and certified to be true and complete by the
chief financial officer of the Guarantor (it being understood that appraisals of
the Fair Market Value of the Vessel for such Asset Maintenance Compliance
Certificate shall be provided to the Facility Agent no later than 15 days prior
thereto);

(iv)

promptly upon the mailing thereof to the shareholders of the Guarantor, copies
of all financial statements, reports, proxy statements and other communications
provided to the Guarantor's shareholders;

(v)

within ten (10) days of the Guarantor's receipt thereof, copies of all audit
letters or other correspondence from any external auditors including material
financial information in respect of the Guarantor and its Subsidiaries; and

(vi)

an updated business forecast, together with the financial statements required to
be delivered in clause (i) above;

(vii)

not later than the third Friday of February of each fiscal year, a budget for
operating expenditures of the Borrower relating to the Vessel for the following
twelve (12) month period in form and substance satisfactory to the Facility
Agent; and

(viii)

such other statements (including, without limitation, monthly consolidated
statements of operating revenues and expenses), lists of assets and accounts,
budgets, forecasts, reports and other financial information with respect to its
business as the Facility Agent may from time to time reasonably request,
certified to be true and complete by the chief financial officer of the
Guarantor;

 

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(e)Contingent Liabilities. For inclusion with each Compliance Certificate
delivered in

connection with Sections 9.1(d)(i) and 9.l(d)(ii), and in any event upon the
reasonable request of the Facility Agent, an accounting of all of the contingent
liabilities of each Security Party;

(f)Vessel Covenants. With respect to the Vessel:

(i)

keep the Vessel registered in the name of the Borrower under the flag of an
Approved Jurisdiction;

(ii)

keep the Vessel in good and safe condition and state of repair (loss or damage
by casualty or condemnation excepted);

(iii)

keep the Vessel classed in the highest classification and rating for vessels of
the same age and type with its Classification Society without any outstanding
recommendations or qualification unless otherwise agreed by the Facility Agent
in writing;

(iv)

keep the Vessel insured in accordance with the provisions of the Mortgage
recorded against it and the requirements thereof in respect of such insurances
have been complied with;

(v)

be in possession of a proper trading certificate at all times;

(vi)

notify the Facility Agent of all modifications to the Vessel and of the removal
of any parts or equipment from the Vessel; and

(vii)

provide the Facility Agent with all requested Vessel related information;

(g)Vessel Valuations. For inclusion with each Asset Maintenance Compliance
Certificate delivered pursuant to Section 9.1(d)(iii) (for the second and fourth
fiscal quarters of the Guarantor or more frequently at the Facility Agent's
option upon and during the continuation of a Default or an Event of Default),
and in any event upon the reasonable request of the Facility Agent, the Borrower
shall obtain appraisals of the Fair Market Value of the Vessel. All valuations
are to be at the Borrower's cost. In the event the Borrower fails or refuses to
obtain the valuations requested pursuant to this Section 9.1(g) within ten (10)
days of the Facility Agent's request therefor, the Facility Agent will be
authorized to obtain such valuations, at the Borrower's cost, from one of the
Approved Ship Brokers, which valuations shall be deemed the equivalent of
valuations duly obtained by the Borrower pursuant to this Section 9.1(g), but
the Facility Agent's actions in doing so shall not excuse any default of the
Borrower under this Section 9.1(g);

(h)Corporate Existence. Do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence in good standing and
all licenses, franchises, permits and assets necessary to the conduct of its
business;

(i)Books and Records. At all times keep proper books of record and account into
which full and correct entries shall be made in accordance with GAAP;

(j)Taxes and Assessments.Pay and discharge all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
property prior to the date upon which penalties attach thereto; provided,
however, that it shall not be required to pay and discharge, or cause to be paid
and discharged, any such tax, assessment, charge or levy so long as the legality
thereof shall be contested in good faith and by appropriate proceedings or other
acts and it shall set aside on its books adequate reserves with respect thereto;

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(k)Inspection. Allow any representative or representatives designated by the
Facility Agent, subject to applicable laws and regulations, to visit and inspect
any of its properties, and, on request, to examine its books of account,
records, reports and other papers and to discuss its affairs, finances and
accounts with its officers, all at such reasonable times and as often as the
Facility Agent reasonably requests and at the expense of the Borrower. In
addition, the Borrower shall provide the Facility Agent with (and cause any
Approved Charter, other than the Initial Charter Party Agreement, to contain a
requirement for the provision with full rights of disclosure to the Facility
Agent of) a copy of any jointly appointed independent inspection report accepted
and signed by the Borrower, any disponent owner and the relevant charterer in
respect of the Vessel issued during the term of this Agreement, promptly upon
the issuance of any such inspection report and whether or not the Borrower is
party to any such inspection report;

(1)Inspection and Survey Reports. If the Lenders shall so request, the Borrower
shall provide the Lenders with copies of all internally generated inspection or
survey reports on the Vessel;

(m) Compliance with Statutes, Agreements, etc. Do or cause to be done all things
(including, but not limited to, obtaining all consents) necessary to comply with
all material contracts or agreements to which any of the Security Parties is a
party, and all material laws, and the rules and regulations thereunder,
applicable to such Security Party, including, without limitation, those laws,
rules and regulations relating to employee benefit plans and environmental
matters except where failure to do so would not be reasonably likely to have a
Material Adverse Effect and shall cause the Technical Manager and the Commercial
Manager to comply with (or shall cause to be included in any Approved Charter
other than the Initial Charter Party Agreement a provision requiring any
charterer party there to comply with in respect of the Vessel and its
operations) all national and international laws, directives, regulations,
decrees, rulings and analogous rules, including but not limited to, rules
relating to international sanctions;

(n) Environmental Matters. Promptly upon the occurrence of any of the following
conditions, provide to the Facility Agent a certificate of a chief executive
officer of the Guarantor, specifying in detail the nature of such condition and
its proposed response or the proposed response of any Environmental Affiliate:
(a) its receipt or the receipt by any Environmental Affiliate of any written
communication whatsoever that alleges that such Person is not in compliance with
any applicable Environmental Law or Environmental Approval, if such
noncompliance could reasonably be expected to have a Material Adverse Effect,
(b) knowledge by it or any Environmental Affiliate that there exists any
Environmental Claim pending or threatened against any such Person, which could
reasonably be expected to have a Material Adverse Effect, or (c) any release,
emission, discharge or disposal of any material that could form the basis of any
Environmental Claim against it or against any Environmental Affiliate, if such
Environmental Claim could reasonably be expected to have a Material Adverse
Effect. Upon the written request by the Facility Agent, the Borrower will submit
to the Facility Agent at reasonable intervals, a report providing an update of
the status of any issue or claim identified in any notice or certificate
required pursuant to this subsection;

(o) Insurance. Maintain with financially sound and reputable insurance companies
insurance on all its properties and against all such risks and in at least such
amounts and with such deductibles as are usually insured against by companies of
established reputation engaged in the same or similar business from time to
time;

(p) Vessel Management. Cause the Vessel to be managed by the Guarantor or a
wholly-owned Subsidiary thereof (it being understood that the technical
management of the Vessel may be subcontracted to Wallem Shipmanagement Hong
Kong, or another internationally recognized vessel technical manager approved by
the Agents, such approval not to be unreasonably withheld, delayed or
conditioned);

(q) Brokerage Commissions, etc. Indemnify and hold each of the Agents and the
Lenders harmless from any claim for any brokerage commission, fee or
compensation from any broker or third party resulting from the transactions
contemplated hereby;

 

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(r) ISM Code, ISPS Code and MTSA Matters. (i) Procure that the Operator will
comply with and ensure that the Vessel will comply with the requirements of the
ISM Code, ISPS Code and MTSA in accordance with the implementation schedules
thereof, including (but not limited to) the maintenance and renewal of valid
certificates, and when required, security plans, pursuant thereto throughout the
term of the Facility; and (ii) procure that the Operator will immediately inform
the Facility Agent if there is any threatened or actual withdrawal of its DOC,
SMC or the ISSC in respect of the Vessel; and (iii) procure that the Operator
will promptly inform the Facility Agent upon the issuance to the Borrower or
Operator of a DOC and to the Vessel of an SMC or 1SSC;

(s) ERISA. Forthwith upon learning of the existence or occurrence of any ERISA
Funding Event, ERISA Termination Event, Foreign Termination Event or Foreign
Underfunding Event that, when taken together with all other ERISA Funding
Events, ERISA Termination Events, Foreign Termination Events and Foreign
Underfunding Events that exist or have occurred, or which could reasonably be
expected to exist or occur, could reasonably be expected to result in liability
to the Security Parties, their respective subsidiaries and ERISA Affiliates in
the aggregate in excess of 5500,000, furnish or cause to be furnished to the
Lenders written notice thereof;

(t) Evidence of Current COFR. If the Lenders shall so request, provide the
Lenders with copies of the current Certificate of Financial Responsibility
pursuant to the Oil Pollution Act 1990 for the Vessel;

(u) Listing on NYSE. With respect to the Guarantor, maintain its listing on the
New York Stock Exchange;

(v) Change of Ownership. Ensure no change in the ownership of the capital stock
or other equity interest of the Borrower;

(w) Subordination of Loans. Cause all loans made to the EGS Borrower by the
Guarantor, any Affiliate, parent or subsidiary of the Guarantor, and all sums
and other financial obligations owed by it to the Guarantor, any Affiliate,
parent or subsidiary of the Guarantor to be fully subordinated to the
obligations owed under the Transaction Documents on terms acceptable to the
Facility Agent';

(x) UCC Financing Statements. Ensure that within 1 Business Day after the
Drawdown Date, (A) an amendment to the UCC financing statement filed in favor of
Regions Bank referenced in Section 4.1(dd)(ii) shall be filed with the Secretary
of State in the State of New York and (B) the UCC financing Statement filed in
favor of Wells Fargo Bank Northwest, National Association, Trustee on February
24, 2012 shall be terminated, in each case, with satisfactory evidence of such
filings to be provided to the Facility Agent; Maintenance of Properties. Keep
all material property necessary in its business in good working order and
condition (loss or damage by casualty or condemnation excepted);

(z)Know Your Customer Requirements. Provide all documentation (including
documentation

requested by the Lenders or any prospective Lenders subsequent to the date
hereof) to the satisfaction of the Lenders or prospective Lenders (as the case
may be) in connection with their know your customer requirements, including but
not limited to:

(i)

completed bank account opening mandates with telephone and fax indemnities to
include the list of the all account holders' authorized signatories and
specimens of their signatures;

(ii)

certified list of directors, including titles, business and residential
addresses and dates of birth;

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(iii)

certified true copy of photo identification (i.e. passport or driving license)
and evidence of residential address for all authorized signatories;

(iv)

with respect to the Borrower, certificate of ultimate beneficial ownership,
certified by the respective secretary or assistant secretary of such entity; and

(v)

non-resident declaration forms, if applicable;

(aa)Classification Society Instructions and Undertaking. The Borrower shall
instruct the Classification Society through a letter sent by the Borrower to the
Classification Society in the form attached hereto as Exhibit H-1 (and procure
that the Classification Society undertakes with the Security Trustee through a
letter in the form attached hereto as Exhibit H-2):

(1)to send to the Security Trustee, following receipt of a written request from
the Security Trustee, certified true copies of all original class records held
by the Classification Society in relation to the Vessel (and, upon the Second
Vessel Transfer, the GLOVIS COUNTESS);

(ii)to allow the Security Trustee (or its agents), at any time and from time to
time, to inspect the original class, related records and other information of
the Borrower and the Vessel (and, upon the Second Vessel Transfer, the GLOVIS
COUNTESS) either (i) electronically (through the Classification Society directly
or by way of indirect access via the Borrower's account manager and designating
the Security Trustee as a user or administrator of the system under its account)
or (ii) in person at the offices of the Classification Society, and to take
copies of them electronically or otherwise;

(iii)to notify the Security Trustee immediately in writing and by Email
at techcom@dvbbank.com if the Classification Society:

(1) receives notification from the Borrower or any other person that the
Vessel's Classification Society of the Vessel (or, upon the Second Vessel
Transfer, the GLOV1S COUNTESS) is to be changed; or

(2) becomes aware of any facts or matters which may result in or have resulted
in a condition of class or a recommendation, or a change, suspension,
discontinuance, withdrawal or expiry of the class of the Vessel (or, upon the
Second Vessel Transfer, the GLOVIS COUNTESS) under the rules or terms and
conditions of the Borrower's or the relevant vessel's membership of the
Classification Society;

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

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

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

(3) to provide any other information reasonably requested;

(bb)GLOVIS COUNTESS Credit Facility Requirements. Comply with the terms of
the GLOVIS COUNTESS Credit Facility;

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(cc)Further Assurances. Promptly upon the written request of the Facility Agent:

(i)

correct any material defect or error that may be discovered in any Transaction
Document or in the execution, acknowledgement, filing or recordation thereof;
and

(ii)

do, execute, acknowledge, deliver, record, re-record, file, re-file, register
and reregister any and all such further acts, deeds, conveyances, pledge
agreements, mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements, notices of
assignments, transfers, certificates, assurances and other instruments as the
Facility Agent, may reasonably require from time to time in order to:

(1) carry out the purposes of the Transaction Documents;

(2) to the fullest extent permitted by applicable law, subject each of item of
Collateral to the Liens now or hereafter intended to be covered by the
Transaction Documents pursuant to the terms thereof;

(3) perfect and maintain the validity, effectiveness and priority of the Liens
intended to be created under the Transaction Documents; and

(4) assure, convey, grant, assign, transfer, preserve, protect and confirm to
the Security Trustee, the rights granted or now or hereafter intended to be
granted to the Security Trustee under any Transaction Document or under any
other instruments executed in connection with any Transaction Document to which
any Security Party is or is to be a party.

9.2Negative Covenants. Each of the Security Parties hereby covenants and
undertakes with the

Lenders that, from the date hereof and so long as any principal, interest or
other moneys are owing in respect of this Agreement, the Note or any other
Transaction Documents, it will not, without the prior written consent of the
Majority Lenders (or all of the Lenders if required pursuant to Section 17.8):

(a)Liens. Create, assume or permit to exist, any mortgage, pledge, lien, charge,
encumbrance or any security interest whatsoever upon any Collateral or, in
respect of the Borrower and the Guarantor, other property except:

(i)

liens disclosed in Schedule III;

(ii)

liens to secure Indebtedness permitted under Section 9.2(m), such liens to be
limited to the vessels constructed or acquired;

(iii)

liens for taxes not yet payable for which adequate reserves have been
maintained;

(iv)

the Mortgage, the GLOV1S COUNTESS Mortgage, the Assignments, the GLOVIS COUNTESS
Assignments and other liens in favor of the Security Trustee or the Lenders;

(v)

liens, charges and encumbrances against the Vessel permitted to exist under the
terms of the Mortgage (or in the case of the GLOVIS COUNTESS, under the terms of
the GLOVIS COUNTESS Mortgage);

(vi)

pledges of certificates of deposit or other cash collateral securing
reimbursement obligations in connection with letters of credit now or
hereinafter issued for its account in connection with the establishment of its
financial responsibility under 33

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C.F.R. Part 130 or 46 C.F.R. Part 540, as the case may be, as the same may be
amended and replaced;

(vii)

pledges or deposits to secure obligations under workmen's compensation laws or
similar legislation, deposits to secure public or statutory obligations,
warehousemen's or other like liens, or deposits to obtain the release of such
liens and deposits to secure surety, appeal or customs bonds on which it is the
principal, as to all of the foregoing, only to the extent arising and continuing
in the ordinary course of business; and

(viii)

other liens, charges and encumbrances incidental to the conduct of its business,
the ownership of its property and assets which are not more than thirty (30)
days overdue and which do not in the aggregate materially detract from the value
of its property or assets or materially impair the use thereof in the operation
of its business;

(b) Third Party Guaranties. Guarantee the obligations of any third party, except
a direct or indirect subsidiary of the Guarantor, whether or not affiliated with
such Security Party, provided, that the Guarantor may guarantee the obligations
of any third party in which the Guarantor owns an equity interest if such
guarantee is of a percentage of the obligations of such third party being
guaranteed which is no more than the percentage of the Guarantor's equity
ownership in such third party. By way of illustration, if the Guarantor owns a
35% equity interest in a third party, the Guarantor may guarantee up to 35% of
such third party's debt;

(c) Liens on Shares of Borrower. With respect to the Guarantor, create, assume
or permit to exist, any mortgage, pledge, lien, charge, encumbrance or any
security interest whatsoever upon the shares of the Borrower;

(d) Subordination of Inter-Company Indebtedness. Upon the occurrence and during
the continuance of an Event of Default, allow any payments to be made by any of
the Security Parties on any inter-company Indebtedness until such time as the
Facility is paid in full;

(e) Transaction with Affiliates. Other than as contemplated by the EGS Borrower
Restructuring, enter into any transaction with an Affiliate, other than on an
arm's length basis;

(f) Change of Flag, Class, Management or Ownership. Change the flag of the
Vessel other than to an Approved Jurisdiction, its Classification Society other
than to another member of the International Association of Classification
Societies acceptable to each of the Lenders, the management of the Vessel other
than to the Guarantor or a wholly-owned Subsidiary thereof (it being understood
that the technical management of the Vessel may be subcontracted to Wallem Ship
management Hong Kong, or another internationally recognized vessel technical
manager approved by the Agents, such approval not to be unreasonably withheld,
delayed or conditioned);

(g) Chartering. Enter into any charter party agreement with respect to the
Vessel, other than an Approved Charter, or permit the Vessel to be
sub-chartered, in each case, without the prior consent of the Majority Lenders,
which consent shall not be unreasonably withheld;

(h) Change in Business. Other than as contemplated by the EGS Borrower
Restructuring, materially change the nature of its business or commence any
business materially different from its current business;

(i) Sale of Assets. Other than as contemplated by the EGS Borrower
Restructuring, as reasonably acceptable to the Majority Lenders, sell, or
otherwise dispose of, the Vessel or any other asset (including by way of
spin-off, installment sale or otherwise) which is substantial in relation to

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its assets taken as a whole; provided, however, that the Borrower may sell the
Vessel to a third party in an arm's length transaction provided that either (i)
the Facility shall be repaid in full together with the Prepayment Premium, as
applicable, and the costs and expenses provided for in Section 13.4 or (ii) the
Borrower places the amount referred to in clause (i) above on charged deposits
with the Facility Agent;

(j) Changes in Offices or Names. Change the location of its chief executive
office, its chief place of business or the office in which its records relating
to the earnings or insurances of the Vessel are kept or change its name unless
the Lenders shall have received sixty (60) days prior written notice of such
change;

(k)Consolidation and Merger. Consolidate with, or merge into, any corporation or
other entity,

or merge any corporation or other entity into it; provided, however, that the
Guarantor and/or either Borrower may merge with any Subsidiary thereof or any
other Person if (A) at the time of such transaction and after giving effect
thereto, no Default or Event of Default shall have occurred or be continuing,
(B) the surviving entity of such consolidation or merger shall be the Guarantor
or the respective Borrower and (C) after giving effect to the transaction, the
Guarantor's Consolidated Tangible Net Worth shall be greater or equal to its
Consolidated Tangible Net Worth prior to the merger;

(1)Change Fiscal Year. In the case of the Guarantor, change its fiscal year;

(m) Indebtedness. In the case of the Security Parties, incur any new
Indebtedness (which, for the sake of clarity, shall exclude any Indebtedness
pursuant to this Agreement) other than (i) with respect to the Guarantor only,
Indebtedness incurred to finance the acquisition and/or construction of any
vessels; (ii) Indebtedness incurred by the Guarantor to finance the acquisition
of any shipping related asset, or any railroad or railcar repair yard asset
ancillary to the Guarantor's existing railroad business; (iii) Indebtedness
incurred by the Guarantor to finance the acquisition of the equity interests of
any company owning shipping related assets whose primary business activity is
shipping or any company owning railroad or railcar repair yard assets ancillary
to the Guarantor's existing railroad business whose primary business activity is
related to such assets; (iv) any Indebtedness incurred in connection with any
refinancing of any Indebtedness permitted under this Section 9.2(m)(i) through
(iii), provided, however, that in each exception listed in clauses (i) through
(iii) above, the principal amount of such Indebtedness shall not exceed eighty
percent (80%) of such acquisition and/or construction price; and (v)
Indebtedness incurred by the Guarantor in connection with any guarantees
permitted under Section 9.2(b) hereof;

(n) Limitations on Ability to Make Distributions. Create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary to pay dividends or make any other distributions
on its capital stock or limited liability company interests, as the case may be,
to the Borrower or the Guarantor, except that the Borrower may declare a
dividend or make other distributions to the Guarantor if and so long as both
immediately before and after payment of such dividend or distribution, no
Default or Event of Default shall have occurred and be continuing and the
Security Parties are in compliance with Sections 9.3, 9.4 and 10.3;

(o) No Money Laundering. Contravene any law, official requirement or other
regulatory measure or procedure implemented to combat "money laundering" (as
defined in Article I of the Directive (2005/60/EC) of the Council of the
European Communities) and comparable United States Federal and state laws;

(p) Charter Party Agreements. Amend any material provision in the Initial
Charter Party Agreement or any Approved Charter, without the prior written
consent of the Facility Agent; and

(q) Nuclear Waste, War Zone, Etc.

(i)Permit the Vessel to carry nuclear waste or material; or

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(ii)  in the event of hostilities in any part of the world (whether war is
declared or not),

cause or permit the Vessel to enter or trade to any zone which is declared a war
zone by any government or by the Vessel's war risks insurers, unless the
Borrower has (at its expense) effected the special, additional or modified
insurance cover which the Security Trustee may reasonably require, prior to
entering into such war zone;

(r) GLOVIS COUNTESS Credit Facility. Amend, or enter into any transaction that
has the effect of amending, the GLOVIS COUNTESS Credit Facility without the
prior written consent of the Facility Agent.

9.3Financial Covenants. The Guarantor hereby covenants and undertakes with the
Lenders that,

from the date hereof and so long as any principal, interest or other moneys are
owing in respect of this Agreement, the Note or any of the other Transaction
Documents, it will:

(a) Maximum Consolidated Leverage Ratio. Maintain a Consolidated Leverage Ratio
not greater than (i) 4.50:1.00, for the fiscal quarter ending June 30, 2015,
(ii) 5.00:1.00, beginning with the fiscal quarter ending September 30, 2015
through the fiscal quarter ending December 31, 2015, (iii) 4.75:1.00, for the
fiscal quarter ending March 31, 2016, (iv) 4.50:1.00, for the fiscal quarter
ending June 30, 2016 and (v) 4.25:1.00, thereafter, measured at the end of each
fiscal quarter of the Guarantor based on the four most recent fiscal quarters of
the Guarantor for which financial information is available;

(b) Working Capital. Maintain on a consolidated basis a ratio of current assets
to current liabilities of not less than 1.00 to 1.00, measured at the end of
each fiscal quarter of the Guarantor based on the four most recent fiscal
quarters for which financial information is available;

(c) [intentionally Omitted].

(d) Minimum Liquidity. Maintain Liquidity of not less than Twenty Million
Dollars
($20,000,000) at all times, measured as of the end of each fiscal quarter of the
Guarantor;

(e) Minimum Consolidated Tangible Net Worth. Maintain a Consolidated Tangible
Net Worth, as measured at the end of each fiscal quarter of the Guarantor, in an
amount of not less than the sum of Two Hundred Fifty-Four Million Eight Hundred
Eighty Thousand Dollars ($254,880,000) plus fifty percent (50%) of all
Consolidated Net Income of the Guarantor and the Subsidiaries earned after March
31, 2015 plus one hundred percent (100%) of the proceeds of all issuances of
equity interests (common or preferred) of the Guarantor and the Subsidiaries (on
a consolidated basis) received after March 31, 2015 (other than issuances in
connection with the exercise by a present or former employee, officer or
director under a stock incentive plan, stock option plan or other equity-based
compensation plan or arrangement);

(f)Consolidated EBITDA to Consolidated Interest Expense. Maintain, on a
consolidated basis,

a ratio of Consolidated EBITDA to Consolidated Interest Expense of not less than
2.50 to 1.00, measured at the end of each fiscal quarter of each fiscal year
based on the four most recent fiscal quarters for which financial information is
available;

(g) Minimum Consolidated Fixed Charge Coverage Ratio. Maintain a Consolidated
Fixed Charge Coverage Ratio of at least (i) 1.15:1.00, for the fiscal quarter
ending June 30, 2015, (ii) 1.05:1.00, beginning with the fiscal quarter ending
September 30, 2015 through the fiscal quarter ending December 31, 2015, (iii)
1.15:1.00, for the fiscal quarter ending March 31, 2016, (iv) 1.20:1.00, for the
fiscal quarter ending June 30, 2016 and (v) 1.25:1.00, thereafter, measured at
the end of each fiscal quarter of the Guarantor based on the four most recent
fiscal quarters of the Guarantor for which financial information is available;

(h) MFN. In the event the Guarantor or any of its Subsidiaries shall enter into,
assume or otherwise become bound by or obligated under any agreement creating or
evidencing Indebtedness, and any financial covenant included therein, in the
sole judgment of the Facility Agent or the Majority Lenders, is more restrictive
than the financial covenants set forth in this Section 9.3 at such time or is
different from the subject matter of such financial covenants (each such
covenant, a "Specified Covenant"), this Agreement shall, without any

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further action on the part of the Facility Agent, the Lenders or the Creditors,
be deemed to be amended automatically to include each such Specified Covenant;
and

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 (i)Covenant Reset. In the event that the Borrower or the Guarantor enters into
a transaction

that has a materially positive impact on the financial condition of the Borrower
or the Guarantor, the Borrower and the Guarantor shall in good faith negotiate
with the Lenders to amend this Agreement in order to bring the covenant levels
set forth in this Section 9.3 closer to the levels that the Guarantor was
subject to in other credit facilities prior to the Closing Date. If the Lenders
and the Security Parties, acting in good faith, fail to agree to new covenant
levels, the covenant levels set forth in Section 9.3 shall revert to the levels
in effect as of December 31, 2014 under the Facility.

9.4Asset Maintenance. If, at any time from the date hereof and so long as any
principal, interest

or other moneys are owing in respect of this Agreement, the Note or any other
Transaction Documents, the Fair Market Value of the Vessel is less than the
Required Percentage of the outstanding amount of the Facility, the Borrower
shall, immediately following receipt by the Borrower of written notice from the
Facility Agent notifying the Borrower of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be deemed
to be conclusive and binding on the Borrower), either (i) prepay such amount of
the Facility (together with interest thereon and any other monies payable in
respect of such prepayment pursuant to Section 5.4) as shall result in the Fair
Market Value of the Vessel being not less than the Required Percentage of the
outstanding amount of the Facility or (ii) place on charged deposits with the
Facility Agent an amount in Dollars (together with interest thereon and any
other monies payable in respect of such prepayment pursuant to Section 5.4) as
shall result in the Fair Market Value of the Vessel together with the amount
deposited being not less than the Required Percentage of the outstanding amount
of the Facility. The charged deposit shall be released to the Borrower when the
Fair Market Value of the Vessel is not less than the Required Percentage of the
outstanding amount of the Facility.

9.5Borrower Restructuring. The Borrower and the Guarantor shall, as soon as
possible after the

date of the Amendment No. 4 to this Agreement but in no event later than 90 days
after the Closing Date (as defined in the GLOVISS COUNTESS Credit Facility),
ensure that:

(a) The Vessel shall be transferred into the ownership of the EGS Borrower and
the Other EGS Vessels shall be transferred out of the ownership of the EGS
Borrower, the effect of which is that the only two vessels owned by the EGS
Borrower as of that date shall be the Vessel and the GLOVIS COUNTESS;

(b) The EGS Borrower shall provide to the Facility Agent the following
documents:

(i)

Evidence of Vessel Transfer. copies of the bills of sale and other evidence
satisfactory to it and its counsel that the transfers contemplated in clause (a)
have been consummated;

(ii)

Vessel Documents. evidence satisfactory to it and its counsel that the Vessel
is:

(I) in the sole and absolute ownership of the EGS Borrower and duly registered

in the EGS Borrower's name in the Republic of the Marshall Islands, free of all
liens and encumbrances of record other than the Mortgage and the GREEN BAY-$32M
Credit Facility Mortgage;

(2) insured in accordance with the provisions of the Mortgage and all

requirements of the Mortgage in respect of such insurance have been fulfilled
(including, but not limited to, letters of undertaking from the insurance
brokers, including confirmation

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notices of assignment, notices of cancellation and loss payable clauses
acceptable to the Lenders);

(3) classed in the highest classification and rating for vessels of the same age
and type with its Classification Society without any outstanding
recommendations; and

(4) operationally seaworthy and in every way fit for its intended service.

(iii)Charter and NYK Consent. (A) copies of the charter party, along with the
relevant

addenda, entered by the EGS Borrower with Nippon Yusen Kaisha in respect of the
Vessel, each certified as true and complete by an officer of the EGS Borrower,
and (B) a copy of the executed and countersigned notice and acknowledgment of
assignment of earnings and time charter and subordination agreement from Nippon
Yusen Kaisha;

(iv)Security Documents.

(1) the GLOVIS COUNTESS Assignments;

(2) the Assignment Notices and the acknowledgements thereof in respect of (I)
above (including the executed and countersigned notice and acknowledgment of
assignment of earnings and time charter and subordination agreement from Hyundai
Glovis Co., Ltd.);

(3) the GLOVIS COUNTESS Mortgage; and

(4) the Manager's Undertaking in respect of the GLOVIS COUNTESS from each of the
Commercial Manager (unless the EGS Borrower is the Commercial Manager) and the
Technical Manager (or any subcontractor thereof), including, where applicable,
an assignment of the interests of such manager in the insurances and
subordination undertakings;

(5) evidence that the EGS Borrower has sent an instruction letter in respect of
the GLOVIS COUNTESS to the Classification Society as required under Section
9.1(aa) and that the Classification Society has executed the undertaking as
required thereby; and

(6) an irrevocable power of attorney granted by the EGS Borrower to the Security
Trustee which, upon the occurrence of an Event of Default, enables the Security
Trustee to make all necessary decisions in relation to the GLOVIS COUNTESS and
obliges the master of the GLOVIS COUNTESS to adhere to the Security Trustee's
instructions;

(v)Registration of the GLOVIS COUNTESS Mortgage. satisfactory evidence that the

GLOVIS COUNTESS Mortgage has been duly registered under the laws of the Republic
of the Marshall Islands and constitutes a preferred mortgage lien under such
jurisdiction;

(vi)Pari Passu Intercreditor Agreement. a Pari Passu Intercreditor Agreement,
duly

executed by the EGS Borrower, the Guarantor, and the security trustee and the
facility agent in respect of the GLOVIS COUNTESS Credit Facility;

(vii)UCC Filings. evidence that Uniform Commercial Code Financing Statements
have

been filed in the District of Columbia and in such other jurisdictions as the
Facility Agent may reasonably require;

 

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(viii)

Legal Opinions. opinions addressed to the Facility Agent from (i) Jones Walker,
L.L.P., special counsel to the EGS Borrower (including a no conflicts opinion
with the other material agreements of the EGS Borrower and the Guarantor) and
(ii) Seward & Kissel LLP, special counsel to the Agents and the Lenders, in each
case in such form as the Facility Agent may require, as well as such other legal
opinions as the Lenders shall require as to all or any matters under the laws of
New York and the Republic of the Marshall Islands;

(ix)

ING Credit Agreement Amendment. evidence that the ING Credit Agreement is
amended to provide for the change of the borrower thereunder, to reset financial
covenant levels and to effect other changes relating to the EGS Borrower
Restructuring in form and substance satisfactory to the Facility Agent;

(x)

Consent. evidence that all third party consent, including that of Citizens Asset
Finance, Inc. as lender under the credit facility entered into by LCI
Shipholdings, Inc. with respect to the GREEN DALE, required or necessary to
effect the transfer of the GREEN BAY to the Borrower has been obtained;

(xi)

Officer's Certificate. an officer's certificate of the EGS Borrower certifying
as of the date of the GLOVIS COUNTESS Mortgage that after giving effect to the
EGS Borrower Restructuring (i) the representations stated in Section 2 are true
and correct as if made on that date, (ii) no Default or Event of Default has
occurred and is continuing, (iii) there has not been any Material Adverse Effect
since the date of the Closing Date, (iv) no third party or governmental consent
(other than those already obtained) is necessary or required in order for the
EGS Borrower to consummate the EGS Borrower Restructuring and (v) the conditions
set forth in this Section 9.5 have been satisfied;

(xii)

ING Credit Agreement. evidence that the EGS Borrower is released from all
obligations under the ING Credit Agreement; and

(xiii)

Miscellaneous. any other certificates, instruments or other documents (including
any amendment to the GLOVIS COUNTESS Credit Facility) that the Facility Agent
may reasonably require in connection with the EGS Borrower Restructuring and the
GLOVIS COUNTESS.

(c)The EGS Borrower shall comply with the obligations set forth in Sections 9.5
of the

GLOVIS COUNTESS Credit Facility.

10. ACCOUNTS.

10.1General. From the date hereof and so long as any principal, interest or
other moneys are

owing in respect of this Agreement, the Note or any other Transaction Documents,
each of the Borrower and the Guarantor, as the case may be, agrees to comply or
cause compliance with the following provisions of this Section 10 except as the
Facility Agent, with the consent of the Majority Lenders, may approve from time
to time in writing, such approval not to be unreasonably withheld.

10.2Payment of Earnings. The Borrower shall ensure that all Earnings of the
Vessel are to be

paid to the Earnings Account.

10.3Monthly Retentions. The Borrower shall ensure that (x) all Earnings of the
Vessel paid into

the Earnings Account on or prior to the 15th day of each calendar month shall be
transferred to the Retention Account and (y) all or a portion of the Earnings of
the Vessel paid into the Earnings Account on or after the 15th day of each
calendar month shall be transferred to the Retention Account, so that on the
last day of each

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calendar month, an aggregate amount equal to one-third of the Debt Service
payable on the next Payment Date is transferred to the Retention Account. The
Borrower hereby authorizes the Facility Agent and the Account Bank to make such
transfer(s). The frequency and amount of such transfer(s) may be modified in the
reasonable discretion of the Facility Agent if the payment intervals under the
relevant Approved Charter changes.

10.4Debt Service Letter of Credit.

(a)The Borrower shall cause to be issued by the Letter of Credit Bank an
irrevocable,

first demand letter of credit (the "Debt Service Letter of Credit") for the
benefit of the Security Trustee and maintain such letter of credit so long as
any principal, interest or other moneys are owing in respect of this Agreement,
the Note or any other Transaction Documents.

(b)Such Debt Service Letter of Credit shall:

(i) have the face amount of $4,500,000 on the Closing Date to be adjusted at the
determination of the Facility Agent, taking into consideration (x) the final
employment rate agreed between the Borrower and the Initial Charterer for an
international flagged vessel and (y) whether or not interest under this
Agreement is fixed (and if it is hedged, the achievable fixed rate) and to be
reduced quarterly by an amount equal to $190,000, commencing on the first
Payment Date after the final face amount is determined by the Facility Agent
pursuant to this clause (i) until the face amount becomes $2,000,000;

(ii)

contain an evergreen provision that automatically renews the expiry date; and

(iii)

be on terms and conditions that are otherwise acceptable to the Facility Agent.

(c)The Borrower shall cause the Letter of Credit Bank to inform the Facility
Agent at

least 60 days prior to the stated expiry date whether or not the Debt Service
Letter of Credit will be renewed.

(d)If (i) there occurs an Event of Default that is continuing or (ii) the Debt
Service

Letter of Credit is not renewed 60 days prior to the stated expiry date, the
Security Trustee at its option may draw upon the Debt Service Letter of Credit
and apply the proceeds from such drawing to prepay the Facility, and Section 5
shall apply in relation to any such prepayment.

(e)In the event that pursuant to Section 5.3 of the GLOVIS COUNTESS Credit

Facility, the proceeds in respect of the GLOVIS COUNTESS are applied to repay
the Facility in an amount equal to the face amount of the Debt Service Letter of
Credit, the Debt Service Letter of Credit may be terminated.

10.5Shortfall in Earnings. If the aggregate Earnings received in the Earnings
Account are

insufficient in any month for the required amount to be transferred to the
Retention Account under Section 10.3, the Borrower shall immediately deposit an
amount equal to such deficiency into the Retention Account.

10.6Transfers from Retention Account; Application of Retentions.

(a) The Borrower shall ensure that on each Payment Date, the amount of the Debt
Service payable on such Payment Date is transferred (and the Borrower hereby
authorizes the Facility Agent to transfer such amount) from the Retention
Account to the Facility Agent's account specified in Section 7.1.

(b) Upon the occurrence and during the continuation of an Event of Default or
any breach under Section 9.3 or 9.4, without prejudice to any other right the
Security Trustee may have under the

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Transaction Documents, the Facility Agent may withdraw from the Earnings
Accounts any Excess Cash Flow and, at the Facility Agent's option:

(i)

transfer any portion of such Excess Cash Flow to the Retention Account; or

(ii)

apply any portion of such Excess Cash Flow to prepayment of the Facility on the
next Payment Date, and Section 5 shall apply in relation to any such prepayment.

(c) Any amount deposited in the Retention Account shall be retained as security
and no funds may be withdrawn by the Borrower from the Retention Account at any
time, so long as any principal, interest or other moneys are owing in respect of
this Agreement or the other Transaction Documents.

10.7Location of Accounts. Each of the Borrower and the Guarantor, as the case
may be, shall

promptly:

(a) comply with any requirement of the Facility Agent as to the location or
re-location of the Earnings Account and the Retention Account (or either of
them), and without limiting the foregoing, each of the Borrower and the
Guarantor agrees to segregate the Earnings Account and the Retention Account (or
any of them) from the banking platform on which their other accounts are located
or designated; and

(b) execute any documents which the Facility Agent specifies to create or
maintain in favor of the Security Trustee a security interest over (and/or
rights of set-off, consolidation or other rights in relation to) the Earnings
Account and the Retention Account.

10.8Debits for Expenses. The Facility Agent, upon providing the Borrower and the
Guarantor

with one (1) Banking Day's prior notice, shall be entitled (but not obliged)
from time to time to debit the Earnings Account or the Retention Account in
order to discharge any amount due and payable under Section 15.2 or 19.8 to a
Creditor or payment of which any Creditor has become entitled to demand under
Section 15.2 or 19.8.

10.9Borrower's Obligations Unaffected. The provisions of this Section 10 do not
affect:

(a) the liability of the Borrower to make payments of principal and interest on
the due dates; or

(b) any other liability or obligation of the Borrower or any other Security
Party under any Transaction Document

11. GUARANTEE

11.1The Guarantee. The Guarantor hereby irrevocably and unconditionally
guarantees to each of

the Creditors and their respective successors and assigns the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest on the Facility made by the Lenders to the Borrower
and evidenced by the Note and all other amounts from time to time owing to the
Creditors by the Borrower under this Agreement, under the Note and under any of
the Transaction Documents, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the "Guaranteed
Obligations"). The Guarantor hereby further agrees that if the Borrower shall
fail to pay in full when due (whether at stated maturity, by acceleration or
otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.

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11.2Obligations Unconditional. The obligations of the Guarantor under Section
11.1 are

absolute, unconditional and irrevocable, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of the Borrower under
this Agreement, the Note or any other agreement or instrument referred to herein
or therein, or any substitution, release or exchange of any other guarantee of,
or security for, any of the Guaranteed Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 11.2 that the
obligations of the Guarantor hereunder shall be absolute, unconditional and
irrevocable, under any and all circumstances. Without limiting the generality of
the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Guarantor hereunder,
which shall remain absolute, unconditional and irrevocable as described above:

a. at any time or from time to time, without notice to the Guarantor, the time
for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance shall be waived;

b. any of the acts mentioned in any of the provisions of this Agreement or the
Note or any other agreement or instrument referred to herein or therein shall be
done or omitted;

c. the maturity of any of the Guaranteed Obligations shall be accelerated, or
any of the Guaranteed Obligations shall be modified, supplemented or amended in
any respect, or any right under this Agreement or the Note or any other
agreement or instrument referred to herein or therein shall be waived or any
other guarantee of any of the Guaranteed Obligations or any security therefor
shall be released or exchanged, in whole or in part, or otherwise dealt with; or

d. any lien or security interest granted to, or in favor of, the Security
Trustee or any Lender or Lenders as security for any of the Guaranteed
Obligations shall fail to be perfected.

The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that any Agent or any
Lender exhaust any right, power or remedy or proceed against the Borrower under
this Agreement or the Note or any other agreement or instrument referred to
herein or therein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.

11.3Reinstatement.The obligations of the Guarantor under this Section 11 shall
be

automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the Borrower in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any Proceedings and the Guarantor agrees
that it will indemnify each Creditor on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by such
Creditor in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.

11.4Subrogation. The Guarantor hereby irrevocably waives, but only until all
amounts payable

hereunder by the Guarantor to the Creditors (or any of them) have been paid in
full, any and all rights to which any of them may be entitled by operation of
law or otherwise, upon making any payment hereunder to be subrogated to the
rights of the payee against the Borrower with respect to such payment or to be
reimbursed, indemnified or exonerated by or to seek contribution from the
Borrower in respect thereof.

 

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11.5Remedies. The Guarantor agrees that, as between the Guarantor and the
Lenders, the

obligations of the Borrower under this Agreement and the Note may be declared to
be forthwith due and payable as provided in Section 8 (and shall be deemed to
have become automatically due and payable in the circumstances provided in said
Section 8) for purposes of Section 11.1 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Guarantor for purposes
of Section 11.1.

11.6Joint, Several and Solidary Liability. The Guarantor's obligations and
liability under this

Agreement shall be on a "solidary" or "joint and several" basis along with
Borrower to the same degree and extent as if the Guarantor had been and/or will
be a co-borrower, co-principal obligor and/or co-maker of the Guaranteed
Obligations. In the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of the Guaranteed Obligations, the Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other guarantors, endorsers and/or sureties.

11.7Continuing Guarantee. The guarantee in this Section 11 is a continuing
guarantee, and shall

apply to all Guaranteed Obligations whenever arising.

12.ASSIGNMENT

12.1Generally. This Agreement shall be binding upon, and inure to the benefit
of, each of the

Security Parties and each of the Creditors and their respective successors and
assigns.

12.2Assignment by Security Parties.

(a) The Security Parties may not assign any of their respective rights or
obligations hereunder without the written consent of the Lenders.

(b) Notwithstanding the foregoing clause (a), the Initial Borrower may assign
its rights and obligations under the Transaction Documents to the Ultimate
Borrower in connection with the Vessel Transfer; provided, (x) before and after
giving effect to the Vessel Transfer, no Event of Default nor any event which
with the giving of notice or lapse of time or both would constitute an Event of
Default shall have occurred and be continuing; and (y) the following conditions
precedent shall have been satisfied:

(i)

Corwrate Authority. The Facility Agent shall have received from the Ultimate
Borrower the documents described in Section 4.1(a) in form and substance
satisfactory to the Facility Agent and its legal advisers, or a certification
that such documents have not changed since the Closing Date and remain in full
force and effect;

(ii)

Bill of Sale. The Initial Borrower and the Ultimate Borrower shall have duly
executed and delivered a bill of sale relating to the transfer of the Vessel in
form and substance acceptable to the Facility Agent;

(iii)

Omnibus Assignment and Assumption Agreement. The Initial Borrower and the
Ultimate Borrower shall have duly executed and delivered the Omnibus Assignment
and Assumption Agreement to the Facility Agent;

(iv)

Note. The Ultimate Borrower shall have duly executed and delivered the Note to
the Facility Agent;

 

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(v)

Environmental Claims. The Lenders shall be satisfied that the Ultimate Borrower
is not subject to any Environmental Claim which could reasonably be expected to
have a Material Adverse Effect.

(vi)

Legal Opinions. The Facility Agent, on behalf of the Agents and the Lenders,
shall have received opinions addressed to the Facility Agent from (i) Jones
Walker, L.L.P., special counsel to the Ultimate Borrower, (ii) the Ultimate
Borrower's Marshall Islands counsel, and (iii) Seward & Kissel LLP, special
counsel to the Agents and the Lenders, in each case in such form as the Facility
Agent may require, as well as such other legal opinions as the Lenders shall
have required as to all or any matters under the laws of New York and the
Republic of the Marshall Islands;

(vii)

Officer's Certificate. The Facility Agent shall have received a certificate
signed by the President or other duly authorized executive officer of the
Ultimate Borrower certifying that under applicable law existing on the date
hereof, the Ultimate Borrower shall not be compelled by law to withhold or
deduct any Taxes from any amounts to become payable to the Facility Agent for
the account of the Creditors hereunder;

(viii)

Approved Charter. The Borrower shall have delivered to the Facility Agent
copies, certified as true and complete by an officer of the Borrower, of the
relevant Approved Charter (or the appropriate novation agreement thereof from
the Initial Borrower to the Ultimate Borrower);

(ix)

Accounts. The Facility Agent shall have received evidence that (i) all amounts
on deposit in the Earnings Account and the Retention Account that are
established in the name of the Initial Borrower, shall have been transferred to
the corresponding accounts established in the name of the Ultimate Borrower and
(ii) the Earnings Account and the Retention Account in the name of the Initial
Borrower shall henceforth have been closed;

(x)

UCC Filings. The Facility Agent shall have received evidence that Uniform
Commercial Code Financing Statements have been filed in the District of Columbia
and in such other jurisdictions as the Facility Agent may reasonably require;

(xi)

Financial Statements. The Ultimate Borrower shall deliver to the Facility Agent
the financial statements of the Ultimate Borrower satisfying the requirements
set forth in Section 9.1(d)(i) and (ii) for the fiscal year ending December 31,
2013 and such other fiscal periods as the Facility Agent may reasonably specify;

(xii)

Licenses, Consents and Approvals. The Facility Agent shall have received
satisfactory evidence that all necessary licenses, consents and approvals in
connection with the transactions contemplated by this Agreement, the Note, the
Security Documents and the Fee Letter have been obtained in respect of the
Ultimate Borrower.

(xiii)

Know Your Customer Requirements. The Facility Agent shall have received, to the
extent any update is required, documentation to its satisfaction in connection
with its know your customer requirements.

(xiv)

Loan Administration Form. The Facility Agent shall have received a duly executed
Loan Administration Form from the Ultimate Borrower.

 

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(xv)Vessel Documents. The Facility Agent shall have received evidence
satisfactory to

it and its counsel that the Vessel is (or will be upon the consummation of the
Vessel Transfer):

(1) in the sole and absolute ownership of the Ultimate Borrower and duly
registered in such Ultimate Borrower's name in the Republic of the Marshall
Islands, free of all liens and encumbrances of record other than the Mortgage;

(2) insured in accordance with the provisions of the Mortgage and all
requirements of the Mortgage in respect of such insurance have been fulfilled
(including, but not limited to, letters of undertaking from the insurance
brokers, including confirmation notices of assignment, notices of cancellation
and loss payable clauses acceptable to the Lenders);

(3) classed in the highest classification and rating for vessels of the same age
and type with its Classification Society without any outstanding
recommendations; and

(4) operationally seaworthy and in every way fit for its intended service.

(xvi) Security Documents. The Ultimate Borrower shall have executed and
delivered to the Facility Agent:

(1) the Earnings and Charterparties Assignment;

(2) the Insurances Assignment;

(3) the Account Pledges relating to the Earnings Account and the Retention
Account;

(4) the Assignment Notice and the acknowledgement thereof in respect of (i)
through (iii) above (including the executed and countersigned notice and
acknowledgment of assignment of earnings and time charter and subordination
agreement from the Initial Charterer);

(5) the MI Continuation Mortgage; and

(6) an irrevocable power of attorney granted by the Borrower to the Security
Trustee which, upon the occurrence of an Event of Default, enables the Security
Trustee to make all necessary decisions in relation to the Vessel and obliges
the master of the Vessel to adhere to the Security Trustee's instructions.

(xvii) Registration of the MI Continuation Mortgage. The Facility Agent shall
have received satisfactory evidence that the MI Continuation Mortgage has been
duly registered under the laws of the Republic of Marshall Islands and
constitutes a first priority mortgage lien under such jurisdiction.

(xviii) Continuation of Security Interest. The Facility Agent and the Security
Trustee shall have received reasonable evidence that the Security Trustee's
security interest granted pursuant to the Security Agreements on the Closing
Date shall be continued after the Vessel Transfer.

(xix) Reaffirmation. The Guarantor shall have executed and delivered to the
Facility Agent a reaffirmation agreement in form and substance reasonably
satisfactory to the Facility Agent.

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(c)Notwithstanding the foregoing clause (a), the Ultimate Borrower may assign
its

rights and obligations under the Transaction Documents to the EGS Borrower in
connection with the Second Vessel Transfer; provided, (x) before and after
giving effect to the Second Vessel Transfer, no Default or Event of Default
shall have occurred and be continuing and (y) the following conditions precedent
shall have been satisfied:

(i)

the requirements set forth in the foregoing clause (b), reasonably modified in
the context of the Second Vessel Transfer; and

(ii)

the Debt Service Letter of Credit to be re-issued in the name of the EGS
Borrower as applicant;

12.3Assignment by Lender.

(a) Each Lender shall be entitled to assign its rights and obligations under
this Agreement or grant participation(s) in the Facility to any subsidiary,
holding company or other affiliate or office of such Lender, to any subsidiary,
office or other affiliate company, special purpose entity or funding vehicle of
any thereof or, with the consent of the Borrower (such consent not to be
unreasonably withheld or delayed and to be deemed granted within ten (10)
Banking Days from the day it has been sought unless it has been expressly
refused within that period, provided, however, that such consent from the
Borrower is not required if an Event of Default has occurred and is continuing)
and with the consent of the Facility Agent, to any other bank or financial
institution (in a minimum amount of not less than $1,000,000), and such Lender
shall forthwith give notice of any such assignment or participation to the
Borrower and pay the other Lender an assignment fee of $3,000 for each such
assignment or participation; provided, however, that any such assignment must be
made pursuant to an Assignment and Assumption Agreement. The Borrower will take
all reasonable actions requested by the Agents or any Lender to effect such
assignment. In addition, any Lender may disclose to any prospective assignee any
information about the Security Parties and the Transaction Documents as the
Lender shall consider appropriate if the person to whom the information is given
agrees in writing to keep such information confidential.

(b) The Facility Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
Agreement delivered to it and a register for the recordation of the names and
addresses of the Lenders and principal amount of the Facility owing to each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the Facility
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

(c) Upon its receipt of a duly completed Assignment and Assumption Agreement
executed by an assigning Lender and an assignee, the assignment fee referred to
above and any written consent to such assignment required, the Facility Agent
shall accept such Assignment and Assumption Agreement and record the information
contained therein in the Register; provided, that if either the assigning Lender
or the assignee shall have failed to make any payment required to be made by it
pursuant to this Agreement, the Facility Agent shall have no obligation to
accept such Assignment and Assumption Agreement and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

(d) In addition, any Lender may at any time, without the consent of, or notice
to, the Borrower or any Agent, sell participations to any Person (other than a
natural person or the Borrower or any of the Borrower's Affiliates) (each, a
"Participant") in all or a portion of such Lender's rights and/or

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obligations under this Agreement (including all or a portion of its Commitment
and/or the Advance owing to it); provided, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrower, the Guarantor, the Facility Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that requires the consent of each Lender
directly affected thereby pursuant to the terms of this Agreement and that
directly affects such Participant.

13.ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.

13.1Illegality. In the event that by reason of any change in any applicable law,
regulation or

regulatory requirement or in the interpretation thereof, a Lender has a
reasonable basis to conclude that it has become unlawful for any Lender to
maintain or give effect to its obligations as contemplated by this Agreement,
such Lender shall inform the Facility Agent and the Borrower to that effect,
whereafter the liability of such Lender to make its Commitment available shall
forthwith cease and the Borrower shall be required either to repay to such
Lender that portion of the Facility advanced by such Lender immediately or, if
such Lender so agrees, to repay such portion of the Facility to the Lender on
the last day of the calendar month in accordance with and subject to the
provisions of Section 13.4. In any such event, but without prejudice to the
aforesaid obligations of the Borrower to repay such portion of the Facility, the
Borrower and the relevant Lender shall negotiate in good faith with a view to
agreeing on terms for making such portion of the Facility available from another
jurisdiction or otherwise restructuring such portion of the Facility on a basis
which is not unlawful.

13.2Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in

the interpretation or application thereof by any governmental or other
authority, shall:

(i)

subject any Lender to any Taxes with respect to its income from the Facility, or
any part thereof, or

(ii)

change the basis of taxation to any Lender of payments of principal or interest
or any other payment due or to become due pursuant to this Agreement (other than
a change in the basis effected by the jurisdiction of organization of such
Lender, the jurisdiction of the principal place of business of such Lender, the
United States of America, the State or City of New York or any governmental
subdivision or other taxing authority having jurisdiction over such Lender
(unless such jurisdiction is asserted by reason of the activities of any
Security Party) or such other jurisdiction where the Facility may be payable),
or

(iii)

impose, modify or deem applicable any reserve requirements or require the making
of any special deposits against or in respect of any assets or liabilities of,
deposits with or for the account of, or loans by, a Lender, or

(iv)

impose on any Lender any other condition affecting the Facility or any part
thereof,

and the result of the foregoing is either to increase the cost to such Lender of
making available or maintaining its Commitment or any part thereof or to reduce
the amount of any payment received by such Lender, then and in any such case if
such increase or reduction in the opinion of such Lender materially affects the
interests of such Lender under or in connection with this Agreement:

 

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(1) such Lender shall notify the Facility Agent and the Borrower of the
happening of such event, and

(2) the Borrower agrees forthwith upon demand to pay to such Lender such amount
as such Lender certifies to be necessary to compensate such Lender for such
additional cost or such reduction; provided, however, that the foregoing
provisions shall not be applicable in the event that increased costs to the
Lender result from the exercise by the Lender of its right to assign its rights
or obligations under Section 12.3.

For the avoidance of doubt, this Section 13.2 shall apply to all requests,
rules, guidelines or directives concerning liquidity and capital adequacy issued
by any United States regulatory authority (i) under or in connection with the
implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act
and (ii) in connection with the implementation of the recommendations of the
Bank for International Settlements or the Basel Committee on Banking Regulations
and Supervisory Practices (or any successor or similar authority), regardless of
the date adopted, issued, promulgated or implemented.

13.3Lender's Certificate Conclusive. A certificate or determination notice of
the Facility Agent

or any Lender, as the case may be, as to any of the matters referred to in this
Section 13 shall, absent manifest error, be conclusive and binding on the
Borrower.

13.4Compensation for Losses. Where any portion of the Facility is to be repaid
by the Borrower

pursuant to Section 5 or this Section 13, the Borrower agrees simultaneously
with such repayment to pay to the relevant Lender all accrued interest to the
date of actual payment on the amount repaid and all other sums then payable by
the Borrower to the relevant Lender pursuant to this Agreement, together with
such amounts as may be certified by the relevant Lender to be necessary to
compensate such Lender for any actual loss, premium or penalties incurred or to
be incurred thereby on account of funds borrowed to make, fund or maintain its
Commitment or such portion thereof for the remainder (if any) of the then
current calendar month, but otherwise without penalty or premium.

14.CURRENCY INDEMNITY

14.1Currency Conversion. If for the purpose of obtaining or enforcing a judgment
in any court

in any country it becomes necessary to convert into any other currency (the
"judgment currency") an amount due in Dollars under this Agreement or the other
Transaction Documents then the conversion shall be made, in the discretion of
the Facility Agent, at the rate of exchange prevailing either on the date of
default or on the day before the day on which the judgment is given or the order
for enforcement is made, as the case may be (the "conversion date"), provided
that the Facility Agent shall not be entitled to recover under this Section any
amount in the judgment currency which exceeds at the conversion date the amount
in Dollars, as applicable, due under this Agreement, the Note and/or the other
Transaction Documents.

14.2Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between

the conversion date and the date of actual payment of the amount due, the
Borrower shall pay such additional amounts (if any, but in any event not a
lesser amount) as may be necessary to ensure that the amount paid in the
judgment currency when converted at the rate of exchange prevailing on the date
of payment will produce the amount then due under this Agreement, the Note
and/or the other Transaction Documents in Dollars; any excess over the amount
due received or collected by the Lenders shall be remitted to the Borrower.

14.3Additional Debt Due. Any amount due from the Borrower under this Section 14
shall be due

as a separate debt and shall not be affected by judgment being obtained for any
other sums due under or in respect of this Agreement, the Note and/or any of the
other Transaction Documents.

 

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14.4Rate of Exchange. The term "rate of exchange" in this Section 14 means the
rate at which

the Facility Agent in accordance with its normal practices is able on the
relevant date to purchase Dollars with the judgment currency and includes any
premium and costs of exchange payable in connection with such purchase.

15. FEES AND EXPENSES

15.1Fees. The Borrower shall pay all fees in the Fee Letter.

15.2Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are

consummated, on demand to pay, or reimburse the Agents for their payment of, the
reasonable expenses of the Agents and (after the occurrence and during the
continuance of an Event of Default) the Lenders incident to said transactions
(and in connection with any supplements, amendments, waivers or consents
relating thereto or incurred in connection with the enforcement or defense of
any of the Agents' and the Lenders' rights or remedies with respect thereto or
in the preservation of the Agents' and the Lenders' priorities under the
documentation executed and delivered in connection therewith) including, without
limitation, all reasonable costs and expenses of preparation, negotiation,
execution and administration of this Agreement and the documents referred to
herein, the reasonable fees and disbursements of the Agents' counsel in
connection therewith, as well as the reasonable fees and expenses of any
independent appraisers, surveyors, engineers and other consultants retained by
the Agents in connection with this transaction, all costs and expenses, if any,
in connection with the enforcement of this Agreement and the other Transaction
Documents (and the security granted pursuant thereto) and stamp and other
similar taxes, if any, incident to the execution and delivery of the documents
(including, without limitation, the other Transaction Documents) herein
contemplated and to hold the Agents and the Lenders free and harmless in
connection with any liability arising from the nonpayment of any such stamp or
other similar taxes. Such taxes and, if any, interest and penalties related
thereto as may become payable after the date hereof shall be paid immediately by
the Borrower to the Agents or the Lenders, as the case may be, when liability
therefor is no longer contested by such party or parties or reimbursed
immediately by the Borrower to such party or parties after payment thereof (if
the Agents or the Lenders, at their sole discretion, chooses to make such
payment).

16. APPLICABLE LAW, JURISDICTION AND WAIVER

16.1Applicable Law. This Agreement shall be governed by, and construed in
accordance with,

the laws of the State of New York.

16.2Jurisdiction. Each of the Security Parties hereby irrevocably submits to the
jurisdiction of

the courts of the State of New York and of the United States District Court for
the Southern District of New York in any action or proceeding brought against it
by any of the Lenders or the Agents under this Agreement or under any document
delivered hereunder and hereby irrevocably agrees that valid service of summons
or other legal process on it may be effected by serving a copy of the summons
and other legal process in any such action or proceeding on the Security Parties
by mailing or delivering the same by hand to the Security Parties at the address
indicated for notices in Section 18.1. The service, as herein provided, of such
summons or other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Security Parties as such, and shall be
legal and binding upon the Security Parties for all the purposes of any such
action or proceeding. Final judgment (a certified or exemplified copy of which
shall be conclusive evidence of the fact and of the amount of any indebtedness
of the Security Parties to the Lenders or the Agent) against the Security
Parties in any such legal action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment. The Security Parties
will advise the Facility Agent promptly of any change of address for the purpose
of service of process. Notwithstanding anything herein to the contrary, the
Lenders may bring any legal action or proceeding in any other appropriate
jurisdiction.

16.3 Waiver of Immunity. To the extent that any of the security parties has or
hereafter may acquire any immunity from suit, jurisdiction of

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any court or any legal process (whether through attachment prior to judgment,
attachment in aid of execution, execution of a judgment, or from any other legal
process or remedy) with respect to itself or its property, each of the security
parties hereby irrevocably waives such immunity in respect of its obligations
under this agreement or any other transaction document.

16.4 Waiver of Jury Trial. It is mutually agreed by and among each of the
security parties and each of the creditors that each of them hereby waives trial
by jury in any action, proceeding or counterclaim brought by any party hereto
against any other party hereto on any matter whatsoever arising out of or in any
way connected with this agreement or the other transaction documents.

17.THE AGENTS

17.1Appointment of Facility Agent. Each of the Lenders irrevocably appoints and
authorizes the

Facility Agent to take such action as facility agent on its behalf and to
exercise such powers under this Agreement, the Note and the other Transaction
Documents as are delegated to the Facility Agent by the terms hereof and
thereof. Neither the Facility Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under this Agreement, the Note or the other Transaction Documents
or in connection therewith, except for its or their own gross negligence or
willful misconduct.

17.2Appointment of Security Trustee. Each of the Lenders irrevocably appoints,
designates and

authorizes the Security Trustee to act as security trustee on its behalf with
regard to (i) the security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Lenders or any of them
or for the benefit thereof under or pursuant to this Agreement or any of the
other Transaction Documents (including, without limitation, the benefit of all
covenants, undertakings, representations, warranties and obligations given, made
or undertaken to any Lender in the Agreement or the other Transaction
Documents), (ii) all moneys, property and other assets paid or transferred to or
vested in any Lender or any agent thereof or received or recovered by any Lender
or any agent thereof pursuant to, or in connection with, this Agreement or the
other Transaction Documents whether from any Security Party or any other person
and (iii) all money, investments, property and other assets at any time
representing or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any Lender or any
agent thereof in respect of the same (or any part thereof). The Security Trustee
hereby accepts such appointment but shall have no obligations under this
Agreement, under the Note or under any of the other Transaction Documents except
those expressly set forth herein and therein. Neither the Security Trustee nor
any of its directors, officers, employees or agents shall be liable for any
action taken or omitted to be taken by it or them under this Agreement, the Note
or the other Transaction Documents or in connection therewith, except for its or
their own gross negligence or willful misconduct.

17.3Distribution of Payments. Whenever any payment is received by the Facility
Agent or the

Security Trustee from the Borrower or the Guarantor for the account of the
Lenders, or any of them, whether of principal or interest on the Note,
commissions, fees under Section 15 or otherwise, it will thereafter cause to be
distributed on the day of receipt if received before 10:00 a.m. New York time,
or on the day after receipt if received thereafter, like funds relating to such
payment ratably to the Lenders according to their respective Commitments, in
each case to be applied according to the terms of this Agreement. Unless the
Facility Agent or the Security Trustee, as the case may be, shall have received
notice from the Borrower prior to the date when any payment is due hereunder
that the Borrower will not make any payment on such date, the Facility Agent or
the Security Trustee may assume that the Borrower have made such payment to the
Facility Agent or the Security Trustee, as the case may be, on the relevant date
and the Facility Agent or the Security Trustee may, in reliance upon such
assumption, make available to the Lenders on such date a

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corresponding amount relating to such payment ratably to the Lenders according
to their respective Commitments. If and to the extent that the Borrower shall
not have so made such payment available to the Facility Agent or the Security
Trustee, as the case may be, the Lenders and the Borrower (but without
duplication) severally agree to repay to the Facility Agent or the Security
Trustee, as the case may be, forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Lenders until the date such amount is repaid to the Facility
Agent or the Security Trustee, as the case may be, as calculated by the Facility
Agent or Security Trustee to reflect its cost of funds.

17.4Holder of Interest in Note. The Agents may treat each Lender as the holder
of all of the

interest of such Lender in the Note.

17.5No Duty to Examine, Etc. The Agents shall not be under a duty to examine or
pass upon the

validity, effectiveness or genuineness of any of this Agreement, the other
Transaction Documents or any instrument, document or communication furnished
pursuant to this Agreement or in connection therewith or in connection with any
other Transaction Document, and the Agents shall be entitled to assume that the
same are valid, effective and genuine, have been signed or sent by the proper
parties and are what they purport to be.

17.6Agents as Lenders. With respect to that portion of the Facility made
available by it, each

Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not an Agent, and the term "Lender" or
"Lenders" shall include any Agent in its capacity as a Lender. Each Agent and
its affiliates may accept deposits from, lend money to and generally engage in
any kind of business with, the Borrower and the Guarantor as if it were not an
Agent.

17.7Acts of the Agents. Each Agent shall have duties and discretion, and shall
act as follows:

(a) Obligations of the Agents. The obligations of each Agent under this
Agreement, the Note and the other Transaction Documents are only those expressly
set forth herein and therein;

(b) No Duty to Investigate. No Agent shall at any time, unless requested to do
so by a Lender or Lenders, be under any duty to enquire whether an Event of
Default, or an event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred or to investigate the
performance of this Agreement, the Note or any Transaction Document by any
Security Party; and

(c) Discretion of the Agents. Each Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement
and the other Transaction Documents, unless the Facility Agent shall have been
instructed by the Majority Lenders to exercise such rights or to take or refrain
from taking such action; provided, however, that no Agent shall be required to
take any action which exposes it to personal liability or which is contrary to
this Agreement or applicable law;

(d) Instructions of Majority Lenders. Each Agent shall in all cases be fully
protected in acting or refraining from acting under this Agreement or under any
other Transaction Document in accordance with the instructions of the Majority
Lenders, and any action taken or failure to act pursuant to such instructions
shall be binding on all of the Lenders.

17.8Certain Amendments. Neither this Agreement, the Note nor any of the other
Transaction

Documents nor any terms hereof or thereof may be amended unless such amendment
is approved by the Borrower and the Majority Lenders, provided that no such
amendment shall, without the consent of each Lender affected thereby, (i) reduce
the interest rate or extend the time of payment of scheduled principal

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payments or interest or fees on the Facility, or reduce the principal amount of
the Facility or any fees hereunder, (ii) increase or decrease the Commitment of
any Lender or subject any Lender to any additional obligation (it being
understood that a waiver of any Event of Default or any mandatory repayment of
the Facility shall not constitute a change in the terms of any Commitment of any
Lender), (iii) amend, modify or waive any provision of this Section 17.8, (iv)
amend the definition of Majority Lenders or any other definition referred to in
this Section 17.8, (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement, (vi) release any
Security Party from any of its obligations under any other Transaction Document
except as expressly provided herein or in such other Transaction Document, or
(vii) amend any provision relating to the maintenance of collateral under
Section 9.4. All amendments approved by the Majority Lenders under this Section
17.8 must be in writing and signed by the Borrower and each of the Lenders. In
the event that any Lender is unable to or refuses to sign an amendment approved
by the Majority Lenders hereunder, such Lender hereby appoints the Facility
Agent as its Attorney-in-Fact for the purposes of signing such amendment. No
provision of this Section 17 or any other provisions relating to the Facility
Agent may be modified without the consent of the Facility Agent.

17.9Assumption regarding Event of Default. Except as otherwise provided in
Section 17.15, the

Facility Agent and the Security Trustee shall be entitled to assume that no
Event of Default, or event which with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and is continuing,
unless it has been notified by any Security Party of such fact, or has been
notified by a Lender that such Lender considers that an Event of Default or such
an event (specifying in detail the nature thereof) has occurred and is
continuing. In the event that either thereof shall have been notified by any
Security Party or any Lender in the manner set forth in the preceding sentence
of any Event of Default or of an event which with the giving of notice or lapse
of time, or both, would constitute an Event of Default, the Facility Agent shall
notify the Lenders and shall take action and assert such rights under this
Agreement, under the Note and under other Transaction Documents as the Majority
Lenders shall request in writing.

17.10 Limitations of Liability. No Agent or Lender shall be under any liability
or responsibility whatsoever:

(1) to any Security Party or any other person or entity as a consequence of any
failure or delay in performance by, or any breach by, any other Lenders or any
other person of any of its or their obligations under this Agreement or under
any Transaction Document;

(2) to any Lender or Lenders as a consequence of any failure or delay in
performance by, or any breach by, any Security Party of any of its respective
obligations under this Agreement or under the other Transaction Documents; or

(3) to any Lender or Lenders for any statements, representations or warranties
contained in this Agreement, in any Transaction Document or in any document or
instrument delivered in connection with the transaction hereby contemplated; or
for the validity, effectiveness, enforceability or sufficiency of this
Agreement, any other Transaction Document or any document or instrument
delivered in connection with the transactions hereby contemplated.

17.11 Indemnification of the Facility Agent and Security Trustee. The Lenders
agree to indemnify each Agent (to the extent not reimbursed by the Security
Parties or any thereof), pro rata according to the respective amounts of their
Commitments, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including legal fees and expenses incurred in
investigating claims and defending itself against such liabilities) which may be
imposed on, incurred by or asserted against, such Agent in any way relating to
or arising out of this Agreement or any other Transaction Document, any action
taken or omitted by such Agent thereunder or the preparation, administration,
amendment or enforcement of, or waiver of any provision of, this Agreement or
any other Transaction Document, except that no Lender shall be liable for

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any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of either such Agent.

17.12 Consultation with Counsel. Each of the Facility Agent and the Security
Trustee may consult with legal counsel selected by such Agent and shall not be
liable for any action taken, permitted or omitted by it in good faith in
accordance with the advice or opinion of such counsel.

17.13 Resignation. Any Agent may resign at any time by giving sixty (60) days'
written notice thereof to the other Agents, the Lenders and the Borrower. Upon
any such resignation, the Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Lenders and
shall have accepted such appointment within sixty (60) days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall be subject to
the prior written consent of the Borrower, such consent not to be unreasonably
withheld. After any retiring Agent's resignation as Agent hereunder, the
provisions of this Section 17 shall continue in effect for its benefit with
respect to any actions taken or omitted by it while acting as an Agent.

17.14 Representations of Lenders. Each Lender represents and warrants to each
other Lender and the Agents that:

(1) in making its decision to enter into this Agreement and to make its
Commitment available hereunder, it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Security Parties, that it has made an independent credit judgment and that it
has not relied upon any statement, representation or warranty by any other
Lender or any Agent; and

(2) so long as any portion of its Commitment remains outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Security Parties.

17.15 Notification of Event of Default. The Facility Agent hereby undertakes to
promptly notify the Lenders, and the Lenders hereby promptly undertake to notify
the Facility Agent and the other Lenders, of the existence of any Event of
Default which shall have occurred and be continuing of which such party has
actual knowledge.

17.16 Reversal of Redistribution. Each of the Lenders agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Transaction Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Facility, of a sum which with respect to the
related sum or sums received by other Lenders is in a greater proportion than
the total of such obligation then owed and due to such Lender bears to the total
of such obligation then owed and due to all of the Lenders immediately prior to
such receipt, then such Lender receiving such excess payment shall purchase for
cash without recourse or warranty from the other Lenders an interest in the
obligations of the respective Security Party to such Lenders in such amount as
shall result in a proportional participation by all the Lenders in such amount;
provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

17.17 Parallel Debt.

(a)The Borrower hereby irrevocably and unconditionally undertakes, as far
as necessary in advance, to pay to the Security Trustee, as creditor in its own
right and not as representative of any of the other Creditor, an amount equal to
the aggregate of all its Principal Obligations to all the Creditor

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Parties from time to time due in accordance with the terms and conditions of
such Principal Obligations (such payment undertaking and the obligations and
liabilities which are the result thereof, its "Parallel Debt").

(b) Each of the parties hereto hereby acknowledges that (i) the Parallel Debt of
the Borrower constitutes undertakings, obligations and liabilities of the
Borrower to the Security Trustee which are separate and independent from, and
without prejudice to, the Principal Obligations which the Borrower has to any
other Creditor and (ii) that the Parallel Debt represents the Security Trustee's
own claim to receive payment of such Parallel Debt by the Borrower, provided
that the total amount which may become due under the Parallel Debt of the
Borrower under this Section 17.17 shall never exceed the total amount which may
become due under all the Principal Obligations of the Borrower to all the
Creditor Parties.

The total amount due by the Borrower as the Parallel Debt under Section 17.17(a)
shall be decreased to the extent that the Borrower shall have paid any amounts
to the Creditor Parties or any of them to reduce the Borrower's outstanding
Principal Obligations or any Creditor otherwise receive any amount of such
Principal Obligations (other than by virtue of Section 17.17(b)(ii)); and

(ii)To the extent that the Borrower shall have paid any amounts to the Security
Trustee

under the Parallel Debt or the Security Trustee shall have otherwise received
monies in payment of such Parallel Debt, the total amount due under the
Principal Obligations shall be decreased by the same amount.

(c) In the event the Security Trustee should resign, the Security Trustee shall
assign the Parallel Debt owed to it to its successor security trustee together
with all of its other rights and obligations under this Section 17.17 and shall
take all such further actions as the Facility Agent in its sole discretion may
deem necessary or desirable in order to assign and transfer to the successor
security trustee the Parallel Debt and the other rights and obligations under
this Section 17.17.

18.NOTICES AND DEMANDS

18.1Notices. All notices, requests, demands and other communications to any
party hereunder

shall be in writing (including prepaid overnight courier, facsimile
transmission, electronic transmission or similar writing) and shall be given to
the Borrower or the Guarantor at the address, facsimile number or email address
set forth below and to the Lenders and the Agents at their address, facsimile
number or email address set forth in Schedule I or at such other address,
facsimile number or email address as such party may hereafter specify for the
purpose by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, on the date of
dispatch thereof (provided further that if the date of dispatch is not a Banking
Day in the locality of the party to whom such notice or demand is sent, it shall
be deemed to have been received on the next following Banking Day in such
locality), (ii) if by email or other electronic communication, upon the sender's
receipt of an acknowledgment from the intended recipient (such as by the "return
receipt requested" function, as available, return e-mail or other written
acknowledgment) or (iii) if given by mail, prepaid overnight courier or any
other means, when received at the address specified in this Section or when
delivery at such address is refused.

If to the Borrower or the Guarantor:

11 North Water Street, Suite 18290 Mobile, Alabama 36602

Facsimile No.: (251) 243-9121 Attention: Chief Financial Officer

With a copy to

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One Whitehall Street

New York, NY 10004

Facsimile No.: (212) 514-5692 Attention: Mr. Niels M. Johnsen

If to the Facility Agent or the Security Trustee:

DVB Bank SE

Park House

16-18 Finsbury Circus

London EC2M 7EB, United Kingdom

Attention: Peter Attridge

Department: Transaction and Loan Services

Email: tls.london@dvbbank.com 

Fax: +44 207 256 4352

with a copy to:

DVB TRANSPORT (US) LLC

609 Fifth Avenue, 5th Floor

New York, New York 10017, USA

Facsimile: + 212 858 2664/+ 1 917 369 2196

Attention: Christoph Clauss / Matthew Galici

christoph.clauss@dvbbank.com / matthew.galicicr@vbbank.com

19.MISCELLANEOUS

19.1Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default,

each Agent and each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and otherwise apply any and all deposits (general or special,
time or demand, provisional or final) at any time held (including, but not
limited to, the Earnings Accounts) and other indebtedness at any time owing by
the Facility Agent, such Lender or such Affiliate to or for the credit or the
account of the Borrower or any other Security Party against any and all of the
Obligations of the Borrower or other Security Party now or hereafter existing
under the Transaction Documents, irrespective of whether the Facility Agent or
such Lender shall have made any demand under this Agreement and although such
Obligations may be unmatured. The Facility Agent and each Lender agrees promptly
to notify the Borrower after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Facility Agent and each Lender
and their respective Affiliates under this Section 19.1 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that the Facility Agent, such Lender and their respective Affiliates may have.
Notwithstanding anything to the contrary set forth in Section 17 or elsewhere
herein, the Facility Agent may not discriminate against the Lenders generally in
favor of its own interests when exercising setoff rights against amounts
received from any Security Party hereunder, including any amount in any Earnings
Account or Retention Account.

19.2Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the

part of any Creditor to exercise any power or right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise by any
Creditor of any power or right hereunder preclude any other or further exercise
thereof or the exercise of any other power or right. The remedies provided
herein are cumulative and are not exclusive of any remedies provided by law.

 

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19.3Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained

in this Agreement or in the other Transaction Documents would, if given effect,
be invalid, illegal or unenforceable in any respect under any law applicable in
any relevant jurisdiction, said provision shall not be enforceable against the
relevant Security Party, but the validity, legality and enforceability of the
remaining provisions herein or therein contained shall not in any way be
affected or impaired thereby.

19.4References. References herein to Articles, Sections, Exhibits and Schedules
are to be

construed as references to articles, sections of, exhibits to, and schedules to,
this Agreement or the other Transaction Documents as applicable, unless the
context otherwise requires.

19.5Further Assurances. Each of the Security Parties hereby agrees that if this
Agreement or any

of the other Transaction Documents shall, in the reasonable opinion of the
Lenders, at any time be deemed by the Lenders for any reason insufficient in
whole or in part to carry out the true intent and spirit hereof or thereof, it
will execute or cause to be executed such other and further assurances and
documents as in the opinion of the Lenders may be required in order to more
effectively accomplish the purposes of this Agreement and/or the other
Transaction Documents.

19.6Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore

entered into between the Security Parties on the one part, and the Creditors, on
the other part, relating to the transactions contemplated hereby, whether
written or oral, are superseded by and merged into this Agreement and the other
agreements (the forms of which are exhibited hereto) to be executed and
delivered in connection herewith to which the Security Parties, the Agent, the
Security Trustee and/or the Lenders are parties, which alone fully and
completely express the agreements between the Security Parties, the Agents, and
the Lenders.

19.7Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the

parties hereto including all parties added hereto pursuant to an Assignment and
Assumption Agreement. Subject to Section 17.8, any provision of this Agreement
or any other Transaction Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower, the Agents, and
the Majority Lenders. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.

19.8Indemnification. Neither any Creditor nor any of its directors, officers,
agents or employees

shall be liable to any of the Security Parties for any action taken or not taken
thereby in connection herewith in the absence of its own gross negligence or
willful misconduct. Each of the Borrower and the Guarantor hereby jointly and
severally agree to indemnify the Creditors, their respective affiliates and the
respective directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities (including without limitation all such liabilities arising out of
(x) Environmental Claims, (y) business conducted by any of the Security Parties
in a Sanctioned Country or with a Blocked Person in violation of Sanctions, at
all times subject to applicable law and the Security Parties' continued
cooperation with OFAC or any other governmental entity, to the extent necessary
and (z) any electronic communication purporting to have originated from any of
the Security Parties to any Lender without proper authorization), losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of this Agreement, any actual
or proposed use of proceeds of the Facility hereunder, or any related
transaction or claim; provided that (i) no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by final judgment by a court of competent jurisdiction
and (ii) to the extent permitted by law, the Indemnitee shall provide the
Security Parties with prompt notice of any such investigative, administrative or
judicial proceeding after the Indemnitee becomes aware of such proceeding;
provided, however, that the Indemnitee's failure to provide such notice in a
timely manner shall not relieve

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the Security Parties of their obligations hereunder. Each of the Borrower and
the Guarantor agrees to, and shall, indemnify and hold each of the Creditors
harmless against any loss, as well as against any reasonable costs or expenses
(including reasonable legal fees and expenses), which any of the Creditors
sustains or incurs as a consequence of any default in payment of the principal
amount of the Facility, interest accrued thereon or any other amount payable
hereunder, under the Note or under the other Transaction Documents including,
but not limited to, all actual losses incurred in liquidating or re-employing
fixed deposits made by third parties or funds acquired to effect or maintain the
Facility or any portion thereof. Any Creditor's certification of such costs and
expenses shall, absent any manifest error, be conclusive and binding on the
Borrower.

19.9 USA PATRIOT Act Notice; OFAC and Bank Secrecy Act. The Facility Agent
hereby notifies each of the Security Parties that pursuant to the requirements
of the USA PATRIOT Act (Title III of Pub. L. 107-56, signed into law October 26,
2001) (the "PATRIOT Act"), and the policies and practices of the Facility Agent,
each of the Creditors is required to obtain, verify and record certain
information and documentation that identifies each of the Security Parties,
which information includes the name and address of each of the Security Parties
and such other information that will allow the Creditors to identify each of the
Security Parties in accordance with the Patriot Act. In addition, each of the
Security Parties shall: (a) ensure that no Person who owns a controlling
interest in or otherwise controls any of the Security Parties or any subsidiary
of any thereof is or shall be listed on the Specially Designated Nationals and
Blocked Person List or other similar lists maintained by the Office of Foreign
Assets Control ("OFAC"), the Department of the Treasury or included in any
Executive Orders; (b) not use or permit the use of the proceeds of the Facility
to violate any of the foreign asset control regulations of OFAC or any enabling
statute or Executive Order relating thereto; and (c) comply, and cause any of
its subsidiaries to comply, with all applicable Bank Secrecy Act laws and
regulations, as amended.

19.10 Remedies Cumulative and Not Exclusive; No Waiver. Each and every right,
power and remedy herein given to the Facility Agent shall be cumulative and
shall be in addition to every other right, power and remedy of the Facility
Agent now or hereafter existing at law, in equity or by statute, and each and
every right, power and remedy, whether herein given or otherwise existing, may
be exercised from time to time, in whole or in part, and as often and in such
order as may be deemed expedient by the Facility Agent, and the exercise or the
beginning of the exercise of any right, power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No failure, delay or omission by the Facility Agent or
any of the Creditors in the exercise of any right or power or in the pursuance
of any remedy accruing upon any breach or default by the Borrower or any
Security Party shall impair any such right, power or remedy or be construed to
be a waiver of any such right, power or remedy or to be an acquiescence therein;
nor shall the acceptance by the Facility Agent or any of the Creditors of any
security or of any payment of or on account of any of the amounts due from the
Borrower or any Security Party to the Facility Agent and maturing after any
breach or default or of any payment on account of any past breach or default be
construed to be a waiver of any right with respect to any future breach or
default or of any past breach or default not completely cured thereby. In
addition to the rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to any of the
Security Parties' obligations, the Facility Agent shall have rights and remedies
of a secured party under the Uniform Commercial Code.

19.11 Counterparts; Electronic Delivery. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument. Delivery of
an executed counterpart of this Agreement by facsimile or electronic
transmission shall be deemed as effective as delivery of an originally executed
counterpart. In the event that any of the Security Parties deliver an executed
counterpart of this Agreement by facsimile or electronic transmission, such
Security Parties shall also deliver an originally executed counterpart as soon
as practicable, but the failure of such Security Parties to deliver an
originally executed counterpart of this Agreement shall not affect the validity
or effectiveness of this Agreement.

 

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19.12 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.

19.13 Disclosure. Each of the Security Parties irrevocably authorizes the
Creditors to give,

divulge and reveal from time to time information and details relating to its
Accounts, any Vessel, the Facility, this Agreement, the Note, the other
Transaction Documents, the Commitments, any agreement entered into by any of the
Security Parties in connection with this Agreement, the Note or the other
Transaction Documents and any other information provided by any of the Security
Parties to any of the Creditors in connection with this Agreement, the Note or
the other Transaction Documents (unless such information and details have been
expressly communicated to the Creditors to be material non-public information
(except in the case where such disclosure is compelled by applicable law)) to
(i) any regulatory or self-regulatory authorities (including any stock
exchanges) or public or internationally recognized authorities, (ii) the head
offices, branches, affiliates and professional advisers of any of the Creditors,
(iii) any other parties to this Agreement, the Note or the other Transaction
Documents and any parties to any agreement entered into by any of the Security
Parties in connection therewith, (iv) any rating agencies and their professional
advisers, (v) any Person with whom any of the Security Parties propose to enter
(or contemplate entering) into contractual relations in relation to the Facility
or the Commitments; and (vi) any other Person (including any transferee or
potential transferee of the Facility) in connection with the funding,
refinancing, transfer, assignment, sale, sub-participation or operational
arrangement or other transaction in relation thereto, including, but not limited
to, any enforcement, preservation, assignment, transfer, sale or
sub-participation of any of the rights and/or obligations of any of the
Creditors.

19.14 Pari Passu Intercreditor Agreement. The terms of this Agreement and the
other Transaction Documents are subject to the terms of the Pari Passu
Intercreditor Agreement. Where a conflict exists between this Agreement and the
Intercreditor Agreement, the lntercreditor Agreement shall govern. The Creditors
hereby authorize the Facility Agent and the Security Trustee to enter into the
Pari Passu Intercreditor Agreement and any necessary amendment, modification or
termination thereof.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the day and year first
above written.

WATERMAN STEAMSHIP CORPORATION, as Borrower

By:___________________________________________________________________________________________

Name:

Title:

INTERNATIONAL SHIPHOLDING CORPORATION, as Guarantor

By:___________________________________________________________________________________________

Name:

Title:

DVB BANK SE

as Mandated Lead Arranger, Facility Agent, Security Trustee and Lender

By:_________________________________________________________________________________________________

Name:

Title:

By:_________________________________________________________________________________________________

Name:

Title:

 

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SCHEDULE I

LENDERSCOMMITMENT

DVB Bank SE$38,500,000

Park House

16-18 Finsbury Circus

London EC2M 7EB, United Kingdom

Attention: Peter Attridge

Department: Transaction and Loan Services

Email: tls.london@dvbbank.com 

Fax: +44 207 256 4352

with a copy to:

DVB TRANSPORT (US) LLC

609 Fifth Avenue, 5th Floor

New York, New York 10017, USA

Facsimile: + 212 858 2664

Attention: Christoph Clauss

Email: christoph.clauss@dvbbank.com 

 

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SCHEDULE II

 

APPROVED SHIP BROKERS

 

R.S. Platou Shipbrokers a.s. Haakon VII's gate 10

Oslo, Norway

Telephone No.: +47 23 11 20 00 Facsimile No.: +47 23 11 23 11

Fearnleys A/S

Grey Wedels plass 9

Oslo, Norway

Telephone No.: +47 22 93 60 00

Facsimile No.: +47 22 93 61 50

H. Clarkson & Company

12 Camomile Street

London EC3A 7BP

England

Telephone No.: +44 207 334 0000

Facsimile No.: +44 207 283 5260

Braemar Shipbrokers Ltd.

35 Cosway Street

London NW1 5BT

England

Telephone No.: +44 207 535 2600

Facsimile No.: +44 207 535 2601

Jacq. Pierot Jr. & Sons, Inc. (USA) 29 Broadway

New York, NY 10006

Telephone No.: (212) 344 3840 Facsimile No.: (212) 943 6598

Barry Rogliano Salles (BRS)

11, boulevard Jean Mermoz

92200 Neuilly-sur-Seine

France

Telephone No.: +33 (0)1 41 92 12 34

Hesnes Shipping AS PO Box 104 Borgheim 3163 Notteroy

Norway

 

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SCHEDULE III

Security Party Liens as of the Closing Date

International Shipholding Corporation

Assignment in favor of JPMorgan Chase Bank of a Deposit Account holding
$6,000,000 to secure the TECO Letter of Credit required under the contract
between U.S. United Ocean Services, LLC and TECO.

Multiple Indebtedness Mortgage, Assignment of Leases and Rents and Security
Agreement in favor of Regions Bank on real estate located at 864-70 South Peters
Street, New Orleans, LA.

International Shipholding Corporation and Waterman Steamship Corporation

Security Agreement covering various collateral in favor of Regions Bank in
connection with the Credit Agreement providing revolving and term loan
facilities up to a maximum amount of $145,000,000

 

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SCHEDULE IV

Security Party Indebtedness as of the Closing Date International Shipholding
Corporation

Guarantee of indebtedness of East Gulf Shipholding, Inc. in the amount of
Japanese Yen 3,140,556,031.00 to DNB Bank ASA, which indebtedness has a maturity
date of September 15, 2020.

Guarantee of indebtedness of East Gulf Shipholding, Inc. in the amount of
$42,319,999.86 to ING Bank N.V., which indebtedness has a maturity date of
January 24, 2018.

Guarantee of indebtedness of Dry Bulk Australia Ltd. and Dry Bulk Americas Ltd.
in the amount of $28,194,523.78 to ING Bank N.V., which indebtedness has a
maturity date of June 20, 2018.

Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of
$23,040,000.00 to RBS Asset Finance, lnc, which indebtedness has a maturity date
of August 29, 2021.

Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of
$10,076,785.80 to Capital One N.A. which indebtedness has a maturity date of
January 1, 2017.

Guarantee of indebtedness of Oslo Bulk 6 Pte Ltd in the amount of $1,000,000.00
to Pareto Bank ASA which has a maturity date of January 2023 dependent upon
vessel delivery date.

Indebtedness to Regions Bank of up to $10,000,000 secured by real estate located
at 864-70 South Peters Street, New Orleans, LA.

International Shipholding Corporation and Waterman Steamship Corporation

Secured Indebtedness of up to $145,000,000 under a Credit Agreement dated
September 23, 2013, between International Shipholding Corporation, Enterprise
Ship Company, Inc, Sulphur Carriers, Inc, CG Railway, Inc, Central Gulf Lines,
Inc, Coastal Carriers, Inc, Waterman Steamship Corporation, Inc, N.W. Johnsen &
Co., Inc, LMS Ship Management, Inc, U.S. united Ocean Services, LLC, Mary Ann
Hudson, LLC, Sheila McDevitt, LLC, Tower, LLC, and Frascati Shops, Inc, as
borrowers, and Regions Bank, among others, as Administrative Agent and
Collateral Agent.

 

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SCHEDULE V

Initial Charter Party Agreement

Vessel

Charterer

Start Date

End Date

Charter Rate (US Flag)

Charter Rate (International Flag)

GREEN BAY

Nippon Yusen Kaisha

June 24, 2010

July 9, 2016

$19, 250 per day

$17,500 per day

 

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EXHIBIT B

PREFERRED MORTGAGE
on the

Marshall Islands Flag Vessel
GLOVIS COUNTESS

EAST GULF SHIPHOLDING, INC.,
as Owner

TO

DVB BANK SE,
as Mortgagee

Dated as of April_____________________________________, 2015

 

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THIS PREFERRED MORTGAGE (this "Mortgage") is made and given as of
the_____________________________________

day of April, 2015 by EAST GULF SHIPHOLDING, [NC., a corporation existing under
the laws of the Republic of the Marshall Islands, with its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH 96960 (the "Owner") in favor of DVB BANK SE, a banking corporation organized
under the laws of the Federal Republic of Germany ("DVB") with offices at Platz
der Republik 6, D-60325 Frankfurt am Main, Germany, as security trustee
(hereinafter, in such capacity, called the "Mortgagee") for the Lenders (as such
term is defined in the Credit Agreement (as hereinafter defined), pursuant to
the terms of the Credit Agreement.

WHEREAS:

A. The Owner is the sole owner of the whole of the vessel GLOVIS COUNTESS
Official No. 3831, of 60,213 gross tons, 18,573 net tons, built in 2010 (the
"Vessel"); and registered and documented in the name of the Owner under the laws
and flag of the Republic of the Marshall Islands.

B. Pursuant to a credit agreement dated as of August 26, 2014 (as amended,
supplemented or otherwise modified from time to time, including by Amendment No.
1 dated October 28, 2014, Amendment No. 2 dated November 24, 2014, the LCI
Assignment and Assumption Agreement (as defined below) dated December 29, 2014,
Amendment No. 3 dated March 30, 2015, Amendment No. 4 dated April [ 1, 2015 and
the EGS Assignment and Assumption Agreement (as defined below), the "Credit
Agreement", a copy of the form of the Credit Agreement, without schedules or
exhibits other than Schedule I is annexed hereto as Exhibit A), made by and
among (1) the Owner, as borrower, (2) INTERNATIONAL SHIPHOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, as
guarantor (the "Guarantor"), (3) the banks and financial institutions listed on
Schedule I thereto, as lenders (together with any bank or financial institution
which becomes a Lender pursuant to Section 12 of the Credit Agreement, the
"Lenders" and each a "Lender"), (4) DVB, as facility agent for the Lenders, (in
such capacity, the "Facility Agent") and as security trustee for the Lenders (in
such capacity, the "Security Trustee") and (5) DVB, as mandated lead arranger
(together with the Lenders, the Facility Agent and the Security Trustee, the
"Creditors"), the Security Trustee has agreed to serve in such capacity under
the Credit Agreement and the Lenders have provided to Waterman a secured term
loan in the amount of up to Thirty Eight Million Five Hundred Thousand Dollars
($38,500,000) (the "Loan").

C. Pursuant to an omnibus assignment, assumption and amendment agreement, dated
December 29, 2014 (the "LCI Assignment and Assumption Agreement"), among LCI
SHIPHOLDINGS, INC., a corporation existing under the laws of the Republic of the
Marshall Islands ("LCI"), the Guarantor, WATERMAN STEAMSHIP CORPORATION, a
corporation organized and existing under the laws of the State of New York
("Waterman"), the original borrower under the Credit Agreement, and the
Creditors, Waterman assigned to LCI all of its right, title, interest, and
obligations in, to and under the Transaction Documents (as defined in the Credit
Agreement) including, inter alia, the transfer of all the Collateral (as defined
in the Credit Agreement) to LCI and whereby LCI was deemed to be the borrower
for all purposes under the Credit Agreement.

 

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D. Pursuant to an omnibus assignment, assumption and amendment

agreement, dated April , 2015 (the "EGS Assignment and Assumption Agreement", a
copy
of the form of the EGS Assignment and Assumption Agreement is annexed hereto as
Exhibit B), among the Guarantor, LCI, the Owner and the Creditors, LCI assigned
to the Owner all of its right, title, interest, and obligations in, to and under
the Transaction Documents (as defined in the Credit Agreement) including, inter
alia, the transfer of all the Collateral (as defined in the Credit Agreement) to
the Owner and whereby the Owner is deemed to be the borrower for all purposes
under the Credit Agreement.

E. The obligation of the Owner to repay the Loan under the Credit

Agreement is evidenced by a promissory note dated April , 2015, from the Owner,
to the
order of the Facility Agent (the "Note"), a copy of the form of the Note being
attached hereto as Exhibit C. The Loan, and interest, fees and commissions
thereon are to be repaid or paid, as the case may be, as provided in the Credit
Agreement. Unless otherwise defined herein, terms defined in the Credit
Agreement shall have the same meaning when used herein.

F. Pursuant to Section 9.5 of the Credit Agreement, the Owner has effectuated
the Borrower Restructuring.

G. Pursuant to Section 17 of the Credit Agreement, the Lenders have appointed
the Mortgagee as facility agent and security trustee on their behalf with regard
to, inter alia, the security conferred on such Lenders pursuant to the terms of
the Credit Agreement, the Note and the Transaction Documents.

H. The Owner, in order to secure the payment of the Obligations, as that term is
defined in subsection 1(A)(v) hereof, and to secure the performance and
observance of and compliance with all the covenants, terms and conditions in the
Credit Agreement and in this Mortgage contained, expressed or implied, to be
performed, observed and complied with by and on the part of the Owner, has duly
authorized the execution and delivery of this Preferred Mortgage under and
pursuant to the Maritime Law.

NOW, THEREFORE, THIS MORTGAGE WITNESSETH:

1.Definitions: In this Mortgage, unless the context otherwise requires:

(A)(i)"Classification Society" when used herein shall have the same meaning as

in the Credit Agreement;

(ii)"Earnings" includes all moneys whatsoever which are now, or later

become, payable (actually or contingently) to the Owner or the Security Trustee
(net of charter commissions payable in respect of the Vessel) and which arise
out of the use or operation of the Vessel, including (but not limited to): (a)
except to the extent that they fall within paragraph (b) (1) all freight, hire
and passage moneys, (2) compensation payable in event

 

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of requisition of the Vessel for hire, (3) remuneration for salvage and towage
services, (4) demurrage and detention moneys, (5) damages for breach (or
payments for variation or termination) of any charterparty or other contract for
the employment of the Vessel, (6) all moneys which are at any time payable under
Insurances in respect of loss of hire and, (b) if and whenever, with the consent
of the Mortgagee, the Vessel is employed on terms whereby any moneys falling
within (1) to (6) above are pooled or shared with any other Person, that
proportion of the net receipts of the relevant pooling or sharing arrangement
which is attributable to the Vessel;

(iii)

"Insurances" includes all policies and contracts of insurance and all entries of
the Vessel in a protection and indemnity or war risks association or club which
are from time to time taken out or entered into pursuant to this Mortgage in
respect of the Vessel and its Earnings or otherwise howsoever in connection with
the Vessel;

(iv)

"Intercreditor Agreement" means that certain Pari Passu Intercreditor Agreement
to be entered into by the Owner, the Guarantor and DVB in its capacity as (i)
facility agent under the Credit Agreement and (ii) facility agent under that
certain credit agreement entered into by and among (1) the Owner, as borrower,
(2) International Shipholding Corporation, as guarantor, (3) the banks and
financial institutions listed on Schedule I thereto, as lenders (4) DVB, as
facility agent and security trustee for the lenders and (5) DVB, as mandated
lead arranger, dated as of April [ 1, 2015.

(v)

"Maritime Law" means Chapter 3 of the Maritime Act 1990 of the Republic of the
Marshall Islands;

(vi)

"Obligations" means the obligations of the Owner or the Guarantor under or in
connection with the Credit Agreement, the Note, this Mortgage, any other
Security Document and any Transaction Documents, including but not limited to
the obligations to repay the Loan when due;

(vii)

"Person" when used herein shall have the same meaning as in the Credit
Agreement;

(viii)

"Requisition Compensation" means all moneys or other compensation payable and
belonging to the Owner during the Security Period by reason of requisition for
title or other compulsory acquisition of the Vessel or otherwise than by
requisition for hire;

(ix)

"Security Documents" when used herein shall have the same meaning as in the
Credit Agreement;

 

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(x)"Security Period" means the period commencing on the date hereof and

terminating upon discharge of the security created by this Mortgage by
indefeasible payment in full of all of the Obligations;

(xi) "Total Loss" means:

(a)

actual, constructive or compromised or arranged total loss of the Vessel;

(b)

requisition for title or other compulsory acquisition of the Vessel (otherwise
than by requisition for hire) which shall continue for fourteen (14) days; or

(c)

capture, seizure, arrest, detention or confiscation of the Vessel by any
government or by Persons acting or purporting to act on behalf of any government
unless the Vessel be released and restored to the Owner from such capture,
seizure, arrest, detention or confiscation within fourteen (14) days after the
occurrence thereof; and

(xii) "Vessel" means the whole of the vessel described in Recital A hereof and
includes its engines, machinery, boats, boilers, masts, rigging, anchors,
chains, cables, apparel, tackle, outfit, spare gear, fuel, consumable or other
stores, freights, belongings and appurtenances, whether on board or ashore,
whether now owned or hereafter acquired, and all additions, improvements and
replacements hereafter made in or to said vessel, or any part thereof, or in or
to the stores, belongings and appurtenances aforesaid except such equipment or
stores which, when placed aboard said vessel, do not become the property of the
Owner.

(B)In Section 5(B) hereof:

(i)

"excess risks" means the proportion of claims for general average and salvage
charges and under the ordinary running-down clause not recoverable in
consequence of the value at which a vessel is assessed for the purpose of such
claims exceeding her insured value;

(ii)

"protection and indemnity risks" means the usual risks covered by a United
States or an English or another protection and indemnity association or club
acceptable to the Mortgagee including the proportion not recoverable in case of
collision under the ordinary running-down clause; and

(iii)

"war risks" means the risk of mines and all risks excluded from the standard
form of United States marine policy by the War, Strikes and Related Exclusion
Clause.

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(C)This Mortgage shall be read together with the Credit Agreement but in case of
any

conflict between the two, the provisions of the Credit Agreement shall prevail.

2.Grant of Mortgage; Representations and Warranties.

2.1In consideration of the premises and of other good and valuable

consideration, the receipt and adequacy whereof are hereby acknowledged, and in
order to secure the payment of the Obligations and to secure the performance and
observance of and compliance with the covenants, terms and conditions in the
Credit Agreement, the Note, this Mortgage, the other Security Documents and the
other Transaction Documents contained, the Owner has granted, conveyed and
mortgaged and does by these presents grant, convey and mortgage to and in favor
of the Mortgagee, its successors and assigns, the whole of the Vessel TO HAVE
AND TO HOLD the same unto the Mortgagee, its successors and assigns, forever,
upon the terms set forth in this Mortgage for the enforcement of the payment of
the Obligations and to secure the performance and observance of and compliance
with the covenants, terms and conditions in this Mortgage, the Credit Agreement,
the Note, the other Security Documents and the other Transaction Documents
contained;

PROVIDED, ONLY, and the conditions of these presents are such that, if the Owner
and/or its successors or assigns shall pay or cause to be paid to the Lenders,
their respective successors and assigns, the Obligations as and when the same
shall become due and payable in accordance with the terms of this Mortgage, the
Credit Agreement, the Note and the other Transaction Documents and shall
perform, observe and comply with all and singular of the covenants, terms and
conditions in this Mortgage, the Credit Agreement, the Note and the other
Transaction Documents contained, expressed or implied, to be performed, observed
or complied with by and on the part of the Owner or its successors or assigns,
all without delay or fraud and according to the true intent and meaning hereof
and thereof, then, these presents and the rights of the Mortgagee under this
Mortgage shall cease and determine and, in such event, the Mortgagee agrees by
accepting this Mortgage, at the expense of the Owner, to execute all such
documents as the Owner may reasonably require to discharge this Mortgage under
the laws of the Republic of the Marshall Islands; otherwise to be and remain in
full force and effect.

2.2 The Owner hereby represents and warrants to the Mortgagee that:

(A) the Owner is a corporation duly domesticated, validly existing and in good
standing under the laws of the Republic of the Marshall Islands qualified to own
and register the Vessel under the Marshall Islands flag;

(B) the Owner lawfully owns the whole of the Vessel free from any security
interest, debt, lien, mortgage, charge, encumbrance or other adverse interest,
other than the encumbrance of this Mortgage and except as permitted by Section
5(N) hereof; and

(C) the Vessel is tight, staunch and strong and well and sufficiently tackled,
appareled, furnished and equipped and in all respects seaworthy.

 

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3. Payment of Obligations. The Owner hereby further covenants and agrees to pay
the Obligations when due to the Mortgagee or its successors or assigns.

4. Covenants Regarding Security Granted Hereunder. It is declared and agreed
that:

(A) The security created by this Mortgage shall be held by the Mortgagee as a
continuing security for the payment of the Obligations and that the security so
created shall not be satisfied by any intermediate payment or satisfaction of
any part of the amount hereby secured.

(B) Any settlement or discharge under this Mortgage between the Mortgagee and
the Owner shall be conditional upon no security or payment to the Mortgagee or
the Lenders, related to or which reduces the obligations secured hereby, by the
Owner or any other Person being avoided or set-aside or ordered to be refunded
or reduced by virtue of any provision or enactment relating to bankruptcy,
insolvency or liquidation for the time being in force, and if such condition is
not satisfied, the Mortgagee shall be entitled to recover from the Owner on
demand the value of such security or the amount of any such payment as if such
settlement or discharge had not occurred.

(C) The rights of the Mortgagee under this Mortgage and the security hereby
constituted shall not be affected by any act, omission, matter or thing which,
but for this provision, might operate to impair, affect or discharge such rights
and security, including without limitation, and whether or not known to or
discoverable by the Owner, the Mortgagee or any other Person:

(i) any time or waiver granted to, or composition with, the Owner or any other
Person; or

(ii) the taking, variation, compromise, renewal or release of or refusal or
neglect to perfect or enforce any rights, remedies or securities against the
Owner or any other Person; or

(iii) any legal limitation, disability, dissolution, incapacity or other
circumstances relating to the Owner or any other Person; or

(iv) any amendment or supplement to the Credit Agreement, the Note, any of the
Security Documents or the other Transaction Documents; or

(v) the unenforceability, invalidity or frustration of any obligations of the
Owner or any other Person under the Credit Agreement, the Note, any of the
Security Documents or the other Transaction Documents.

(D) The Owner acknowledges and agrees that it has not received any security from
any Person for the granting of this Mortgage and it will not take any such
security without

 

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the prior written consent of the Mortgagee, and the Owner will hold any security
taken in breach of this provision in trust for the Mortgagee.

(E) Until the Obligations have been unconditionally and irrevocably paid and
discharged in full to the satisfaction of the Mortgagee, the Owner shall not by
virtue of any payment made under the Credit Agreement, the Note or this Mortgage
on account of such moneys and liabilities or by virtue of any enforcement by the
Mortgagee of its right under or the security constituted by this Mortgage:

(i) be entitled to exercise any right of contribution from any co-surety liable
in respect of such moneys and liabilities under any other guarantee, security or
agreement; or

(ii) exercise any right of set-off or counterclaim against any such co-surety;
or

(iii) receive, claim or have the benefit of any payment, distribution, security
or indemnity from any such co-surety; or

(iv) unless so directed by the Mortgagee (which the Owner shall prove in
accordance with such directions), claim as a creditor of any such co-surety in
competition with the Mortgagee.

The Owner shall hold in trust for the Mortgagee and forthwith pay or transfer
(as appropriate) to the Mortgagee any such payment (including an amount equal to
any such set-off), distribution or benefit of such security, indemnity or claim
in fact received by it.

(F)The Owner hereby irrevocably subordinates all of its rights of subrogation

(whether contractual, statutory, under common law or otherwise) to the claims of
the Mortgagee against any Person and all contractual, statutory or common law
rights of contribution, reimbursement indemnification and similar rights and
claims against any Person which arise in connection with, or as a result of, the
Credit Agreement or this Mortgage until full and final payment of all of the
Obligations.

5. Affirmative Covenants and Insurances. The Owner further covenants with the
Mortgagee and undertakes at all times throughout the Security Period:

(A) to maintain its existence as a corporation under the laws of the Republic of
the Marshall Islands;

(B) (i) To insure and keep the Vessel insured or cause or procure the Vessel to
be insured and to be kept insured at no expense to the Mortgagee (or to
reimburse the Mortgagee therefor (including with regard to the insurance cover
described in (f) below), using brokers, insurance companies, underwriters and/or
War Risk/P&I Associations and on such terms as the Mortgagee shall from time to
time approve in writing, in regard to:

 

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(a)

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

(b)

war risks (including war protection and indemnity liability with a separate
limit not less than hull value and including the London blocking and trapping
addendum or similar arrangement) covering, inter alia, the perils of
confiscation, terrorism, expropriation, nationalization, seizure and blocking;

(c)

protection and indemnity risks (including pollution risks and including
protection and indemnity war risks in excess of the amount for war risks (hull)
to the highest amount available in the market for the full value and tonnage of
the Vessel, as approved in writing by the Mortgagee, and, in case of oil
pollution liability risks, at the highest level of cover from time to time
available under basic protection and indemnity clubs entry, currently One
Billion United States Dollars ($1,000,000,000) covered by a protection and
indemnity association which is a member of the International Group of Protection
and Indemnity Associations (and to strictly comply with all rules of such
association as they are in effect);

(d)

freight, demurrage and defense risks;

(e)

loss of hire in respect of any charter party agreement, with the minimum
obtaining waiting period and a minimum cover of 90 days with an insured daily
amount equal to at least (i) the daily rate under such charter party agreement
or (ii) the daily running costs plus the daily debt service amount under the
Credit Agreement;

(f)

Mortgagee's interest insurance in an amount not less than one hundred twenty
percent (120%) of the Facility and mortgagee's additional perils (pollution)
insurance against the possible consequences of pollution involving the Vessel
including, without limitation, expropriation or sequestration of the Vessel or
the imposition of a Lien or encumbrances of any kind having priority to the
security interest granted to the Mortgagee or claims against the Lenders to be
subscribed by the Mortgagee and, on demand, reimburse the Mortgagee for all
premiums, costs and expenses paid or incurred by the Mortgagee from time to
time;

(g)

such other insurances as the Mortgagee may reasonably require (including without
limitation political risks or mortgage rights insurance in the event that the
Vessel is registered (or operated via a charter agreement fully and exclusively)
in a jurisdiction that is not an Approved Jurisdiction);

(ii) with respect to the Vessel, to effect the Insurances aforesaid or to cause
or procure the same to be effected:

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(a)

in the cases of the Insurances referred to in sub-sections (i) (a) and (b)
above, (x) in such amounts as shall be at least equivalent to the higher of (I)
the Fair Market Value (as such term is defined in the Credit Agreement) of the
Vessel at the most recent date at which such Fair Market Value shall have been
determined pursuant to the terms of the Credit Agreement and (II) One Hundred
Twenty percent (120%) of the total amount outstanding under the Facility (as
such term is defined in the Credit Agreement), and all such insurance shall be
payable in lawful money of the United States of America, and (y) upon such terms
(including provisions as to named insureds and loss payees and prior notice of
cancellation) and with such deductibles as shall from time to time be approved
by the Mortgagee;

(b)

in the case of the protection and indemnity Insurances referred to in subsection
(i)(c) above payable in lawful money of the United States of America, to the
full extent commercially available and to include provisions as to loss payees
and prior notice of cancellation in form and substance satisfactory to the
Mortgagee; and

(c)

with first class insurance companies, underwriters and protection and indemnity
associations or clubs with a rating from Standard & Poor's of at least BBB as
shall from time to time be approved by the Mortgagee (hereinafter called the
"Insurers");

(iii) (a) to renew all such Insurances or cause or procure the same to be
renewed before the relevant policies or contracts expire and (b) to procure that
the Insurers or the firm of insurance brokers referred to herein below shall
promptly confirm in writing to the Mortgagee at least fourteen (14) days prior
to all insurance renewals;

(iv) to procure concurrently with the execution hereof and thereafter at
intervals of not more than twelve (12) calendar months, a detailed report from a
firm of independent marine insurance brokers, appointed by the Owner and
acceptable to the Mortgagee, with respect to the Insurances together with their
opinion to the Mortgagee that the Insurances comply with the provisions of this
Section 5(B), such report and opinion to be addressed and delivered promptly to
the Mortgagee and the costs of such report and opinion to be for the account of
the Owner;

(v) to cause the said independent marine insurance brokers or the Insurers to
agree to use reasonable efforts to advise the Mortgagee promptly of any failure
to renew any of the Insurances and of any default in payment of any premium and
of any other act or omission on the part of the Owner of which they have
knowledge and which might, in their opinion, invalidate or render unenforceable,
or cause the lapse of or prevent the renewal or extension of, in whole or in
part, any Insurances on the Vessel;

(vi) to cause the said independent marine insurance brokers to agree to mark
their records and to use their best efforts to promptly advise the Mortgagee
that such Insurances have

 

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been renewed or replaced with new insurance which complies with the provisions
of this Section 5(B);

(vii) duly and punctually to pay or to cause duly and punctually to be paid all
premiums, calls, contributions or other sums payable in respect of all such
Insurances, to produce or to cause to be produced all relevant receipts when so
required by the Mortgagee and duly and punctually to perform and observe or to
cause duly and punctually to be performed and observed any other obligations and
conditions under all such Insurances;

(viii) to execute or use reasonable efforts to cause to be executed such
guarantees as may from time to time be required by any relevant protection and
indemnity association or club;

(ix) to procure that all policies, binders, cover notes or other instruments of
the Insurances referred to in subsections (i)(a) and (b) above shall be taken
out in the name of the Owner, with the Mortgagee as an additional assured, the
Owner to ensure that the Mortgagee is not liable for any premiums thereby, as
its or their respective interests may appear, and shall incorporate a loss
payable clause naming the Mortgagee as loss payee and first priority mortgagee
prepared in compliance with the terms of this Mortgage and such loss payable
clause to be in any event in form and substance acceptable to the Mortgagee and
all policies, binders, cover notes or other instruments referred to in
subsection (i) shall provide (a) for prompt notice to be given to the Mortgagee
before cancellation of insurance for any reason whatsoever and for a waiver of
liability for payment of premiums as to the Mortgagee; provided, however, that
unless otherwise required by the Mortgagee by notice to the underwriters,
although all losses under such Insurances are payable to the Mortgagee, in case
of any such losses involving any damage to the Vessel the underwriters may pay
direct for the repair, salvage and other charges involved or, if the Owner shall
have first fully repaired the damage or paid all of the salvage and other
charges, may pay the Owner as reimbursement therefor, provided, further,
however, that if such damage involves a loss in excess of US$500,000, or its
equivalent, the underwriters shall not make such payment without first obtaining
the written consent thereto of the Mortgagee and (b) in the event that the
Vessel shall be insured under any form of fleet cover, written undertakings that
the brokers, underwriters, association or club (as the case may be) will not set
off claims relating to the Vessel against premiums, calls or contributions in
respect of any other vessel or other insurance and that the insurance cover of
the Vessel will not be cancelled by reason of non-payment of premiums, calls or
contributions relating to any other vessel or other insurance; the brokers shall
also undertake in writing to issue a separate policy in respect of either or
both Vessels if requested to do so by the Mortgagee;

(x) to procure that all entries, policies, binders, cover notes or other
instruments of the Insurances referred to in sub-section (i)(c) above
incorporate a loss payable clause naming the Mortgagee as loss payee and first
priority mortgagee prepared in compliance with the terms of this Mortgage and
such loss payable clause to be in any event in form and substance acceptable to
the Mortgagee and shall provide for prompt notice to be given to the Mortgagee
before cancellation of insurance for any reason whatsoever and for a waiver of
liability for payment of premiums, backcalls and assessments as to the
Mortgagee, it being agreed that although such insurance is payable to the
Mortgagee so long as no Event of Default has occurred

 

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and is continuing under this Mortgage, any loss payments under any such
insurance on the Vessel may be paid directly to the Owner to reimburse it for
any loss, damage or expenses incurred by it and covered by such insurance or to
the Person to whom any liability covered by such insurance has been incurred;

(xi) to procure that originals or photocopies of all such instruments of
Insurances as are referred to in sub-sections (ix) and (x) above shall be from
time to time deposited with the Mortgagee after receipt by the Owner thereof and
that the Insurers shall, if so requested by the Mortgagee, furnish the Mortgagee
with a letter or letters of undertaking in such form as may be reasonably
required by the Mortgagee in respect of such Insurances;

(xii) not to change any terms of any Insurances or suffer them to be changed, or
change underwriters of any Insurances or suffer them to be changed, without the
Mortgagee's prior written approval;

(xiii) not to employ the Vessel or suffer the Vessel to be employed otherwise
than in conformity with the terms of all policies, binders, cover notes or other
instruments of the Insurances (including any warranties express or implied
therein) without first obtaining the written consent of the Insurers to such
employment (if required by such Insurers) and complying with such requirements
as to extra premiums or otherwise as the Mortgagee and/or the Insurers may
prescribe;

(xiv) to do all things necessary and proper, and execute and deliver all
documents and instruments to enable the Mortgagee to collect or recover any
moneys to become due the Mortgagee in respect of the Insurances; and

(xv) to obtain an assignment from any Person other than the Owner who is named
as an assured or co-assured in any insurance policy covering a Vessel, such
assignment to be made to the Mortgagee upon such terms and conditions as the
Mortgagee may require.

(C) To keep and to cause to be kept the Vessel in a good and efficient state of
repair so as to maintain her present class with its Classification Society and
so as to comply with the provisions of all laws, regulations and requirements
(statutory or otherwise) from time to time applicable to vessels registered
under the laws of the Republic of the Marshall Islands, to procure that the
Vessel's Classification Society make available to the Mortgagee, upon its
request, such information and documents in respect of the Vessel as are
maintained in the records of such Classification Society, and to procure that
all repairs to or replacements of any damaged, worn or lost parts or equipment
be effected in such manner (both as regards workmanship and quality of
materials) as not to diminish the value of the Vessel;

(D) To submit or to cause the Vessel to be submitted on a timely basis to such
periodic or other surveys as may be required for classification purposes and, if
requested by the Mortgagee, to supply or to cause to be supplied to the
Mortgagee copies of all survey and inspection reports and confirmations of class
issued in respect thereof;

 

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(E) To permit the Mortgagee, by surveyors or other Persons appointed by it in
its behalf, to board the Vessel at all reasonable times for the purpose of
inspecting her condition or for the purpose of satisfying themselves in regard
to proposed or executed repairs and compliance by the Owner with relevant
covenants in the Transaction Documents and to afford or to cause to be afforded
all proper facilities for such inspections, provided that such inspections will
cause no undue delay to the Vessel;

(F) (i) To pay and discharge or to cause to be paid and discharged all debts,
damages and liabilities whatsoever which have given or may give rise to maritime
or possessory liens on or claims enforceable against the Vessel except to the
extent permitted by Section 5(N) hereof and (ii) in event of arrest of the
Vessel pursuant to legal process or in event of her detention in exercise or
purported exercise of any such lien as aforesaid to procure the release of the
Vessel from such arrest or detention within fourteen (14) days of receiving
notice thereof by providing bail or otherwise as the circumstances may require;

(G) Not to employ the Vessel or suffer her employment in any trade or business
which is forbidden by the laws of the Republic of the Marshall Islands or is
otherwise illicit or in carrying illicit or prohibited goods or in any manner
whatsoever which may render her liable to condemnation in a Prize Court or to
destruction, seizure or confiscation and in event of hostilities in any part of
the world (whether war be declared or not), not to employ the Vessel or suffer
her employment in carrying any contraband goods or to enter or trade to any zone
which is declared a war zone by any government or by the Vessel's War Risks
Insurers unless the required extra war risk insurance cover has been obtained
for the Vessel;

(H) Promptly to furnish or to use its best efforts to cause promptly to be
furnished to the Mortgagee all such information as the Mortgagee may from time
to time reasonably request regarding the Vessel, her employment, position and
engagements, particulars of all towages and salvages and copies of all charters
and other contracts for her employment or otherwise howsoever pertaining to the
Vessel;

(I) Promptly after learning of the same to notify or cause to be notified the
Mortgagee forthwith in writing of:

(i) any accident to the Vessel involving repairs the cost whereof will or is
likely to exceed US$500,000 (or the equivalent in any other currency);

(ii) any occurrence in consequence whereof the Vessel has become or is likely to
become a Total Loss;

(iii) any material requirement or recommendation made by any Insurer or
Classification Society or by any competent authority which is not complied with
in accordance with reasonable commercial practices;

(iv) any arrest of the Vessel or the exercise or purported exercise of any lien
on the Vessel or her Earnings; and

 

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(v) any occurrence of circumstances forming the basis of an Environmental Claim.

(J) To keep or to cause to be kept proper books of account of the Owner in
respect of the Vessel and her Earnings and, if requested by the Mortgagee, to
make or to cause to be made such books available for inspection on behalf of the
Mortgagee and furnish or cause to be furnished satisfactory evidence that the
wages and allotments and the insurance and pension contributions of the Master
and crew are being regularly paid and that all deductions from crew's wages in
respect of any tax liability are being properly accounted for and that the
Master has no claim for disbursements other than those incurred by him in the
ordinary course of trading on the voyage then in progress;

(K) To assign and provide that Requisition Compensation is applied in accordance
with Section 8 hereof as if received in respect of the sale of the Vessel;

(L) [Intentionally Omitted];

(M) To keep the Vessel registered under the flag of the Republic of the Marshall
Islands and to do or suffer to be done nothing whereby such registration may be
forfeited or imperiled;

(N) To keep and to cause the Vessel to be kept free and clear of all liens,
charges, mortgages and encumbrances except in favor of the Mortgagee and as
otherwise provided for in the Credit Agreement, and except for crew's wages
remaining unpaid in accordance with reasonable commercial practices or for
collision or salvage, liens in favor of suppliers of necessaries or other
similar liens arising in the ordinary course of its business, accrued for not
more than thirty (30) days or, if requested by the Mortgagee by written notice
to the Owner to discharge such lien, not more than twenty one (21) days from the
date of such written notice (unless any such lien is being contested in good
faith and by appropriate proceedings or other acts and the Owner shall have set
aside on its books adequate reserves with respect to such lien and so long as
such deferment in payment shall not subject the Vessel to forfeiture or loss) or
liens for loss, damage or expense which are fully covered by insurance, subject
to applicable deductibles satisfactory to the Mortgagee, or in respect of which
a bond or other security has been posted by or on behalf of the Owner with the
appropriate court or other tribunal to prevent the arrest or secure the release
of the Vessel from arrest, and not, except in favor of the Mortgagee and as
otherwise provided for in the Credit Agreement, to pledge, charge, assign or
otherwise encumber her Insurances, Earnings or Requisition Compensation or to
suffer the creation of any such pledge, charge, assignment or encumbrance as
aforesaid to or in favor of any Person other than the Mortgagee or as otherwise
provided for in the Credit Agreement;

(0) Not, without the previous consent in writing of the Mortgagee (and then only
subject to such terms and conditions as the Mortgagee may impose), to sell
(otherwise than on an arm's length basis provided that the proceeds of such sale
are distributed in accordance with Section 5.3 of the Credit Agreement), abandon
or otherwise dispose of the Vessel or any interest therein;

 

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(P) To pay promptly to the Mortgagee all moneys (including reasonable fees of
counsel) whatsoever which the Mortgagee shall or may expend, be put to or become
liable for, in or about the protection, maintenance or enforcement of the
security created by this Mortgage or in or about the exercise by the Mortgagee
of any of the powers vested in it hereunder and to pay interest thereon at the
Default Rate from the date whereon such expense or liability was incurred by the
Mortgagee;

(Q) To comply with all declaration and reporting requirements imposed by the
protection and indemnity club or insurers including, without limitation, the
quarterly declarations required by the U.S. Oil Pollution Section 20/2/91, and
to pay all premiums required to maintain in force the necessary U.S. Oil
Pollution Cover;

(R) To comply with and satisfy all the requisites and formalities established by
the laws of the Republic of the Marshall Islands to perfect this Mortgage as a
legal, valid and enforceable preferred lien upon the Vessel and to furnish to
the Mortgagee from time to time such proofs as the Mortgagee may reasonably
request for its satisfaction with respect to the compliance by the Owner with
the provisions of this Section 5(R);

(S) Not without the previous consent of the Mortgagee in writing, which consent
shall not be unreasonably withheld, to enter into any charter party agreement
with respect to the Vessel, other than an Approved Charter;

(T) To place or to cause to be placed and at all times and places to retain or
to cause to be retained a properly certified copy of this Mortgage on board the
Vessel with her papers and cause this Mortgage to be exhibited to any and all
Persons having business with the Vessel which might give rise to any lien
thereon other than liens for crew's wages and salvage, and to any representative
of the Mortgagee on demand; and to place and keep or to cause to be placed and
kept prominently displayed in the chart room and in the Master's cabin of the
Vessel a framed printed notice in plain type in English of such size that the
paragraph of reading matter shall cover a space not less than six inches wide by
nine inches high, reading as follows:

"NOTICE OF MORTGAGE

This Vessel is owned by EAST GULF SHIPHOLDING, INC., and is subject to a
preferred mortgage (the "Mortgage") in favor of DVB BANK SE, as security
trustee, under the authority of Chapter 3 of the Maritime Act 1990 of the
Republic of the Marshall Islands. Under the terms of the said Mortgage, neither
the Owner nor any charterer nor the Master of this Vessel nor any other Person
has any power, right or authority whatever to create, incur or permit to be
imposed upon this Vessel any lien or encumbrance except as permitted
thereunder."

6. Mortgagee's Right to Cure. Without prejudice to any other rights of the
Mortgagee hereunder:

(i) in the event that the provisions of Section 5(B) hereof or any of them shall
not be complied with, the Mortgagee shall be at liberty, but not obligated, to
effect

 

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and thereafter to replace, maintain and renew all such Insurances upon the
Vessel as it in its sole discretion may deem advisable;

(ii) in the event that the provisions of Section 5(C) and/or 5(D) hereof or any
of them shall not be complied with, the Mortgagee shall be at liberty, but not
obligated, to arrange for the carrying out of such repairs and/or surveys as it
deems expedient or necessary; and

(iii) in the event that the provisions of Section 5(F) hereof or any of them
shall not be complied with, the Mortgagee shall be at liberty, but not
obligated, to pay and discharge all such debts, damages and liabilities as are
therein mentioned and/or to take any such measures as it deems expedient or
necessary for the purpose of securing the release of the Vessel;

Any and all expenses incurred by the Mortgagee (including fees of counsel) in
respect of its performances under the foregoing subsections (i), (ii) and (iii)
shall be paid by the Owner on demand, with interest thereon at the rate provided
for in Section 5(P) hereof from the date when such expenses were incurred by the
Mortgagee.

7.Events of Default and Remedies.

(A) In case any one or more of the following events herein termed an "Event of
Default" shall occur and shall not have been received:

(i) a default in the payment when due of all or any part of the Obligations;

(ii) an Event of Default stipulated in Section 8.1 of the Credit Agreement shall
occur and be continuing;

(iii) a default by the Owner occurs in the due and punctual observance of any of
the covenants contained in Section 5 of this Mortgage (other than those listed
in clause (iv) below); or

(iv) a default by the Owner occurs in the due and punctual observance of any of
the covenants contained in subsections (A), (D), (E), (H), (J), or (P) of
Section 5 of this Mortgage and such default continues unremedied for a period of
ten (10) days; or

(v) it becomes impossible or unlawful for the Owner to fulfill any of the
covenants and obligations contained in this Mortgage and the Mortgagee considers
that such impossibility or illegality will have a material adverse effect on its
rights under this Mortgage or the enforcement thereof.

(B) If any Event of Default shall occur, the Mortgagee shall be entitled:

 

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(i) to demand payment by written notice of the Obligations, whereupon such
payment shall be immediately due and payable, anything contained in the Credit
Agreement, the Note, this Mortgage, any of the other Transaction to the contrary
notwithstanding and without prejudice to any other rights and remedies of the
Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the
other Transaction Documents, provided, however, that if, before any sale of the
Vessel, all defaults shall have been remedied in a manner satisfactory to the
Mortgagee, the Mortgagee may waive such defaults by written notice to the Owner;
but no such waiver shall extend to or affect any subsequent or other default or
impair any rights and remedies consequent thereon;

(ii) at any time and as often as may be necessary to take any such action as the
Mortgagee may in its discretion deem advisable for the purpose of protecting the
security created by this Mortgage and each and every expense or liability
(including reasonable fees of counsel) so incurred by the Mortgagee in or about
the protection of such security shall be repayable to it by the Owner promptly
after demand, together with interest thereon at the Default Rate from the date
when such expense or liability was incurred by the Mortgagee. The Owner shall
promptly execute and deliver to the Mortgagee such documents or cause promptly
to be executed and delivered to the Mortgagee such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee or
its counsel may be necessary or advisable to facilitate or expedite the
protection, maintenance and enforcement of the security created by this
Mortgage;

(iii) to exercise all the rights and remedies in foreclosure and otherwise given
to the Mortgagee by any applicable law, including those under the provisions of
the Maritime Law;

(iv) to take possession of the Vessel, wherever the same may be, without prior
demand and without legal process (when permissible under applicable law) and
cause the Owner or other Person in possession thereof forthwith upon demand of
the Mortgagee to surrender to the Mortgagee possession thereof as demanded by
the Mortgagee;

(v) to require that all policies, contracts and other records relating to the
Insurances (including details of and correspondence concerning outstanding
claims) be forthwith delivered to such adjusters, brokers or other insurers as
the Mortgagee may nominate;

(vi) to collect, recover, compromise and give a good discharge for all claims
then outstanding or thereafter arising under the Insurances or any of them and
to take over or institute (if necessary using the name of the Owner) all such
proceedings in connection therewith as the Mortgagee in its absolute discretion
deems advisable and to permit the brokers through whom collection or recovery is
effected to charge the usual brokerage therefor;

 

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(vii) to discharge, compound, release or compromise claims against the Owner in
respect of the Vessel which have given or may give rise to any charge or lien
thereon or which are or may be enforceable by proceedings thereagainst;

(viii) to take appropriate judicial proceedings for the foreclosure of this
Mortgage and/or for the enforcement of the Mortgagee's rights hereunder or
otherwise; recover judgment for any amount due in respect of the Credit
Agreement, the Note, this Mortgage or any of the other Transaction Documents and
collect the same out of any property of the Owner;

(ix) to sell the Vessel by private contract at any time, free from any claim of
or by the Owner of any nature whatsoever;

(x) to sell the Vessel at public auction (with power for the Security Trustee to
purchase the Vessel at any such public auction and to set off the purchase price
against all or any part of the Obligations), free from any claim of or by the
Owner of any nature whatsoever by first giving notice of the time and place of
sale with a general description of the property in the following manner:

(a)

by publishing such notice for ten (10) consecutive days in a daily newspaper of
general circulation published in New York City;

(b)

if the place of sale should not be New York City, then also by publication of a
similar notice in a daily newspaper, if any, published at the place of sale; and

(c)

by sending a similar notice by telecopy confirmed by registered mail to the
Owner at its address hereinafter set forth at least fourteen (14) days prior to
the date of sale.

Such sale of the Vessel may be held at such place as the Mortgagee in such
notices may have specified, or such sale may be adjourned by the Mortgagee from
time to time by announcement at the time and place appointed for such sale or
for such adjourned sale and without further notice or publication the Mortgagee
may make such sale at the time and place to which the same shall be so
adjourned; and such sale may be conducted without bringing the Vessel to the
place designated for such sale and in such manner as the Mortgagee may deem to
be for its best advantage, and the Mortgagee may become the purchaser at such
sale.

(xi) pending sale of the Vessel (either directly or indirectly) to manage,
charter, lease, insure, maintain and repair the Vessel and to employ or lay up
the Vessel upon such terms, in such manner and for such period as the Mortgagee
in its absolute discretion deems expedient and for the purpose aforesaid the
Mortgagee shall be entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements respecting the Vessel,
her insurance,

 

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management, maintenance, repair, classification and employment in all respects
as if the Mortgagee were the owner of the Vessel and without being responsible
for any loss thereby incurred;

(xii) to recover from the Owner on demand any such losses as may be incurred by
the Mortgagee in or about the exercise of the powers vested in the Mortgagee
under Section 7(B)(xi) above with interest thereon at the Default Rate from the
date when such losses were incurred by the Mortgagee; and

(xiii) to recover from the Owner on demand all expenses, payments and
disbursements (including fees and expenses of counsel) incurred by the Mortgagee
in or about or incidental to the exercise by it of any of the powers vested in
it hereunder together with interest thereon at the Default Rate from the date
when such expenses, payments or disbursements were incurred by it;

PROVIDED, ALWAYS, that any sale of the Vessel or any interest therein by the
Mortgagee pursuant to Section 7(B)(x) above shall operate to divest all right,
title and interest of the Owner, its successors and assigns, in or to the Vessel
so sold and upon such sale the purchaser shall not be bound to see or inquire
whether the Mortgagee's power of sale has arisen in the manner herein provided
and the sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable therefor.

In case the Mortgagee shall have proceeded to enforce any right, power or remedy
under this Mortgage by foreclosure, entry or otherwise, and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Mortgagee, then and in every such case the Owner and
the Mortgagee shall be restored to their former positions and rights hereunder
with respect to the property, subject or intended to be subject to this
Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as
if no such proceedings had been taken.

(C)Notwithstanding the foregoing, it is understood that, other than Clause (c)

of the definition of Total Loss, a Total Loss of the Vessel which is covered by
the insurance maintained by the Owner pursuant to Section 5(B) hereof shall not
be deemed to be a default under this Mortgage, the Credit Agreement, the Note,
the other Security Documents, or any of them.

8. Application of Proceeds. The proceeds of any sale made either under the power
of sale hereby granted to the Mortgagee or under a judgment or decree in any
judicial proceedings for the foreclosure of this Mortgage or for the enforcement
of any remedy granted to the Mortgagee hereunder, any net earnings arising from
the management, charter or other use of the Vessel by the Mortgagee under any of
the powers herein contained or by law provided and the proceeds of any and all
Insurances and any claims for damages on account of the Vessel or the Owner of
any nature whatsoever and any Requisition Compensation, shall be applied as
follows:

 

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First:To the payment of all costs and expenses (together with interest

thereon as hereinbefore provided) incurred by the Mortgagee, the Agents and/or
the Lenders, including the compensation of their respective agents and
attorneys, by reason of any sale, retaking, management or operation of the
Vessel and all other sums payable to the Mortgagee, the Agents and/or the
Lenders hereunder by reason of any expenses or liabilities incurred or advances
made by it for the protection, maintenance and enforcement of the security or of
any of its rights hereunder or in the pursuit of any remedy hereby conferred;
and at the option of the Mortgagee to the payment of all taxes, assessments or
liens claiming priority over the lien of this Mortgage;

Second:To the payment of the Obligations in the manner provided in the

Credit Agreement; and

Third:Any surplus thereafter remaining, to the Owner or to the Owner's

successors in interest or assigns, or to whomsoever may be

lawfully entitled to receive the same.

In the event that the proceeds are insufficient to pay the amounts specified in
paragraphs "First" and "Second" above, the Mortgagee shall be entitled to
collect the balance from the Owner or any other Person liable therefor.

9. No Waiver. No delay or omission of the Mortgagee to exercise any right or
power vested in it under the Credit Agreement, the Note, this Mortgage, the
other Transaction Documents or any of them shall impair such right or power or
be construed as a waiver thereof or as acquiescence in any default by the Owner
hereunder, nor shall the acceptance by the Mortgagee of any payments in
connection with this Mortgage from any source be deemed a waiver hereunder.
However, if at any time after an Event of Default and prior to the actual sale
of the Vessel by the Mortgagee or prior to any foreclosure proceedings the Owner
cures all Events of Default and pays all expenses, advances and damages to the
Mortgagee consequent on such Events of Default, with interest at the Default
Rate from the date when such expenses, advances and damages were incurred, then
the Mortgagee may accept such cure and payment and restore the Owner to its
former position, but such action shall not affect any subsequent Event of
Default or impair any rights consequent thereon.

10. Delegation of Power. The Mortgagee shall be entitled at any time and as
often as may be expedient to delegate all or any of the powers and discretions
vested in it by this Mortgage (including the power vested in it by virtue of
Section 12 hereof) in such manner and upon such terms and to such Persons as the
Mortgagee in its absolute discretion may deem advisable.

11. Indemnity. Without prejudice to any other rights and remedies of the
Mortgagee under the Credit Agreement, the Note, this Mortgage or any of the
other Transaction

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Documents, the Owner hereby agrees and undertakes to indemnify the Mortgagee
against all obligations and liabilities whatsoever and whensoever arising which
the Mortgagee may incur in good faith in respect of, in relation to or in
connection with the Vessel or otherwise howsoever in relation to or in
connection with the enforcement of the Mortgagee's rights hereunder or under any
of the other Transaction Documents to which the Owner is a party.

12. Power of Attorney.

(A) The Owner hereby irrevocably appoints the Mortgagee as its attorney-in-fact
for the duration of the Security Period to do in its name or in the name of the
Owner all acts which the Owner, or its successors or assigns, could do in
relation to the Vessel, including without limitation, to demand, collect,
receive, compromise, settle and sue for (insofar as the Mortgagee lawfully may)
all freights, hire, earnings, issues, revenues, income and profits of the
Vessel, and all amounts due from underwriters under the Insurances as payment of
losses or as return premiums or otherwise, salvage awards and recoveries,
recoveries in general average or otherwise, and all other sums due or to become
due to the Owner or in respect of the Vessel, and to make, give and execute in
the name of the Owner, a quittance, receipts, releases or other discharges for
the same, whether under seal or otherwise, to take possession of, sell or
otherwise dispose of or manage or employ, the Vessel, to execute and deliver
charters and a bill of sale with respect to the Vessel, and to endorse and
accept in the name of the Owner all checks, notes, drafts, warrants, agreements
and all other instruments in writing with respect to the foregoing; PROVIDED,
HOWEVER, that, unless the context otherwise permits under this Mortgage, such
power shall not be exercisable by or on behalf of the Mortgagee unless and until
any Event of Default shall occur and shall not be exercisable after all defaults
have been cured.

(B) The exercise of the power granted in this Section 12 by or on behalf of the
Mortgagee shall not require any Person dealing with the Mortgagee to conduct any
inquiry as to whether any such Event of Default has occurred and is continuing,
nor shall such Person be in any way affected by notice that any such Event of
Default has not occurred nor is continuing, and the exercise by the Mortgagee of
such power shall be conclusive evidence of its right to exercise the same.

13. Appointment of Receiver. If any legal proceedings shall be taken to enforce
any right under this Mortgage, the Mortgagee shall be entitled as a matter of
right to the appointment of a receiver of the Vessel and of the freights, hire,
earnings, issues, revenues, income and profits due or to become due and arising
from the operation thereof.

14. Commencement of Proceedings. The Mortgagee shall have the right to commence
proceedings in the courts of any country having competent jurisdiction and in
particular the Mortgagee shall have the right to arrest and take action against
the Vessel at whatever place the Vessel shall be found lying and for the purpose
of any action which the Mortgagee may bring before the local court for the
jurisdiction of such court or other judicial authority and the Owner agrees that
for the purpose of proceedings against the Vessel any writ, notice, judgment or
other legal process or documents may be served upon the Master of the Vessel (or
upon anyone acting as the Master) and that such service shall be deemed good
service on the Owner for all purposes.

 

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15. Partial Invalidity. In the event that any provision or provisions of this
Mortgage shall be declared invalid, void or otherwise inoperative by any present
or future court of competent jurisdiction in any country, the Owner will,
without prejudice to any other right and remedy of the Mortgagee under the
Credit Agreement, the Note, this Mortgage, the other Transaction Documents or
any of them, execute and deliver such other and further instruments and do such
things as in the opinion of the Mortgagee or its counsel will be necessary or
advisable to carry out the true intent and spirit of this Mortgage. In any
event, any such declaration of partial invalidity shall not affect the validity
of any other provision or provisions of this Mortgage, or the validity of this
Mortgage as a whole.

16. Cumulative Remedies. Each and every power and remedy in this Mortgage
specifically given to the Mortgagee shall be in addition to every other power
and remedy herein or in the Credit Agreement, the Note or the other Transaction
Documents specifically given or now or hereafter existing at law, in equity,
admiralty, or by statute, and each and every power and remedy whether
specifically in this Mortgage or in the Credit Agreement, the Note or the other
Transaction Documents given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Mortgagee,
and the exercise or the beginning of the exercise of any such power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other power or remedy under the Credit Agreement, the Note,
this Mortgage or any other Transaction Documents.

17. Recordation of Mortgage. For the purpose of recording this Preferred
Mortgage the total amount is Thirty Eight Million Five Hundred Thousand Dollars
($38,500,000) (exclusive of interest, expenses and fees) and interest and
performance of mortgage covenants. The discharge amount is the same as the total
amount and there is no separate discharge amount for the Vessel. It is not
intended that this Mortgage shall include property other than the Vessel, and it
shall not include property other than the Vessel as the term "vessel" is used in
the Maritime Law. Notwithstanding the foregoing, for property other than the
Vessel, if any should be determined to be covered by this Mortgage, the
discharge amount is zero point zero one percent (0.01%) of the total amount.

18. No Waiver of Preferred Status.Anything herein to the contrary
notwithstanding, it is intended that nothing herein shall waive the preferred
status of this Mortgage under the Maritime Law or under the corresponding
provisions of any other jurisdiction in which it is sought to be enforced and
that, if any provision or portion thereof herein shall be construed to waive the
preferred status of this Mortgage, then such provision to such extent shall be
void and of no effect.

19. Counterparts. This Mortgage may be executed in any number of counterparts
each of which shall be an original but such counterparts shall together
constitute but one and the same instrument.

20. Notices. Notices and other communications under this Mortgage shall be in
writing and may be given by facsimile as follows:

 

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If to the Owner:

East Gulf Shipholding, Inc.

11 North Water Street

Suite 18290

Mobile, Alabama 36602

Attention: Chief Financial Officer

Facsimile No.: (251) 243 9121

with a copy to:

International Shipholding Corporation

One Whitehall Street

New York, New York 10004

Attention: Niels M. Johnsen

Facsimile No.: (212) 514-5692

If to the Mortgagee:

DVB Bank SE

Park House

16-18 Finsbury Circus

London EC2M 7EB, United Kingdom

Attention: Peter Attridge

Department: Transaction and Loan Services

Email: tls.london@dvbbank.com 

Fax: +44 207 256 4352

 

with a copy to:

 

DVB TRANSPORT (US) LLC

609 Fifth Avenue, 5th Floor

New York, New York 10017, USA

Facsimile: + 212 858 2664/+ 1 917 369 2196

Attention: Christoph Clauss/Matthew Galici

Email: christoph.clauss@dvbbank.com /  matthew.galici@dvbbank.com

or to such other address as either party shall from time to time specify in
writing to the other. Any notice sent by facsimile shall be confirmed by letter
dispatched as soon as practicable thereafter.

Every notice or other communication shall, except so far as otherwise expressly
provided by this Mortgage, be deemed to have been received (provided that it is
received prior to 10 a.m. New York time; otherwise it shall be deemed to have
been received on the next following Banking Day), in the case of a facsimile at
the time of dispatch thereof (provided further that if the date of dispatch is
not a Banking Day in the locality of the party to whom such

 

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notice or demand is sent it shall be deemed to have been received on the next
following Banking Day in such locality), and in the case of a letter, at the
time of receipt thereof.

21. Rights of Owner. Unless one or more Events of Default shall have occurred
and be continuing, the Owner (a) shall be suffered and permitted to retain
actual possession and use of the Vessel and (b) shall have the right, from time
to time in its discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from the lien
hereof; any boilers, engines, machinery, masts, spars, sails, rigging, boats,
anchors, cables, chains, tackle, apparel, furniture, fittings, equipment or any
other appurtenances of the Vessel that are no longer useful, necessary,
profitable or advantageous in the operation of the Vessel, first or
simultaneously replacing the same by new boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, cables, chains, tackle, apparel,
furniture, fittings, equipment or any other appurtenances of substantially equal
value to the Owner, which shall forthwith become subject to the lien of this
Mortgage.

22. Waiver; Amendment. None of the terms and conditions of this Mortgage may be
changed, waived, modified or varied in any manner whatsoever unless in writing
duly signed by the Owner and the Mortgagee.

23. Successors and Assigns. All the covenants, promises, stipulations and
agreements of the Owner and all the rights and remedies of the Mortgagee
contained in this Mortgage shall bind the Owner, its successors and assigns, and
shall inure to the benefit of the Mortgagee, its successors and assigns, whether
so expressed or not.

24. Applicable Law. This Mortgage shall be governed by, and construed in
accordance with, the laws of the Republic of the Marshall Islands.

25. Headings. In this Mortgage, section headings are inserted for convenience of
reference only and shall be ignored in the interpretation of this Mortgage.

26. Intercreditor Agreement. This Mortgage shall be subject to the terms of the
Intercreditor Agreement. Where a conflict exists between this Mortgage and the
Intercreditor Agreement, the Intercreditor Agreement shall govern.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, the Owner has executed this Mortgage by its duly authorized
representative as of the day and year first above written.

EAST GULF SHIPHOLDING, INC., as Owner

By:_____________________________________________________________________________________

Name:

Title:

 

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ACKNOWLEDGMENT OF MORTGAGE

STATE OF NEW YORK)

ss:

COUNTY OF NEW YORK)

On the ___________day of ___________, in the year 2015, before me,
the undersigned personally appeared  ___________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

 

 

 

 

 

______________________________________

Notary Public

 

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ACKNOWLEDGMENT OF MORTGAGE

STATE OF NEW YORK)

: ss:

COUNTY OF NEW YORK)

On the ___________day of ___________, in the year 2015, before me, the
 undersigned personally appeared ___________, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

 

 

 

 

_________________________________

Notary Public

 

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Exhibit A

 

Credit Agreement

 

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Exhibit B

 

 

 

 

 

 

 

Assignment and Assumption Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit C

 

 

 

 

 

 

 

Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT C

 

PARI PASSU INTERCREDITOR AGREEMENT

DVB BANK SE,

as Glovis Countess Agent

AND

DVB BANK SE,
as Green Bay Agent

AND

EAST GULF SHIPHOLDING, INC.,
as Borrower

AND

INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor

[              ], 2015

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THIS AGREEMENT is dated [], 2015 and made by and among:

(1)

DVB BANK SE as facility agent and security trustee (the "Glovis Countess Agent")
and lender under the Glovis Countess Credit Agreement;

(2)

DVB BANK SE as facility agent and security trustee (the "Green Bay Agent") and
lender under the Green Bay Credit Agreement;

(3)

EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws
of the Republic of the Marshall Islands (the "Borrower"); and

(4)

INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing
under the laws of the State of Delaware (the "Guarantor").

IT IS AGREED as follows:

1.DEFINITIONS AND INTERPRETATION

1.1Definitions

In this Agreement:

"Business Day" means any day that is not a Saturday, Sunday or other day on
which banks in London, England, Frankfurt, Germany or New York, New York are
authorized or required by law to remain closed.

"Cash Proceeds" means:

(a)

proceeds of the Security Property which are in the form of cash; and

(b)

any cash which is generated by holding, managing, exploiting, collecting,
realizing or disposing of any proceeds of the Security Property which are in the
form of Non-Cash Consideration.

"Controlling Agent" means the Glovis Countess Agent.

"Creditors" means the Glovis Countess Creditors and the Green Bay Creditors.

"Debt Document" means each of this Agreement, the Glovis Countess Transaction
Documents and the Green Bay Transaction Documents.

"Distress Event" means any of:

(a)

an Event of Default; or

(b)

an Enforcement Action.

“Enforcement Action” means:

a.

in relation to any Liabilities:

i.

the acceleration of any Liabilities or the making of any declaration that any
Liabilities are prematurely due and payable (other than as a result of any
voluntary prepayment arising under the Debt Documents);

ii.

the making of any declaration that any Liabilities are payable on demand;

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iii.

the making of a demand in relation to a Liability that is payable on demand;

iv.

the exercise of any right of set-off, account combination or payment netting
against any Obligor in respect of any Liabilities other than the exercise of any
such right which is otherwise expressly permitted under the Glovis Countess
Credit Agreement or the Green Bay Credit Agreement to the extent that the
exercise of that right gives effect to a Permitted Payment; and

v.

the suing for, commencing or joining of any legal or arbitration proceedings
against either Obligor to recover any Liabilities;

b.

the taking of any steps to enforce or require the enforcement of any Transaction
Security;

c.

the entering into of any composition, compromise, assignment or arrangement with
either Obligor which owes any Liabilities, or has given any Security, guarantee
or indemnity or other assurance against loss in respect of the Liabilities
(other than any action permitted under Clause 9 (Changes to the Parties); or

d.

the petitioning, applying or voting for, or the taking of any steps (including
the appointment of any liquidator, receiver, administrator or similar officer)
in relation to, the winding up, dissolution, administration or reorganization of
either Obligor which owes any Liabilities, or has given any Security, guarantee,
indemnity or other assurance against loss in respect of any of the Liabilities,
or any of such Obligor's assets or any suspension of payments or moratorium of
any indebtedness of any such Obligor, or any analogous procedure or step in any
jurisdiction,

except that the taking of any action falling within paragraphs (a)(v) or (d)
above which is necessary (but only to the extent necessary) to preserve the
validity, existence or priority of claims in respect of Liabilities, including
the registration of such claims before any court or governmental authority and
the bringing, supporting or joining of proceedings to prevent any loss of the
right to bring, support or join proceedings by reason of applicable limitation
periods shall not constitute Enforcement Action.

"Event of Default" means any event or circumstance specified as such in either
the Glovis Countess Credit Agreement or the Green Bay Credit Agreement.

"Facility Agreement" means each of the Glovis Countess Credit Agreement and the
Green Bay Credit Agreement.

"Final Discharge Date" means the later to occur of the Glovis Countess Discharge
Date and the Green Bay Discharge Date.

"Financial Adviser" means any:

(a)

independent internationally recognized investment bank;

(b)

independent internationally recognized accounting firm;

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(c)

other independent internationally recognized professional services firm which is
regularly engaged in providing valuations of businesses or financial assets or,
where applicable, advising on competitive sales processes; or

(d)

with respect to any vessel, an "Approved Ship Broker" as such term is defined in
the Glovis Countess Credit Agreement.

"Clovis Countess Credit Agreement" means the credit agreement made by and among,
inter alios, the Borrower, the Guarantor and the Glovis Countess Agent, dated
April [   ], 2015, as such document is amended, amended and restated,
supplemented or otherwise modified from time to time.

"Glovis Countess Creditors" means the "Creditors" as defined in the Glovis
Countess Credit Agreement.

"Glovis Countess Discharge Date" means the first date on which all Glovis
Countess Liabilities have been fully and finally discharged to the satisfaction
of the Glovis Countess Agent, whether or not as the result of an enforcement,
and the Glovis Countess Agent is under no further obligation to provide
financial accommodation to the Borrower under the Debt Documents.

"Glovis Countess Liabilities" means the Liabilities owed by the Obligors to the
Glovis Countess Creditors under or in connection with the Glovis Countess
Transaction Documents.

"Glovis Countess Transaction Documents" has the meaning given to the term
"Transaction Documents" in the Glovis Countess Credit Agreement.

"Green Bay Credit Agreement" means the credit agreement made originally by and
among, inter alios, Waterman Steamship Corporation, as original borrower, the
Guarantor, and the Green Bay Agent, dated August 26, 2014, as such document has
been and is amended, amended and restated, supplemented or otherwise modified
from time to time.

"Green Bay Creditors" means the "Creditors" as defined in the Green Bay Credit
Agreement.

"Green Bay Discharge Date" means the first date on which all Green Bay
Liabilities have been fully and finally discharged to the satisfaction of the
Green Bay Agent, whether or not as a result of an enforcement, and the Green Bay
Agent is under no further obligation to provide financial accommodation to the
Borrower under the Debt Documents.

"Green Bay Liabilities" means the Liabilities owed by the Obligors to the Green
Bay Creditors under or in connection with the Green Bay Transaction Documents.

"Green Bay Transaction Documents" has the meaning given to the term "Transaction
Documents" in the Green Bay Credit Agreement.

"Insolvency Event" means, in relation to any Obligor:

(a)

any resolution is passed or order made for the suspension of payments, winding
up, dissolution, administration or reorganization of that Obligor, a moratorium
is declared in relation to any indebtedness of that Obligor or an administrator
is appointed to that Obligor;

(b)

any composition, compromise, assignment or arrangement is made with any of its
creditors;

 

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(c)

the appointment of any liquidator, receiver, administrative receiver,
administrator, compulsory manager or other similar officer in respect of that
Obligor or any of its assets;

(d)

enforcement of any Security over any assets of any Obligor; or

(e)

any analogous procedure or step is taken in any jurisdiction.

"Instructing Group" means at any time the "Majority Lenders" as defined in the
Glovis Countess Credit Agreement.

"Liabilities" means all present and future liabilities and obligations at any
time of the Obligors to any Creditor under the Debt Documents, both actual and
contingent and whether incurred solely or jointly or as principal or surety or
in any other capacity together with any of the following matters relating to or
arising in respect of those liabilities and obligations:

(a)

any refinancing, novation, deferral or extension;

(b)

any claim for breach of representation, warranty or undertaking or on an event
of default or under any indemnity given under or in connection with any document
or agreement evidencing or constituting any other liability or obligation
falling within this definition;

(c)

any claim for damages or restitution; and

(d)

any claim as a result of any recovery by any Debtor of a Payment on the grounds
of preference or otherwise,

and any amounts which would be included in any of the above but for any
discharge, non-provability, unenforceability or non-allowance of those amounts
in any insolvency or other proceedings.

"Non-Cash Consideration" means consideration in a form other than cash.

"Non-Cash Recoveries" means any amount distributed to the Controlling Agent
pursuant to Clause 5.1 (Turnover by the Creditors), which are, or is, in the
form of Non-Cash Consideration.

"Obligor" shall mean each of the Borrower and/or the Guarantor. "Party" means a
party to this Agreement.

"Payment" means, in respect of any Liabilities (or any other liabilities or
obligations), a payment, prepayment, repayment, redemption, defeasance or
discharge of those Liabilities (or other liabilities or obligations).

"Permitted Payment" means a Permitted Glovis Countess Payment or a Permitted
Green Bay Payment.

"Permitted Glovis Countess Payments" means the Payments permitted by Clause 3.1
(Payment of Glovis Countess Liabilities).

"Permitted Green Bay Payments" means the Payments permitted by Clause 3.2
(Payment of Green Bay Liabilities).

"Recoveries" has the meaning given to that term in Clause 7.1 (Order of
Application).

 

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"Relevant Liabilities" means Liabilities for which a payment or distribution has
been received.

"Secured Obligations" means all the Liabilities and all other present and future
liabilities and obligations at any time due, owing or incurred by any Obligor to
any Creditor under the Debt Documents, both actual and contingent and whether
incurred solely or jointly and as principal or surety or in any other capacity.

"Security" means a mortgage, charge, pledge, lien or other security interest
securing any obligation of any person or any other agreement or arrangement
having a similar effect.

"Security Documents" means the "Security Documents" under and as defined in the
Glovis Countess Credit Agreement and the "Security Documents" under and as
defined in the Green Bay Credit Agreement.

"Security Property" means:

(a)

the Transaction Security and all proceeds of that Transaction Security; and

(b)

all obligations expressed to be undertaken by an Obligor to pay amounts in
respect of the Liabilities to the Creditors and secured by the Transaction
Security together with all representations and warranties expressed to be given
by an Obligor in favor of either Creditor.

"Taxes" has the meaning assigned to such term in the Glovis Countess Credit
Agreement.

"Transaction Security" means the Security created or evidenced or expressed to
be created or evidenced under or pursuant to the Security Documents.

1.2Construction

(a)Unless a contrary indication appears, a reference in this Agreement to:

(i)

The "Borrower", "Guarantor", "Glovis Countess Agent", "Green Bay Agent",
"Controlling Agent" or any "Creditor" or "Obligor" shall be construed to be a
reference to it in its capacity as such and not in any other capacity;

(ii)

any "Creditor" or "Obligor" or any other person shall be construed so as to
include its successors in title, permitted assigns and permitted transferees to,
or of, its rights and/or obligations under the Debt Documents;

(iii)

an "amount" includes an amount of cash and an amount of Non-Cash Consideration;

(iv)

"assets" includes present and future properties, revenues and rights of every
description;

(v)

a  "Debt Document" or any other agreement or instrument is a reference to that
Debt Document, or other agreement or instrument, as amended, novated,
supplemented, extended or restated as permitted by this Agreement;

(vi)

a  "distribution" of or out of the assets of an Obligor, includes a distribution
of cash and a distribution of Non-Cash Consideration;

 

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(vii)

"enforcing" (or any derivation) the Transaction Security includes the
appointment of an administrator (or any analogous officer in any jurisdiction)
of an Obligor by a Creditor;

(viii)

"indebtedness" includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual
or contingent;

(ix)

a  "person" includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium,
partnership or other entity (whether or not having separate legal personality);

(x)

a  "regulation" includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law but if not having the force of
law one with which companies customarily comply) of any governmental,
intergovernmental or supranational body, agency, department or of any
regulatory, self-regulatory or other authority or organization; and

(xi)

a provision of law is a reference to that provision as amended or reenacted.

(b)Section, Clause and Schedule headings are for ease of reference only.

2. RANKING AND PRIORITY

2.1Creditor Liabilities

Each of the Parties agrees that the Liabilities owed by the Obligors to the
Creditors shall rank in right and priority of payment pari passu and without any
preference between them.

2.2Transaction Security

Each of the Parties agrees, acknowledges and stipulates that all Liabilities
owed by the Obligors to the Creditors are intended to be secured by the
Transaction Security and that the priorities in the Transaction Security, as
between the Glovis Countess Creditors and the Green Bay Creditors, shall be
equal and that each shall share and be equal in priority and rights with the
other, subject to the terms of this Agreement, in each case, regardless of the
time, method or order of attachment or perfection of any Transaction Security,
or the lien priorities which might apply as a matter of law, and in each case,
notwithstanding that any Transaction Security is not actually granted or
improperly granted, unperfected, avoided, a fraudulent transfer or otherwise
unenforceable or ineffective.

3. CREDITOR LIABILITIES

3.1Payment of Glovis Countess Liabilities

The Obligors may make Payments of the Glovis Countess Liabilities at any time
and in accordance with the Glovis Countess Transaction Documents.

3.2Payment of Green Bay Liabilities

The Obligors may make Payments of the Green Bay Liabilities at any time and in
accordance with the Green Bay Transaction Documents.

 

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4.EFFECT OF INSOLVENCY EVENT

4.1Distributions

(a)

After the occurrence of an Insolvency Event in relation to either Obligor,
either Creditor entitled to receive a distribution out of the assets of that
Obligor in respect of Liabilities owed to that Creditor shall, to the extent it
is able to do so, direct the person responsible for the distribution of the
assets of that Obligor to make that distribution to the Controlling Agent (or to
such other person as the Controlling Agent shall direct).

(b)

The Controlling Agent shall apply distributions made to it under paragraph (a)
above, including any distributions made directly to it from the assets of either
Obligor, in accordance with Clause 7 (Application of Proceeds).

4.2Set-Off

To the extent that any Obligor's Liabilities are discharged by way of set off
(mandatory or otherwise) after the occurrence of an Insolvency Event in relation
to that Obligor, any Creditor which benefited from that set-off shall pay an
amount equal to the amount of the Liabilities owed to it which are discharged by
that set-off to the Controlling Agent for application in accordance with Clause
7 (Application of Proceeds).

4.3Non cash distributions

If either Creditor receives a distribution in the form of Non-Cash Consideration
in respect of any of the Liabilities (other than any distribution of Non-Cash
Recoveries), the Liabilities will not be reduced by that distribution until and
except to the extent that the realization proceeds are actually applied towards
the Liabilities.

4.4Filing of claims

After the occurrence of an Insolvency Event in relation to either Obligor, each
Creditor shall be authorized to:

(a)

take any Enforcement Action (in accordance with the terms of this Agreement)
against that Obligor;

(b)

demand, sue, prove and give receipt for any or all of that member of the
Obligor's Liabilities;

(c)

collect and receive all distributions on, or on account of, any or all of that
Obligor's Liabilities; and

(d)

file claims, take proceedings and do all other things the Controlling Agent
considers reasonably necessary to recover that Obligor's Liabilities.

5.TURNOVER OF RECEIPTS

5.1Turnover by the Creditors

Subject to Clause 5.2, if at any time prior to the Final Discharge Date, any
Creditor receives or recovers:

(a)any Payment or distribution of, or on account of or in relation to, any of
the

Liabilities which is not either:

(i)a Permitted Payment; or

 

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(ii)made in accordance with Clause 7 (Application of Proceeds);

(b)other than where Clause 4.2 (Set-Off) applies, any amount by way of set off
in

respect of any of the Liabilities owed to it which does not give effect to a
Permitted Payment;

(c)notwithstanding paragraphs (a) and (b) above, and other than where Clause 4.2

(Set-Of]) applies, any amount:

(1)on account of, or in relation to, any of the Liabilities:

(A)

after the occurrence of a Distress Event; or

(B)

as a result of any other litigation or proceedings against either Obligor (other
than after the occurrence of an Insolvency Event in respect of that Obligor); or

(ii)by way of set off in respect of any of the Liabilities owed to it after the

occurrence of a Distress Event,

other than, in each case, any amount received or recovered in accordance with
Clause 7 (Application of Proceeds);

(d)the proceeds of any enforcement of any Transaction Security except in

accordance with Clause 7 (Application of Proceeds); or

(e)other than where Clause 4.2 (Set-Off) applies, any distribution or Payment
of, or

on account of or in relation to, any of the Liabilities owed by any Obligor
which is not in accordance with Clause 7 (Application of Proceeds) and which is
made as a result of, or after, the occurrence of an Insolvency Event in respect
of that Obligor,

that Creditor will:

(i)in relation to receipts and recoveries not received or recovered by way

of set-off:

(A)

hold an amount of that receipt or recovery equal to the Relevant Liabilities (or
if less, the amount received or recovered) on trust for the Controlling Agent
and promptly pay or distribute that amount to the Controlling Agent for
application in accordance with the terms of this Agreement; and

(B)

promptly pay or distribute an amount equal to the amount (if any) by which the
receipt or recovery exceeds the Relevant Liabilities to the Controlling Agent
for application in accordance with the terms of this Agreement; and

(ii)in relation to receipts and recoveries received or recovered by way of

set-off, promptly pay an amount equal to that recovery to the Controlling Agent
for application in accordance with the terms of this Agreement.

5.2Turnover of Non-Cash Consideration

For the purposes of this Clause 5, if any Creditor receives or recovers any
amount or distribution in the form of Non-Cash Consideration which is subject to
Clause 5.1

 

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(Turnover by the Creditors) the cash value of that Non-Cash Consideration shall
be determined in accordance with Clause 7.7 (Cash value of Non-Cash Recoveries).

6. ENFORCEMENT OF TRANSACTION SECURITY

6.1Enforcement Instructions

The Transaction Security shall only be enforced by the Controlling Agent upon
the instruction of the Instructing Group. No other Creditor shall have any
independent power to enforce, or have recourse to, any of the Transaction
Security or to exercise any right, power, authority or discretion arising under
the Security Documents except through the Controlling Agent.

6.2Waiver of rights

To the extent permitted under applicable law and subject to Clause 6.1
(Enforcement Instructions) and Clause 7 (Application of Proceeds), each of the
Creditors and the Obligors waives all rights it may otherwise have to require
that the Transaction Security be enforced in any particular order or manner or
at any particular time or that any amount received or recovered from any person,
or by virtue of the enforcement of any of the Transaction Security or of any
other security interest, which is capable of being applied in or towards
discharge of any of the Secured Obligations is so applied.

7. APPLICATION OF PROCEEDS

7.1Order of Application

Subject to Clause 7.2 (Prospective liabilities), all amounts from time to time
received or recovered by either Creditor pursuant to the terms of any Debt
Document (unless such recovery is a Permitted Payment) or in connection with the
realization or enforcement of all or any part of the Transaction Security (for
the purposes of this Clause 7, the "Recoveries") shall be held by the
Controlling Agent on trust to apply them at any time as the Controlling Agent
(in its discretion) sees fit, to the extent permitted by applicable law (and
subject to the provisions of this Clause 7), in the following order of priority:

(a)

first, on a pro rata basis, in or towards the payment or reimbursement of any
expenses or liabilities incurred by (i) any of the Creditors in connection with
the ascertainment, protection or enforcement of their rights and remedies under
the Debt Documents or (ii) the Account Bank in relation to the Earnings Account
and Retention Account (as such terms are defined in the respective Facility
Agreement);

(b)

second, on a pro rata basis, in or towards payment of any interest owing in
respect of the Facilities;

(c)

third, on a pro rata basis, in or towards repayment of the principal of the
Facilities;

(d)

fourth, on a pro rata basis, in or towards payment of all other sums which may
be owing to any of the Creditors under the Debt Documents; and

(e)

fifth, the balance, if any, in payment or distribution to the relevant Obligor.

7.2Prospective liabilities

Following a Distress Event, the Controlling Agent may, in its discretion:

 

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(a)

hold any amount of the Recoveries which is in the form of cash, and any cash
which is generated by holding, managing, exploiting, collecting, realizing or
disposing of any Non-Cash Consideration; and

(b)

hold, manage, exploit, collect and realize any amount of the Recoveries which is
in the form of Non-Cash Consideration,

in each case for so long as the Controlling Agent shall think fit for later
application under Clause 7.1 (Order of Application) in respect of:

(i)

any sum to any Creditor; and

(ii)

any part of the Liabilities,

that the Controlling Agent reasonably considers, in each case, might become due
or owing at any time in the future.

7.3Investment of Cash Proceeds

Prior to the application of the proceeds of the Security Property in accordance
with Clause 7.1 (Order of Application) the Controlling Agent may, in its
discretion, hold all or part of any Cash Proceeds in one or more suspense or
impersonal account in the name of the Controlling Agent with such financial
institution (including itself) and for so long as the Controlling Agent shall
think fit (the interest being credited to the relevant account) pending the
application from time to time of those monies in the Controlling Agent's
discretion in accordance with the provisions of this Clause 7.

7.4Permitted Deductions

The Controlling Agent shall be entitled, in its discretion, (a) to set aside by
way of reserve amounts required to meet and (b) to make and pay, any deductions
and withholdings (on account of Taxes or otherwise) which it is or may be
required by any law or regulation to make from any distribution or payment made
by it under this Agreement, and to pay all Taxes which may be assessed against
it in respect of any of the Security Property, or as a consequence of performing
its duties or exercising its rights, powers, authorities and discretions.

7.5Good Discharge

(a)Any distribution or payment made in respect of the Secured Obligations shall

be a good discharge, to the extent of that payment or distribution, by the
Controlling Agent:

(i)

in the case of a payment made in cash, to the extent of that payment; and

(ii)

in the case of a distribution of Non-Cash Recoveries, as determined by Clause
7.7 (Cash value of Non-Cash Recoveries).

7.6Calculation of Amounts

For the purpose of calculating any person's share of any amount payable to or by
it, the Controlling Agent shall be entitled to assume that all amounts received
or recovered as a result of the enforcement or realization of the Security
Property are applied in discharge of the Liabilities in accordance with the
terms of the Debt Documents under which those Liabilities have arisen.

 

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7.7Cash value of Non-Cash Recoveries

(a)

The cash value of any Non-Cash Recoveries shall be determined by reference to a
valuation obtained by the Controlling Agent from a Financial Adviser appointed
by the Controlling Agent on such terms as it may consider appropriate.

(b)

If any Non-Cash Recoveries are distributed pursuant to Clause 7 (Application of
Proceeds), the extent to which such distribution is treated as discharging the
Liabilities shall be determined by reference to the cash value of those Non-Cash
Recoveries determined pursuant to paragraph (a) above.

8.THE CONTROLLING AGENT

8.1Authority

(a)

Notwithstanding any other provision of this Agreement, nothing herein shall be
construed to impose any fiduciary or other duty on the Controlling Agent to any
other Party.

(b)

Each Party acknowledges and agrees that the Controlling Agent shall be entitled,
for the benefit of the Creditors, to sell, transfer or otherwise dispose of or
deal with any Transaction Security as provided herein and the Security
Documents, as applicable, without regard to any rights to which the other
Creditors would otherwise be entitled as a result of the Liabilities held by
such other Creditors. Without limitation of the foregoing, each Party agrees
that the Controlling Agent shall not have any duty or obligation first to
marshal or realize upon any type of the Transaction Security, or to sell,
dispose of or otherwise liquidate all or any portion of the Transaction Security
in any manner that would maximize the return to the Creditors, notwithstanding
that the order and timing of any such realization, sale, disposition or
liquidation may affect the amount of proceeds actually received by the Creditors
from such realization, sale, disposition or liquidation. Each of the Creditors
waives any claim it may now or hereafter have against the Controlling Agent or
the Instructing Group arising out of any actions which the Controlling Agent or
the Instructing Group take or omit to take in respect of the Transaction
Security.

(c)

Each of the Creditors authorizes the Controlling Agent to perform the duties,
obligations and responsibilities and to exercise the rights, powers, authorities
and discretions specifically given to the Controlling Agent under or in
connection with the Debt Documents together with any other incidental rights,
powers, authorities and discretions.

8.2Exclusion of liability

(a)Without limiting paragraph (b) below (and without prejudice to any other

provision of any Debt Document excluding or limiting the liability of the

Controlling Agent), the Controlling Agent will not be liable for:

(i)

any damages, costs or losses to any person, any diminution in value, or any
liability whatsoever arising as a result of taking or not taking any action
under or in connection with any Debt Document or the Security Property unless
directly caused by its gross negligence or wilful misconduct;

(ii)

exercising or not exercising any right, power, authority or discretion given to
it by, or in connection with, any Debt Document, the Security Property or any
other agreement, arrangement or document entered

 

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into, made or executed in anticipation of, under or in connection with, any Debt
Document or the Security Property;

(iii)

any shortfall which arises on the enforcement or realization of the Security
Property; or

(iv)

without prejudice to the generality of paragraphs (i) to (iii) above, any
damages, costs, losses, any diminution in value or any liability whatsoever
arising as a result of:

(A)

any act, event or circumstance not reasonably within its control; or

(B)

the general risks of investment in, or the holding of assets in, any
jurisdiction,

including (in each case and without limitation) such damages, costs, losses,
diminution in value or liability arising as a result of: nationalization,
expropriation or other governmental actions; any regulation, currency
restriction, devaluation or fluctuation; market conditions affecting the
execution or settlement of transactions or the value of assets; breakdown,
failure or malfunction of any third party transport, telecommunications,
computer services or systems; natural disasters or acts of God; war, terrorism,
insurrection or revolution; or strikes or industrial action.

(b)

No Party (other than the Controlling Agent) may take any proceedings against any
officer, employee or agent of the Controlling Agent in respect of any claim it
might have against the Controlling Agent or in respect of any act or omission of
any kind by that officer, employee or agent in relation to any Debt Document or
any Security Property.

(c)

Nothing in this Agreement shall oblige the Controlling Agent to carry out:

(i)

any "know your customer" or other checks in relation to any person; or

(ii)

any check on the extent to which any transaction contemplated by this Agreement
might be unlawful for any Creditor,

on behalf of any Creditor and each Creditor confirms to the Controlling Agent
that it is solely responsible for any such checks it is required to carry out
and that it may not rely on any statement in relation to such checks made by the
Controlling Agent.

8.3Creditors' indemnity to the Controlling Agent

(a)Each Creditor shall (in the proportion that the Liabilities due to it bear to
the

aggregate of the Liabilities due to all the Creditors for the time being (or, if
the Liabilities due to the Creditors are zero, immediately prior to their being
reduced to zero)), indemnify the Controlling Agent, within three Business Days
of demand, against any cost, loss or liability incurred by any of them
(otherwise than by reason of the relevant Controlling Agent's gross negligence
or wilful misconduct) in acting as Controlling Agent under, or exercising any
authority conferred under, the Debt Documents (unless the relevant Controlling
Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Debt
Document).

 

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(b)The Obligors shall immediately on demand reimburse any Creditor for any

payment that Creditor makes to the Controlling Agent pursuant to paragraph (a)
above.

9.CHANGES TO THE PARTIES

9.1Assignments and transfers

No Party may:

(a) assign any of its rights; or

(b) transfer any of its rights and obligations,

in respect of any Debt Documents or the Liabilities except as permitted by this
Clause 9 or otherwise by the Debt Documents.

9.2Change of Creditor

A Creditor may assign any of its rights in respect of any Debt Documents or the
Liabilities if:

(i)

that assignment or transfer is in accordance with the terms of the Facility
Agreement to which it is a party; and

(ii)

any assignee or transferee has (if not already a Party as a Creditor (as the
case may be)) acceded to this Agreement, as a Creditor.

10. NOTICES

10.1Communications in writing

Any communication to be made under or in connection with this Agreement shall be
made in writing and, unless otherwise stated, may be made electronically or by
letter.

10.2 Addresses

The contact information (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with this Agreement
is that identified with its name in the respective Facility Agreement.

10.3 Delivery

(a)Any communication or document made or delivered by one person to another

under or in connection with this Agreement will only be effective:

(i)

if by way of electronic means, when received in legible form; or

(ii)

if by way of letter, when it has been left at the relevant address or five
Business Days after being deposited in the post postage prepaid in an envelope
addressed to it at that address,

and, if a particular department or officer is specified as part of its address
details provided under Clause 10.2 (Addresses), if addressed to that department
or officer.

 

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(b)Any communication or document which becomes effective, in accordance with

paragraphs (a) above, after 5:00 p.m. in the place of receipt shall be deemed
only to become effective on the following day.

11. PRESERVATION

11.1Partial invalidity

If, at any time, any provision of a Debt Document is or becomes illegal, invalid
or unenforceable in any respect under any law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions nor the
legality, validity or enforceability of that provision under the law of any
other jurisdiction will in any way be affected or impaired.

11.2No impairment

If, at any time after its date, any provision of a Debt Document (including this
Agreement) is not binding on or enforceable in accordance with its terms against
a person expressed to be a party to that Debt Document, neither the binding
nature nor the enforceability of that provision or any other provision of that
Debt Document will be impaired as against the other party(ies) to that Debt
Document.

11.3Remedies and waivers

No failure to exercise, nor any delay in exercising, on the part of any Party,
any right or remedy under a Debt Document shall operate as a waiver of any such
right or remedy or constitute an election to affirm any Debt Document. No
election to affirm any Debt Document on the part of a Creditor shall be
effective unless it is in writing. No single or partial exercise of any right or
remedy shall prevent any further or other exercise or the exercise of any other
right or remedy. The rights and remedies provided in each Debt Document are
cumulative and not exclusive of any rights or remedies provided by law.

11.4Waiver of defenses

The provisions of this Agreement or any Transaction Security will not be
affected by an act, omission, matter or thing which, but for this Clause 11.4,
would reduce, release or prejudice the subordination and priorities expressed to
be created by this Agreement including (without limitation and whether or not
known to any Party):

(a)

any time, waiver or consent granted to, or composition with, either Obligor or
other person;

(b)

the release of either Obligor or any other person under the terms of any
composition or arrangement with any creditor of any affiliate;

(c)

the taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take up or enforce, any rights against, or security over
assets of, either Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in respect of any
instrument or any failure to realize the full value of any Security;

(d)

any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of either Obligor or other
person;

(e)

any amendment, supplement, extension (whether of maturity or otherwise) or
restatement (in each case, however fundamental and of whatsoever nature, and

 

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whether or not more onerous) or replacement of a Debt Document or any other
document or security;

(f)

any unenforceability, illegality or invalidity of any obligation of any person
under any Debt Document or any other document or security;

(g)

any intermediate Payment of any of the Liabilities owing to the Creditors in
whole or in part; or

(h)

any insolvency or similar proceedings.

12. CONSENTS, AMENDMENTS AND OVERRIDE

12.1Required consents

This Agreement may be amended or waived only with the consent of each Party;
provided, that the Glovis Countess Agent (for itself and on behalf of the Glovis
Countess Creditors who hereby authorizes the Glovis Countess Agent) and the
Green Bay Agent (for itself and on behalf of the Green Bay Creditors who hereby
authorize the Green Bay Agent) may enter into an amendment, supplement,
termination or other modification of this Agreement without the consent of the
Obligors, so long as such amendment, supplement, termination or other
modification does not impose any duty or responsibility on the Obligors that
materially adversely affects them.

12.2Amendments to transaction documents

Neither Creditor shall agree to any amendment to the Facility Agreement or Debt
Documents to which it is a party without the express written consent of the
other Creditor.

12.3Agreement to override

Unless expressly stated otherwise in this Agreement, this Agreement overrides
anything in the Debt Documents to the contrary.

13. Counterparts

This Agreement may be executed in any number of counterparts, and this has the
same effect as if the signatures on the counterparts were on a single copy of
this Agreement.

14.Governing Law

This Agreement and any non-contractual obligations arising out of or in
connection with it are governed by the laws of the State of New York.

15. Enforcement

15.1Jurisdiction

(a)The courts of the State of New York sitting in the Borough of Manhattan in

New York City or of the United States for the Southern District of such State
sitting in the Borough of Manhattan in New York City have exclusive jurisdiction
to settle any dispute arising out of or in connection with this Agreement
(including a dispute relating to the existence, validity or termination of this
Agreement or any non-contractual obligation arising out of or in connection with
this Agreement) (a "Dispute").

 

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(b)

The Parties agree that the courts of State of New York sitting in the Borough of
Manhattan in New York City or of the United States for the Southern District of
such State sitting in the Borough of Manhattan in New York City are the most
appropriate and convenient courts to settle Disputes and accordingly no Party
will argue to the contrary.

(c)

This Clause 15.1 is for the benefit of the Creditors only. As a result, no
Creditor shall be prevented from taking proceedings relating to a Dispute in any
other courts with jurisdiction. To the extent allowed by law, the Creditors may
take concurrent proceedings in any number of jurisdictions.

[Signature Page Follows]

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IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the day and year first
above written.

DVB BANK SE,

as Glovis Countess Agent and as Creditor

By:_____________________________________________________________________________________________________________

Name:

Title:

By:_____________________________________________________________________________________________________________

Name:

Title:

DVB BANK SE,

as Green Bay Agent and as Creditor

By:_____________________________________________________________________________________________________________

Name:

Title:

By:_____________________________________________________________________________________________________________

Name:

Title:

EAST GULF SHIPHOLDING, INC., as Obligor

By:___________________________________________________________________________________________________________

Name:

Title:

INTERNATIONAL SHIPHOLDING CORPORATION, as Obligor

By:___________________________________________________________________________________________________________

Name:

Title:

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