EXECUTION
VERSION

FACILITY AGREEMENT PROVIDING FOR A
SENIOR SECURED TERM LOAN
OF UP TO ¥6,280,000,000

EAST GULF SHIPHOLDING, INC.
as Borrower,

AND

The Banks and Financial Institutions listed on Schedule I hereto,
as Lenders,

AND

DNB NOR BANK ASA,
as Facility Agent

AND

DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT,
as Security Trustee,

AND

INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor

 

 January 23, 2008

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

      
        TABLE OF CONTENTS      
      
        
      
      
        Page      
 
    

1.
DEFINITIONS 
1

 
 
1.1
Specific Definitions 
1

 
 
1.2
Computation of Time Periods; Other Definitional
Provisions                                                                                          14

 
 
1.3
Accounting Terms 
14

 
 
1.4
Certain Matters Regarding Materiality 
14

 
 
2.
REPRESENTATIONS AND WARRANTIES 
14

 
 
2.1
Representations and Warranties 
14

 
 
(a)
Due Organization and Power 
15

 
 
(b)
Authorization and Consents 
15

 
 
(c)
Binding Obligations 
15

 
 
(d)
No Violation 
15

 
 
(e)
Filings; Stamp Taxes 
15

 
 
(f)
Litigation 
15

 
 
(g)
No Default 
15

 
 
(h)
Vessel 
15

 
 
(i)
Insurance 
16

 
 
(j)
Financial Information 
16

 
 
(k)
Tax Returns 
16

 
 
(l)
ERISA 
16

 
 
(m)
Chief Executive Office 
17

 
 
(n)
Foreign Trade Control Regulations 
17

 
 
(o)
Equity Ownership 
17

 
 
(p)
Environmental Matters and Claims 
17

 
 
(q)
Liens 
18

 
 
(r)
Indebtedness 
18

 
 
(s)
Payment Free of Taxes 
18

 
 
(t)
No Proceedings to Dissolve 
18

 
 
(u)
Solvency 
18

 
 
(v)
Compliance with Laws 
18

 
 
(w)
Survival 
18

 
 
3.
THE FACILITY 
18

 
 
3.1
(a)            Purposes 
18

 
 
(b)
Making of the Facility 
18

 
 
(c)
Availability of Advances 
19

 
 
(d)
One Drawdown Date for Each Advance 
19

 
 
3.2
Drawdown Notice 
19

 
 
3.3
Effect of Drawdown Notice 
19

 
 
4.
CONDITIONS 
19

 
 
4.1
Conditions Precedent to the Effectiveness of this
Agreement                                                                                            
19

 
 
(a)
Corporate Authority 
19

 
 
(b)
The Agreement 
20

 
 
(c)
The Note 
20

 
 
(d)
The Creditors 
20

 
 
(e)
Fees 
20

 
 
(f)
Environmental Claims 
20

 
 
(g)
Legal Opinions 
20

 
 
(h)
Officer's Certificate 
21

 
 
(i)
Shipsales Contract 
21

 
 
4.2
Condition Precedent to Advance I 
21

 
 
(a)
Security Documents 
21

 
 
4.3
Conditions Precedent to Advance III 
21

 
 
(a)
Vessel Documents 
21

 
 
(b)
Security Documents 
22

 
 
(c)
Vessel Appraisals 
22

 
 
(d)
ISM DOC 
22

 
 
(e)
Evidence of Current COFR 
22

 
 
(f)
Vessel Liens 
22

 
 
(g)
Vessel Delivery 
22

 
 
(h)
Maritime Administration Approval 
22

 
 
4.4
Further Conditions Precedent 
22

 
 
(a)
Drawdown Notice 
22

 
 
(b)
Representations and Warranties True 
22

 
 
(c)
No Default 
23

 
 
(d)
No Material Adverse Effect 
23

 
 
4.5
Breakfunding Costs 
23

 
 
4.6
Satisfaction after Drawdown 
23

 
 
5.
REPAYMENT AND PREPAYMENT 
23

 
 
5.1
Repayment 
23

 
 
5.2
Voluntary Prepayment; No Re-borrowing 
23

 
 
5.3
Mandatory Prepayment; Sale or Loss of Vessel 
23

 
 
5.4
Optional Reduction of Facility by the Lenders 
24

 
 
5.5
Interest and Cost With Application of Prepayments 
24

 
 
5.6
Borrower's Obligation Absolute 
24

 
 
6.
INTEREST AND RATE 
24

 
 
6.1
Payment of Interest; Interest Rate 
24

 
 
6.2
Maximum Interest 
25

 
 
7.
PAYMENTS 
25

 
 
7.1
Time and Place of Payments, No Set Off 
25

 
 
7.2
Tax Credits 
25

 
 
7.3
Computations; Banking Days 
25

 
 
8.
EVENTS OF DEFAULT 
26

 
 
8.1
Events of Default 
26

 
 
(a)
Principal Payments 
26

 
 
(b)
Interest and other Payments 
26

 
 
(c)
Representations, etc 
26

 
 
(d)
Impossibility, Illegality 
26

 
 
(e)
Mortgage 
26

 
 
(f)
Certain Covenants 
26

 
 
(g)
Covenants 
26

 
 
(h)
Indebtedness and Other Obligations 
26

 
 
(i)
Bankruptcy 
27

 
 
(j)
Judgments 
27

 
 
(k)
Inability to Pay Debts 
27

 
 
(l)
Termination of Operations; Sale of Assets 
27

 
 
(m)
Change in Financial Position 
27

 
 
(n)
Cross-Default 
27

 
 
(o)
ERISA Debt 
27

 
 
8.2
Indemnification 
28

 
 
8.3
Application of Moneys 
28

 
 
9.
COVENANTS 
29

 
 
9.1
Affirmative Covenants 
29

 
 
(a)
Performance of Agreements 
29

 
 
(b)
Notice of Default, etc 
29

 
 
(c)
Obtain Consents 
29

 
 
(d)
Financial Information 
29

 
 
(e)
Contingent Liabilities 
30

 
 
(f)
Vessel Valuations 
30

 
 
(g)
Corporate Existence 
30

 
 
(h)
Books and Records 
30

 
 
(i)
Taxes and Assessments 
30

 
 
(j)
Inspection 
31

 
 
(k)
Inspection and Survey Reports 
31

 
 
(l)
Compliance with Statutes, Agreements, etc 
31

 
 
(m)
Environmental Matters 
31

 
 
(n)
Insurance 
31

 
 
(o)
Vessel Management 
31

 
 
(p)
Brokerage Commissions, etc 
31

 
 
(q)
ISM Code, ISPS Code and MTSA Matters 
32

 
 
(r)
ERISA 
32

 
 
(s)
Evidence of Current COFR 
32

 
 
(t)
Mortgage 
32

 
 
(u)
Listing on NYSE 
32

 
 
9.2
Negative Covenants 
32

 
 
(a)
Liens 
32

 
 
(b)
Third Party Guaranties 
33

 
 
(c)
Liens on Shares of Borrower 
33

 
 
(d)
Subordination of Inter-Company Indebtedness 
33

 
 
(e)
Transaction with Affiliates 
33

 
 
(f)
Change of Flag, Class, Management or Ownership 
33

 
 
(g)
Chartering 
33

 
 
(h)
Change in Business 
34

 
 
(i)
Sale of Assets 
34

 
 
(j)
Changes in Offices or Names 
34

 
 
(k)
Consolidation and Merger 
34

 
 
(l)
Change Fiscal Year 
34

 
 
(m)
Indebtedness 
34

 
 
(n)
Limitations on Ability to Make Distributions 
34

 
 
(o)
Change of Control 
34

 
 
(p)
No Money Laundering 
34

 
 
(q)
Shipsales Contract 
34

 
 
9.3
Financial Covenants 
34

 
 
(a)
Consolidated Indebtedness to Consolidated EBITDA Ratio 
35

 
 
(b)
Working Capital 
35

 
 
(c)
Consolidated Tangible Net Worth 
35

 
 
(d)
Consolidated EBITDA to Interest Expense 
35

 
 
9.4
Asset Maintenance 
35

 
 
10.
Grant of Security. 
35

 
 
11.
GUARANTEE 
36

 
 
11.1
The Guarantee 
36

 
 
11.2
Obligations Unconditional 
36

 
 
11.3
Reinstatement 
37

 
 
11.4
Subrogation 
37

 
 
11.5
Remedies 
37

 
 
11.6
Joint, Several and Solidary Liability 
37

 
 
11.7
Continuing Guarantee 
37

 
 
12.
ASSIGNMENT 
38

 
 
13.
ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC 
38

 
 
13.1
Illegality 
38

 
 
13.2
Increased Costs 
38

 
 
13.3
Nonavailability of Funds 
39

 
 
13.4
Lender's Certificate Conclusive 
39

 
 
13.5
Compensation for Losses 
39

 
 
14.
CURRENCY INDEMNITY 
40

 
 
14.1
Currency Conversion 
40

 
 
14.2
Change in Exchange Rate 
40

 
 
14.3
Additional Debt Due 
40

 
 
14.4
Rate of Exchange 
40

 
 
15.
FEES AND EXPENSES 
40

 
 
15.1
Fees 
40

 
 
15.2
Expenses 
41

 
 
16.
APPLICABLE LAW, JURISDICTION AND WAIVER 
41

 
 
16.1
Applicable Law 
41

 
 
16.2
Jurisdiction 
41

 
 
16.3
WAIVER OF JURY TRIAL 
41

 
 
17.
THE AGENTS 
42

 
 
17.1
Appointment of Agents 
42

 
 
17.2
Appointment of Security  Trustee 
42

 
 
17.3
Distribution of Payments 
42

 
 
17.4
Holder of Interest in Note 
43

 
 
17.5
No Duty to Examine, Etc 
43

 
 
17.6
Agents as Lenders 
43

 
 
17.7
Acts of the Agents 
43

 
 
(a)
Obligations of the Agents 
43

 
 
(b)
No Duty to Investigate 
43

 
 
(c)
Discretion of the Agents 
43

 
 
(d)
Instructions of Majority Lenders 
43

 
 
17.8
Certain Amendments 
43

 
 
17.9
Assumption re Event of Default 
44

 
 
17.10Limitations of
Liability                                                                                                               
44

 
 
17.11Indemnification of the Agent and Security
Trustee                                                                                             
44

 
 
17.12Consultation with
Counsel                                                                                                          45

 
 
17.13Resignation                                                                                                                    45

 
 
17.14Representations of
Lenders                                                                                                          45

 
 
17.15Notification of Event of
Default                                                                                                        45

 
 
18.
NOTICES AND DEMANDS 
45

 
 
18.1
Notices 
45

 
 
19.
MISCELLANEOUS 
46

 
 
19.1
Time of Essence 
46

 
 
19.2
Unenforceable, etc., Provisions - Effect 
46

 
 
19.3
References 
46

 
 
19.4
Further Assurances 
46

 
 
19.5
Prior Agreements, Merger 
46

 
 
19.6
Entire Agreement; Amendments 
47

 
 
19.7
Indemnification 
47

 
 
19.8
Headings 
47

 
SCHEDULES

 
I
The Lenders and the Commitments

II           Approved Ship Brokers
III           Liens
IV           Indebtedness

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            Form of Shipsales Contract Assignment
H            Form of U.S. First Preferred Mortgage
I            Form of Panamanian First Priority Mortgage
J            Form of Marshall Islands First Preferred Mortgage

 

 

 

 

               

                  
                  --                
                

             
        
      
    

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

SENIOR LOAN FACILITY AGREEMENT
 
THIS SENIOR SECURED LOAN AGREEMENT (the “ Agreement” or “Agreement”) is made as
of the 23rd day of January 2008, by and among (1) EAST GULF SHIPHOLDING, INC., a
corporation organized and existing under the laws of the Marshall Islands (the
“Borrower”), (2) INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized
and existing under the laws of the State of Delaware (the “Guarantor”), as
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 Article 11, the “Lenders” and each a “Lender”), (4) DNB NOR BANK
ASA, as facility agent (in such capacity including any successor thereto, the
“Facility Agent”) and (5) DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT, as security
trustee for the Lenders (in such capacity, the “Security Trustee” and, together
with the Facility Agent, the “Agents”).
 
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 Six Billion Two Hundred Eighty Million Yen (¥6,280,000,000);
 
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
 
1.1  Specific 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 Ernst & Young 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;
“Acceptable Charter”
shall mean a time charter in respect of the Vessel with a minimum term
(inclusive of the primary term and any renewal or extension term options) of
five years in form and substance reasonably acceptable to the Majority Lenders;
“Advance I”
shall mean that certain portion of the Facility to be advanced at the request of
the Borrower pursuant to Section 3.1(a) upon the completion of the keel laying
of the Vessel, in the maximum principal amount of up to Seven Hundred Eighty
Five Million Yen (¥785,000,000);
“Advance II”
shall mean that certain portion of the Facility to be advanced at the request of
the Borrower pursuant to Section 3.1(a) upon the completion of the launching of
the Vessel, in the maximum principal amount of up to Seven Hundred Eighty Five
Million Yen (¥785,000,000) plus the amount, if any, of Advance I not advanced to
the Borrower on the Initial Drawdown Date;
“Advance III”
shall mean that certain portion of the Facility to be advanced at the request of
the Borrower pursuant to Section 3.1(a) upon the delivery of the Vessel, in the
maximum principal amount of Four Billion Seven Hundred Ten Million Yen
(¥4,710,000,000) plus the amount, if any, of Advance I and Advance II not
previously advanced to the Borrower;
“Advance(s)”
shall mean Advance I, Advance II and Advance III;
“Affiliate”
shall mean with respect to any Person, any other Person directly or indirectly
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 the meaning ascribed thereto in the preamble;
“Agreement”
shall mean this Agreement, as the same shall be amended, modified or
supplemented from time to time;
“Applicable Margin”
shall mean the rate per annum to be determined, subject to any adjustments
pursuant to Section 6.1 hereof, according to the Guarantor’s Pricing Ratio as
determined by the most recent Compliance Certificate in accordance with the
following:
       Pricing Ratio Applicable Margin
       > 4.0 to 1.0                                    1.10% per annum
       < 4.0 to 1.0                                    0.90% per annum
 
provided however, that after the Final Drawdown Date until the eighth
anniversary thereof, if the Vessel is subject to an Acceptable Charter,
“Applicable Margin” shall mean, for the duration of such Acceptable Charter, the
rate per annum to be determined, subject to any adjustments pursuant to Section
6.1 hereof, according to the Guarantor’s Pricing Ratio as determined by the most
recent Compliance Certificate in accordance with the following:
       Pricing Ratio Applicable Margin
       > 4.0 to 1.0                                    1.00% per annum
       < 4.0 to 1.0                                    0.80% per annum
provided further that following the eighth anniversary of the Final Drawdown
Date “Applicable Margin” shall mean the rate per annum to be determined, subject
to any adjustments pursuant to Section 6.1 hereof, according to the Guarantor’s
Pricing Ratio as determined by the most recent Compliance Certificate in
accordance with the following:
 
      Pricing Ratio Applicable Margin
Without Acceptable Charter
       > 4.0 to 1.0                                    1.25% per annum
       < 4.0 to 1.0                                    1.05% per annum
With Acceptable Charter
       > 4.0 to 1.0                                    1.15% per annum
       < 4.0 to 1.0                                    0.95% per annum
 
any determination of Applicable Margin to be made and become effective on the
first day following the expiry of the then current Interest Period based on the
most recently delivered Compliance Certificate;
“Applicable Rate”
shall mean any rate of interest applicable to an Advance  from time to time
pursuant to Section 6.1;
“Approved Charter”
shall mean any charter party agreement with respect to the Vessel with charter
hire rates that are comparable to the then current market charter hire rates for
similar vessels.  Borrower shall provide the Facility Agent with documented
support for the then current market charter hire rates for vessels similar to
the Vessel at least ninety days prior to the final delivery of the Vessel;
“Assignment and Assumption Agreement(s)”
shall mean any Assignment and Assumption Agreement(s) executed pursuant to
Section 12 substantially in the form set out in Exhibit D;
“Assignment Notices”
shall mean (a) the notice with respect to the Earnings and Charterparties
Assignment substantially in the form set out in Exhibit 1 thereto, (b) the
notice with respect to the Insurances Assignment substantially in the form set
out in Exhibit 3 thereto, and (c) the notice with respect to the Shipsales
Contract Assignment substantially in the form set out in Exhibit 1 thereto;
“Assignments”
shall mean the Earnings and Charterparties Assignment, the Insurances Assignment
and the Shipsales Contract Assignment;
“Banking Day(s)”
shall mean any day that is not a Saturday, Sunday or other day on which (a)
banks in Bremen, Germany, New York, New York and London, England 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;
“Borrower”
shall have the meaning ascribed thereto in the preamble;
“Builder”
shall mean Mitsubishi Heavy Industries, Ltd., a Japanese corporation;
“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, that becomes the beneficial
owner (as defined in Rules 13d-3 under the Exchange Act), directly or
indirectly, of a greater percentage of the total voting power of the Guarantor
than the Johnsen Family or (b)  the Guarantor ceases to own, directly or
indirectly, 100% of the Borrower or (c) the Board of Directors of the Borrower
or 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 or (d) the Johnsen Family shall cease to own at least fifteen
percent (15%) of the Guarantor;
“Classification Society”
shall mean a member of the International Association of Classification Societies
acceptable to the Lenders with whom the Vessel is entered and who conducted
periodic physical 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 a
Security Document or this Facility Agreement;
“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;
“Commitment Fee”
shall have the meaning ascribed thereto in Section 15.1;
“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;
“Consolidated EBITDA”
shall mean, for any period, with respect to the Guarantor and the Subsidiaries,
the sum of (without duplication) (a) Consolidated Net Income; (b) all Interest
Expenses of the Guarantor and the Subsidiaries; (c) income taxes of the
Guarantor and the Subsidiaries; and (d) depreciation and amortization, as well
as other non-cash charges to the extent they have been deducted from income, of
the Guarantor and the Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period; 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, but adding back other
non-cash charges to the extent they have been deducted from income in accordance
with GAAP;
“Consolidated Indebtedness”
all Indebtedness of the Guarantor and the Subsidiaries determined on a
consolidated basis in accordance with GAAP;
“Consolidated Net Income”
for any period shall mean the consolidated net income of the Guarantor and the
Subsidiaries for such period, as shown on the consolidated financial statements
of the Guarantor and the 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) the amount of capital stock (including
its outstanding preferred stock); plus (b) the amount of surplus and retained
earnings (or, in the case of a surplus or retained earnings deficit, minus the
amount of such deficit); plus (c) deferred charges to the extent amortized and
acquired contract costs net of accumulated amortization as stated on the then
most recent audited balance sheet of the Guarantor; minus (d) the sum of (i) the
cost of treasury shares and (ii) the book value of all assets that should be
classified as intangibles (without duplication of deductions in respect of items
already deducted in arriving at surplus and retained earnings) but in any event
including goodwill, minority interests, research and development costs,
trademarks, trade names, copyrights, patents and franchises, unamortized debt
discount and expense, all reserves and any write up in the book value of assets
resulting from a revaluation thereof subsequent to December 31, 1996;
“Creditors”
shall mean, together, the Agents and the Lenders, each a “Creditor”;
“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 a rate per annum equal to two percent (2%) over the Applicable Rate
then in effect;
“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 an Advance be made available to the Borrower, and such Advance is made, as
provided in Section 3;
“Drawdown Notice”
shall have the meaning ascribed thereto in Section 3.2;
“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 4.2(b)(ii), substantially in the
form set out in Exhibit E;
“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(p);
“Environmental Claim(s)”
shall have the meaning ascribed thereto in Section 2.1(p);
“Environmental Law(s)”
shall have the meaning ascribed thereto in Section 2.1(p);
“ERISA”
shall mean the Employment Retirement Income Security Act of 1974, as amended;
“ERISA Affiliate”
shall mean a trade or business (whether or not incorporated) which is under
common control with the Borrower within the meaning of Sections 414(b), (c), (m)
or (o) of the Code;
“ERISA Group”
shall mean the Guarantor and its subsidiaries within the meaning of Section
424(f) of the Code;
“Event(s) of Default”
shall mean any of the events set out in Section 8.1;
“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 in three Advances pursuant to Section 3 in the aggregate principal
amount of the lesser of (i) eighty percent (80%) of the final delivered cost of
the Vessel and (ii) Six Billion Two Hundred Eighty Million Yen (¥6,280,000,000),
or the balance thereof from time to time outstanding, provided however that the
Lenders shall have the right at any time before the fourteenth (14) day prior to
the Final Drawdown Date to reduce the facility to sixty-five (65%) of the final
delivered cost of the Vessel pursuant to Section 5.4;
“Facility Agent”
shall have the meaning ascribed thereto in the preamble;
“Fair Market Value”
shall mean, in respect of the Vessel, the average of two appraisals (measured in
Dollars) on a “willing seller, willing buyer” basis of the Vessel free from any
charterparty or other employment contract from ship brokers listed in Schedule
II or such other independent ship brokers approved by the Majority Lenders, no
such appraisal to be dated more than thirty (30) days prior to the date on which
a determination of Fair Market Value is required pursuant to this Agreement;
“Fee Letter”
shall mean fee letter of even date herewith between the Borrower and the
Facility Agent;
“Final Drawdown Date”
shall mean the Drawdown Date on which Advance III is made available to the
Borrower;
“Final Payment”
shall mean the principal amount of Two Billion One  Hundred Ninety-Eight Million
Twenty-Six Yen (¥2,198,000,026) (as such amount may be adjusted pursuant to
Section 5.4) plus such other amounts as may be necessary to repay the Facility
in full together with accrued but unpaid interest and any other amounts owing by
any Security Party  to any Creditor pursuant to this Agreement, the Note or any
Security Document;
“Final Payment Date”
shall mean September 15, 2020;
“GAAP”
shall have the meaning ascribed thereto in Section 1.3;
“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 trade payables;
“Indemnitee”
shall have the meaning ascribed thereto in Section 19.7;
“Initial Drawdown Date”
shall mean the Drawdown Date on which Advance I is made available to the
Borrower;
“Initial Payment Date”
shall mean December 15, 2010;
“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 4.2(b)(i), 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;
“Interest Period”
shall mean period(s) of one, three, six or twelve months as selected by the
Borrower, or as otherwise agreed by the Lenders and the Borrower;
“Interest Notice”
shall mean a notice from the Borrower to the Facility Agent specifying the
duration of any relevant Interest Period;
“Interest Rate Agreements”
shall mean any interest rate protection agreement, interest rate future
agreement, interest rate option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement entered into between the
Borrower, the Guarantor or any Subsidiary of the Borrower with the Facility
Agent, which is designed to protect the Borrower, the Guarantor or any of the
Borrower's Subsidiaries against fluctuations in interest rates applicable under
this Agreement, to or under which the Borrower, the Guarantor or any of the
Borrower's Subsidiaries is a party or a beneficiary on the date of this
Agreement or becomes a party or a beneficiary hereafter;
“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;
“Johnsen Family”
shall mean (i) Niels W. Johnsen, Erik F. Johnsen, Niels M. Johnsen and Erik L.
Johnsen; (ii) the wives and issue of Niels W. Johnsen, Erik F. Johnsen, Niels M.
Johnsen and Erik L. Johnsen; and (iii) any trust for the benefit of, or
controlled by, any of foregoing;
“LIBOR Rate”
shall mean, for each Interest Period, the London Interbank Offered Rate
(“LIBOR”) as set and published by the British Banker's Association (“BBA”), as
selected by the Borrower three (3) Banking Days before the first day of such
Interest Period as obtained by the Facility Agent from a wire that is sent
through Bloomberg, L.P. which rate is based by BBA on an average of the
Interbank Offered Rates for Yen deposits in the London market based on quotes
from designated banks in the London market two (2) Banking Days before the first
day of such Interest Period. In the event that  LIBOR is no longer available
from the BBA or Bloomberg, L.P. for the applicable interest period, the “LIBOR
Rate” for the interest period shall be equal to the sum of (i) the Short Term
Prime Rate plus (ii) twenty-five one hundredths of one percent (.25%);
“Majority Lenders”
at any time shall mean Lenders holding an aggregate of more than 66.66% of the
Facility then outstanding;
“Material Adverse Effect”
shall mean a material adverse effect on the 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 other obligations that are material to the Borrower
and the Guarantor considered as a whole;
“Materials of Environmental Concern”
shall have the meaning ascribed thereto in Section 2.1(p);
“Mortgage”
shall mean the first preferred United States ship mortgage, the first priority
Panamanian naval mortgage or the first preferred Marshall Islands mortgage on
the Vessel, to be executed by the Borrower in favor of the Security Trustee
pursuant to Section 4.2(a)(i), substantially in the form set out in Exhibit H;
“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 the Borrower or any ERISA Affiliate is making or accruing an
obligation to make contributions or has within any of the three preceding plan
years made or accrued an obligation to make contributions;
“Multiple Employer Plan”
shall mean, at any time, an employee benefit plan, other than a Multiemployer
Plan, subject to Title IV or ERISA, to which a Borrower or ERISA Affiliate, and
one or more employers other than a Borrower or ERISA Affiliate, is making or
accruing an obligation to make contributions or, in the event that any such plan
has been terminated, to which a Borrower or ERISA Affiliate made or accrued an
obligation to make contributions during any of the five plan years preceding the
date of termination of such plan;
“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;
“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”;
“Payment Dates”
means the Initial Payment Date and the dates falling at three (3) month
intervals thereafter, the last of which is the Final Payment Date;
“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 or a
Multiple Employer Plan) covered by Title IV of ERISA;
“Pricing Ratio”
shall mean, at any time, the ratio of the Guarantor’s Consolidated Indebtedness
to Consolidated EBITDA determined on a trailing four quarter basis;
“Proceeding”
shall have the meaning ascribed thereto in Section 8.1(i);
“Required Percentage”
shall mean (i) eighty five percent (85%) from the Final Drawdown Date until the
second anniversary thereof, (ii) eighty percent (80%) from the second
anniversary of the Final Drawdown Date until the third anniversary thereof,
(iii) seventy five percent (75%) from the third anniversary of the Final
Drawdown Date until the fourth anniversary thereof, (iv) seventy percent (70%)
from the fourth anniversary of the Final Drawdown Date until the sixth
anniversary thereof, and (v) sixty five percent (65%) from the sixth anniversary
of the Final Drawdown Date and thereafter;
“Second Drawdown Date”
shall mean the Drawdown Date on which Advance II is made available to the
Borrower;
“Security Document(s)”
shall mean the Mortgage, the Assignments and any other documents that may be
executed as security for the Facility and the Borrower's obligations in
connection therewith;
“Security Party(ies)”
shall mean each of the Borrower and the Guarantor;
“Security Trustee”
shall have the meaning ascribed thereto in the preamble;
“Shipsales Contract”
means that certain shipsales contract between Clio Marine Inc., a Liberian
corporation, and the Borrower dated September 21, 2007, providing for the sale
of the Vessel by Clio Marine Inc. and the purchase of the Vessel by the
Borrower.
“Shipsales Contract Assignment”
shall mean the assignment of the Shipsales Contract, to be executed by the
Borrower in favor of the Security Trustee pursuant to Section 4.1(i)(i),
substantially in the form set out in Exhibit G;
“Short Term Prime Rate”
means the rate quoted on Bloomberg page BTMM JN with the ticker symbol PRIMJPN
Index;
“SMC”
shall mean the safety management certificate issued in respect of a 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(ies)”
shall mean all of the subsidiaries of the Guarantor;
“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
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);
“Termination Event”
shall mean (i) a “reportable event,” as defined in Section 403 of ERISA,
(ii) the withdrawal of a Borrower or any ERISA Affiliate from a Multiemployer
Plan during a plan year in which it was a “substantial employer,” as defined in
Section 4001(a)(2) of ERISA, or the incurrence of liability by a Borrower or any
ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, (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 proceedings to
terminate a Plan or a Multiemployer Plan, or (v) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan or Multiemployer
Plan;
“Total Loss”
shall have the meaning ascribed thereto in the Mortgage;
“Transaction Documents”
shall mean each of this Agreement, the Note and the Security Documents;
“Vessel”
shall mean that certain 6,400 pure car truck carrier currently being constructed
by the Builder with an expected delivery date in the first quarter of 2010,
given Hull No. 2253;
“Withdrawal Liability(ies)”
shall have the meaning given to such term under Part 1 of Subtitle E of Title IV
of ERISA.
“Yen” and the sign “¥”
shall mean the legal currency, at any relevant time hereunder, of Japan;
   

1.2  Computation of Time Periods; Other Definitional Provisions.  In this
Agreement, the Note and the other Security 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 Security Document,
as applicable; references to agreements and other contractual instruments
(including this Agreement, the Note and the Security 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 Security
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.
 
1.3  Accounting Terms.  Unless otherwise specified herein, all accounting terms
used in this Agreement, the Note and in the Security 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.
 
1.4  Certain Matters Regarding Materiality.  To the extent that any
representation, warranty, covenant or other undertaking of the Borrower 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 the Borrower with any governmental rule.
 
2.  REPRESENTATIONS AND WARRANTIES
 
2.1  Representations 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 duly formed and is
validly existing in good standing under the laws of its jurisdiction of
incorporation or formation, 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 Security Documents to which it is a party, and has complied
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 Security
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;
 
(c)  Binding Obligations.  This Agreement, the Note and the Security 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 and those of the Security 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 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 or for
the account of a Subsidiary or Affiliate of the Borrower;
 
(e)  Filings; Stamp Taxes.  Other than the recording of the Mortgage with the
appropriate authorities for the United States, the Republic of Panama or the
Republic of the Marshall Islands (as applicable), and the filing of Uniform
Commercial Code Financing Statements with the Recorder of Deeds in the District
of Columbia in respect of the Assignments, and the payment and 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 Security 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 Security 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 material agreement
by which it is bound, or is in default in respect of any material financial
commitment or obligation;
 
(h)  Vessel.  Upon delivery of the Vessel to the Borrower the Vessel:
 
(i)  
will be in the sole and absolute ownership of the Borrower and duly registered
in the Borrower's name under United States, Panamanian or Marshall Islands flag,
unencumbered, save and except for the Mortgage and as permitted thereby;

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

 
(iii)  
will be operationally seaworthy and in every way fit for its intended service;
and

 
(iv)  
will be 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;
 
(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 which are material in the aggregate 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 within
the meaning of ERISA or Section 4975 of the Code and no condition exists or
event or transaction has occurred in connection with any Plan maintained or
contributed to by any member of the ERISA Group or any ERISA Affiliate resulting
from the failure of any thereof to comply with ERISA which is reasonably likely
to result in any member of the ERISA Group or any ERISA Affiliate incurring any
liability, fine or penalty which individually or in the aggregate could have a
Material Adverse Effect. No member of the ERISA Group nor any ERISA Affiliate,
individually or collectively, has incurred, or reasonably expects to incur,
Withdrawal Liabilities or liabilities upon the happening of a Termination Event
the aggregate of which for all such Withdrawal Liabilities and other liabilities
exceeds or would exceed $30,000,000.  With respect to any Multiemployer Plan,
Multiple Employer Plan or Plan, no member of the ERISA Group nor any ERISA
Affiliate is aware of or has been notified that any “variance” from the “minimum
funding standard” has been requested (each such term as defined in Part 3,
Subtitle B, of Title 1 of ERISA).  No member of the ERISA Group nor any ERISA
Affiliate has received any notice that any Multiemployer Plan is in
reorganization, within the meaning of Title IV of ERISA, which reorganization
could have a Material Adverse Effect;
 
(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;
 
(n)  Foreign Trade Control Regulations.  To the best knowledge of each of the
Security Parties, none of the transactions contemplated herein will violate the
provisions of any statute or regulation enacted to prohibit or limit economic
transactions with certain foreign Persons including, without limitation, any of
the provisions of the Foreign Assets Control Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 500, as
amended);
 
(o)  Equity Ownership.  The Borrower is owned, directly or indirectly, one
hundred percent (100%) by the Guarantor;
 
(p)  Environmental Matters and Claims.  (a) Except as heretofore disclosed in
writing to the Facility Agent (i) the Borrower and its Affiliates (which for
purposes of this Section 2(p) shall be deemed to include the Guarantor and its
respective 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) 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 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;
 
(q)  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 Security Documents or permitted thereby;
 
(r)  Indebtedness.  Other than as disclosed in Schedule IV, neither of the
Security Parties has any Indebtedness;
 
(s)  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 Security Documents
shall be made free and clear of, and without deduction or withholding for an
account of, any Taxes;
 
(t)  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.
 
(u)  Solvency.  On the Closing Date, 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;
 
(v)  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
 
(w)  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  (a)           Purposes.  The Lenders shall make the Facility available to
the Borrower for the purpose of financing up to one hundred percent (100%) of
each of the remaining construction and delivery installments under the Shipsales
Contract.  
 
(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. on the Drawdown Dates, make its
portion of the relevant Advance, in Federal or other funds, immediately
available in New York City to the Facility Agent at its address set forth on
Schedule I 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 4.2 or 4.3 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 Date, and in any event as soon as practicable after receipt.
 
(c)  Availability of Advances.  Subject to satisfaction of the terms and
conditions set forth herein, the Facility will be made available in three
Advances as follows:
 
Advance I on the Initial Drawdown Date,
Advance II on the Second Drawdown Date, and
Advance III on the Final Drawdown Date.
 
(d)  One Drawdown Date for Each Advance.  Each Advance will only be available on
a single Drawdown Date; provided, however, that to the extent an Advance is not
drawn in full on its respective Drawdown Date, the remaining amount of such
Advance may be drawn down on any subsequent Drawdown Date.
 
3.2  Drawdown Notice.  The Borrower shall, at least three (3) Banking Days (or
fewer Banking Days if agreed by the Lenders) before the Drawdown Date with
respect to Advance I and Advance II and at least twenty (20) days before the
Drawdown Date with respect to Advance III, 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 (which shall be consistent in all
material respects with Article II of the Shipsales Contract), (f) specify the
initial Interest Period and (g) be irrevocable.
 
3.3  Effect of Drawdown Notice.  Delivery of a 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
 
4.1  Conditions Precedent to the Effectiveness of this Agreement.  The
effectiveness of this Agreement and 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:
 
(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:
 
(i)  
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 the
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, of the certificate or articles of incorporation and by-laws or similar
constituent document thereof;

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

 
(iv)  
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 (or, in the case of any
Lender as to which an executed counterpart shall not have been received, the
Facility Agent shall have received in form satisfactory to it a telex, facsimile
or other written confirmation from such Lender of the execution of a counterpart
of this Agreement by such Lender).
 
(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.
 
(f)  Environmental Claims.  The Lenders shall be satisfied that neither 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, Waechter, Poitevent, Carrère & Denègre, 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, the United States of America and the Marshall Islands
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)  Shipsales Contract.  The Borrower shall have delivered to the Facility
Agent a true and complete copy of the Shipsales Contract and evidence
satisfactory to the Facility Agent that the Borrower has paid the first
installment of twenty percent (20%) of the Contract Price (as defined in the
Shipsales Contract) due under the Shipsales Contract as required pursuant to
Section 3(a) thereof.
 
4.2  Condition Precedent to Advance I.  The obligation of the Lenders to make
Advance I available to the Borrower under this Agreement shall be expressly
subject to the following condition precedent:
 
(a)  Security Documents.  The Borrower shall have executed and delivered to the
Facility Agent:
 
(i)  
the Shipsales Contract Assignment;

 
(ii)  
the Assignment Notice and the acknowledgement thereof in respect of (i) above;
and

 
(iii)  
such Uniform Commercial Code Financing Statements (Forms UCC-1) as the Facility
Agent shall require.

 
4.3  Conditions Precedent to Advance III.  The obligation of the Lenders to make
Advance III available to the Borrower under this Agreement on the Final Drawdown
Date shall be expressly subject to the following conditions precedent:
 
(a)  Vessel Documents.  The Facility Agent shall have received evidence
satisfactory to it and its counsel that the Vessel upon delivery to the Borrower
will be:
 
(i)  
in the sole and absolute ownership of the Borrower and is duly registered in the
Borrower's name under United States, Panamanian or Marshall Islands flag free of
all liens and encumbrances of record other than its Mortgage;

 
(ii)  
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);

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

 
(iv)  
operationally seaworthy and in every way fit for its intended service;

 
(b)  Security Documents.  The Borrower shall have executed and delivered to the
Facility Agent:
 
(i)  
the Insurances Assignment;

 
(ii)  
the Earnings and Charterparties Assignment;

 
(iii)  
the Assignment Notices with respect to (i) and (ii) above; and

 
(iv)  
such Uniform Commercial Code Financing Statements (Forms UCC-1) as the Facility
Agent shall require.

 
(c)  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.  
 
(d)  ISM DOC.  To the extent required to be obtained by the ISM Code the
Security Trustee shall have received a copy of the DOC for the Vessel.
 
(e)  Evidence of Current COFR.  If the Vessel is registered in the United
States, the Facility Agent shall have received copies of the current Certificate
of Financial Responsibility pursuant to the Oil Pollution Act 1990 for the
Vessel.
 
(f)  Vessel Liens.  The Facility Agent shall have received evidence satisfactory
to it and to its legal advisor that, save for the liens created by the Mortgage
and the Assignments, there are no liens, charges or encumbrances of any kind
whatsoever on the Vessel or on its earnings except as permitted hereby or by any
of the Security Documents.
 
(g)  Vessel Delivery.  The Facility Agent shall be satisfied that satisfactory
arrangements have been made for (x) the registration of the Vessel in the name
of the Borrower under Panamanian or United States flag, (y) the execution of the
Mortgage and (z) the recordation of the Mortgage with the National Vessel
Documentation Center of the United States Coast Guard or the appropriate
authorities in the Republic of Panama or the Republic of the Marshall Islands
(as applicable), in each case on the opening of business on the Banking Day
immediately following the delivery of the Vessel to the Borrower.
 
(h)  Maritime Administration Approval.  If the Vessel is registered in the
United States, the Borrower shall have obtained 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 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.
 
4.4  Further Conditions Precedent.  The obligation of the Lenders to make any
Advance available to the Borrower shall also be expressly conditional upon:
 
(a)  Drawdown Notice.  The Facility Agent having received a Drawdown Notice in
accordance with the terms of Section 3.2.
 
(b)  Representations and Warranties True.  The representations stated in
Section 2 being true and correct as if made on that date.
 
(c)  No Default.  No Default or Event of Default having occurred and being
continuing or would result from the making of the requested Advance.
 
(d)  No Material Adverse Effect.  There having been no Material Adverse Effect
since September 30, 2007.
 
4.5  Breakfunding Costs.  In the event that, on the date specified for the
making of an Advance in the relevant Drawdown Notice, the Lenders shall not be
obliged under this Agreement to make the requested Advance available under this
Agreement, 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 such
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.
 
4.6  Satisfaction 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 prior to the satisfaction of all or
any of the conditions referred to in Sections 4.1, 4.2, 4.3 or 4.4, 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
 
5.1  Repayment.  Subject to the provisions of this Section 5 regarding
application of prepayments, the Borrower shall repay the principal of the
Facility in forty (40) consecutive quarterly installments beginning on the
Initial Payment Date and ending on the Final Payment Date, the first thirty-nine
(39) such installments being in equal amounts, each in the amount of One Hundred
Four Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six Yen
(¥104,666,666) and the last such installment being in the amount of the Final
Payment, such last installment to be paid on the Final Payment Date.
 
5.2  Voluntary Prepayment; No Re-borrowing.  The Borrower may prepay, upon three
(3) Banking Days written notice, the Facility or any portion thereof, without
penalty, 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 5.5.  Each prepayment shall be in a minimum amount of
One Hundred Million Yen (¥100,000,000), plus any One Hundred Million Yen
(¥100,000,000) 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.
 
5.3  Mandatory Prepayment; Sale or Loss of Vessel.  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 Borrower shall either (I) deliver to
the Security Trustee, such additional collateral, of equal or greater value with
the Vessel, as may be satisfactory to the Lenders in their sole discretion or
(II) repay the Facility in full, or such proceeds shall be applied by the
Facility Agent first, towards prepayment of the Facility and the Borrower's
other obligations hereunder in full and second, to the Borrower.
 
5.4  Optional Reduction of Facility by the Lenders.  Any Lender shall have the
right at any time before the fourteenth (14th) day prior to the Final Drawdown
Date, upon written notice to the Borrower, to reduce the Facility to sixty-five
percent (65%) of the final delivered cost of the Vessel.  Should a Lender
exercise the reduction option provided in this Section 5.4 the repayments under
Section 5.1 and each Lender’s Commitment shall be reduced pro-rata.
 
5.5  Interest and Cost With Application of Prepayments.  Any and all prepayments
hereunder, whether mandatory or voluntary, shall be applied in the following
order:
 
(a)  firstly, towards accrued and unpaid interest and for fees due under this
Agreement; and
 
(b)  secondly, towards the installments of the Facility in the inverse order of
their due dates for payment.
 
5.6  Borrower'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.
 
6.  INTEREST AND RATE
 
6.1  Payment 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 Initial 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, which shall be the rate per annum
which is equal to the aggregate of (a) the LIBOR Rate plus (b) the Applicable
Margin; provided, however, that if the Borrower has requested and the Lenders
have agreed to an Interest Period of less than one (1) month, for the purposes
of determining the Applicable Rate, the LIBOR Rate shall be replaced with the
rate equal to the sum of (i) the Short Term Prime Rate plus (ii) twenty-five one
hundredths of one percent (.25%).  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.  Interest for the period beginning on the Initial
Drawdown Date through September 15, 2010 shall be payable quarterly on each
three (3) month anniversary of the Initial Drawdown Date with the exception of
the interest payment due immediately prior to September 15, 2010, which shall be
due on September 15, 2010.  Interest for the period beginning on September 15,
2010 through the Final Payment Date shall be paid quarterly on the fifteenth day
of the month in which it is due.
 
(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)  The Borrower shall give the Facility Agent an Interest Notice specifying
the Interest Period selected at least three (3) Banking Days prior to the end of
any then existing Interest Period, which notice the Facility Agent agrees to
forward on to all Lenders as soon as practicable.  If at the end of any then
existing Interest Period the Borrower fails to give an Interest Notice, the
relevant Interest Period shall be three (3) months.  The Borrower's right to
select an Interest Period shall be subject to the restriction that no selection
of an Interest Period shall be effective unless each Lender is satisfied that
the necessary funds will be available to such Lender for such period and 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 shall have occurred and be
continuing.
 
(d)  Interest payable at the Default Rate shall be payable from time to time on
demand of the Facility Agent.
 
6.2  Maximum 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
 
7.1  Time 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 Banking Day two Banking Days
prior to the due date of such payment, at its office located at 200 Park Avenue,
New York, New York 10166 or to such other office of the Facility Agent as the
Facility Agent may direct, without set-off or counterclaim and free from, clear
of, and without deduction for, any Taxes, provided, however, that 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 as may be
required from time to time by the Lenders.
 
7.2  Tax Credits.  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 has paid additional amounts as
aforesaid (and each Lender agrees to use its best efforts to obtain the benefit
of any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Lender shall reimburse the
Borrower for the amount of the credit so obtained.  Each Lender agrees that in
the event that Taxes are imposed on account of the situs of its loans hereunder,
such Lender, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Lender so as
to avoid the imposition of such Taxes.
 
7.3  Computations; 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
 
8.1  Events 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 and under any Transaction Document
or under any of them, 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 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
 
(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 and such impossibility or illegality, in the reasonable opinion of
such Lender, will have a Material Adverse Effect on any of its rights hereunder
or under the other Transaction Documents or on any of its rights to enforce any
thereof; or
 
(e)  Mortgage.  The Mortgage is not recorded within three (3) Banking Days of
the Final Drawdown Date or 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(m), 9.2(i) and
9.3(a) through (d) inclusive; 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 fifteen (15) 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
 
(h)  Indebtedness and Other Obligations.  Any Security Party 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 Two Million Dollars ($2,000,000) 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 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
 
(l)  Termination of Operations; Sale of Assets.  Except as expressly permitted
under this Agreement, 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 financial position of any
Security Party which, in the reasonable opinion of the Majority Lenders, shall
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; or
 
(o)  ERISA Debt.  Any member of the ERISA Group or any ERISA Affiliate shall (i)
fail to pay when due an amount or amounts aggregating in excess of $1,000,000
which it or they shall have become liable to pay under Title IV of ERISA or
(ii) any member of the ERISA Group or any ERISA Affiliate, individually or
collectively, shall incur, or shall reasonably expect to incur, any Withdrawal
Liability or liability upon the happening of a Termination Event and the
aggregate of all such Withdrawal Liabilities and such other liabilities shall be
in excess of $10,000,000;
 
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 (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.
 
8.2  Indemnification.  The Borrower 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.
 
8.3  Application of Moneys.  Except as otherwise provided in any Security
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:
 
(a)  firstly, 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;
 
(b)  secondly, in or towards payment of any interest owing in respect of the
Facility;
 
(c)  thirdly, in or towards repayment of the principal of the Facility;
 
(d)  fourthly, 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;
 
(e)  fifthly, in or towards payments of any amounts then owed under any Interest
Rate Agreement; and
 
(f)  sixthly, the surplus (if any) shall be paid to the Borrower or to
whomsoever else may be entitled thereto.
 
9.  COVENANTS
 
9.1  Affirmative 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 Security 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 Security 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
material 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 Security 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 ninety (90) days after the end of each
fiscal year of the Guarantor, complete copies of the consolidated financial
reports of the Guarantor and its Subsidiaries together with a separate financial
report of the Borrower (together with a Compliance Certificate), all in
reasonable detail which shall include at least the consolidated balance sheet of
the Guarantor and its Subsidiaries and a balance sheet for the Borrower as of
the end of such year and the related statements of income and sources and uses
of funds for such year, 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 less than forty-five (45) days after the end of
each of the first three quarters of each fiscal year 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 and sources and
uses of funds (together with a Compliance Certificate), all in reasonable
detail, unaudited, but certified to be true and complete by the chief financial
officer of the Guarantor;

 
(iii)  
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;

 
(iv)  
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

 
(v)  
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;

 
(e)  Contingent Liabilities.  For inclusion with each Compliance Certificate
delivered in connection with Sections 9.1(d)(i) and 9.1(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 Valuations.  For inclusion with each Compliance Certificate
delivered pursuant to Section 9.1(d)(i) and 9.1(d)(ii) (for the third quarter of
each year), 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,
provided however, that at any time when the Vessel is subject to an Acceptable
Charter the Borrower shall not be required to deliver the appraisals of the
Vessel together with the third quarter Compliance Certificate.  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 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 listed on Schedule II, which valuations shall be deemed
the equivalent of valuations duly obtained by the Borrower pursuant to this
Section 9.1(f), but the Facility Agent's actions in doing so shall not excuse
any default of the Borrower under this Section 9.1(f);
 
(g)  Corporate Existence.  Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and all
licenses, franchises, permits and assets necessary to the conduct of its
business;
 
(h)  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;
 
(i)  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;
 
(j)  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;
 
(k)  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;
 
(l)  Compliance with Statutes, Agreements, etc.  Do or cause to be done all
things 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;
 
(m)  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;
 
(n)  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;
 
(o)  Vessel Management.  Upon the delivery of the Vessel, cause the Vessel to be
managed both commercially and technically by the Guarantor, a wholly-owned
subsidiary thereof;
 
(p)  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;
 
(q)  ISM Code, ISPS Code and MTSA Matters.  Upon the delivery of the Vessel, (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 ISSC;
 
(r)  ERISA.  Forthwith upon learning of the occurrence of any material liability
of any member of the ERISA Group or any ERISA Affiliate pursuant to ERISA in
connection with the termination of any Plan or withdrawal or partial withdrawal
of any multi-employer plan (as defined in ERISA) or of a failure to satisfy the
minimum funding standards of Section 412 of the Code or Part 3 of Title I of
ERISA by any Plan for which any member of the ERISA Group or any ERISA Affiliate
is plan administrator (as defined in ERISA), furnish or cause to be furnished to
the Lenders written notice thereof;
 
(s)  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; and
 
(t)  Mortgage.  Within three (3) Banking Days of the Final Drawdown Date, cause
the Mortgage to be recorded with the National Vessel Documentation Center of the
United States Coast Guard or the appropriate authorities in the Republic of
Panama or Republic of the Marshall Islands (as applicable).
 
(u)  Listing on NYSE.  With respect to the Guarantor, maintain its listing on
the New York Stock Exchange.
 
9.2  Negative 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 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 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;

 
(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 33C.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 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.  Guaranty the obligations of any third party,
except a direct or indirect subsidiary of the Guarantor, whether or not
affiliated with such Security Party;
 
(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.  With respect to the
Guarantor, procure that, upon the occurrence and during the continuance of an
Event of Default, no payments are made by any Security Party on any
inter-company Indebtedness until such time as the Facility is paid in full;
 
(e)  Transaction with Affiliates.  Enter into any transaction with an Affiliate,
other than on an arms length basis;
 
(f)  Change of Flag, Class, Management or Ownership.  After delivery of the
Vessel to the Borrower, change the flag of the Vessel other than to a
jurisdiction reasonably acceptable to the Lenders, its Classification Society
other than to another member of the International Association of Classification
Societies, the technical management of the Vessel other than to one or more
technical management companies reasonably acceptable to the Lenders or the
immediate or ultimate ownership of the Vessel;
 
(g)  Chartering.  Enter into any charter party agreement with respect to the
Vessel, other than an Approved Charter, without the prior consent of the
Majority Lenders, which consent shall not be unreasonably withheld;
 
(h)  Change in Business.  Materially change the nature of its business or
commence any business materially different from its current business;
 
(i)  Sale of Assets.  Other than 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 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 the proceeds of such sale are distributed in accordance with Section 5.3 of
this Agreement;
 
(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 may merge with any Subsidiary 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 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;
 
(l)  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 Indebtedness incurred to finance the
acquisition and/or construction of any vessels, provided that the principal
amount of such Indebtedness shall not exceed eighty percent (80%) of such
acquisition and/or construction price, unless such Indebtedness is subordinated
to all existing Indebtedness and this Facility; and
 
(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.
 
(o)  Change of Control. Cause or permit a Change of Control.
 
(p)  No Money Laundering. Contravene any law, official requirement or other
regulatory measure or procedure implemented to combat “money laundering” (as
defined in Article 1 of the Directive (91/308/EEC) of the Council of the
European Communities) and comparable United States Federal and state laws.
 
(q)  Shipsales Contract.  Amend any material provision in the Shipsales
contract, without the prior consent of the Facility Agent.
 
9.3  Financial 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
Security Documents, it will:
 
(a)  Consolidated Indebtedness to Consolidated EBITDA Ratio.  Maintain, on a
consolidated basis, a ratio of Consolidated Indebtedness to Consolidated EBITDA
of not more than 4.25 to 1.00, as measured at the end of each fiscal quarter
based on the four most recent fiscal quarters 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, as measured at the
end of each fiscal quarter;
 
(c)  Consolidated Tangible Net Worth.  Maintain a Consolidated Tangible Net
Worth, as measured at the end of each fiscal quarter, in an amount of not less
than the sum of (i) ninety percent (90%) of Consolidated Tangible Net Worth as
of March 31, 2008 and (ii) the sum of fifty percent (50%) of (A) all net income
of the Guarantor (on a consolidated basis) earned after March 31, 2008,  and (B)
the proceeds from the issuance of any common and/or preferred stock of the
Guarantor on or after the date hereof;
 
(d)  Consolidated EBITDA to Interest Expense.  Maintain a ratio of Consolidated
EBITDA to Interest Expense of not less than 2.50 to 1.00, measured at the end of
each fiscal quarter based on the four most recent fiscal quarters for which
financial information is available;
 
9.4  Asset Maintenance.  If at any time during the term of this Agreement after
the Final Drawdown Date, the Fair Market Value of the Vessel is less than the
Required Percentage of the outstanding amount of the Facility, the Borrower
shall, within a period of thirty (30) days 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 5.5) 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 5.5) 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.  For the
purposes of this Section 9.4, the outstanding amount of the Facility shall be
measured in Dollars based on the Facility Agent’s Yen/Dollar exchange rate at
the time of such measurement.
 
10.  GRANT OF SECURITY. 
 
10.1           The Borrower does hereby transfer, convey, mortgage, hypothecate,
pledge, assign and grant a first priority security interest to the Security
Trustee, in and to any Interest Rate Agreement and any forward foreign exchange
contract to the extent of its right, title and interest therein TO HAVE AND TO
HOLD any such Interest Rate Agreement or forward foreign exchange contract unto
the Security Trustee, and its successors and assigns, as security for the due
and punctual payment and performance of its obligations hereunder and under the
Note; provided however that, and these presents are subject to the condition
that, if the Borrower shall have paid or caused to be paid or performed all of
the obligations hereunder and under the Note which are due and owing on or
before the Final Payment Date and no Event of Default shall have occurred and be
subsisting, the security interest created by this Facility Agreement shall
terminate and be discharged and upon the request of the Borrower, the Lenders
shall execute and deliver to the Borrower, at the expense of the Borrower, such
instruments of satisfaction and release as may be appropriate.
 
11.  GUARANTEE
 
11.1  The 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 Security 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.
 
11.2  Obligations 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.
 
11.3  Reinstatement.  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 recission 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.
 
11.4  Subrogation.  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.
 
11.5  Remedies.  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.
 
11.6  Joint, 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.
 
11.7  Continuing Guarantee.  The guarantee in this Section 11 is a continuing
guarantee, and shall apply to all Guaranteed Obligations whenever arising.
 
12.  ASSIGNMENT.
 
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, except that the Guarantor may not assign any of its rights or
obligations hereunder without the written consent of the Lenders.  The Borrower
may assign its rights or obligations hereunder without the consent of the
Lenders to another wholly-owned Subsidiary, subject to such Subsidiary executing
such documentation reasonably required by the Lenders, including but not limited
to a promissory note, first priority vessel mortgage, assignment of earnings and
assignment of insurances relating to the Vessel.  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 of such Lender, to any subsidiary or other affiliate company of any
thereof or, with the consent of the Borrower (except upon the occurrence and
during the continuation of an Event of Default, in which case the Borrower's
consent shall not be required) and the Agents, in the case of the Borrower such
consent not to be unreasonably withheld, to any other bank or financial
institution (in a minimum amount of not less than ¥100,000,000), 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, including, without limitation, the execution of a written consent to
any Assignment and Assumption Agreement.
 
13.  ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
 
13.1  Illegality.  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 13.5.  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.
 
13.2  Increased 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:
 
(a)  such Lender shall notify the Facility Agent and the Borrower of the
happening of such event, and
 
(b)  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.
 
13.3  Nonavailability of Funds.  If the Facility Agent shall determine that, by
reason of circumstances affecting the London Interbank Market generally,
adequate and reasonable means do not or will not exist for ascertaining the
Applicable Rate, the Facility Agent shall give notice of such determination to
the Borrower and the Lenders.  The Borrower, the Facility Agent and the Majority
Lenders shall then negotiate in good faith in order to agree upon a mutually
satisfactory interest rate to be substituted for that which would otherwise have
applied under this Agreement.  If the Borrower, the Facility Agent and the
Majority Lenders are unable to agree upon such a substituted interest rate
within thirty (30) days of the giving of such determination notice, the Facility
Agent shall set an interest rate to take effect at the Facility Agent's
direction, which rate shall be equal to the Applicable Margin plus the cost to
the Lenders (as certified by each Lender) of funding the Facility.
 
13.4  Lender'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.
 
13.5  Compensation for Losses.  Where any portion of the Facility is to be
repaid by the Borrower pursuant to 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
 
14.1  Currency 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 or Yen 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 or Yen, as applicable, due under
this Agreement, the Note and/or the other Transaction Documents.
 
14.2  Change 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 Yen; any excess over the amount due
received or collected by the Lenders shall be remitted to the Borrower.
 
14.3  Additional 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 Security Documents.
 
14.4  Rate 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 Yen with the judgment currency and
includes any premium and costs of exchange payable in connection with such
purchase.
 
15.  FEES AND EXPENSES
 
15.1  Fees.  The Borrower shall pay, for the account of the Lenders, a fee (the
“Commitment Fee”) equal to (i) seventeen and one-half of one percent (17.5%) of
the Applicable Margin from December 7, 2007 through March 31, 2010, and (ii)
thirty-five percent (35%) of the Applicable Margin from April 1, 2010 until the
Final Drawdown Date, in each case, on the average undrawn portion of the
Facility.  Notwithstanding the foregoing, if the Borrower does not draw down the
maximum amount of any Advance on the Drawdown Date on which such amount first
becomes available, the Commitment Fee applicable to the undrawn portion of such
Advance shall be thirty-five percent (35%) of the Applicable Margin.  The
Commitment Fee shall be payable on the undrawn portion of the Facility, provided
however, that if the Lenders exercise their right to reduce the Facility
pursuant to Section 5.4, the Commitment Fee will be calculated on the reduced
amount of the Facility.  For the purposes of the Commitment Fee, if the Facility
is reduced pursuant to Section 5.4, the Facility shall be deemed to be reduced
as of the Closing Date and the excess Commitment Fee paid up to the date of such
reduction shall be refunded to the Borrower.
 
The Borrower shall also pay all fees in the Fee Letter.
 
15.2  Expenses.  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
reasonable costs and expenses, if any, in connection with the enforcement of
this Agreement and the other Transaction Documents 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
 
16.1  Applicable Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
 
16.2  Jurisdiction.  The Borrower 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 Borrower
by mailing or delivering the same by hand to the Borrower 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 Borrower as such, and shall be legal and
binding upon the Borrower 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
Borrower to the Lenders or the Agent) against the Borrower in any such legal
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment.  The Borrower 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 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
 
17.1  Appointment of Agents.  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.  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.
 
17.2  Appointment 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 of any
Lender or received or recovered by any Lender or any agent of any Lender
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 of any Lender
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 Security Documents except those expressly set
forth herein and therein.
 
17.3  Distribution 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 second day after receipt if received before
10 a.m. New York time, or on the third 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 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.
 
17.4  Holder of Interest in Note.  The Agents may treat each Lender as the
holder of all of the interest of such Lender in the Note.
 
17.5  No 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.
 
17.6  Agents 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 the 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.
 
17.7  Acts 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 Security 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.
 
17.8  Certain Amendments.  Neither this Agreement, the Note nor any of the
Security 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 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
Security Document except as expressly provided herein or in such Security
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 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 Agent may be modified without the consent of the Agent.
 
17.9  Assumption re 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 Security 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:
 
(a)  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 Security Document;
 
(b)  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
 
(c)  to any Lender or Lenders for any statements, representations or warranties
contained in this Agreement, in any Security 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 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 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 Agent.
 
17.14  Representations of Lenders.  Each Lender represents and warrants to each
other Lender and the Agent that:
 
(a)  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
 
(b)  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.
 
18.  NOTICES AND DEMANDS
 
18.1  Notices.  All notices, requests, demands and other communications to any
party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to the Borrower or
the Guarantor at the address or facsimile number set forth below and to the
Lenders and the Agents at their address and facsimile numbers set forth in
Schedule I or at such other address or facsimile numbers 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, when such facsimile is transmitted to the facsimile number specified
in this Section and telephonic confirmation of receipt thereof is obtained or
(ii) 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
 
One Whitehall Street
 
New York, NY 10004
 
Facsimile No.:  (212) 514-5692
 
Attention:  Mr. Niels M. Johnsen
 
19.  MISCELLANEOUS
 
19.1  Time 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.
 
19.2  Unenforceable, 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.
 
19.3  References.  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.
 
19.4  Further 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.
 
19.5  Prior 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.
 
19.6  Entire 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.
 
19.7  Indemnification.  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.  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, 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 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 the Security
Parties of their obligations hereunder.
 
19.8  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.
 
[Remainder of Page Intentionally Left Blank]
 

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

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.
 
EAST GULF SHIPHOLDING, INC.,
as Borrower
 
By:___________________________________
Name:
Title:
   
INTERNATIONAL SHIPHOLDING CORPORATION,
as Guarantor
 
By:___________________________________
Name:
Title:
   
DNB NOR BANK ASA,
as Facility Agent and Lender
 
By:____________________________________
Name:
Title:
   
By:____________________________________
Name:
Title:
   
DEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT,
as Security Trustee and Lender
 
By:____________________________________
Name:
Title:
   
By:____________________________________
Name:
Title:

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

SCHEDULE I

LENDERS                                                                                                                     COMMITMENT

DnB NOR Bank ASA
New York Branch
200 Park Avenue, 31st Floor
New York, New York  10166-0396
Facsimile No.:                                212 681 3900
Telephone No.:                                212 681 3856
Email: asa.jemseby@dnbnor.no
Attention: Ms. Asa Jemseby
 
¥3,140,000,000
     
Deutsche Schiffsbank Aktiengesellschaft
Domshof 17, D-28195 Bremen
Germany
Facsimile No.:                                011 49 421 36 09 324
Telephone No.:                                011 49 421 36 09 329
011 49 421 360-9329
Email:Matthias.Fischer@schiffsbank.com
Attention: Dr. Matthias Fischer
 
¥3,140,000,000

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

SCHEDULE II

Approved Ship Brokers

R.S. Platou Shipbrokers
a.s.                                                                                                           Faber
Shipping
Haakon VII's gate
10                                                                                                               Olgasvej
39
Oslo,
Norway                                                                                                            DK-2950
Vedbek
Telephone No.: +47 23 11 20
00                                                                                                     Copenhagen,
Denmark
Facsimile No.: +47 23 11 23
11                                                                                                  
Telephone No.: +45 4566 0450
          Facsimile No.: +45 4566 0547

Fearnleys A/S
Grev 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

Hesnes Shipping AS
Rosanes
Ørsnesallen 20
P.O. Box 40, Teie
3106 Tønsberg
Norway
Telephone No.: +47 33 30 44 44
Facsimile No.: +47 33 32 30 30

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

SCHEDULE III

Security Party Liens as of September 10, 2007

International Shipholding Corporation
 

NONE

The foregoing does not reflect Liens to be discharged as a result of
Indebtedness paid off with the proceeds of the Facility.
 

 
East Gulf Shipholding, Inc.

NONE

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

SCHEDULE IV

Security Party Indebtedness as of January 9, 2008

International Shipholding Corporation
 
1.  
Guarantee of indebtedness in the amount of $0 to Whitney National Bank and
others, which indebtedness has a maturity date of December 6, 2009.

 
2.  
Guarantee of indebtedness in the amount of $26,000,000 to DnB NOR Bank ASA and
others, which indebtedness has a maturity date of September 26, 2015.

 
3.  
Guarantee of indebtedness in the amount of $59,261,000 to Deutsche Schiffsbank
AG and others, which indebtedness has a maturity date of September 30, 2013.

 
4.  
Guarantee of indebtedness of $13,720,000 to Liberty Community Ventures III,
L.L.C., which indebtedness has a maturity date of December 14, 2012.

 
5.  
Guarantee of indebtedness of ¥4,931,818,182 to DnB NOR Bank ASA and others,
which indebtedness has a maturity date of September 10, 2010.

 

 
SK 00382 0150 837418 v6

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