EX-10.2

 

Date 27 January 2011

 

ARGYLE MARITIME CORP.

CATON MARITIME CORP.

DORCHESTER MARITIME CORP.

LONGWOODS MARITIME CORP.

McHENRY MARITIME CORP.

SUNSWYCK MARITIME CORP.

as Joint and Several Borrowers

 

— and —

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

— and —

 

THE ROYAL BANK OF SCOTLAND PLC

as Mandated Lead Arranger

 

— and —

 

THE ROYAL BANK OF SCOTLAND PLC

as Bookrunner, Agent, Security Trustee and Swap Bank

 

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AMENDING AND RESTATING AGREEMENT

 

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relating to
a term loan facility of US$150,000,000

 

Watson, Farley & Williams

London

 

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INDEX

 

Clause

 

Page

 

 

 

1

INTERPRETATION

3

 

 

 

2

AGREEMENT OF ALL PARTIES TO THE AMENDMENT OF THE LOAN AGREEMENT, MASTER
AGREEMENT AND EXISTING FINANCE DOCUMENTS

6

 

 

 

3

CONDITIONS PRECEDENT AND SUBSEQUENT

6

 

 

 

4

CAPITAL INFUSION

7

 

 

 

5

PERMITTED DISCRETIONARY ACTIVITIES

9

 

 

 

6

EXCESS CASH FOR DEBIT AMORTIZATION

9

 

 

 

7

REPRESENTATIONS AND WARRANTIES

10

 

 

 

8

AMENDMENT OF LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

10

 

 

 

9

FURTHER ASSURANCES

12

 

 

 

10

FEES AND EXPENSES

12

 

 

 

11

NOTICES

13

 

 

 

12

SUPPLEMENTAL

13

 

 

 

13

LAW AND JURISDICTION

13

 

 

 

SCHEDULE 1 LENDERS

14

 

 

SCHEDULE 2 REPAYMENT SCHEDULE

15

 

 

SCHEDULE 3 TBS CREDIT FACILITIES

16

 

 

EXECUTION PAGES

17

 

 

APPENDIX 1 FORM OF AMENDED AND RESTATED LOAN AGREEMENT MARKED TO INDICATE
AMENDMENTS TO THE LOAN AGREEMENT

21

 

 

APPENDIX 2 FORM OF CORPORATE GUARANTEE SUPPLEMENTS

1

 

 

APPENDIX 3 FORM OF MORTGAGE ADDENDUM

6

 

 

APPENDIX 4 JOINT VENTURE INVESTMENT SCHEDULES

16

 

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THIS AGREEMENT (hereinafter “this Agreement”) is made on 27 January 2011

 

BETWEEN

 

(1)                                  ARGYLE MARITIME CORP., CATON MARITIME
CORP., DORCHESTER MARITIME CORP., LONGWOODS MARITIME CORP., McHENRY MARITIME
CORP. and SUNSWYCK MARITIME CORP., each a corporation organised and existing
under the laws of the Marshall Islands and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH96960 as joint and several borrowers (the “Borrowers”);

 

(2)                                  THE BANKS AND FINANCIAL INSTITUTIONS listed
in Schedule 1 as lenders (the “Lenders”);

 

(3)                                  THE ROYAL BANK OF SCOTLAND PLC, a company
incorporated in Scotland having its registered office at 36 St. Andrew Square,
Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10
Great Tower Street, London EC3P 3HX, England as mandated lead arranger (the
“Mandated Lead Arranger”);

 

(4)                                  THE ROYAL BANK OF SCOTLAND PLC, a company
incorporated in Scotland having its registered office at 36 St. Andrew Square,
Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10
Great Tower Street, London EC3P 3HX, England as agent (the “Agent”);

 

(5)                                  THE ROYAL BANK OF SCOTLAND PLC, a company
incorporated in Scotland having its registered office at 36 St. Andrew Square,
Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10
Great Tower Street, London EC3P 3HX, England as security trustee (the “Security
Trustee”);

 

(6)                                  THE ROYAL BANK OF SCOTLAND PLC, a company
incorporated in Scotland having its registered office at 36 St. Andrew Square,
Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10
Great Tower Street, London EC3P 3HX, England as swap bank (the “Swap Bank”); and

 

(7)                                  THE ROYAL BANK OF SCOTLAND PLC, a company
incorporated in Scotland having its registered office at 36 St. Andrew Square,
Edinburgh EH2 2YB, Scotland acting through the Shipping Business Centre at 5-10
Great Tower Street, London EC3P 3HX, England as bookrunner (the “Bookrunner”).

 

BACKGROUND

 

(A)                              By a loan agreement dated 29 March 2007 as
amended by a side letter dated 24 July 2007, a supplemental letter agreement
dated 26 March 2008, a supplemental agreement dated 27 March 2009, a side letter
dated 27 May 2009, a side letter dated 3 September 2009, a side letter dated 31
December 2009, a supplemental agreement dated 7 January 2010, a side letter
dated 28 February 2010, a side letter dated 31 March 2010, an amending and
restating agreement dated 6 May 2010 and a side letter dated 16 August 2010 and
as further supplemented and/or amended by letter agreements dated 30
September 2010, 12 November 2010 and 23 December 2010 (the “Loan Agreement”)
each made between (inter alia) (i) the Borrowers as joint and several borrowers,
(ii) the Lenders, (iii) the Mandated Lead Arranger, (iv) the Bookrunner, (v) the
Agent, (vi) the Security Trustee and (viii) the Swap Bank, the Lenders agreed to
make available to the

 

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Borrowers a term loan facility in an amount of One hundred and fifty million
United States Dollars (US$150,000,000).

 

(B)                                By an ISDA master agreement dated 29
March 2007 (the “Master Agreement”) made between the Borrowers and the Swap
Bank, the Borrowers have entered into or will enter into certain Transactions
(as such term is defined in the said Master Agreement) pursuant to separate
Confirmations (as such term is defined in the said Master Agreement).

 

(C)                                By the letter agreement dated 23
December 2010 referred to in Recital (A) above (the “Forbearance Letter”), and
subject to the terms and conditions therein, (i) the Lenders agreed to extend
the period for which they would agree not to exercise their rights or remedies
arising from certain specified Events of Default which forbearance was
originally granted under the letter agreement dated 30 September 2010 referred
to in Recital (A) and previously extended under the letter agreement dated 12
November 2010 referred to in Recital (A), (ii) the Borrowers agreed (inter alia)
to utilise the funds on the Restricted Equity Deposit Account (being $6,175,000)
to meet the delivery instalment of the Contract Price payable under the
Shipbuilding Contract for Ship E (iii) the Lenders agreed to make an Advance of
$160,000 the proceeds of which, together with the Borrowers’ own funds
(including the funds from the Restricted Equity Deposit Account), were used to
meet the delivery instalment of the Contract Price payable under the
Shipbuilding Contract for Ship E, which Ship delivered on 5 January 2011, and
(iv) the Lenders agreed to amend the drawdown schedule for Loans D and F so that
the remaining delivery instalments of the Contract Price payable under the
relevant Shipbuilding Contracts in respect of Ship D and Ship F (which are
scheduled for delivery in April 2011 and August 2011 respectively) shall be met
as follows:

 

 

 

Ship D

 

Ship F

 

 

 

 

 

 

 

Delivery Advance

 

$

7,420,000

 

$

7,420,000

 

 

 

 

 

 

 

Borrower’s own funds

 

0

 

0

 

 

 

 

 

 

 

Payment to Seller

 

$

7,420,000

 

$

7,420,000

 

 

(D)                               As at the date hereof the Total Commitment is
One hundred and forty six million and six hundred and seventy thousand Dollars
($146,670,000) of which One hundred and thirty one million eight hundred and
thirty thousand Dollars ($131,830,000) remains outstanding as follows:-

 

 

 

Amount Drawn

 

Amount Outstanding

 

Amount available for
Drawdown

 

 

 

 

 

 

 

 

 

Loan A

 

$

25,000,000

 

$

23,330,000

 

Zero

 

 

 

 

 

 

 

 

 

Loan B

 

$

24,587,000

 

$

23,752,500

 

Zero

 

 

 

 

 

 

 

 

 

Loan C

 

$

25,000,000

 

$

25,000,000

 

Zero

 

 

 

 

 

 

 

 

 

Loan D

 

$

20,000,000

 

$

20,000,000

 

$

7,420,000

 

 

 

 

 

 

 

 

 

Loan E

 

$

20,000,000

 

$

19,747,500

 

Zero

 

 

 

 

 

 

 

 

 

Loan F

 

$

20,000,000

 

$

20,000,000

 

$

7,420,000

 

 

2

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(E)                                 Subject to the terms and conditions of this
Agreement the Lenders have agreed with the Borrowers:

 

(i)                                     to amend certain covenants in the Loan
Agreement on the terms and conditions set out herein;

 

(ii)                                  to change the Margin;

 

(iii)                               that the Borrowers will pay an additional
restructuring fee;

 

(iv)                              to incorporate within an amended and restated
Loan Agreement the amendments to the Loan Agreement agreed pursuant to the
Forbearance Letter;

 

(v)                                 to reschedule the repayment instalments in
respect of the Loans with no repayments until 30 June 2011 but retaining the
Final Repayment Date of 9 September 2014; and

 

(vi)                              that there will be an infusion of equity into
the New Corporate Guarantor of not less than Ten million Dollars ($10,000,000).

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

1.1                               Defined expressions.  Words and expressions
defined in the Loan Agreement shall have the same meanings when used in this
Agreement unless the context otherwise requires.

 

1.2                               Definitions.  In this Agreement, unless the
contrary intention appears:

 

“Additional Capital Infusion” shall have the meaning given in Clause 4.3;

 

“Additional Fee Letter”  means any letter or letters dated on or about the date
of this Agreement between the Borrowers and any of the Creditor Parties in
respect of any additional fees;

 

“Amended and Restated Loan Agreement”  means the Loan Agreement as amended and
restated by this Agreement in the form set out in Appendix 1;

 

“Capital Infusion” shall mean the Initial Capital Infusion, the proceeds of the
Rights Offering and any Additional Capital Infusion;

 

“Corporate Guarantee Supplements”  means letters supplemental to each of the
Corporate Guarantee and the New Corporate Guarantee executed or to be executed
by the Corporate Guarantor and the New Corporate Guarantor for respectively in
favour of the Security Trustee substantially in the forms set out in Appendix 2;

 

“Deferring Lenders” means the lenders under the TBS Credit Facilities other than
Credit Suisse and Commerzbank AG;

 

3

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“Effective Date”  means the date on which the Agent notifies the Borrowers and
the Creditor Parties that the conditions precedent in Clause 3.2 have been
fulfilled;

 

“Equity Outside Date” means the date falling six months after the Effective
Date;

 

“Escrow Agreement” means the escrow agreement dated 25 January 2011 made between
the New Corporate Guarantor, the Management Shareholders, the Agent, Bank of
America N.A., DVB Group Merchant Bank (Asia) Ltd and JP Morgan Chase Bank,
National Association as escrow agent;

 

“Excess Cash” shall have the meaning given in Clause 6.1;

 

“Existing Finance Documents”  means the Finance Documents (other than the Loan
Agreement) which have been executed prior to the date hereof;

 

“Existing Mortgages”  means:

 

(a)                                  a first preferred Panamanian ship mortgage
dated 23 September 2009 as amended by a first addendum dated 26 March 2010 and a
second addendum dated 6 May 2010, permanently registered at the Public Registry
Office, Microfilm (Mercantile) Section, at Microjacket N-33447, Document
No. 1689768 as of 5 December 2009 by which Argyle Maritime Corp. mortgaged the
vessel “ROCKAWAY BELLE” to and in favour of the Security Trustee on the terms
and conditions therein contained; and

 

(b)                                 a first preferred Panamanian ship mortgage
dated 26 March 2010 as amended by a first addendum dated 6 May 2010 permanently
registered at the Public Registry Office, Microfilm (Mercantile) Section, at
Microjacket N-34102, Document No. 1806157 as of 7 July 2010 by which Caton
Maritime Corp. mortgaged the vessel “DAKOTA PRINCESS” to and in favour of the
Security Trustee on terms and conditions therein contained; and

 

(c)                                  a first preferred Panamanian ship mortgage
dated 2 September 2010 permanently registered at the Public Registry Office,
Microfilm (mercantile) Section, at Microjacket N-34665, Document No. 1895105 as
of 21 December 2010 by which Dorchester Maritime Corp. mortgaged the vessel
“MONTAUK MAIDEN” to and in favour of the Security Trustee on terms and
conditions therein contained;

 

(d)                                 a first preferred Panamanian ship mortgage
dated 5 January 2011 preliminary registered at the Public Registry Office,
Microfilm (mercantile) Section, at Microjacket N-35071, Document No. 1900814 as
of 5 January 2011 by which McHenry Maritime Corp. mortgaged the vessel “OMAHA
BELLE” to and in favour of the Security Trustee on terms and conditions therein
contained;

 

“Final Capital Infusion” shall have the meaning given in Clause 4.1;

 

“Global Restructuring Term Sheet” means the term sheet dated 14 January 2011 in
respect of the restructuring of the Loan Facility and the other TBS Credit
Facilities;

 

“Initial Capital Infusion” shall have the meaning given in Clause 4.1;

 

“Investment Agreement” means the investment agreement dated 25 January 2011,
made between the New Corporate Guarantor and the Management Shareholders;

 

4

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“Jamaican JV” means investment projects in relation to limestone mines in the
Dominican Republic and Jamaica;

 

“Loan Agreement”  means the loan agreement dated 29 March 2007 as referred to in
Recital (A);

 

“LOG-STAR” means LOG-STAR Navegação S.A., a corporation organised under the laws
of Brazil;

 

“Logstar JV” means the joint venture with LOG-STAR in Brazil which will/does
provide break-bulk, bulk, liner and parcel services in the Brazilian coastal
cabotage trade;

 

“Management Shareholders” means Joseph E. Royce, Lawrence A. Blatte and Gregg L.
McNelis;

 

“Master Agreement”  means the master agreement dated 29 March 2007 as amended
and supplemented from time to time and  as referred to in Recital (B);

 

“Minimum Liquidity Covenant” means the covenant set out in Schedule 8(a) of the
Loan Agreement as amended by this Agreement;

 

“Mortgage Addendum” or “Mortgage Addenda”  means in relation to each Existing
Mortgage, an addendum to the Existing Mortgage, executed or to be executed by
the relevant Borrower in favour of the Security Trustee substantially in the
form set out in Appendix 3 (or in such other form as the Agent may approve or
require);

 

“Net Working Capital” shall have the meaning given in Clause 6.1;

 

“Permitted Discretionary Activities” means investments permitted under Clause
5.1;

 

“Permitted Additional Junior Capital” shall have the meaning given in Clause
4.7;

 

“Preferred Equity” shall have the meaning given in Clause 4.1;

 

“Quarter Date” means 31 March, 30 June, 30 September and 31 December in each
year and, in the singular, means any of them;

 

“Rights Offering” means the offering by the New Corporate Guarantor to its
shareholders of rights to purchase Preferred Equity in the New Corporate
Guarantor pursuant to the provisions of the Investment Agreement;

 

“Rollover Capex” shall have the meaning given in Clause 6.1;

 

“Special Accounts” shall have the meaning given in Clause 4.4;

 

“Swap Facility Forbearance Letter” means the letter agreement dated 23
December 2010 and made between the Swap Bank, the Borrowers and the New
Corporate Guarantor;

 

“TBS Credit Facilities” means the credit facilities to various members of the
TBS Group listed in Schedule 3;  and

 

“TBS Group” means the New Corporate Guarantor and its subsidiaries.

 

5

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1.3                               Application of construction and interpretation
provisions of Loan Agreement.  Clauses 1.2, 1.5 and 1.6 of the Loan Agreement
apply, with any necessary modifications, to this Agreement.

 

2                                         AGREEMENT OF ALL PARTIES TO THE
AMENDMENT OF THE LOAN AGREEMENT, MASTER AGREEMENT AND EXISTING FINANCE DOCUMENTS

 

2.1                               Agreement of the parties to this Agreement. 
The parties to this Agreement agree, subject to and upon the terms and
conditions of this Agreement to the amendment of the Loan Agreement, the Master
Agreement and the Existing Finance Documents to be made pursuant to Clauses 8.1,
8.2 and 8.3.

 

2.2                               Effective Date.  The agreement of the parties
to this Agreement contained in Clause 2.1 shall have effect on and from the
Effective Date.

 

2.3                               Repayment Schedules.  With effect from the
Effective Date the repayment schedules in respect of the Loans shall be as set
out in Schedule 2 to this Agreement (and so that Schedule 5 to the Loan
Agreement shall be replaced by Schedule 2 to this Agreement).

 

3                                         CONDITIONS PRECEDENT AND SUBSEQUENT

 

3.1                               General.  The agreement of the parties to this
Agreement contained in Clause 2.1 is subject to the fulfilment of the conditions
precedent in Clause 3.2.

 

3.2                               Conditions precedent.  The conditions referred
to in Clause 2.1 are that the Agent shall have received the following documents
and evidence in all respects in form and substance satisfactory to the Agent and
its lawyers on or before 31 January 2011 or such later date as the Agent may
agree with the Creditor Parties and the Borrowers:

 

(a)                                  in relation to the Borrowers, the New
Corporate Guarantor, the Corporate Guarantor and the Shareholder, documents of
the kind specified in paragraphs 2, 3, 4 and 5 of Part A of Schedule 3 of the
Loan Agreement with appropriate modifications to refer to this Agreement, the
Additional Fee Letter, the Corporate Guarantee Supplements and the Mortgage
Addenda and insofar as each is a party thereto;

 

(b)                                 a duly executed original of this Agreement
duly executed by the parties to it;

 

(c)                                  a duly executed original of the Mortgage
Addenda;

 

(d)                                 a duly executed original of the Corporate
Guarantee Supplements;

 

(e)                                  evidence that each of the TBS Credit
Facilities (other than the Loan Facility) have been restructured upon the
Effective Date as per the Global Restructuring Term Sheet with the approval of
all of the creditors under such TBS Credit Facilities;

 

(f)                                    documentary evidence that the agent for
service of process named in Clause 31 of the Loan Agreement has accepted its
appointment in respect of this Agreement;

 

(g)                                 evidence reasonably satisfactory to the
Agent that the requirements of Clause 4.1(a) have been met;

 

6

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(h)                                 schedules in relation to the proposed
investments in the Logstar JV and Jamaican JV approved by the Agent;

 

(i)                                     schedule of capital expenditure
necessary to complete the construction programmes in respect of Ship D and Ship
F and to maintain the existing fleet of the New Corporate Guarantor and its
subsidiaries’ approved by the Agent;

 

(j)                                     a duly executed original of the
Additional Fee Letter; and

 

(k)                                  any further opinions, consents, agreements
and documents in connection with this Agreement, the Additional Fee Letter, the
Mortgage Addenda, the Corporate Guarantee Supplements and the Finance Documents
which the Agent may reasonably request by notice to the Borrowers no less than 5
Business Days prior to the Effective Date.

 

3.3                               Condition subsequent.  The Agent shall receive
no later than 7 days after the Effective Date, documentary evidence that each
Mortgage Addendum has been duly recorded against the relevant Ship as a valid
addendum to the relevant Existing Mortgage over that Ship according to the laws
of Panama.

 

4                                         CAPITAL INFUSION

 

4.1                               Capital Infusion.

 

(a)                                  On or before the Effective Date the
Management Shareholders shall:

 

(i)                                     invest $3,000,000 (the “Initial Capital
Infusion”) in the New Corporate Guarantor in exchange for the issuance of
Preferred Equity (as defined below) issued separately and apart from the Rights
Offering;

 

(ii)                                  unconditionally backstop the funding of an
additional investment of $7,000,000 (the “Final Capital Infusion”) in the New
Corporate Guarantor by depositing the Final Capital Infusion in an escrow
account with JPMorgan Chase Bank, National Association in accordance with the
Escrow Agreement; and

 

(iii)                               execute and deliver the Investment Agreement
and the Escrow Agreement, each in form and substance reasonably satisfactory to
the Agent.

 

(b)                                 Pursuant to the Investment Agreement, the
New Corporate Guarantor shall issue to the Management Shareholders and other
shareholders, in exchange for the Capital Infusion, rights to acquire preferred
stock, convertible preferred stock or similar equity securities in the New
Corporate Guarantor (the “Preferred Equity”).  The conversion price of
convertible Preferred Equity shall be calculated as determined by the
independent directors of the New Corporate Guarantor.

 

(c)                                  If the full amount of the Final Capital
Infusion is not funded to the New Corporate Guarantor by the Equity Outside
Date, an Event of Default shall occur under the Loan Agreement and the other
Finance Documents.

 

(d)                                 The Initial Capital Infusion shall be
immediately available for Permitted Discretionary Activities.

 

4.2                               Dividends on Preferred Equity.  Until the end
of the Security Period, except as permitted by the Investment Agreement and the
Escrow Agreement, the New Corporate

 

7

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Guarantor shall not declare or pay any dividends or return any capital to any
holder of Preferred Equity or authorise or make any other distribution, payment
or delivery of property or cash to any holder of Preferred Equity, or redeem,
retire, purchase or otherwise acquire, directly or indirectly, for value, any
share of Preferred Equity, and the holders of the Preferred Equity shall not be
entitled to require the New Corporate Guarantor to redeem the Preferred Equity
or pay cash dividends on such Preferred Equity before 9 September 2016.

 

4.3                               Use of Final Capital Infusion.

 

(a)                                  Some or all of the Final Capital Infusion
shall be drawn, as provided in the Investment Agreement and the Escrow
Agreement, on or prior to the Equity Outside Date in exchange for the issuance
to the Management Shareholders of Preferred Equity.  The Management
Shareholders’ portion of the Final Capital Infusion shall be calculated as
$7,000,000 less the sum of (i) the amount, if any, received from other
shareholders subscribing to the Rights Offering and (ii) the amount of the
Additional Capital Infusion (as defined below).

 

(b)                                 In accordance with the Investment Agreement
and the Escrow Agreement, the Final Capital Infusion shall be available to be
drawn, at the discretion of the New Corporate Guarantor, on or prior to the
Equity Outside Date to fund Permitted Discretionary Activities or to maintain
compliance with the Minimum Liquidity Covenant.  Any amounts so withdrawn (an
“Additional Capital Infusion”) shall be in exchange for the issuance to the
Management Shareholders of Preferred Equity of the New Corporate Guarantor
issued separately and apart from the Rights Offering.

 

4.4                               Deposit of Capital Infusion.  The New
Corporate Guarantor shall deposit the proceeds of any Capital Infusion up to
$20,000,000, into one or more segregated accounts (the “Special Accounts”) held
by the New Corporate Guarantor.

 

4.5                               Use of funds in Special Accounts.

 

(a)                                  The funds held in the Special Accounts
shall be available, at the discretion of the New Corporate Guarantor, to fund
Permitted Discretionary Activities or provide liquidity relief (including curing
any breach of the Minimum Liquidity Covenant).  Any funds from the Special
Account used to cure a breach of the Minimum Liquidity Covenant may thereafter
be returned to the Special Accounts to the extent no longer needed to maintain
compliance with such covenant; provided however that no such refund can be
effectuated unless, after such refund, aggregate cash balances (other than cash
in any Special Account and any cash pledged to support letters of credit) equal
or exceed $22,500,000, subject to a limit, applied separately for each cure of a
breach of the Minimum Liquidity Covenant, of the sum of (i) $5,000,000 plus
(ii) the amount by which aggregate amounts spent for Permitted Discretionary
Activities are less than $5,000,000.

 

(b)                                 The New Corporate Guarantor shall not pledge
the Special Accounts or any funds standing to the credit of the Special
Accounts.

 

(c)                                  The New Corporate Guarantor shall have the
sole and exclusive rights to the Special Accounts and the funds standing to the
credit of the Special Accounts and neither the Management Shareholders nor
investors participating in the Rights Offering shall have any residual rights
with respect to funds in the Special Accounts.

 

8

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4.6                               Replenishment of Special Accounts.  The
Special Accounts may be replenished as provided in Clause 4.5(a) above, Clause
4.7 below, by Clause 11.18(iv)(4) of the Loan Agreement and as may otherwise be
permitted by the Finance Documents.

 

4.7                               Permitted Additional Junior Capital. 
Additional capital infusions in the New Corporate Guarantor (“Permitted
Additional Junior Capital”) may be made in any form permitted for the Capital
Infusion and shall be used initially to replenish the Special Accounts up to
$15,000,000 if the aggregate amount of the Capital Infusion before the Equity
Outside Date is $15,000,000 or less, and up to $20,000,000, if the aggregate
amount of the Capital Infusion before the Equity Outside Date is in excess of
$15,000,000.  Permitted Additional Junior Capital in excess of amounts required
to replenish the Special Accounts shall be treated as available cash for the
purposes of calculating Excess Cash.

 

5                                         PERMITTED DISCRETIONARY ACTIVITIES

 

5.1                               Permitted Discretionary Activities.  The New
Corporate Guarantor shall be permitted to make investments in the Logstar JV and
the Jamaican JV out of the funds in the Special Account without the prior
approval of the Lenders provided that:

 

(a)                                  the amount of such investments does not
exceed the lower of Six million five hundred thousand Dollars ($6,500,000) and
fifty per cent (50%) of the sum of the amount of the Capital Infusion and any
Permitted Additional Junior Capital that is funded to the Special Account; and

 

(b)                                 the Borrowers and the other Security Parties
are in compliance with all covenants and undertakings under this Agreement, the
Loan Agreement as amended by the Agreement and the Finance Documents; and

 

(c)                                  such investments are substantially in
accordance with the schedules approved by the Agent on or before the Effective
Date and attached to this Agreement as Appendix 4.

 

6                                         EXCESS CASH FOR DEBIT AMORTIZATION

 

6.1                               Calculation of Excess Cash.  The amount of any
Excess Cash shall be calculated semi-annually beginning with the first such
calculation to be made as at 31 December 2011. “Excess Cash” for these purposes
means:-

 

(a)                                 aggregate cash balances of the New Corporate
Guarantor and its subsidiaries at the measurement date (other than cash in the
Special Account and any cash pledged to support letters of credit);

 

(b)                                 minus Rollover Capex (and “Rollover Capex”
means for these purposes capital expenditure permitted under the terms of the
Loan Agreement as amended by this Agreement to be incurred in the last quarter
of the relevant measurement period but actually to be incurred in the subsequent
measurement period);

 

(c)                                  minus any insurance proceeds held for
repair of any vessel within the fleet of vessels owned and/or operated by the
New Corporate Guarantor or any of its subsidiaries;

 

(d)                                 minus an amount equal to the funds
transferred from the Special Account to cure any breach of the Minimum Liquidity
Covenant and eligible to be refunded to the Special

 

9

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Account under the terms of this Agreement, but not yet so refunded on the
relevant measurement date;

 

(e)                                  plus any increase in net working capital
(as this term is used in GAAP as defined in Schedule 8 of the Loan Agreement)
during the measurement period that exceeds Four million Dollars ($4,000,000) and
minus any decrease in net working capital during the measurement period that
exceeds Four million Dollars ($4,000,000);

 

(f)                                    minus net proceeds from the sale of any
encumbered assets of the New Corporate Guarantor and its subsidiaries outside
the ordinary course of business to the extent used or anticipated to be used
within 30 days of the measurement period to repay debt encumbering such assets;

 

(g)                                 minus Thirty million Dollars ($30,000,000).

 

6.2                               Cash Management Practices.  The New Corporate
Guarantor and its subsidiaries to maintain normal cash management practices
provided however that nothing in such cash management practices are to impair
the New Corporate Guarantor’s ability to pay the calculated amount of Excess
Cash for debt amortisation as provided in this Clause 6.

 

6.3                               Debt amortisation.  Any Excess Cash calculated
at the end of each semi-annual period as aforesaid shall be payable within 60
days after the end of such period where that period is the end of a calendar
year and within 45 days after the end of such period where that period is not
the end of a calendar year towards prepayment of the principal amount (in
inverse order of maturity of instalments) of the Financial Indebtedness owing to
the Deferring Lenders in proportion to the percentage allocations specified
against each of the TBS Credit Facilities in Schedule 3.

 

7                                         REPRESENTATIONS AND WARRANTIES

 

7.1                               Repetition of Loan Agreement representations
and warranties.  The Borrowers represent and warrant to the Agent that the
representations and warranties in clause 10 of the Loan Agreement, as amended
and restated by this Agreement and updated with appropriate modifications to
refer to this Agreement and, where appropriate, the Mortgage Addendum, remain
true and not misleading if repeated on the date of this Agreement with reference
to the circumstances now existing.

 

7.2                               Repetition of representations and warranties
under Existing Finance Documents.  The Borrowers represent and warrant to the
Agent that the representations and warranties in the Existing Finance Documents
to which they are a party, as amended and restated by this Agreement and updated
with appropriate modifications to refer to this Agreement and, where
appropriate, the Mortgage Addendum, remain true and not misleading if repeated
on the date of this Agreement with reference to the circumstances now existing.

 

8                                         AMENDMENT OF LOAN AGREEMENT, MASTER
AGREEMENT AND EXISTING FINANCE DOCUMENTS

 

8.1                               Amendments to Loan Agreement

 

(a)                                  With effect on and from the Effective Date
the Loan Agreement shall be, and shall be deemed by this Agreement to be,
amended and restated in the form of the Amended and Restated Loan Agreement.  In
addition the Loan Agreement shall be amended so that this Agreement becomes an
integral part of the Loan Agreement, so that (i) all references

 

10

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

 

therein to this “Agreement” shall include this Agreement, (ii) the definitions
set out in Clause 1.2 of this Agreement are included in Clause 1.1 of the Loan
Agreement, (iii) by construing references therein to the Existing Mortgages as
if the same referred to the Existing Mortgages as amended and supplemented by
the Mortgage Addenda (iv) by construing references therein to the Corporate
Guarantee and the New Corporate Guarantee as if the same referred to such
Corporate Guarantee and the New Corporate Guarantee as amended and supplemented
by the Corporate Guarantee Supplements and (iv) so that the definition of
Finance Documents therein includes the Additional Fee Letter.

 

(b)                                 As so amended and restated pursuant to
(a) above, the Loan Agreement shall continue to be binding on each of the
parties to it in accordance with its terms.

 

8.2                               Amendments to Master Agreement.  With effect
on and from the Effective Date the Master Agreement shall be, and shall be
deemed by this Agreement to be, amended so that the definition of, and
references throughout to, the Loan Facility and the Credit Support Documents
shall be construed as if the same referred to the Loan Agreement and those
Credit Support Documents as amended and restated or supplemented by this
Agreement and the Mortgage Addendum.

 

8.3                               Amendments to Existing Finance Documents. 
With effect on and from the Effective Date each of the Existing Finance
Documents (other than the Existing Mortgages which are amended and supplemented
by the Mortgage Addenda) shall be, and shall be deemed by this Agreement to be,
amended as follows:

 

(a)                                  the definition of, and references
throughout each of the Existing Finance Documents to, the Loan Agreement, the
Master Agreement and any of the Existing Finance Documents shall be construed as
if the same referred to the Loan Agreement, the Master Agreement and those
Existing Finance Documents as amended and restated or supplemented by this
Agreement;

 

(b)                                 by construing references throughout each of
the Existing Finance Documents to “the Finance Documents” and other like
expressions as if the same included the Additional Fee Letter and the Corporate
Guarantee Supplements;

 

(c)                                  the definition of, and references
throughout each of the Existing Finance Documents to, the Existing Mortgages,
shall be construed as if the same referred to the Existing Mortgages as amended
and supplemented by the Mortgage Addenda; and

 

(d)                                 by construing references throughout each of
the Existing Finance Documents to “this Agreement”, “this Deed”, “hereunder” and
other like expressions as if the same referred to such Existing Finance
Documents as amended and supplemented by this Agreement.

 

8.4                               The Master Agreement and the Existing Finance
Documents to remain in full force and effect.  The Master Agreement and the
Existing Finance Documents shall remain in full force and effect, as amended by:

 

(a)                                  the amendments contained or referred to in
Clause 8.2 and 8.3 and the Mortgage Addenda; and

 

11

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

 

(b)                                 such further or consequential modifications
as may be necessary to give full effect to the terms of this Agreement.

 

8.5                               Waiver.  Pursuant to the Forbearance Letter,
the Lenders and the Agent (for and on behalf of itself and the other Creditor
Parties) agreed, subject to the terms and conditions set out in the Forbearance
Letter, to forbear from exercising any of their rights or remedies arising from
the Specified Events of Default and the Further Specified Events of Default
(each as defined in the Forbearance Letter).  Subject to the fulfilment or
waiver of the conditions set out in Clause 3 of  this  Agreement  and with
effect from the Effective Date:

 

(a)                                  each Creditor Party hereby waives (i) each
of the Specified Events of Default and the Further Specified Events of Default
(as defined in the Forbearance Letter); and (ii) the rights and remedies of the
Creditor Parties (or any of them) arising from the matters referred to in
(a)(i) aforesaid; and

 

(b)                                 the Swap Bank waives (i) each of the
Specified Events of Default and the Further Events of Default (as defined in the
Swap Facility Forbearance Letter) and (ii) the rights and remedies of the Swap
Bank arising from the matters referred to in (b)(i)aforesaid.

 

9                                         FURTHER ASSURANCES

 

9.1                               Borrowers’ obligations to execute further
documents etc.  The Borrowers shall:

 

(a)                                  execute and deliver to the Agent (or as it
may direct) any assignment, mortgage, power of attorney, proxy or other
document, governed by the law of England or such other country as the Agent may,
in any particular case, specify;

 

(b)                                 effect any registration or notarisation,
give any notice or take any other step;

 

which the Agent may, by notice to the Borrowers, reasonably specify for any of
the purposes described in Clause 9.2 or for any similar or related purpose.

 

9.2                               Purposes of further assurances.  Those
purposes are:

 

(a)                                  validly and effectively to create any
Security Interest or right of any kind which the Agent intended should be
created by or pursuant to the Loan Agreement or any other Finance Document, each
as amended and restated or supplemented by this Agreement, or by the Mortgage
Addenda; and

 

(b)                                 implementing the terms and provisions of
this Agreement.

 

9.3                               Terms of further assurances.  The Agent may
specify the terms of any document to be executed by the Borrowers under Clause
9.1, and those terms may include such powers and provisions which the Agent
reasonably considers appropriate to protect its interests under the Finance
Documents.

 

10                                  FEES AND EXPENSES

 

10.1                        Amendment Fee.  The Borrowers shall pay to the Agent
a restructuring fee which in aggregate is equal to zero point five per cent
(0.5%) of the Total Commitment outstanding as at the Effective Date such fee to
be distributed pro rata amongst the

 

12

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

 

Lenders and to be payable in three (3) equal instalments on 31 January 2011, 31
March 2011 and 30 June 2011.

 

10.2                        Expenses.  The provisions of clauses 20.2 - 20.6 of
the Loan Agreement as amended and restated by the Agreement shall apply to the
Agreement as if they were expressly incorporated in this Agreement with any
necessary modifications.

 

11                                  NOTICES

 

11.1                        General.  The provisions of clause 28 (Notices) of
the Loan Agreement, as amended and restated by this Agreement, shall apply to
this Agreement as if they were expressly incorporated in this Agreement with any
necessary modifications.

 

12                                  SUPPLEMENTAL

 

12.1                       Counterparts.  This Agreement may be executed in any
number of counterparts.

 

12.2                        Third party rights.  Other than a Creditor Party, no
person who is not a party to this Agreement has any right under the Contracts
(Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any
term of this Agreement.

 

13                                  LAW AND JURISDICTION

 

13.1                        Governing law.  This Agreement and any
non-contractual obligations arising out of or in connection with it shall be
governed by and construed in accordance with English law.

 

13.2                        Incorporation of the Loan Agreement provisions.  The
provisions of clauses 31.2-31.6 of the Loan Agreement, as amended and restated
by this Agreement, shall apply to this Agreement as if they were expressly
incorporated in this Agreement with any necessary modifications.

 

THIS AGREEMENT has been duly executed as a deed on the date stated at the
beginning of this Agreement.

 

13

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

 

SCHEDULE 1

 

LENDERS

 

 

Lender

 

Lending Office

The Royal Bank of Scotland plc

 

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

Fax No: + 44 207 085 7142

 

Attn: Transaction and Portfolio Management

 

 

 

Citibank, N.A.

 

750 Washington Boulevard

Stamford CT06901

USA

 

Fax No: + 203 975 6265

 

Attn: Mark McElwain

 

 

 

Landesbank Hessen-Thüringen Girozentrale

 

420 Fifth Avenue, 24th Floor

New York, NY 100108-2729

USA

 

Fax No: +1 212 703 5256

 

Attn: Corporate Finance/ Portfolio Management

 

 

 

Norddeutsche Landesbank Girozentrale

 

Ship and Aircraft Finance Department

Friedrichswall 10

30159 Hannover, Germany

 

Fax No: +49 511 361 4785

 

Attn: International Shipping Group

 

 

 

Santander Asset Finance plc

 

298 Deansgate

Manchester

M3 4HH

 

Fax No: + 44 161 953 3517

 

Attn: Corporate Administration Manager

 

 

 

Bank of America, N.A.

 

Bank of America

100 Federal Street

Boston MA 02110

 

Fax No: +617434 1955

 

Attn: Transportation Division - Credit Products

 

14

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

 

SCHEDULE 2

 

REPAYMENT SCHEDULE

 

1                                         The Borrowers shall make a repayment
instalment in respect of each Loan in relation to a Ship* in the following
amounts on each corresponding Quarter Date:

 

Quarter Date

 

Amount Per Ship

 

 

 

 

 

Second Quarter Date 2011

 

$

419,500

 

 

 

 

 

Third Quarter Date 2011

 

$

335,600

 

 

 

 

 

Fourth Quarter Date 2011

 

$

279,667

 

 

 

 

 

First Quarter Date 2012

 

$

214,833

 

 

 

 

 

Second Quarter Date 2012

 

$

214,833

 

 

 

 

 

Third Quarter Date 2012

 

$

214,833

 

 

 

 

 

Fourth Quarter Date 2012

 

$

214,833

 

 

 

 

 

First Quarter Date 2013

 

$

295,833

 

 

 

 

 

Second Quarter Date 2013

 

$

295,833

 

 

 

 

 

Third Quarter Date 2013

 

$

295,833

 

 

 

 

 

Fourth Quarter Date 2013

 

$

295,833

 

 

 

 

 

First Quarter Date 2014

 

$

295,833

 

 

 

 

 

Second Quarter Date 2014

 

$

295,833

 

 

2                                         On the Final Repayment Date the
Borrowers shall repay any outstanding amounts of the Loans in full.

 

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

* For the Second Quarter Date 2011 “Ship” shall include Ship A, Ship B, Ship C
and Ship E.  For the Third Quarter Date 2011 “Ship” shall include Ship A, Ship
B, Ship C, Ship D and Ship E.  For subsequent Quarter Dates “Ship” shall include
all Ships

 

15

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

 

SCHEDULE 3

 

TBS CREDIT FACILITIES

 

Lender Group

 

% Allocation

 

 

 

 

 

 

 

1

 

Bank of America Credit Facilities

 

58.96

%

 

 

 

 

 

 

2

 

DVB Group Merchant Bank (Asia) Ltd Credit Facility

 

12.92

%

 

 

 

 

 

 

3

 

Credit Suisse Credit Facility

 

00.00

%

 

 

 

 

 

 

4

 

AIG Commercial Equipment Finance, Inc. Credit Facility

 

6.15

%

 

 

 

 

 

 

5

 

Commerzbank AG Credit Facility

 

00.00

%

 

 

 

 

 

 

6

 

Berenberg Bank Credit Facility

 

02.52

%

 

 

 

 

 

 

7

 

The Royal Bank of Scotland Credit Facility

 

19.45

%

 

 

 

 

 

 

 

 

 

 

100

%

 

16

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

 

EXECUTION PAGES

 

BORROWERS

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

)

 

ARGYLE MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

)

 

CATON MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

DORCHESTER MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

LONGWOODS MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

McHENRY MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

17

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

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

SUNSWYCK MARITIME CORP.

 

)

 

acting by

/s/ Keith Krut

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

LENDERS

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

PLC

 

 

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

CITIBANK, N.A.

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

LANDESBANK HESSEN-THÜRINGEN

 

)

 

GIROZENTRALE

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

NORDDEUTSCHE LANDESBANK

 

)

 

GIROZENTRALE

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

18

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

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

SANTANDER ASSET FINANCE PLC

 

)

 

acting by

/s/ A. Walhaus

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Ewan Gregory

 

)

 

2 Triton Square, Regents Place

 

 

 

London, NWI 3AN

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

BANK OF AMERICA, N.A.

 

)

 

acting by

/s/ Kavita Shah

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

MANDATED LEAD ARRANGER

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

BOOKRUNNER

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

 

 

 

 

 

 

 

 

 

 

 

AGENT

 

 

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

/s/ Andrew Guthrie

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

19

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

 

SECURITY TRUSTEE

 

 

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

/s/ Andrew Guthrie

 

)

 

 

 

 

 

)

 

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Stephanie Garner

 

)

 

 

 

 

 

 

 

 

 

 

 

SWAP BANK

 

 

 

 

 

 

 

EXECUTED and DELIVERED as a DEED

 

)

 

by

 

 

 

)

 

THE ROYAL BANK OF SCOTLAND PLC

 

)

 

acting by

 

 

 

)

/s/ Colin Manchester,

 

 

)

Heading of Shipping Coverage, Americas

its duly authorised attorney-in-fact

 

)

 

in the presence of:

/s/ Nicola Manchester

 

)

 

 

20

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

 

APPENDIX 1

 

FORM OF AMENDED AND RESTATED LOAN AGREEMENT MARKED TO INDICATE AMENDMENTS TO THE
LOAN AGREEMENT

 

Amendments are indicated as follows:

 

1                                         additions are indicated by underlined
text; and

 

2                                         deletions are shown by the relevant
text being struck out.

 

21

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

 

Dated as of 29 March 2007

 

ARGYLE MARITIME CORP.

CATON MARITIME CORP.

DORCHESTER MARITIME CORP.

LONGWOODS MARITIME CORP.

McHENRY MARITIME CORP.

SUNSWYCK MARITIME CORP.

 

as Joint and Several Borrowers

 

— and —

 

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

 

— and —

 

THE ROYAL BANK OF SCOTLAND plc

as Mandated Lead Arranger

 

— and —

 

THE ROYAL BANK OF SCOTLAND plc

as Bookrunner, Agent, Security Trustee and Swap Bank

 

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

 

LOAN AGREEMENT

 

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

 

relating to a term loan facility of US$150,000,000

 

Watson, Farley & Williams

London

 

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

 

INDEX

 

Clause

 

Page

 

 

 

1

INTERPRETATION

1

 

 

 

2

LOAN FACILITY

1719

 

 

 

3

POSITION OF THE LENDERS AND THE SWAP BANK

2022

 

 

 

4

DRAWDOWN

2122

 

 

 

5

INTEREST

2224

 

 

 

6

INTEREST PERIODS

2426

 

 

 

7

DEFAULT INTEREST

2527

 

 

 

8

REPAYMENT AND PREPAYMENT

2628

 

 

 

9

CONDITIONS PRECEDENT

2831

 

 

 

10

REPRESENTATIONS AND WARRANTIES

3033

 

 

 

11

GENERAL UNDERTAKINGS AND FINANCIAL COVENANTS

3235

 

 

 

12

CORPORATE UNDERTAKINGS

3742

 

 

 

13

INSURANCE

3843

 

 

 

14

SHIP COVENANTS

4247

 

 

 

15

SECURITY COVER

4651

 

 

 

16

PAYMENTS AND CALCULATIONS

4752

 

 

 

17

APPLICATION OF RECEIPTS

4954

 

 

 

18

EARNINGS ACCOUNT AND STANDBY EARNINGS ACCOUNT

4955

 

 

 

19

EVENTS OF DEFAULT

5056

 

 

 

20

FEES AND EXPENSES

5661

 

 

 

21

INDEMNITIES

5763

 

 

 

22

NO SET-OFF OR TAX DEDUCTION

5965

 

 

 

23

ILLEGALITY, ETC

6066

 

 

 

24

INCREASED COSTS

6167

 

 

 

25

SET-OFF

6369

 

 

 

26

TRANSFERS AND CHANGES IN LENDING OFFICES

6369

 

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

 

27

VARIATIONS AND WAIVERS

6672

 

 

 

28

NOTICES

6773

 

 

 

29

JOINT AND SEVERAL LIABILITY

6976

 

 

 

30

SUPPLEMENTAL

7077

 

 

 

31

LAW AND JURISDICTION

7077

 

 

 

SCHEDULE 1 LENDERS

7279

 

 

SCHEDULE 2 DRAWDOWN NOTICE

7381

 

 

SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS

7483

 

 

SCHEDULE 4 TRANSFER CERTIFICATE

7988

 

 

SCHEDULE 5 REPAYMENT INSTALMENTS

8392

 

 

SCHEDULE 6 MANDATORY COST FORMULA

8594

 

 

SCHEDULE 7 CLASSIFICATION OF SHIPS

8797

 

 

SCHEDULE 8 FINANCIAL COVENANTS

8898

 

 

SCHEDULE 9 FORM OF COMPLIANCE CERTIFICATE

97109

 

 

EXECUTION PAGES

992

 

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

 

THIS LOAN AGREEMENT is made as of 29 March 2007

 

BETWEEN:

 

(1)                                  ARGYLE MARITIME CORP., CATON MARITIME
CORP., DORCHESTER MARITIME CORP., LONGWOODS MARITIME CORP., McHENRY MARITIME
CORP. and SUNSWYCK MARITIME CORP. as Joint and Several Borrowers;

 

(2)                                  THE BANKS AND FINANCIAL INSTITUTIONS listed
in Schedule 1, as Lenders;

 

(3)                                  THE ROYAL BANK OF SCOTLAND plc as Mandated
Lead Arranger;

 

(4)                                  THE ROYAL BANK OF SCOTLAND plc as
Bookrunner;

 

(5)                                  THE ROYAL BANK OF SCOTLAND plc as Agent;
and

 

(6)                                  THE ROYAL BANK OF SCOTLAND plc as Swap
Bank.

 

BACKGROUND

 

(A)                              The Lenders have agreed to make available to
the Borrowers a term loan facility of up to $150,000,000 for the purpose of part
financing the acquisition cost of each of six newbuilding multipurpose carriers
being built at Yahua Shipyard, China having hull nos. NYHS200720, NYHS200721,
NYHS200722, NYHS200723, NYHS200724 and NYHS200725.

 

(B)                                The Swap Bank has agreed to enter into
interest rate swap transactions with the Borrowers from time to time to hedge
the Borrowers’ exposure under this Agreement to interest rate fluctuations.

 

(C)                                The Lenders and the Swap Bank have agreed to
share in the security to be granted to the Security Trustee pursuant to this
Agreement on the terms described herein.

 

IT IS AGREED as follows:

 

1                                         INTERPRETATION

 

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

 

“Account Security Deed”  means a deed creating security in respect of the
Standby Earnings Account made or to be made by and between the Borrowers, TBS
Pacific Liner and the Security Trustee, in such form as the Borrowers, TBS
Pacific Liner and the Agent may agree;

 

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

 

“Affected Lender”  has the meaning given in Clause 5.7;

 

“Agency and Trust Agreement”  means the agency and trust agreement executed or
to be executed between the Borrowers, the Lenders, the Agent and the Security
Trustee in such form as the Borrowers and the Agent may agree;

 

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“Agent”  means The Royal Bank of Scotland plc, acting in such capacity through
its office at Level 5, 135 Bishopsgate, London EC2M 3UR, or any successor of it
appointed under clause 5 of the Agency and Trust Agreement;

 

“Approved Managers”  means, Roymar Ship Management Inc., a company incorporated
under the laws of New York and having a place of business at 612 East Grassy
Sprain Road, Yonkers, New York 10710, USA or such other company which the Agent
may, with the authorisation of the Majority Lenders, approve from time to time
as the manager of the Ships;

 

“Availability Period”  means the period commencing on the date of this Agreement
and ending on:

 

(a)                                  (i)                                     in
respect of Loan A, 30 September 2009 (or such later date as the Agent may, with
the authorisation of the Majority Lenders, agree with the Borrowers);

 

(ii)                                  in respect of Loan B, 31 March 2010 (or
such later date as the Agent may, with the authorisation of the Majority
Lenders, agree with the Borrowers);

 

(iii)                               in respect of Loan C, 31 August30
September 2010 (or such later date as the Agent may, with the authorisation of
the Majority Lenders, agree with the Borrowers);

 

(iv)                              in respect of Loan D, 30 April 2011 (or such
later date as the Agent may, with the authorisation of the Majority Lenders,
agree with the Borrowers);

 

(v)                                 in respect of Loan E, 31 January 2011 (or
such later date as the Agent may, with the authorisation of the Majority
Lenders, agree with the Borrowers);

 

(vi)                              in respect of Loan F, 31 August 2011 (or such
later date as the Agent may, with the authorisation of the Majority Lenders,
agree with the Borrowers);

 

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

 

“Available Commitment”  means, in relation to a Lender and at any time, its
Commitment less its Contribution at that time (and “Total Available
Commitments”  means the aggregate of the Available Commitments of all the
Lenders);

 

“Bank of America Facilities” means the credit facilities made available to
Albermarle Maritime Corp and others pursuant to the amended and restated credit
agreement dated as of 28 March 2008 (as amended and in effect from time to time)
and made between Albermarle Maritime Corp., the New Corporate Guarantor, Bank of
America, N.A and others;

 

“Bareboat Charter”  means, in relation to each Ship, the bareboat charter made
or to be made between the relevant Borrower and the Bareboat Charterer in
respect of such Ship;

 

“Bareboat Charterer”  means a company to be nominated by the Borrowers which is
incorporated in the Philippines and owned or controlled by Aboitiz Jebsen, or
such other company as the Borrowers may nominate with the Agent’s approval which
is not to be unreasonably withheld;

 

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“Bookrunner” means The Royal Bank of Scotland plc, acting in such capacity
through Loan Markets, 3rd Floor, 135 Bishopsgate, London EC2M 3UR;

 

“Borrower A”  means Argyle Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrower B”  means Caton Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrower C”  means Dorchester Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrower D”  means Longwoods Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrower E”  means McHenry Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrower F”  means Sunswyck Maritime Corp., being a corporation organised and
existing under the laws of the Marshall Islands and having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“Borrowers”  means together Borrower A, Borrower B, Borrower C, Borrower D,
Borrower E and Borrower F and, in the singular, means any of them;

 

“Builder”  means Nantong Yahua Shipbuilding Co., Ltd a corporation organised and
existing under the laws of the People’s Republic of China, having its registered
office at 1# Hongzha Road, Jinweigang, Nantong Jiangsu P.C. 226361, the People’s
Republic of China;

 

“Business Day”  means a day on which banks are open for general business in
Dublin, Frankfurt, London and Paris and, in respect of a day on which a payment
is required to be made under a Finance Document, also in New York City;

 

“China Communications”  means China Communications Construction Company Ltd, a
corporation organised and existing under the laws of the People’s Republic of
China, having its registered office at No. B88, An Ding Men Wai Street, Beijing
100011, The People’s Republic of China;

 

“Classification” means, in relation to a Ship, the classification set opposite
its name in Schedule 7;

 

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

 

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

 

3

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“Contract Price”  means, in relation to each Ship, the aggregate amount payable
to the Seller pursuant to the terms of the Shipbuilding Contract for such Ship
being in each case $35,420,000;

 

“Contractual Currency”  has the meaning given in Clause 21.4;

 

“Contribution”  means, in relation to a Lender the part of the Loans which is
owing to that Lender (and “Total Contributions” means the aggregate of the
Contributions of all the Lenders);

 

“Corporate Guarantee”  means the corporate guarantee executed or to be executed
by the Corporate Guarantor in favour of the Security Trustee, in such form as
the Corporate Guarantor and the Agent may agree;

 

“Corporate Guarantor”  means TBS International Limited, a company incorporated
under the laws of Bermuda having its principal office at Suite 306, Commerce
Building, One Chancery Lane, Hamilton HM12, Bermuda;

 

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

 

“Delivery Advances”  means together Loan A Delivery Advance, Loan B Delivery
Advance, Loan C Delivery Advance, Loan D Delivery Advance, Loan E Delivery
Advance and Loan F Delivery Advance (as each such expression is defined in
Clause 2.1) and, in the singular, means any of them;

 

“Delivery Date”  means, in relation to each Ship, the date of delivery of such
Ship by the Seller to the relevant Borrower under the relevant Shipbuilding
Contract;

 

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

 

(a)                                  it is entered into by the Borrowers
pursuant to the Master Agreement with the Swap Bank; and

 

(b)                                 its purpose is the hedging of the Borrowers’
exposure under this Agreement to fluctuations in LIBOR arising from the funding
of the Loans (or any part thereof) for a period expiring no later than the final
Repayment Date;

 

“Dispute” has the meaning given to that term in Clause 31.6;

 

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

 

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

 

“Drawdown Notice”  means a notice in the form set out in Schedule 2 (or in any
other form which the Agent approves or reasonably requires);

 

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

 

4

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(a)                                  all freight, hire and passage moneys,
compensation payable to the Borrower owning the Ship in the event of requisition
of the Ship for hire, remuneration for salvage and towage services, demurrage
and detention moneys and damages for breach (or payments for variation or
termination) of any charterparty or other contract for the employment of the
Ship;

 

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

 

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

 

“Earnings Account”  means an account in the name of TBS Pacific Liner with the
Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX
designated with such designation as the Agent may allocate upon its opening or
any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Earnings Account for the purposes of this Agreement;

 

“Environmental Claim” means:

 

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

 

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

 

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

 

“Environmental Incident”  means:

 

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

 

(b)                                 any incident in which Environmentally
Sensitive Material is released from a vessel other than a Ship and which
involves a collision between a Ship and such other vessel or some other incident
of navigation or operation, in either case, in connection with which a Ship is
actually or potentially liable to be arrested, attached, detained or injuncted
and/or a Ship and/or a Borrower and/or any Approved Manager of a Ship is at
fault or allegedly at fault or otherwise liable to any legal or administrative
action; or

 

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

 

5

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

 

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

 

“Event of Default”  means any of the events or circumstances described in Clause
19.1;

 

“Fee Letter” means any letter or letters dated on or about the date of this
Agreement between the Mandated Lead Arranger and the Borrowers (or the Agent and
the Borrowers) setting out any of the fees referred to in Clause 20.1(a), (b) ,
(c), (d), (e), (f), (g) and (h), a letter dated 27 March 2009 between the
Borrowers and the Agent and any further letters in relation to fees between the
Borrowers and the Agent;

 

“Final Repayment Date” means 9 September 2014;

 

“Finance Documents” means:

 

(a)                                  this Agreement;

 

(b)                                 the Agency and Trust Agreement;

 

(c)                                  the Multiparty Deeds;

 

(d)                                 the Mortgages;

 

(e)                                  the Master Agreement;

 

(f)                                    the Master Agreement Assignment;

 

(g)                                 the Predelivery Security Assignments;

 

(h)                                 the Corporate Guarantee;

 

(i)                                     the New Corporate Guarantee;

 

(j)                                     the Shares Security Deeds;

 

(k)                                  the Account Security Deed;

 

(l)                                     the Restricted Equity Deposit Account
Security Deed;

 

(l)                                     (m)the Fee Letter; and

 

(n)                                 the Intercreditor Agreement; and

 

(m)                               (o)any other document (whether creating a
Security Interest or not) which is executed at any time by the Borrowers or any
other person as security for, or to establish any

 

6

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form of subordination or priorities arrangement in relation to, any amount
payable to the Creditor Parties under this Agreement or any of the other
documents referred to in this definition;

 

“Financial Indebtedness”  means, in relation to a person (the “debtor”), a
liability of the debtor:

 

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

 

(b)                                 under any loan stock, bond, note or other
security issued by the debtor;

 

(c)                                  under any acceptance credit, guarantee or
letter of credit facility made available to the debtor;

 

(d)                                 under a financial lease, a deferred purchase
consideration arrangement or any other agreement having the commercial effect of
a borrowing or raising of money by the debtor (other than normal trade credit
not exceeding 180 days);

 

(e)                                  under any foreign exchange transaction, any
interest or currency swap or any other kind of derivative transaction entered
into by the debtor or, if the agreement under which any such transaction is
entered into requires netting of mutual liabilities, the liability of the debtor
for the net amount; or

 

(f)                                    under a guarantee, indemnity or similar
obligation entered into by the debtor in respect of a liability of another
person which would fall within paragraphs (a) to (e) if the references to the
debtor referred to the other person;

 

“First Sub-Time Charter” means in relation to each Ship, the time charter made
or to be made between the Time Charterer and the relevant Borrower in respect of
such Ship;

 

“Guarantee Facility Agreement”  means the guarantee facility agreement of even
date herewith made between the Borrowers as obligors and the Issuing Bank
relating to a guarantee facility of $84,000,000;

 

“Insurances”  means, in relation to a Ship:

 

(a)                                  all policies and contracts of insurance,
including entries of the Ship in any protection and indemnity or war risks
association, which are effected in respect of the Ship, its Earnings or
otherwise in relation to it; and

 

(b)                                 all rights and other assets relating to, or
derived from, any of the foregoing, including any rights to a return of a
premium;

 

“Intercreditor Agreement”  means the intercreditor agreement executed or to be
executed between the Borrowers, the Security Trustee and the Issuing Bank in
such form as such parties may agree;

 

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

 

“ISM Code”  means the International Safety Management Code (including the
guidelines on its implementation), adopted by the International Maritime
Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may
be amended or supplemented from time to time (and the terms “safety management
system”, “Safety Management

 

7

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Certificate” and “Document of Compliance” have the same meanings as are given to
them in the ISM Code);

 

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

 

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

 

“Issuing Bank”  means The Royal Bank of Scotland plc acting as issuing bank
under the Guarantee Facility Agreement acting through the Shipping Business
Centre, 5-10 Great Tower Street, London EC3P 3HXLaguna Belle and Seminole
Princess Leases” means the operating leases from DVB Bank of m.v.s “Laguna
Belle” and “Seminole Princess”;

 

“Joint Ventures”  means the following investment projects (details of which have
separately been advised to the Agent):

 

(a)                                   investments and loans in relation to a
joint venture in South Africa with ICM Forwarding to form African Projects
Logistics, a logistics provider for the South African Medupi Power Station
Project;

 

(b)                                  investments in relation to limestone mines
in the Dominican Republic and Jamaica;

 

(c)investments in relation to the LOG-STAR joint venture in Brazil which
will/does provide break bulk, bulk, liner and parcel services in the Brazilian
coastal cabotage trade

 

“Laguna Belle and Seminole Princess Leases” means the operating leases from DVB
Bank of m.v.s. “Laguna Belle” and “Seminole Princess”;

 

“Lender”  means a bank or financial institution listed in Schedule 1 and acting
through its branch indicated in Schedule 1 (or through another branch notified
to the Agent under Clause 26.14) or its transferee, successor or assign;

 

“LIBOR”  means, for an Interest Period the higher of:

 

(a)                                   One point five per cent (1.5%) per annum;
or

 

(b)

 

(ai)                               the rate per annum equal to the offered
quotation for deposits in Dollars for a period equal to, or as near as possible
equal to, the relevant Interest Period which appears on REUTERS BBA Page LIBOR
01 at or about 11.00 a.m. (London time) on the Quotation Date for that Interest
Period (and, for the purposes of this Agreement, “REUTERS BBA Page LIBOR 01“
means the display designated as “REUTERS BBA Page LIBOR 01” on the Reuters Money
News Service or such other page as may replace REUTERS BBA Page LIBOR 01 on that
service for the purpose of displaying rates comparable to that rate or on such
other service as may be nominated by the British Bankers’ Association as the
information vendor for the purpose of displaying British Bankers’ Association
Interest Settlement Rates for Dollars); or

 

(bii)                           if no rate is quoted on REUTERS BBA Page LIBOR
01, the rate per annum determined by the Agent to be the arithmetic mean
(rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.)
of the rates per annum notified to the Agent by each Reference Bank as the rate
at which deposits in Dollars are offered to that Reference Bank by leading banks
in the London Interbank Market at that Reference Bank’s request at or about

 

8

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11.00 a.m. (London time) on the Quotation Date for that Interest Period for a
period equal to that Interest Period and for delivery on the first Business Day
of it;

 

“Loan A”  means the five Advances referred to in Clause 2.1(i) or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan B”  means the five Advances referred to in Clause 2.1(ii) or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan C”  means the five Advances referred to in Clause 2.1(iii) or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan D”  means the five Advances referred to in Clause 2.1(iv) or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan E”  means the five Advances referred to in Clause 2.1(v) or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan F”  means the five Advances referred to in Clause 2.1(vi)or (as the
context requires) the principal amount thereof for the time being advanced and
outstanding under this Agreement;

 

“Loan Facility”  means, the loan facility of $150,000,000 made available under
this Agreement;

 

“Loans”  means Loan A, Loan B, Loan C, Loan D, Loan E and Loan F and, in the
singular, means any of them;

 

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

 

“Majority Lenders”  means:

 

(a)                                  before an Advance has been made, Lenders
whose Commitments total 66.66 per cent. of the Total Commitments; and

 

(b)                                 after an Advance has been made, Lenders
whose Contributions total 66.66 per cent. of the Total  Contributions;

 

“Mandated Lead Arranger”  means The Royal Bank of Scotland plc, acting in such
capacity through the Shipping Business Centre, 5-10 Great Tower Street, London
EC3P 3HX;

 

“Mandatory Cost”  means the percentage rate per annum calculated by the Agent in
accordance with Schedule 6;

 

“Margin”  means in relation to each Loan fivefour point zerotwo five per cent.
(5.004.25%) per annum;

 

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“Master Agreement”  means the master agreement (on the 1992 ISDA (Multicurrency
Crossborder) form) dated 29 March 2007 between the Borrowers and the Swap Bank
and includes all Designated Transactions from time to time entered into and
Confirmations from time to time exchanged under such master agreement as the
same may be amended, supplemented or the subject of one of more assumption
agreements;

 

“Master Agreement Assignment”  means the assignment of the Master Agreement to
be made between the Borrowers and the Security Trustee, in such form as the
Borrowers and the Agent may agree;

 

“Mortgage”  means, in relation to a Ship, the first preferred Panamanian ship
mortgage on that Ship to be executed by the relevant Borrower in favour of the
Security Trustee, in such form as the relevant Borrower and the Agent may agree
and fully cross-collateralised with the Mortgages over the other Ships;

 

“Multiparty Deed”  means, in relation to a Ship, a deed containing amongst other
things (i) an assignment of the relevant Borrower’s interest in the Earnings,
the Insurances and any Requisition Compensation of that Ship, (ii) an assignment
of the relevant Borrower’s rights under the relevant Bareboat Charter and the
Second Sub-Time Charter (iii) an assignment of the Bareboat Charterer’s interest
in the Insurances of that Ship and the relevant Time Charter, (iv) an assignment
of the Time Charterer’s rights under the First Sub-Time Charter and (v) an
assignment of TBS Worldwide’s rights under the TBS Worldwide Time Charters to be
made by and between the relevant Borrower, the Bareboat Charterer the, Time
Charterer, TBS Worldwide and the Security Trustee, in such form as the relevant
Borrower and the Agent may agree;

 

“Negotiation Period”  has the meaning given in Clause 5.10;

 

“New Corporate Guarantee”  means the corporate guarantee executed or to be
executed by the New Corporate Guarantor in favour of the Security Trustee, in
such form as the New Corporate Guarantor and the Agent may agree;

 

“New Corporate Guarantor”  means TBS International Public Limited Company, a
company incorporated in Ireland having its registered office at Arthur Cox
Building, Earlsfort Centre, Earlsfort terrace, Dublin 2, Ireland;

 

“Other Pre-delivery Security Assignments” means the Pre-delivery Security
Assignments as defined in the Guarantee Facility Agreement;

 

“Overall Agreement”  means the overall agreement dated 24 February 2007 relating
to the Shipbuilding Contracts and made between the Corporate Guarantor and the
Seller;

 

“Payment Currency”  has the meaning given in Clause 21.4;

 

“Permitted Logstar Debt” means the debt of the Logstar JV up to $3,500,000
related to merchant marine credits and provided that such debt shall be non
recourse to the New Corporate Guarantor, the Corporate Guarantor and the
Borrowers;

 

“Permitted Security Interests”  means:

 

(a)                                  Security Interests created by the Finance
Documents and the Other Pre-delivery Security Assignments;

 

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(b)                                 liens for unpaid master’s and crew’s wages
in accordance with usual maritime practice;

 

(c)                                  liens for salvage;

 

(d)                                 liens arising by operation of law for not
more than 2 months’ prepaid hire under any charter in relation to a Ship not
prohibited by this Agreement;

 

(e)                                  liens for master’s disbursements incurred
in the ordinary course of trading and any other lien arising by operation of law
or otherwise in the ordinary course of the operation, repair or maintenance of a
Ship, provided such liens do not secure amounts more than 30 days overdue
(unless the overdue amount is being contested by the relevant Borrower in good
faith by appropriate steps) and subject, in the case of liens for repair or
maintenance, to Clause 14.12(g);

 

(f)                                    any Security Interest created in favour
of a plaintiff or defendant in any proceedings or arbitration as security for
costs and expenses while the relevant Borrower is actively prosecuting or
defending such proceedings or arbitration in good faith; and

 

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

 

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

 

(a)                                  England and Wales;

 

(b)                                 the country under the laws of which the
company is incorporated or formed;

 

(c)                                  a country in which the company’s central
management and control is or has recently been exercised;

 

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

 

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

 

(f)                                    a country the courts of which have
jurisdiction to make a winding up, administration or similar order in relation
to the company or which would have such jurisdiction if their assistance were
requested by the courts of a country referred to in paragraphs (b) or (c);

 

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

 

“Predelivery Security Assignment”  means, in relation to each Shipbuilding
Contract and corresponding Refund Guarantees, an assignment of the relevant
Borrower’s rights under such Shipbuilding Contract and Refund Guarantees to be
executed by the relevant Borrower

 

11

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in favour of the Security Trustee in such form as the relevant Borrower and the
Agent may agree;

 

“Quotation Date”  means, in relation to any Interest Period (or any other period
for which an interest rate is to be determined under any provision of a Finance
Document), the day on which quotations would ordinarily be given by leading
banks in the London Interbank Market for deposits in the currency in relation to
which such rate is to be determined for delivery on the first day of that
Interest Period or other period;

 

“Reference Banks”  means, subject to Clause 26.16, The Royal Bank of Scotland
plc, Citibank and Bank of America;

 

“Refund Guarantee”  means, in relation to each Ship, each refund guarantee
issued by the Refund Guarantor in favour of the relevant Borrower pursuant to
the Shipbuilding Agreement in respect of such Ship;

 

“Refund Guarantor”  means Bank of Communications acting through its branch at 33
Jin Rong Da Jie, Xichang District, Beijing 100032, The People’s Republic of
China;

 

“Related Party Charters” means, in relation to a Ship, the Bareboat Charter, the
Time Charter, the First Sub-Time Charter, the Second Sub-Time Charter and the
TBS Worldwide Time Charters in relation to such Ship and which are the subject
of the assignments under the relevant Multiparty Deed;

 

“Relevant Person”  has the meaning given in Clause 19.9;

 

“Relevant Percentage” means for that part of the Security Period up to (but not
including) 1 December 2012, One hundred and twenty five per cent and thereafter
during the Security Period, One hundred and thirty five per cent (135%);

 

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

 

“Replacement Debt” means debt incurred to repay other existing debt provided
that, except with respect to debt that refinances all existing debt scheduled to
become due on or before 9 September 2014, the Replacement Debt shall only
include debt (a) which does not provide for payment, on or before 9
September 2014, of current cash interest at a rate in excess of the existing
debt refinanced or principal payments in excess of those required for existing
debt refinanced and (b) which has no tighter covenant restrictions or events of
default than the existing debt refinanced;

 

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

 

“Restricted Equity Deposit Account”  means an account in the name of the
Borrowers with the Agent at Shipping Business Centre, 5-10 Great Tower Street,
London EC3P 3HX designated with such designation as the Agent may allocate upon
its opening or any other account (with that or another office of the Agent or
with a bank or financial institution other than the Agent) which is designated
by the Agent as the Restricted Equity Deposit Account for the purposes of this
Agreement;

 

“Restricted Equity Deposit Account Security Deed”  means a deed creating
security in respect of the Restricted Equity Deposit Account made or to be made
by and between the

 

12

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Borrowers and the Security Trustee in such form set as the Borrowers and the
Agent may agree;

 

“Second Sub-Time Charter” means in relation to each Ship, the time charter made
or to be made between the relevant Borrower and TBS Worldwide in respect of such
Ship;

 

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

 

“Security Interest”  means:

 

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

 

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

 

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

 

“Security Party”  means the Borrowers, the Corporate Guarantor, the New
Corporate Guarantor, the Shareholder and any person who, as a surety or
mortgagor, as a party to any subordination or priorities arrangement, or in any
similar capacity, executes a document falling within the last paragraph of the
definition of “Finance Documents” but for the avoidance of doubt “Security
Party” shall not include any Creditor Party, the Mandated Lead Arranger, the
Bookrunner, the Issuing Bank, the Bareboat Charterer, the Time Charterer, TBS
Pacific Liner, TBS Worldwide and the Approved Managers;

 

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

 

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

 

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

 

(c)                                  none of the Borrowers nor any Security
Party has any future or contingent liability under Clause 20, 21 or 22 or any
other provision of this Agreement or another Finance Document; and

 

(d)                                 the Agent, the Security Trustee and the
Majority Lenders do not consider that there is a significant risk that any
payment or transaction under a Finance Document would be set aside, or would
have to be reversed or adjusted, in any present or possible future bankruptcy of
a Borrower or a Security Party or in any present or possible

 

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future proceeding relating to a Finance Document or any asset covered (or
previously covered) by a Security Interest created by a Finance Document;

 

“Security Trustee”  means The Royal Bank of Scotland plc, acting in such
capacity through its office at Level 5, 135 Bishopsgate, London EC2M 3UR, or any
successor of it appointed under clause 5 of the Agency and Trust Agreement;

 

“Seller”  means together China Communications and the Builder;

 

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

 

“Shareholder”  means Westbrook Holdings Ltd., a company incorporated under the
laws of the Marshall Islands having its registered office at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

 

“Shares Security Deed”  means, in relation to each Borrower, a deed creating
security over the share capital of that Borrower and including an assignment of
any shareholder loans made to the Borrowers to be executed by the Shareholder in
favour of the Security Trustee in such form as the Shareholder and the Agent may
agree;

 

“Ships”  means together Ship A, Ship B, Ship C, Ship D, Ship E and Ship F and,
in the singular, means any of them;

 

“Ship A”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200720 to be constructed and sold by the Seller and to be
purchased by Borrower A pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the name of Borrower A with the Panamanian registry
and bareboat registered in the name of the Bareboat Charterer under the
Philippines flag;

 

“Ship B”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200721 to be constructed and sold by the Seller and to be
purchased by Borrower B pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the name of Borrower B with the Panamanian registry
and bareboat registered in the name of the Bareboat Charterer under the
Philippines flag;

 

“Ship C”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200722 to be constructed and sold by the Seller and to be
purchased by Borrower C pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the name of Borrower C with the Panamanian registry
and bareboat registered in the name of the Bareboat Charterer under the
Philippines flag;

 

“Ship D”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200723 to be constructed and sold by the Seller and to be
purchased by Borrower D pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the name of Borrower D with the Panamanian registry
and bareboat registered in the name of the Bareboat Charterer under the
Philippines flag;

 

“Ship D Sub-Advance” shall have the meaning given in Clause 2.1(iv);

 

“Ship E”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200724 to be constructed and sold by the Seller and to be
purchased by Borrower E pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the

 

14

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name of Borrower E with the Panamanian registry and bareboat registered in the
name of the Bareboat Charterer under the Philippines flag;

 

“Ship F”  means the multipurpose bulk carrier of about 35,000 dwt having
Builder’s Hull No. NYHS200725 to be constructed and sold by the Seller and to be
purchased by Borrower F pursuant to the relevant Shipbuilding Contract and upon
delivery to be registered in the name of Borrower F with the Panamanian registry
and bareboat registered in the name of the Bareboat Charterer under the
Philippines flag;

 

“Ship F Sub-Advance” shall have the meaning given in Clause 2.1(vi);

 

“Shipbuilding Contract”  means, in relation to Ship A, the shipbuilding contract
dated 24 February 2007 made between the Seller and Borrower A in respect of such
Ship, in relation to Ship B, the shipbuilding contract dated 24 February 2007
made between the Seller and Borrower B in respect of such Ship, in relation to
Ship C, the shipbuilding contract dated 24 February 2007 made between the Seller
and Borrower C in respect of such Ship, in relation to Ship D, the shipbuilding
contract dated 24 February 2007 made between the Seller and Borrower D in
respect of such Ship, in relation to Ship E, the shipbuilding contract dated 24
February 2007 made between the Seller and Borrower E in respect of such Ship, in
relation to Ship F, the shipbuilding contract dated 24 February 2007 made
between the Seller and Borrower F in respect of such Ship and, in each case, as
supplemented by the Overall Agreement;

 

“Standby Earnings Account”  means an account in the name of TBS Pacific Liner
with the Agent at Shipping Business Centre, 5-10 Great Tower Street, London EC3P
3HX designated with such designation as the Agent may allocate upon its opening
or any other account (with that or another office of the Agent or with a bank or
financial institution other than the Agent) which is designated by the Agent as
the Standby Earnings Account for the purposes of this Agreement;

 

“Swap Bank”  means The Royal Bank of Scotland plc acting in such capacity
through its office at 135 Bishopsgate, London EC2M 3UR and its successors in
title and assigns under the Master Agreement;

 

“Swap Facility” means the interest rate swap facility made or to be made
available by the Swap Bank to the Borrowers under the Master Agreement;

 

“TBS Pacific Liner”  means TBS Pacific Liner, Ltd. being a corporation organised
and existing under the laws of the Marshall Islands and having its registered
office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands, MH 96960;

 

“TBS Worldwide” means TBS Worldwide Services Inc being a corporation organised
and existing under the laws of the Marshall Islands having its registered office
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands, MH 96960;

 

“TBS Worldwide Time Charters” means, in relation to each Ship, the time charters
entered or to be entered into between TBS Worldwide and other subsidiaries of
the New Corporate Guarantor pursuant to which TBS Worldwide has agreed or shall
agree to let, and such charterers have agreed or shall agree to hire, such Ship
on time charter;

 

“Time Charter” means, in relation to each Ship, the time charter made or to be
made between the Bareboat Charterer and the Time Charterer in respect of such
Ship;

 

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“Time Charterer” means Pacific Rim Shipping Corp., a company incorporated in the
Marshall Islands whose principal office is at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960;

 

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

 

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

 

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

 

(c)                                  any condemnation of the Ship by any
tribunal or by any person or person claiming to be a tribunal; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Transaction”  means a Transaction as defined in the introductory paragraph of
the Master Agreement;

 

“Transfer Certificate”  has the meaning given in Clause 26.2; and

 

“Transfer Date” means, in relation to a transfer, the later of:

 

(a)                                  the proposed transfer date specified in the
Transfer Certificate; and

 

(b)                                 the date on which the Agent executes the
Transfer Certificate under Clause 26.3.

 

1.2                              Construction of certain terms.  In this
Agreement:

 

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“administration notice”  means a notice appointing an administrator, a notice of
intended appointment and any other notice which is required by law (generally or
in the case concerned) to be filed with the court or given to a person prior to,
or in connection with, the appointment of an administrator;

 

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

 

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

 

“company”  includes any partnership, joint venture and unincorporated
association;

 

“consent”  includes an authorisation, consent, approval, resolution, licence,
exemption, filing, registration, notarisation and legalisation;

 

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

 

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

 

“excess risks”  means, in relation to a Ship, the proportion of claims for
general average, salvage and salvage charges not recoverable under the hull and
machinery policies in respect of the Ship in consequence of its insured value
being less than the value at which the Ship is assessed for the purpose of such
claims;

 

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

 

“law”  includes any order or decree, any form of delegated legislation, any
treaty or international convention and any regulation, directive, decision or
resolution of the Council of the European Union, the European Commission, the
United Nations or its Security Council;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

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“protection and indemnity risks” means the usual risks covered by a protection
and indemnity association managed in London, including pollution risks and the
proportion (if any) of any sums payable to any other person or persons in case
of collision which are not recoverable under the hull and machinery policies by
reason of the incorporation in them of clause 1 of the Institute Time Clauses
(Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or
the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 

“regulation”  includes any regulation, rule, official directive, request or
guideline whether or not having the force of law of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;

 

“subsidiary”  has the meaning given in Clause 1.4;

 

“tax”  includes any present or future tax, duty, impost, levy or charge of any
kind which is imposed by any state, any political sub-division of a state or any
local or municipal authority (including any such imposed in connection with
exchange controls), and any connected penalty, interest or fine; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.5                               General Interpretation.  In this Agreement:

 

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(a)                                  references in Clause 1.1 to a Finance
Document or any other document being in the form of a particular appendix
include references to that form with any modifications to that form which the
Agent (with the authorisation of the Majority Lenders in the case of substantial
modifications) approves or reasonably requires;

 

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

 

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

 

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

 

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

 

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

 

2                                         LOAN FACILITY

 

2.1                               Amount of facilities.  Subject to the other
provisions of this Agreement, the Lenders shall make available to the Borrowers
the Loan Facility in an amount of up to $150,000,000 which shall be made
available in the following Advances:

 

(i)                                     five Advances in an aggregate amount of
up to $25,000,000 to enable Borrower A to finance its acquisition of Ship A as
follows:

 

(A)                              $5,000,000 to enable Borrower A to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship A;

 

(B)                                $5,000,000 to enable Borrower A to meet the
second stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship A;

 

(C)                                $5,000,000 to enable Borrower A to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship A;

 

(D)                               $5,000,000 to enable Borrower A to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship A;

 

(E)                                 $5,000,000 to enable Borrower A to meet the
final delivery payment of the Contract Price payable under the Shipbuilding
Contract in respect of Ship A (the “Loan A Delivery Advance”);

 

(ii)                                  five Advances in an aggregate amount of
$25,000,000 to enable Borrower B to finance its acquisition of Ship B as
follows:

 

(A)                              $5,000,000 to enable Borrower B to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship B;

 

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(B)                                $5,000,000 to enable Borrower B to meet the
second stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Agreement in respect of Ship B;

 

(C)                                $5,000,000 to enable Borrower B to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship B;

 

(D)                               $5,000,000 to enable Borrower B to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship B;

 

(E)                                 $5,000,000 to enable Borrower B to meet the
final delivery payment of the Contract Price payable under the Shipbuilding
Contract in respect of Ship B (the “Loan B Delivery Advance”);

 

(iii)                               five Advances in an aggregate amount of up
to $25,000,000 to enable Borrower C to finance its acquisition of Ship C as
follows:

 

(A)                              $5,000,000 to enable Borrower C to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship C;

 

(B)                                $5,000,000 to enable Borrower C to meet the
second stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Agreement in respect of Ship C;

 

(C)                                $5,000,000 to enable Borrower C to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship C;

 

(D)                               $5,000,000 to enable Borrower C to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship C;

 

(E)                                 $5,000,000 to enable Borrower C to meet the
final delivery payment of the Contract Price payable under the Shipbuilding
Contract in respect of Ship C (the “Loan C Delivery Advance”);

 

(iv)                              five Advances in an aggregate amount of up to
$25,000,00027,420,000 to enable Borrower D to finance its acquisition of Ship D
as follows:

 

(A)                              $5,000,000 to enable Borrower D to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship D;

 

(B)                                $5,000,000 to reimburse Borrower D the second
stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship D;

 

(C)                                $5,000,000 to enable Borrower D to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship D;

 

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(D)                               $5,000,000 to enable Borrower D to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship D;

 

(E)                                 $5,000,0007,420,000 to enable Borrower D to
meet the final delivery payment of the Contract Price payable under the
Shipbuilding Contract in respect of Ship D; (the “Loan D Delivery Advance”)
which shall be advanced in two Sub-Advances of $5,000,000 and $2,420,000 the
latter hereinafter being referred to as the “Ship D Sub-Advance”;

 

(v)                                 five Advances in an aggregate amount of up
to $25,000,00020,160,000 to enable Borrower E to finance its acquisition of Ship
E as follows:

 

(A)                              $5,000,000 to enable Borrower E to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship E;

 

(B)                                $5,000,000 to reimburse Borrower E the second
stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship E;

 

(C)                                $5,000,000 to enable Borrower E to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship E;

 

(D)                               $5,000,000 to enable Borrower E to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship E;

 

(E)                                 $5,000,000160,000 to enable Borrower E to
meet the final delivery payment of the Contract Price payable under the
Shipbuilding Contract in respect of Ship E; (the “Loan E Delivery Advance”);

 

(vi)                              five Advances in an aggregate amount of up to
$25,000,00027,420,000 to enable Borrower F to finance its acquisition of Ship F
as follows:

 

(A)                              $5,000,000 to enable Borrower F to meet the
first stage payment (contract signing) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship F;

 

(B)                                $5,000,000 to reimburse Borrower F the second
stage payment (steel cutting) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship F;

 

(C)                                $5,000,000 to enable Borrower F to meet the
third stage payment (keel laying) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship F;

 

(D)                               $5,000,000 to enable Borrower F to meet the
fourth stage payment (launching) of the Contract Price payable under the
Shipbuilding Contract in respect of Ship F;

 

(E)                                 $5,000,0007,420,000 to enable Borrower F to
meet the final delivery payment of the Contract Price payable under the
Shipbuilding Contract in

 

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respect of Ship F; (the “Loan F Delivery Advance”) which shall be advanced in
two Sub-Advances of $5,000,000 and $2,420,000, the latter hereinafter referred
to as “Ship F Sub-Advance”;

 

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

 

2.3                               Purpose of Advances.  The Borrowers undertake
with each Creditor Party to use each Advance only for the respective purposes
stated in the preamble of this Agreement.

 

3                                         POSITION OF THE LENDERS AND THE SWAP
BANK

 

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

 

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

 

3.3                               Proceedings by individual Creditor Party
requiring Majority Lenders’ consent.  Except as provided in Clause 3.2, neither
the Swap Bank nor any Lender may commence proceedings against the Borrowers or
any Security Party in connection with a Finance Document without the prior
consent of the Majority Lenders.

 

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

 

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

 

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

 

and in no circumstances shall a Lender or the Swap Bank have any responsibility
for a failure of another Lender or the Swap Bank (as the case may be) to perform
its obligations under this Agreement.

 

3.5                               Ranking of Swap Facility.  It is agreed by the
Borrowers and the Creditor Parties that the Swap Facility and all amounts
payable thereunder shall rank in priority after the Loan Facility.

 

4                                         DRAWDOWN

 

4.1                               Request for an Advance.  Subject to the
following conditions, a Borrower may request that an Advance be made by ensuring
that the Agent receives a completed Drawdown Notice not later than 11.00 a.m.
(London time) 3 Business Days prior to the intended Drawdown Date.

 

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

 

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(a)

 

(i)                                     the Drawdown Date for such Advance has
to be a Business Day during the Availability Period for the relevant Loan;

 

(ii)                                  the aggregate amount of the Advances shall
not exceed the Total Commitments;

 

(iii)                               in the case of a Delivery Advance of a Loan,
the amount of such Delivery Advance when aggregated with each of the other
Advances made in relation to that Loan shall not exceed 75% of the valuation of
the relevant Ship to be obtained pursuant to Schedule 3, Part C, Item 4 and if
such test is not met the amount of such Delivery Advance shall be
correspondingly reduced provided that (i) in the case of Ship D, the amount of
Loan D for the purposes of determining whether the amount of the Loan D Delivery
Advance needs to be reduced hereunder shall exclude an amount equal to the Ship
D Sub-Advance and (ii) in the case of Ship F, the amount of Loan F for the
purposes of determining whether the amount of Loan F Delivery Advance needs to
be reduced hereunder shall exclude an amount equal to the Ship F Sub-Advance..

 

(b)

 

(i)                                     no Event of Default or Potential Event
of Default has occurred and is continuing or might result from the making of the
relevant Advance;

 

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

 

(iii)                               that if the ratio set out in Clause 15.1
were applied immediately following the making of the Advance the Borrowers would
not be obliged to provide additional security or prepay part of the Loans under
that Clause and if the Borrowers would be so obliged the amount of the Advance
to be made shall be correspondingly reduced provided that (i) in the case of
Ship D, for the purposes of determining whether the amount of the Loan D
Delivery Advance needs to be reduced hereunder the amount of Loan D shall
exclude an amount equal to the Ship D Sub-Advance and Loans, where Ship E is
subject to a Mortgage, shall include both the Ship D Sub-Advance and the Ship F
Sub-Advance and (ii) in the case of Ship F for the purposes of determining
whether the amount of Loan F Delivery Advance needs to be reduced hereunder, the
amount of Loan F shall exclude an amount equal to the Ship F Sub-Advance and
Loans, where Ship E is subject to a Mortgage, shall include both the Ship D
Sub-Advance and Ship F Sub-Advance.

 

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

 

(a)                                  the amount of the Advance and the Drawdown
Date;

 

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

 

(c)                                  the duration of the first Interest Period
for the relevant Advance.

 

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

 

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4.5                               Lenders to make available Contributions. 
Subject to the provisions of this Agreement, each Lender shall, on and with
value on each Drawdown Date, make available to the Agent for the account of the
Borrowers the amount due from that Lender on that Drawdown Date under Clause
2.2.

 

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

 

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

 

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

 

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

 

5                                         INTEREST

 

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

 

5.2                               Normal rate of interest.  Subject to the
provisions of this Agreement, the rate of interest on each Advance in respect of
an Interest Period shall be the aggregate of the Margin, the Mandatory Cost (if
any) and LIBOR for that Interest Period.

 

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

 

5.4                               Notification of Interest Periods and rates of
normal interest.  The Agent shall (subject to Clause 6.2(a) notify the Borrowers
and each Lender of:

 

(a)                                  each rate of interest; and

 

(b)                                 the duration of each Interest Period;

 

as soon as reasonably practicable after each is determined.

 

5.5                               Obligation of Reference Banks to quote.  A
Reference Bank which is a Lender shall use all reasonable efforts to supply the
quotation required of it for the purposes of fixing a rate of interest under
this Agreement.

 

5.6                               Absence of quotations by Reference Banks.  If
any Reference Bank fails to supply a quotation, the Agent shall determine the
relevant LIBOR on the basis of the quotations supplied by the other Reference
Bank or Banks; but if 2 or more of the Reference Banks fail to provide a
quotation, the relevant rate of interest shall be set in accordance with the
following provisions of this Clause 5.

 

5.7                               Market disruption.  The following provisions
of this Clause 5 apply if:

 

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(a)                                 no rate is quoted on REUTERS BBA Page LIBOR
01 and the Reference Banks do not, before 1.00 p.m. (London time) on the
Quotation Date for an Interest Period, provide quotations to the Agent in order
to fix LIBOR; or

 

(b)                                 at least 1 Business Day before the start of
an Interest Period, Lenders having Contributions together amounting to more than
66.66 per cent. of the Loans (or, if an Advance has not been made, Commitments
amounting to more than 66.66 per cent. of the Total Commitments) notify the
Agent that LIBOR fixed by the Agent would not accurately reflect the cost to
those Lenders of funding their respective Contributions (or any part of them)
during the Interest Period in the London Interbank Market at or about 11.00 a.m.
(London time) on the Quotation Date for the Interest Period; or

 

(c)                                  at least 1 Business Day before the start of
an Interest Period, the Agent is notified by a Lender (the “Affected Lender”)
that for any reason it is unable to obtain Dollars in the London Interbank
Market in order to fund its Contribution (or any part of it) during the Interest
Period.

 

5.8                               Notification of market disruption.  The Agent
shall promptly notify the Borrowers and each of the Lenders stating the
circumstances falling within Clause 5.7 which have caused its notice to be
given.

 

5.9                               Suspension of drawdown.  If the Agent’s notice
under Clause 5.8 is served before an Advance is made:

 

(a)                                  in a case falling within Clauses 5.7(a) or
5.7(b), the Lenders’ obligations to make the Advance;

 

(b)                                 in a case falling within Clause 5.7(c), the
Affected Lender’s obligation to participate in the Advance;

 

shall be suspended while the circumstances referred to in the Agent’s notice
continue.

 

5.10                        Negotiation of alternative rate of interest.  If the
Agent’s notice under Clause 5.8 is served after an Advance is made, the
Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender
shall use reasonable endeavours to agree, within the 30 days after the date on
which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”),
an alternative interest rate or (as the case may be) an alternative basis for
the Lenders or (as the case may be) the Affected Lender to fund or continue to
fund their or its Contribution during the Interest Period concerned.

 

5.11                        Application of agreed alternative rate of interest. 
Any alternative interest rate or an alternative basis which is agreed during the
Negotiation Period shall take effect in accordance with the terms agreed.

 

5.12                        Alternative rate of interest in absence of
agreement.  If an alternative interest rate or alternative basis is not agreed
within the Negotiation Period, and the relevant circumstances are continuing at
the end of the Negotiation Period, then the Agent shall, with the agreement of
each Lender or (as the case may be) the Affected Lender, set an interest period
and interest rate representing the cost of funding of the Lenders or (as the
case may be) the Affected Lender in Dollars or in any available currency of
their or its Contribution plus the Margin; and the procedure provided for by
this Clause 5.12 shall be repeated if the relevant circumstances are continuing
at the end of the interest period so set by the Agent.  Once the circumstances
giving rise to the invoking of Clauses 5.7 through 5.12 have ceased the Agent
and the Lenders shall return to the normal method of calculating the interest
rate hereunder.

 

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5.13                        Notice of prepayment.  If the Borrowers do not agree
with an interest rate set by the Agent under Clause 5.12, the Borrowers may give
the Agent not less than 14 Business Days’ notice of their intention to prepay
the Loans or the Affected Lender’s Contribution (as the case may require) at the
end of the interest period set by the Agent.

 

5.14                        Prepayment; termination of Commitments.  A notice
under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the
Lenders or (as the case may require) the Affected Lender of the Borrowers’
notice of intended prepayment; and:

 

(a)                                  on the date on which the Agent serves that
notice, the Total Commitments or (as the case may require) the Commitment of the
Affected Lender shall be cancelled; and

 

(b)                                 on the last Business Day of the interest
period set by the Agent, the Borrowers shall prepay (without premium or penalty)
the Loans or, as the case may be, the Affected Lender’s Contribution, together
with accrued interest thereon at the applicable rate plus the Margin.

 

5.15                        Amounts payable upon prepayment etc.  The provisions
of Clauses 8.9 to 8.12 inclusive shall apply in relation to the prepayment.

 

5.16                        Designated Transactions under the Master Agreement.

 

(a)                                  The Borrowers have entered into the Master
Agreement with the Swap Bank and, pursuant thereto, may at any time conclude
Designated Transactions, for the purpose of swapping their interest payment
obligations under this Agreement in relation to the Loan Facility.

 

(b)                                 In relation to the Master Agreement, the
Borrowers hereby agree and undertake throughout the Security Period:

 

(i)                                     only to use Designated Transactions
concluded under the Master Agreement for the purpose of swapping their interest
payment obligations under this Clause 5 in relation to the Loan Facility from
LIBOR-based funding to longer-term fixed rate funding; and

 

(ii)                                  not to conclude Designated Transactions
which would result, at any time during the Security Period, in the notional
principal amount of all Designated Transactions then remaining exceeding the
aggregate amount of the Loans, as reduced from time to time pursuant to Clause
8.

 

(c)                                  The Lenders agree that, to enable the
Borrowers to secure their obligations to the Swap Bank under the Master
Agreement, the security of the New Corporate Guarantee, the Corporate Guarantee,
the Mortgages, the Multiparty Deeds, the Predelivery Security Assignments, the
Shares Security Deeds, the Restricted Equity Deposit Account Security Deed and
the Account Security Deed in respect of each of the Ships shall be held by the
Security Trustee not only to secure the Borrowers’ obligations under this
Agreement but also the Borrower’s obligations under the Master Agreement on the
terms set out in Clause 18.

 

6                                         INTEREST PERIODS

 

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

 

6.2                              Duration of normal Interest Periods.  Subject
to Clauses 6.3 and 6.4, each Interest Period shall be:

 

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(a)                                  1, 3 or 6 months as notified by the
Borrowers to the Agent not later than 11.00 a.m. (London time) 3 Business Days
before the commencement of the Interest Period; or

 

(b)                                 in the case of the first Interest Period
applicable to any Advance of a Loan other than the first such Advance of such
Loan, a period ending on the last day of the Interest Period applicable to the
first Advance of that Loan then current, whereupon all such Advances of that
Loan shall be consolidated and treated as a single Advance;

 

(c)                                  3 months, if the Borrowers fail to notify
the Agent by the time specified in paragraph (a); or

 

(d)                                 such other period as the Agent may, with the
authorisation of the Majority Lenders, agree with the Borrowers.

 

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

 

6.4                               Non-availability of matching deposits for
Interest Period selected.  If, after the Borrowers have selected and the Lenders
have agreed an Interest Period longer than 6 months, any Lender notifies the
Agent by 11.00 a.m. (London time) on the third Business Day before the
commencement of the Interest Period that it is not satisfied that deposits in
Dollars for a period equal to the Interest Period will be available to it in the
London Interbank Market when the Interest Period commences, the Interest Period
shall be of 6 months.

 

7                                         DEFAULT INTEREST

 

7.1                               Payment of default interest on overdue
amounts.  The Borrowers shall pay interest in accordance with the following
provisions of this Clause 7 on any amount payable by the Borrowers under any
Finance Document which the relevant Creditor Party does not receive on or before
the relevant date, that is:

 

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

 

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

 

(c)                                  if such amount has become immediately due
and payable under Clause 19.4, the date on which it became immediately due and
payable.

 

7.2                               Default rate of interest.  Interest shall
accrue on an overdue amount from (and including) the relevant date until the
date of actual payment (as well after as before judgment) at the rate per annum
determined by the Agent to be 1.5 per cent. above:

 

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

 

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

 

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

 

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

 

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(b)                                 the aggregate of the Margin and the
Mandatory Cost (if any) plus, in respect of successive periods of any duration
(including at call) up to 3 months which the Agent may select from time to time:

 

(i)                                     LIBOR; or

 

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

 

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

 

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

 

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

 

7.7                               Application to Master Agreement.  For the
avoidance of doubt, this Clause 7 does not apply to any amount payable under the
Master Agreement in respect of any continuing Designated Transaction as to which
section 2(e) (Default Interest;  Other Amounts) of the Master Agreement shall
apply.

 

8                                         REPAYMENT AND PREPAYMENT

 

8.1                               Repayment of Loans.  The Borrowers shall repay
the Loans in the instalments and on the repayment dates set out in Schedule 5.

 

8.2                               Final Repayment Date.  On the Final Repayment
Date, the Borrowers shall additionally pay to the Agent for the account of the
Creditor Parties all other sums then accrued or owing under any Finance
Document.

 

8.3                               Voluntary prepayment.  Subject to the
following conditions, the Borrowers may prepay the whole or any part of a Loan.

 

8.4                               Conditions for voluntary prepayment.  The
conditions referred to in Clause 8.3 are that:

 

(a)                                  a partial prepayment shall be in a minimum
amount of $2,500,000 (and in integral multiples of $500,000);

 

(b)                                 the Agent has received from the Borrowers at
least 7 Business Days’ prior written notice specifying the amount to be prepaid
and the date on which the prepayment is to be made; and

 

(c)                                 the Borrowers have provided evidence
satisfactory to the Agent that any consent required by the Borrowers in
connection with the prepayment has been obtained and remains in force,

 

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and that any official  regulation relevant to this Agreement which affects the
Borrowers has been complied with.

 

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

 

8.6                               Notification of notice of prepayment.  The
Agent shall notify the Lenders promptly upon receiving a prepayment notice, and
shall provide any Lender which so requests with a copy of any document delivered
by the Borrowers under Clause 8.4(c).

 

8.7                               Mandatory prepayment upon a Sale or Total Loss
of a Ship.  Without prejudice to the provisions of Clause 15, the Borrowers
shall be obliged to make a prepayment in respect of the Loans if a Ship is sold
or becomes a Total Loss or on the occurrence of one of the events set out in
Clause 8.13 in relation to a Shipbuilding Contract:

 

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

 

(b)                                 in the case of a Total Loss, on the earlier
of the date falling 120 days after the Total Loss Date and the date of receipt
by the Security Trustee of the proceeds of insurance relating to such Total
Loss; or

 

(c)                                  in the case of the occurrence of one of the
events set out in Clause 8.13 in relation to a Shipbuilding Contract, on demand
by the Agent,

 

and in any such case the amount to be prepaid in respect of the Loans shall be
the greater of:

 

(i)                                     the Loan relative to that Ship or that
Shipbuilding Contract (and in the case of Ship D the Loan for these purposes
shall exclude the Ship D Sub-Advance; in the case of Ship F the Loan shall
exclude the Ship F Sub-Advance and in the case of Ship E the Loan shall include
both the Ship D Sub-Advance and the Ship F Sub-Advance); and

 

(ii)                                  such sum as is necessary to ensure that,
in relation to the remaining amount of the Loans and the remaining Ship or Ships
immediately after such prepayment, the same asset cover ratio (calculated as per
Clause 15.3) applies as applied immediately prior to such prepayment or, if
higher, such sum as shall ensure that the requirements of Clause 15.1 are then
complied with.

 

8.8                               Mandatory prepayment upon a change of
control.  If there is a change of ownership of the shares in the New Corporate
Guarantor or any Borrower such that an individual or company (or group of
individuals and/or companies acting in concert) which does not at the date of
this Agreement control the New Corporate Guarantor or that Borrower acquires
control of the New Corporate Guarantor or that Borrower:

 

(i)                                     the Borrowers shall promptly notify the
Agent upon becoming aware of that event; and

 

(ii)           a Lender shall not be obliged to fund an Advance requested in a
Drawdown Notice and (unless the Agent has previously given its written consent
to such change of control acting on the instruction of all the Lenders) a
Lender, by not less than 10 days’ notice to the Borrowers and the other Lenders,
may cancel its Available Commitment and require repayment of all of its
Contribution immediately.

 

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For the purpose of this Clause 8.8 “acting in concert” means actively
co-operating pursuant to an agreement or understanding (whether formal or
informal).

 

8.9                               Amounts payable on prepayment.  A prepayment
shall be made together with accrued interest (and any other amount payable under
Clauses 8.14,  21 or otherwise) in respect of the amount prepaid and, if the
prepayment is not made on the last day of an Interest Period together with any
sums payable under Clause 21.1(b) but without premium or penalty.

 

8.10                        Application of partial prepayment.  Each partial
prepayment of a Loan shall be applied against the repayment instalments of such
Loan in inverse order of maturity.

 

8.11                        No Reborrowing.  No amount of the Loans prepaid may
be reborrowed.

 

8.12                        Unwinding of Designated Transactions.  On or prior
to any repayment or prepayment of the Loans under this Clause 8 or any other
provision of this Agreement, the Borrowers shall wholly or partially reverse,
offset, unwind or otherwise terminate one or more of the continuing Designated
Transactions so that the notional principal amount of the continuing Designated
Transactions thereafter remaining does not and will not in the future (taking
into account the scheduled amortisation) exceed the amount of the Loans as
reducing from time to time thereafter pursuant to Clause 8.1.

 

8.13                        Prepayment pursuant to events arising in respect of
the Shipbuilding Contracts.  The events referred to in Clause 8.7(c) are:

 

(a)                                  the occurrence of any of the events
referred to in Article(s) X or XI of any of the Shipbuilding Contracts and in
the case where the relevant Borrower has rescinded such Shipbuilding Contract
either the Security Trustee has received from the Seller or the Refund Guarantor
all amounts to be refunded under such Shipbuilding Contract or a period of 30
days (or such longer period as the Agent may agree) has elapsed from the date of
such rescission whichever is the earlier; or

 

(b)                                 any of the Shipbuilding Contracts being
cancelled, terminated, rescinded or suspended or otherwise ceasing to remain in
force for any reason and in the case where the relevant Borrower has rescinded
such Shipbuilding Contract either the Security Trustee has received from the
Seller or the Refund Guarantor all amounts to be refunded under such
Shipbuilding Contract or a period of 30 days (or such longer period as the Agent
may agree) has elapsed from the date of such rescission whichever is the
earlier; or

 

(c)                                  any of the Shipbuilding Contracts being
amended or varied without the prior written consent of the Majority Lenders
except for any such amendments or variation as is permitted by this Agreement or
any other relevant Finance Document; or

 

(d)                                 any Ship not for any reason being delivered
to, and accepted by, the relevant Borrower under the relevant Shipbuilding
Contract by the end of the Availability Period applicable to the Loan to which
that Ship relates; or

 

(e)                                  the rights of the Borrowers under any of
the Shipbuilding Contracts are sold, novated or assigned other than by way of
security pursuant to the Finance Documents.

 

8.14                       Refinancing of a Ship.  In the event that any of the
Borrowers wish to refinance their Financial Indebtedness in respect of a Ship
the Lenders agree to release the Mortgage and related security over such Ship
subject to receiving a prepayment in respect of the Loans on or before the
release in an amount equal to the greater of:

 

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(i)                                     the Loan relative to that Ship (and in
the case of Ship D the Loan for these purposes shall exclude the Ship D
Sub-Advance; in the case of Ship F the Loan shall exclude the Ship F Sub-Advance
and in the case of Ship E the Loan shall include both the Ship D Sub-Advance and
the Ship F Sub-Advance); and

 

(ii)                                  15.315.1such sum as is necessary to ensure
that, in relation to the remaining amount of the Loans and the remaining Ship or
Ships immediately after such prepayment, the same asset cover ratio (calculated
as per Clause 15.3) applies as applied immediately prior to such prepayment or,
if higher, such sum as shall ensure that the requirements of Clause 15.1 are
then complied with.

 

9                                         CONDITIONS PRECEDENT

 

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

 

(a)                                  that, on or before the service of the first
Drawdown Notice, the Agent receives the documents described in Part A of
Schedule 3 in form and substance satisfactory to it;

 

(b)                                 that, on or before a Drawdown Date but prior
to the making of an Advance (other than a Delivery Advance), the Agent receives
the documents described in Part B of Schedule 3 in form and substance
satisfactory to it;

 

(c)                                  that, on or before the Drawdown Date but
prior to the drawdown of a Delivery Advance, the Agent receives the documents
described in Part C of Schedule 3 in form and substance satisfactory to it;

 

(d)                                 that, on or before each Drawdown Date, the
Agent has received all arrangement, commitment and agency fees accrued due and
payable pursuant to Clause 20.1;

 

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

 

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

 

(ii)                                  the representations and warranties in
Clause 10.1 and those of the Borrowers or any Security Party which are set out
in the other Finance Documents would be true and not misleading if repeated on
each of those dates with reference to the circumstances then existing; and

 

(iii)                               none of the circumstances contemplated by
Clause 5.7 has occurred and is continuing;

 

(f)                                    that, if the ratio set out in Clause 15.1
were applied immediately following the making of the relevant Advance, the
Borrowers would not be obliged to provide additional security or prepay part of
the Loans; and

 

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

 

Provided that the Lenders shall not be required to make an Advance if the Loans
relating to Ships which have not yet been delivered (but including the Advance
being requested by the

 

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Borrowers) exceed 75% of (i) the aggregate Contract Value of the Ships and
(ii) the net realisable value of any additional security provided under this
Agreement and for.  In the case of Ship D, Loan D for these purposes shall
exclude an amount equal to the Ship D Sub-Advance and in the case of Ship F,
Loan F for these purposes shall exclude an amount equal to the Ship F
Sub-Advance.  For the purpose of this Clause, “Contract Value” shall mean:

 

the market value of a Ship at any date based on the acquisition price of the
rights and obligations under the Shipbuilding Contract relating to that Ship or
a ship of a similar size and type and due to be delivered at the same time as
that Ship as shown by a valuation prepared as at a date not more than 10
Business Days previously by an independent international sale and purchase
shipbroker which the Agent has approved for the purpose and after deducting the
estimated amount of usual and reasonable expenses which would be incurred in
connection with such a sale.

 

9.2                               Waiver of conditions precedent.  If all the
Lenders or, in relation to a condition which the Agent determines is
non-material, the Majority Lenders, at their discretion, permit an Advance to be
borrowed before certain of the conditions referred to in Clause 9.1 are
satisfied, the Borrowers shall ensure that those conditions are satisfied within
14 Business days after the Drawdown Date (or such longer period as the Agent
may, with the authorisation of all the Lenders or (as the case may be) the
Majority Lenders, specify).

 

9.3                               Pre-positioning of delivery instalments under
Shipbuilding Contracts. Notwithstanding the foregoing provisions of Clause 9, in
the event a Delivery Advance is required to be drawndown prior to the
satisfaction of the relevant conditions precedent set out in Schedule 3 and
remitted to the Seller’s bank in accordance with Article II, 2.4 of the relevant
Shipbuilding Contract, the Agent may with the authorisation of the Majority
Lenders agree to remit such amount to the Seller’s bank prior to the
satisfaction of such conditions precedent provided that:

 

(a)                                  the amount remitted shall be held by the
Seller’s bank in an account to the order of the Agent;

 

(b)                                 such amount will only be released to the
Seller upon the Seller’s presentation to the Seller’s bank of a copy of the
protocol of delivery and acceptance for the relevant Ship in the form agreed
between the Seller and the relevant Borrower and duly signed on behalf of the
Agent by a person named in the Agent’s remittance instructions;

 

(c)                                  such amount so released may only be used
for payment to the account of the Seller with the Seller’s bank in satisfaction
of the delivery instalment referred to in Article II, 2.3(e) of the relevant
Shipbuilding Contract;

 

(d)                                 in the event that none of the said amount so
remitted is released in accordance with the Agent’s instructions or any part
thereof is not so released ten (or such longer period as the Agent may agree, up
to a maximum of thirty days) days after its receipt by the Seller’s bank the
money held by the Seller’s bank is returned to the account specified in the
Agent’s remittance instructions;

 

(e)                                  the relevant conditions precedent set out
in Schedule 3 shall be satisfied simultaneously with any release to the Seller
pursuant to (b) above; and

 

(f)                                   any amounts so remitted and returned
pursuant to (d) above will be applied in or towards prepayment of the relevant
Delivery Advance pursuant to Clause 8 but will continue to be available to the
Borrowers for borrowing subject to the terms and conditions of this Agreement.

 

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10                                  REPRESENTATIONS AND WARRANTIES

 

10.1                        General.  Each Borrower represents and warrants to
each Creditor Party as follows.

 

10.2                        Status.  It is duly incorporated and validly
existing and in good standing under the laws of the Marshall Islands.

 

10.3                        Share capital and ownership.  It has an authorised
share capital of 500 registered and/or bearer shares without par value all of
which shares have been issued, and the legal title and beneficial ownership of
all those shares is held, free of any Security Interest or other claim, by
Westbrook Holdings Ltd.

 

10.4                        Corporate power.  It has the corporate capacity, and
has taken all corporate action and obtained all consents necessary for it:

 

(a)                                  to execute the Shipbuilding Contract to
which it is a party, to purchase and pay for its Ship under that Shipbuilding
Contract and to register such Ship in its name in the Panamanian Ship Registry;

 

(b)                                 to execute the Bareboat Charter to which it
is a party and to bareboat charter its Ship to the Bareboat Charterer;

 

(c)                                  to execute the Finance Documents to which
it is a party; and

 

(d)                                 to borrow under this Agreement and to make
all the payments contemplated by, and to comply with, those Finance Documents.

 

10.5                        Consents in force.  All the consents referred to in
Clause 10.4 remain in force and nothing to the best of the Borrower’s knowledge
and belief has occurred which makes any of them liable to revocation.

 

10.6                        Legal validity; effective Security Interests.  The
Finance Documents to which it is a party, do now or, as the case may be, will,
upon execution and delivery (and, where applicable, registration as provided for
in the Finance Documents):

 

(a)                                  constitute its legal, valid and binding
obligations enforceable against it in accordance with their respective terms;
and

 

(b)                                 create legal, valid and binding Security
Interests enforceable in accordance with their respective terms over all the
assets to which they, by their terms, relate;

 

subject to any relevant insolvency laws affecting creditors’ rights generally
and subject to any qualifications as to matters of law which are specifically
referred to in any legal opinion delivered to the Agent pursuant to Schedule 3.

 

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

 

(a)                                  the relevant Borrower or Borrowers which
are a party to that Finance Document will have the right to create all the
Security Interests which that Finance Document purports to create; and

 

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(b)                                no third party will to the best of the
Borrower’s knowledge and belief have any Security Interest (except for Permitted
Security Interests) or any other interest, right or claim over, in or in
relation to any asset to which a Security Interest created by a Finance Document
relates.

 

10.8                        No conflicts.  The execution by that Borrower of
each Finance Document to which it is a party, and the borrowing by that Borrower
of the Loans, and its compliance with each Finance Document to which it is a
party will not involve or lead to a contravention of:

 

(a)                                  any law or regulation in force at the date
of this Agreement; or

 

(b)                                 the constitutional documents of that
Borrower; or

 

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

 

10.9                        No withholding taxes.  No tax is imposed in any
jurisdiction in which that Borrower is ordinarily resident for tax by way of
withholding or deduction or otherwise on any payment to be made under this
Agreement.

 

10.10                 No default.  No Event of Default or Potential Event of
Default has occurred and is continuing.

 

10.11                 Information.  All information which has been provided in
writing by or on behalf of the Borrowers or any Security Party to any Creditor
Party in connection with any Finance Document was to the best of the Borrower’s
knowledge and belief true and not misleading as at the time it was given and all
audited and unaudited accounts which have been so provided satisfied the
requirements of Clause 11.7; and there has been no material adverse change in
the financial position or state of affairs of the Borrowers from that disclosed
in the latest of those accounts.

 

10.12                 No litigation.  No legal or administrative action
involving the Borrowers (including action relating to any alleged or actual
breach of the ISM Code or the ISPS Code) has been commenced or taken or, to that
Borrower’s knowledge, is likely to be commenced or taken which, in either case,
would be likely to have a material adverse effect on the Borrowers’ financial
position or profitability.

 

10.13                 Validity and completeness of Shipbuilding Contracts.  Each
Shipbuilding Contract constitutes valid, binding and enforceable obligations of
the Seller and the relevant Borrower respectively in accordance with its terms
subject to any relevant insolvency laws attaching creditors’ rights generally
and:

 

(a)                                  each copy of the Shipbuilding Contracts
delivered to the Agent before the date of this Agreement is a true and complete
copy; and

 

(b)                                 no amendments or additions to the
Shipbuilding Contracts have been agreed nor has any Borrower or the Seller
waived any of their respective rights under the Shipbuilding Contracts.

 

10.14                 No rebates etc.  There is no agreement or understanding to
allow or pay any rebate, premium, commission, discount or other benefit or
payment (howsoever described) to the Borrowers, the Seller or a third party in
connection with the purchase by the Borrowers of the Ships, other than as
disclosed to the Agent in writing on or prior to the date of this Agreement.

 

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10.15                 Compliance with certain undertakings.  At the date of this
Agreement, each Borrower is in compliance with Clause 11.13 and (save as
described in writing to the Agent) Clauses 11.4 and 11.9.

 

10.16                 Taxes paid.  Each Borrower has paid all taxes applicable
to, or imposed on or in relation to it, its business or its Ships.

 

10.17                 Money laundering.  Without prejudice to the generality of
Clause 2.3, in relation to the borrowing by the Borrowers of the Loan Facility,
the performance and discharge of their obligations and liabilities under the
Finance Documents, and the transactions and other arrangements affected or
contemplated by the Finance Documents to which the Borrowers or any of them are
a party, each Borrower confirms (i) that it is acting for its own account; 
(ii) that it will use the proceeds of the Loans for its own benefit, under its
full responsibility and exclusively for the purposes specified in this
Agreement; and (iii) that the foregoing will not involve or lead to a
contravention of any law, official requirement or other regulatory measure or
procedure implemented and in force to combat “money laundering” (as defined in
Article 1 of Directive (91/308/EEC) of the Council of the European Communities).

 

10.18                 Conformity of Financial Covenants and Dividend
Restrictions.

 

(a)                                  The financial covenants set out in Schedule
8 conform to the financial covenants given by the New Corporate Guarantor and
its subsidiaries under the Bank of America Facilities.

 

(b)                                 The dividend restrictions in Clause 11.21
conform in substance to the dividend restrictions imposed on the New Corporate
Guarantor under the Bank of America Facilities.

 

10.19                 Charters with TBS Worldwide to which Borrowers are a
party.  Any charter which a Borrower shall enter into with TBS Worldwide shall
be on terms comparable to, as far as charterhire is concerned, the time charter
dated 10 May 2005, a copy of which was previously delivered to the Agent.

 

10.20                 Shareholder loans.  All shareholder loans and
inter-company Indebtedness made available to the Borrowers (or any of them)
shall be made by the Shareholder.

 

11                                  GENERAL UNDERTAKINGS AND FINANCIAL COVENANTS

 

11.1                        General.  Each Borrower undertakes with each
Creditor Party to comply with the following provisions of this Clause 11 at all
times during the Security Period except as the Agent may, with the authorisation
of the Majority Lenders otherwise permit.

 

11.2                        Title; negative pledge.  Each Borrower will keep its
rights under the Shipbuilding Contract and Refund Guarantees to which it is a
party, and with effect from the Delivery Date of the Ship, will hold the legal
title to, and own the entire beneficial interest in its Ship, its Insurances and
Earnings, in each case free from all Security Interests and other interests and
rights of every kind, except for Permitted Security Interests.

 

11.3                        No disposal of assets.  Save pursuant to the
relevant Bareboat Charter or in the case of the disposal of a Ship or a
Shipbuilding Contract where the provisions of Clause 8.7 are complied with, no
Borrower will transfer, lease or otherwise dispose of:

 

(a)                                 its Ship or its rights under the
Shipbuilding Contract to which it is a party or all or a substantial part of its
other assets, whether by one transaction or a number of transactions, whether
related or not; or

 

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(b)                                 any debt payable to it or any other right
(present, future or contingent right) to receive a payment, including any right
to damages or compensation.

 

11.4                        No other liabilities or obligations to be incurred. 
No Borrower will incur any liability or obligation except

 

(a)                                  liabilities and obligations under the
Shipbuilding Contract, the Bareboat Charter, the First Sub-Time Charter, the
Second Sub-Time Charter, the Finance Documents, the Guarantee Facility Agreement
and the Finance Documents (as defined in the Guarantee Facility Agreement) to
which it is a party; and

 

(b)                                 liabilities or obligations incurred in the
ordinary course of supervising the construction of, providing supplies for,
operating and chartering its Ship (and for the avoidance of doubt the management
fees payable by the Borrowers to the Approved Managers may be a permitted
expense); and

 

(c)                                  provided the terms of Clause 12.3(c)  are
complied with, inter-company Indebtedness from other companies which are in the
same ultimate beneficial ownership as the Borrowers.

 

11.5                        Information provided to be accurate.  All financial
and other information which is provided in writing by or on behalf of each
Borrower under or in connection with any Finance Document will to the best of
that Borrower’s knowledge and belief be true and not misleading and will not
omit any material fact or consideration which, if disclosed, would reasonably be
expected to adversely affect the decision of a person considering whether to
enter into this Agreement.

 

11.6                        Provision of financial statements.  Each Borrower
will procure that there is sent to the Agent:

 

(a)                                  as soon as possible, but in no event later
than 120 days after the end of each of the Corporate Guarantor’s and the New
Corporate Guarantor’s financial years, the annual audited accounts of the
Corporate Guarantor and the New Corporate Guarantor and each of their
consolidated subsidiaries;

 

(b)                                 as soon as possible, but in no event later
than 30 days after the end of each quarter in each of the Corporate Guarantor’s
and the New Corporate Guarantor’s financial years:

 

(i)                                     the unaudited accounts of the Corporate
Guarantor and the New Corporate Guarantor and each of their consolidated
subsidiaries which are certified as to their correctness by its chief financial
officer; and

 

(ii)                                  with effect from the relevant Delivery
Date of its Ship management accounts in a format approved by the Agent which
show the results of the operation of its Ship during the preceding financial
quarter and which are certified as to their correctness by its chief financial
officer;

 

(c)                                  as soon as possible, but in no event later
than 3 months after the end of each of its financial years (but only with effect
from the relevant Delivery Date of its Ship), a budget in a format approved by
the Agent which shows all anticipated income and expenditure of its Ship during
its next financial year;

 

(d)                                 (d)           by the New Corporate Guarantor
on a monthlysemi annual basis, and in no event later than the 20th day of each
month, monthly management information including information from the preceding
month in respect of sales, operating profit, net income,

 

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EBITDA and available liquidity each on a consolidated basis and each compared
against the relevant budget numbers for that month; and(e)by the New Corporate
Guarantor on a monthly basis, and in no event later than the 30th day of each
month60th day after each financial half year, updated financial projections
including but not limited to revenues, operating expenses, net income, cash
balances, loan balances, working capital requirements and equity for the period
up to and including the following 24 months.income statements, balance sheets
and cash flows projected on a monthly basis for the then subsequent 24 month
period and on a yearly basis for the subsequent period commencing 24 months
later and ending 60 months later;

 

(d)                                

 

(e)                                  by the New Corporate Guarantor within 45
days from the end of each calendar month or 60 days where the end of that month
coincides with the end of a calendar year monthly financials including income
statements, balance sheets, cash flows and key performance indicators for the
business; and

 

(f)                                    by the New Corporate Guarantor 13 week
cash flow report to be delivered on the Wednesday of each week reporting the
prior week’s results and variances and rolling 13 week forecast.

 

11.7                        Form of financial statements.  All accounts (audited
and unaudited) delivered under Clause 11.6 will:

 

(a)                                  be prepared in accordance with all
applicable laws and generally accepted accounting principles of the U.S.A.
consistently applied;

 

(b)                                 give a true and fair view of the financial
condition of the relevant Borrower at the date of those accounts and of its
profit for the period to which those accounts relate;

 

(c)                                  fully disclose or provide for all
significant liabilities of the relevant Borrower.

 

11.8                        Shareholder and creditor notices.  Each Borrower
will send the Agent, at the same time as they are despatched, copies of all
communications which are despatched to its shareholders or creditors or any
class of them.

 

11.9                        Consents.  Each Borrower will maintain in force and
promptly obtain or renew, and will promptly send certified copies to the Agent
of, all consents required:

 

(a)                                  for that Borrower to perform its
obligations under any Finance Document to which it is a party;

 

(b)                                 for the validity or enforceability of any
Finance Document to which it is a party;

 

(c)                                  for that Borrower to continue to own,
charter and operate its Ship;

 

and the Borrower will comply with the terms of all such consents.

 

11.10                 Maintenance of Security Interests.  Each Borrower will:

 

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

 

(b)                                 without limiting the generality of paragraph
(a), at its own cost, promptly register, file, record or enrol any Finance
Document with any applicable court or authority, pay any applicable

 

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stamp, registration or similar tax in respect of any Finance Document, give any
notice or take any other step which, in the reasonable opinion of the Majority
Lenders, is or has become necessary or desirable for any Finance Document to be
valid, enforceable or admissible in evidence or to ensure or protect the
priority of any Security Interest which it creates.

 

11.11                 Notification of litigation.  Each Borrower will provide
the Agent with details of any legal or administrative action involving any
Borrower, any Security Party, the Approved Managers or the Ships, their Earnings
or the Insurances promptly upon becoming aware of the same where such legal or
administrative action might, if adversely determined, have a material adverse
effect on the ability of that Borrower to perform its obligations under any
Finance Document to which it is a party.

 

11.12                 No amendment to Shipbuilding Contracts.  No Borrower will
agree to any material amendment or supplement to, or waive or fail to enforce,
the Shipbuilding Contract to which it is a party or any of its provisions (and
for the purposes of this Clause 11.12 an amendment of a Shipbuilding Contract
will always be material if alone or with any previous variations it increases
the Contract Price thereunder by more than 5%).

 

11.13                 Chief Executive Office.  Each Borrower will maintain its
chief executive office, and keep its corporate documents and records, at Suite
306, Commerce Building, One Chancery Lane, Hamilton, MH12, Bermuda.

 

11.14                 Confirmation of no default.  Each Borrower will, within 2
Business Days after service by the Agent of a written request, serve on the
Agent a notice which is signed by the representative director of such Borrower
and which:

 

(a)                                  states that no Event of Default or
Potential Event of Default has occurred and is continuing; or

 

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

 

11.15                 Notification of default.  Each Borrower will notify the
Agent as soon as it becomes aware of:

 

(a)                                  the occurrence of an Event of Default or a
Potential Event of Default; or

 

(b)                                 any matter which indicates that an Event of
Default or a Potential Event of Default may have occurred and is continuing;

 

and will keep the Agent fully up-to-date with all developments.

 

11.16                 Provision of further information.  Each Borrower will, as
soon as practicable after receiving the request, provide the Agent with any
additional financial or other information relating:

 

(a)                                  to it, its Ship, her Earnings or
Insurances; or

 

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

 

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

 

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11.17                 Provision of copies and translation of documents.  Each
Borrower will supply the Agent with a sufficient number of copies of the
documents referred to above to provide 1 copy for each Creditor Party; and if
the Agent so requires in respect of any of those documents, such Borrower will
provide a certified English translation prepared by a translator approved by the
Agent.

 

11.18                 Financial Covenants including Minimum Liquidity Covenant.

 

(i)                                     The Borrowers undertake to comply at all
times with the financial covenants set out in Schedule 8.

 

(ii)                                  The Borrowers shall provide to the Agent
within 60 days after the end of each financial quarter of the New Corporate
Guarantor’s financial year a compliance certificate in the form set out in
Schedule 9 executed by the chief financial officer of the New Corporate
Guarantor and confirming that the Financial Covenants set out in Schedule 8 have
been complied with during each financial quarter.

 

(iii)                               A formal review of the financial covenants
set out in Schedule 8 will be undertaken by the Agent, having consulted and
received the written agreement of the Lenders, upon expiry and prepayment of the
Bank of America Facilities whichever is the earlier.

 

(iv)                              The parties to this Agreement shall review the
financial covenants set out in Schedule 8 on or around 1 May 2012.

 

(1)                        Compliance with the Minimum Liquidity Covenant shall
be reported on the 13-week cash flow report to be provided pursuant to Clause
11.6(f) above.  For any day after 6 January 2011 on which fees and expenses are
actually paid in connection with the restructuring contemplated by the Global
Restructuring Term Sheet, the calculation in respect of the Minimum Liquidity
Covenant shall include, for the week in which such payment is made and the three
weeks after each such payment, an add-back for such fees and expenses.  For
these purposes restructuring fees and expenses include, without limitation,
financing fees, commitment fees and professional and legal fees (but will
expressly exclude any interest).

 

(2)                        If on any measurement date occurring after 31 January
2011 the Qualified Cash is $17,500,000 or less, the New Corporate Guarantor
shall promptly conduct a bank update call with the Agent to discuss liquidity
issues.  This threshold will not have add-back for restructuring fees and
expenses.

 

(3)                        Qualified Cash shall exclude the monies on the
Special Account and any cash pledged to support letters of credit.

 

(4)                        At the discretion of the New Corporate Guarantor,
funds from the Special Account can be used to cure a breach of the Minimum
Liquidity Covenant within the cure period specified below.  If funds are not
required for compliance with the Minimum Liquidity Covenant in subsequent period
the funds can be refunded to the Special Account at the discretion of the New
Corporate Guarantor provided however that no such refund can be effectuated
unless, after such refund, aggregate Qualified Cash (other than cash in the
Special Account and any cash pledged to support letters of credit) equal or
exceed $22,500,000 subject to a cap, applied separately for each cure of a
breach of the Minimum

 

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Liquidity Covenant of the sum of (i) $5,000,000 plus (ii) the amount by which
aggregate amounts spent for Permitted Discretionary Activities are less than
$5,000,000.

 

(5)                        The cure period for any breach of the Minimum
Liquidity Covenant before such breach becomes an Event of Default shall be two
(2) Business Days after the delivery of a 13 week cash flow report reflecting
liquidity below $15,000,000 for any period provided however that such applicable
cure period shall be extended by two (2) Business Days if an Additional Capital
Infusion is required to cure a breach of the Minimum Liquidity Covenant.

 

11.19                 Operational business of TBS Pacific Liner.  The Borrowers
undertake to procure that TBS Pacific Liner opens the Earnings Account with the
Agent no later than 30 June 2007 and that thereafter and throughout the Security
Period (i) all of the operational business of TBS Pacific Liner shall be
conducted through the Earnings Account and (ii) TBS Pacific Liner does not
operate accounts with any banks other than the Agent (save that the Creditor
Parties agree there may be a transitional period of up to 6 months from the date
of opening the Earnings Account until all operational business of TBS Pacific
Liner is completely transferred and all other accounts of TBS Pacific Liner
which are currently with other banks are closed).

 

11.20                 Designated Transactions.  The Borrowers hereby undertake
that on the Drawdown Date in respect of an Advance they shall hedge the interest
rate payable in respect of such Advance for the period for which such Advance is
scheduled to be outstanding by entering into a Designated Transaction with the
Swap Bank pursuant to the Master Agreement.

 

11.21                 No Dividends.  As long as no Event of Default has occurred
or would occur as a result of the payment of any dividend or the making of any
distribution the Borrowers may pay any dividends or make other forms of
distributions to the New Corporate Guarantor.  The Borrowers shall procure that
the New Corporate Guarantor does not pay any dividend or make any other form of
distribution Provided that so long as no Event of Default has occurred or would
occur as a result of the payment of any dividend or the making of any
distribution the New Corporate Guarantor may withhold stock in order that it be
sold and the proceeds used solely to pay any payroll withholding taxes as
required in connection with stock bonuses made to employees of the New Corporate
Guarantor and its subsidiaries.

 

11.22                 Financial Covenants in other facilities.  The Borrowers
undertake to provide and to procure that the New Corporate Guarantor provides
the Creditor Parties with the benefit of any additional or more favourable
financial covenants provided to other financing parties under other or future
financing agreements in order that the Creditor Parties shall be treated no less
favourably than any other of the financing parties to the New Corporate
Guarantor and/or any of its subsidiaries by providing details of such financial
covenants in order that appropriate amendments can be made by this Agreement and
the relevant Finance Documents.

 

11.23                 Equity Contributions.  The Borrowers shall ensure that all
amounts due under the Shipbuilding Contracts other than those amounts being
financed by a Loan under this Agreement shall be paid from operating cashflow
and the Borrowers shall not use any monies credited to the Restricted Equity
Deposit Account until the Agent has notified the Borrowers that it is satisfied
that the amount standing to the credit of the Restricted Equity Deposit Account
is sufficient to meet all remaining amounts due under the Shipbuilding Contracts
other than those amounts being financed by a Loan under this Agreement.  The
Borrowers shall further ensure that any further equity raised by the New
Corporate Guarantor shall be utilised in meeting the Borrowers’ equity
contributions as required under this Clause

 

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in the first instance and any balance thereafter shall promptly be credited to
the Restricted Equity Deposit Account. Any amount of equity raised over such
amounts required to fund equity contributions in respect of amounts due under
the Shipbuilding Contracts other than those amounts being financed by a Loan
under this Agreement shall not be credited to the Restricted Equity Deposit
Account but shall be used to prepay all loans and indebtedness owed by the New
Corporate Guarantor and its subsidiaries to Bank of America, The Royal Bank of
Scotland plc, DVB Group Merchant Bank (Asia) Ltd., Credit Suisse, AIG Commercial
Equipment Finance, Inc., Commerzbank AG and Berenberg Bank under loan or
facility agreements entered into with them on a pro rata basis.  Any prepayment
of the Loans under this Clause shall be applied to all Loans on a pro rata basis
in accordance with Clause 8.

 

11.23                 Operating leases and charter in agreements.

 

(a)                                  11.24Operating Leases.  TheSubject to
Clause 11.23(b) the Borrowers shall ensure that neither the New Corporate
Guarantor nor any of its subsidiaries shall permit any new or increase their
existing off balance sheet operating leases, operating lease payments and
payments associated with vessels chartered in for more than 12 months without
the prior written consent of the Agent acting on the instructions of the
Majority Lenders.  In no circumstances shall any such off-balance sheet
operating obligations exceed $45,000,000 when aggregated.

 

(b)                                 The New Corporate Guarantor and any of its
subsidiaries (other than the Borrowers) may enter into ordinary course charter
in agreements subject to a cap of $10,000,000 outstanding at any one time.  Such
limit shall only apply to vessels chartered in so long as they have a fixed
remaining term of greater than 12 months but shall not apply to the Laguna Belle
and Seminole Princess Leases.  For the avoidance of doubt none of the New
Corporate Guarantor and its subsidiaries shall be permitted to enter into any
speculative charter in agreements of 12 months or less.

 

11.24                 11.25Additional Vessels.  The Borrowers shall not and
shall procure that the New Corporate Guarantor or any of its subsidiaries do not
purchase any additional vessels without the prior written consent of the Agent
acting on the instructions of the Majority Lenders.

 

11.26Investments in Joint Ventures.  The Borrowers, the Corporate Guarantor and
the New Corporate Guarantor acting individually or together shall not invest
more than $10,000,000 in aggregate in any Joint Ventures of which any amounts in
excess of $5,000,000 shall require the prior written consent of the Agent acting
on the instructions of the Majority Lenders. For the avoidance of doubt, the
$10,000,000 amount referred to above shall include all Joint Venture investments
made on or after 27 March 2009.

 

11.25                 Other Restrictions.

 

(a)                                  None of the New Corporate Guarantor and its
subsidiaries shall incur any capital expenditure other than to complete the
construction programme in respect of Ship D and Ship F and to maintain their
existing fleet and including Rollover Capex;

 

(b)                                 None of the New Corporate Guarantor and its
subsidiaries shall incur any further Financial Indebtedness other than Capital
Infusions, Permitted Additional Junior Capital, Replacement Debt, Permitted
Logstar Debt and the existing Financial Indebtedness under each of the TBS
Credit Facilities and under the Swap Facility.

 

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(c)                                  The New Corporate Guarantor and its
subsidiaries shall not enter into any leases (other than existing leases and
renewals related thereto and future de minimis and ordinary course leases nor
make any investments (other than Permitted Discretionary Activities) nor make
any distributions.

 

(d)                                 The New Corporate Guarantor shall be
permitted to consolidate the Westchester Offices of the TBS Group in a new
location within the same geographic area; provided that any such consolidation
shall have no adverse cash flow impact compared to the aggregate premises
expense of the existing Westchester offices.

 

(e)                                  The New Corporate Guarantor and its
subsidiaries shall be permitted to cash collateralise letters of credit up to
$3,000,000.

 

(f)                                    The New Corporate Guarantor shall be
permitted to convert the Laguna Belle and Seminole Princess Leases to debt up to
$25,000,000 in aggregate with no incremental profit & loss cash impact on the
New Corporate Guarantor and its subsidiaries on an on-going basis.

 

12                                  CORPORATE UNDERTAKINGS

 

12.1                        General.  Each Borrower also undertakes with each
Creditor Party to comply with the following provisions of this Clause 12 at all
times during the Security Period except as the Agent may, with the authorisation
of the Majority Lenders, otherwise permit.

 

12.2                        Maintenance of status.  Each Borrower will maintain
its separate corporate existence and remain in good standing under the laws of
the Marshall Islands.

 

12.3                        Negative undertakings.  No Borrower will:

 

(a)                                  carry on any business other than in
relation to the construction, purchase and eventual ownership, chartering and
operation of its Ship; or

 

(b)                                 effect any form of redemption, purchase or
return of share capital; or

 

(c)                                  provide any form of credit or financial
assistance to:

 

(i)                                     a person who is directly or indirectly
interested in that Borrower’s share or loan capital; or

 

(ii)                                  any company in or with which such a person
is directly or indirectly interested or connected;

 

or enter into any transaction with or involving such a person or company on
terms which are, in any respect, less favourable to that Borrower than those
which it could obtain in a bargain made at arms’ length provided however that
prior to an Event of Default which is continuing that Borrower may provide loans
to or incur inter-company Indebtedness from other subsidiaries of the New
Corporate Guarantor and may service such inter-company Indebtedness provided
that in the case of any such inter-company Indebtedness the relevant lending
company has first executed an agreement in favour of the Security Trustee fully
subordinating the rights of such lending company in respect of such Indebtedness
to those of the Creditor Parties under the Finance Documents and assigning its
rights in respect of any loan agreements relating to such inter-company
Indebtedness made between it and the Borrowers;

 

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(d)                                 issue, allot or grant any person a right to
any shares in its capital or repurchase or reduce its issued share capital;

 

(e)                                  acquire any shares or other securities
other than US or UK Treasury bills and certificates of deposit issued by major
North American or European banks, or enter into any transaction in a derivative;
or

 

(f)                                    enter into any form of amalgamation,
merger or de-merger or any form of reconstruction or reorganisation.

 

13                                  INSURANCE

 

13.1                        General.  Each Borrower also undertakes with each
Creditor Party to comply with the following provisions of this Clause 13 in
respect of each Ship at all times during the Security Period after that Ship has
been delivered to it under the relevant Shipbuilding Contract except as the
Agent may, with the authorisation of the Majority Lenders, otherwise permit.

 

13.2                        Maintenance of obligatory insurances.  Each Borrower
shall keep its Ship insured at its expense against:

 

(a)                                  fire and usual marine risks (including hull
and machinery and excess risks);

 

(b)                                 war risks;

 

(c)                                  protection and indemnity risks; and

 

(d)                                 any other risks against which the Agent
considers, having regard to practices and other circumstances prevailing at the
relevant time, it would in the reasonable opinion of the Agent be reasonable for
a prudent owner to insure and which are specified by the Agent by notice to the
Borrower.

 

13.3                        Terms of obligatory insurances.  Such insurances in
relation to a Ship shall be effected by the Borrowers:

 

(a)                                  in Dollars;

 

(b)                                 in the case of fire and usual marine risks
and war risks, in an amount on an agreed value basis at least the greater of (i)
One hundred and twenty per cent. (120%) of the Loan in respect of such Ship and
(ii) the market value of such Ship;

 

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

 

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

 

(e)                                  on approved terms; and

 

(f)                                    through approved brokers and with
approved insurance companies and/or underwriters or, in the case of war risks
and protection and indemnity risks, in approved war risks and protection and
indemnity risks associations and without prejudice to the Borrowers’ obligation
to obtain the prior approval of the Agent such approval not to be unreasonably
withheld, at all times with reputable international brokers, companies,
underwriters and mutual insurance associations.

 

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13.4                        Further protections for the Creditor Parties.  In
addition to the terms set out in Clause 13.3, each Borrower shall use its best
endeavours to procure that the obligatory insurances shall:

 

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

 

(b)                                 name the Security Trustee as loss payee with
such directions for payment as the Security Trustee may reasonably specify;

 

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

 

(d)                                 provide that the insurers shall waive, to
the fullest extent permitted by English law, their entitlement (if any) (whether
by statute, common law, equity, or otherwise) to be subrogated to the rights and
remedies of the Agent in respect of any rights or interests (secured or not)
held by or available to the Agent under the Finance Documents, until the Secured
Liabilities shall have been fully repaid and discharged, except that the
insurers shall not be restricted by the terms of this paragraph (d) from making
personal claims against persons (other than the Borrowers or any other Creditor
Party) in circumstances where the insurers have fully discharged their
liabilities and obligations under the relevant obligatory insurances;

 

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

 

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

 

(g)                                 provide so far as possible that if any
obligatory insurance is cancelled, or if any substantial change is made in the
coverage which adversely affects the interest of the Agent, or if any obligatory
insurance is allowed to lapse for non-payment of premium, such cancellation,
charge or lapse shall not be effective with respect to the Agent for 30 days (or
7 days in the case of war risks) after receipt by the Agent of prior written
notice from the insurers of such cancellation, change or lapse.

 

13.5                        Renewal of obligatory insurances.  The Borrowers
shall:

 

(a)                                  at least 14 days before the expiry of any
obligatory insurance effected by it:

 

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

 

(ii)                                  obtain the Security Trustee’s approval to
the matters referred to in paragraph (i) such approval not to be unreasonably
withheld;

 

(b)                                 at least 7 days before the expiry of any
obligatory insurance effected by it, renew that obligatory insurance in
accordance with the Security Trustee’s approval pursuant to paragraph (a); and

 

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

 

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

 

(a)                                  they will have endorsed on each policy,
immediately upon issue, a loss payable clause and a notice of assignment
complying with the provisions of Clause 13.4;

 

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

 

(c)                                  they will advise the Security Trustee
immediately of any material change to the terms of the obligatory insurances;

 

(d)                                 they will notify the Security Trustee, not
less than 10 days before the expiry of the obligatory insurances, in the event
of their not having received notice of renewal instructions from the Borrowers
or their agents and, in the event of their receiving instructions to renew, they
will promptly notify the Security Trustee of the terms of the instructions; and

 

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

 

13.7                        Copies of certificates of entry.  The Borrowers
shall ensure that any protection and indemnity and/or war risks associations in
which a Ship is entered provides the Security Trustee with:

 

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

 

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

 

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

 

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

 

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

 

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

 

13.11                 Restrictions on employment.  The Borrowers shall not
employ the Ships, nor permit them to be employed, outside the cover provided by
any obligatory insurances.

 

13.12                 Compliance with terms of insurances.  The Borrowers shall
not do nor omit to do (nor permit to be done or not to be done) any act or thing
which would or might render any obligatory insurance invalid, void, voidable or
unenforceable or render any sum payable under an obligatory insurance repayable
in whole or in part; and, in particular:

 

(a)                                  the Borrowers shall take all necessary
action and comply with all requirements which may from time to time be
applicable to the obligatory insurances, and (without limiting the obligation
contained in Clause 13.7(c)) ensure that the obligatory insurances are not made
subject to any exclusions or qualifications to which the Security Trustee has
not given its prior approval;

 

(b)                                 the Borrowers shall not make any changes
relating to the classification or classification society or manager or operator
of the Ships approved by the underwriters of the obligatory insurances;

 

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

 

(d)                                 the Borrowers shall not employ the Ships,
nor allow them to be employed, otherwise than in conformity with the terms and
conditions of the obligatory insurances, without first obtaining the consent of
the insurers and complying with any requirements (as to extra premium or
otherwise) which the insurers specify.

 

13.13                 Alteration to terms of insurances.  The Borrowers shall
not either make or agree to any alteration to the terms of any obligatory
insurance nor waive any right relating to any obligatory insurance.

 

13.14                 Settlement of claims.  The Borrowers shall not either
settle, compromise or abandon any claim under any obligatory insurance for Total
Loss or for a Major Casualty unless the Agent is satisfied that such release,
compromise or abandonment will not prejudice any of the Lenders’ interests, and
the Borrowers shall do all things necessary and provide all documents, evidence
and information to enable the Security Trustee to collect or recover any moneys
which at any time become payable in respect of the obligatory insurances.

 

13.15                 Provision of copies of communications.  The Borrowers
shall provide the Security Trustee, at the time of each such communication,
copies of all written communications between the Borrowers and:

 

(a)                                  the approved brokers; and

 

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

 

(c)                                  the approved insurance companies and/or
underwriters,

 

which relate directly or indirectly to:

 

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

 

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

 

13.16                 Provision of information.  In addition, the Borrowers
shall promptly provide the Security Trustee (or any persons which it may
designate) with any information which the Security Trustee (or any such
designated person) reasonably requests for the purpose of:

 

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

 

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

 

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

 

13.17                 Mortgagee’s interest, additional perils.  The Security
Trustee shall be entitled from time to time to effect, maintain and renew a
mortgagee’s interest additional perils insurance and a mortgagee’s interest
marine insurance in relation to each Ship the subject of a Mortgage, in each
case in an amount, which when aggregated with any such insurance policy taken
out in relation to the other Ships then the subject of a Mortgage is equal to
one hundred and ten per cent. (110%) of the Loans or part thereof at the
discretion of the Security Trustee, on such terms, through such insurers and
generally in such manner as the Security Trustee may from time to time consider
appropriate and the Borrowers shall upon demand fully indemnify the Security
Trustee in respect of all premiums and other expenses which are incurred in
connection with or with a view to effecting, maintaining or renewing any such
insurance or dealing with, or considering, any matter arising out of any such
insurance.

 

13.18                 Review of insurance requirements.  The Agent may and, on
instruction of the Majority Lenders, shall review the requirements of this
Clause 13 from time to time in order to take account of any changes in
circumstances after the date of this Agreement which are, in the reasonable
opinion of the Agent or any Lender significant and capable of affecting the
Borrowers or the Ships and their insurance (including, without limitation,
changes in the availability or the cost of insurance coverage or the risks to
which the Borrowers may be subject).

 

13.19                 Modification of insurance requirements.  The Agent shall
notify the Borrowers of any proposed modification under Clause 13.18 to the
requirements of this Clause 13 which the Agent, may or, on instruction of the
Majority Lenders, shall reasonably consider appropriate, in the circumstances
and, after consultation and taking full account of the Borrower’s opinions, such
modification shall take effect on and from the date it is notified in writing to
the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers
accordingly.

 

14                                  SHIP COVENANTS

 

14.1                        General.  Each Borrower also undertakes with each
Creditor Party to comply with the following provisions of this Clause 14 in
respect of each Ship at all times during the Security

 

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Period after that Ship has been delivered to it under the relevant Shipbuilding
Contract except as the Agent, with the authorisation of the Majority Lenders,
may otherwise permit.

 

14.2                        Ship’s name and registration.  Each Borrower shall
keep its Ship registered in its name in the Panamanian ship registry; shall not
do or allow to be done anything as a result of which such registration might be
cancelled or imperilled; and shall not change the name or port of registry of
its Ship.

 

14.3                        Repair and classification.  Each Borrower shall keep
its Ship in a good and safe condition and state of repair:

 

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

 

(b)                                 so as to maintain such Ship’s present
Classification in each case free of  recommendations and conditions affecting
that Ship’s Classification; and

 

(c)                                  so as to comply with all laws and
regulations applicable to vessels registered at ports in the Republic of Panama
or to vessels trading to any jurisdiction to which that Ship may trade from time
to time, including but not limited to the ISM Code and the ISPS Code.

 

14.4                        Modification.  The Borrowers shall not make any
modification or repairs to, or replacement of, any Ship or equipment installed
on it which would or might materially alter the structure, type or performance
characteristics of that Ship or materially reduce its value.

 

14.5                        Removal of parts.  The Borrowers shall not remove
any material part of any Ship, or any item of equipment installed on, any Ship
unless the part or item so removed is forthwith replaced by a suitable part or
item which is in the same condition as or better condition than the part or item
removed, is free from any Security Interest or any right in favour of any person
other than the Security Trustee and becomes on installation on the relevant Ship
the property of the relevant Borrower and subject to the security constituted by
the relevant Mortgage Provided that the Borrowers may install equipment owned by
a third party if the equipment can be removed without any risk of damage to the
relevant Ship.

 

14.6                        Surveys.  The Borrowers shall submit the Ships
regularly to all periodical or other surveys which may be required for
classification purposes and, if so required by the Security Trustee provide the
Security Trustee, with copies of all survey reports.

 

14.7                        Inspection.  The Borrowers shall permit the Security
Trustee (by surveyors or other persons appointed by it for that purpose) to
board the Ships at all reasonable times and without interference to their
itineraries to inspect their condition or to satisfy themselves about proposed
or executed repairs and shall afford all proper facilities for such inspections.

 

14.8                        Prevention of and release from arrest.  The
Borrowers shall promptly discharge:

 

(a)                                  all liabilities which give or may give rise
to maritime or possessory liens on or claims enforceable against the Ships,
their Earnings or the Insurances;

 

(b)                                 all taxes, dues and other amounts charged in
respect of the Ships, their Earnings or the Insurances; and

 

(c)                                 all other outgoings whatsoever in respect of
the Ships, their Earnings or the Insurances;

 

and, upon receiving notice of the arrest of a Ship, or of its detention in
exercise or purported exercise of any lien or claim, the Borrowers shall procure
its release by providing bail or

 

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otherwise as the circumstances may require as soon as practicable and in any
event within 14 days.

 

14.9                        Compliance with laws etc.  The Borrowers shall:

 

(a)                                  comply, or procure compliance with the ISM
Code, the ISPS Code, all Environmental Laws and all other laws or regulations
relating to the Ships, their ownership, operation and management or to the
business of the Borrowers;

 

(b)                                 not employ the Ships nor allow their
employment in any manner contrary to any law or regulation in any relevant
jurisdiction including but not limited to the ISM Code and the ISPS Code; and

 

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

 

14.10                 Provision of information.  The Borrowers shall promptly
provide the Security Trustee with any information which it reasonably requests
regarding:

 

(a)                                  the Ships, their employment, position and
engagements;

 

(b)                                 the Earnings and payments and amounts due to
the master and crew of the Ships;

 

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

 

(d)                                 any towages and salvages;

 

(e)                                  its compliance, the Approved Managers’
compliance and the compliance of the Ships with the ISM Code and the ISPS Code;

 

and, upon the Security Trustee’s request, provide copies of any current charter
relating to any Ship, of any current charter guarantee and copies of a Ship’s
Document of Compliance.

 

The Agent shall communicate any of the above information to any one of the
Lenders upon receiving written demand subject to receipt of the same from the
Borrower.

 

14.11                 Notification of certain events.  The Borrowers shall
immediately notify the Security Trustee by fax, confirmed forthwith by letter,
of:

 

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

 

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

 

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

 

(d)                                 any arrest or detention of a Ship, any
exercise or purported exercise of any lien on a Ship or its Earnings or any
requisition of a Ship for hire;

 

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(e)                                  any intended dry docking of a Ship;

 

(f)                                    any Environmental Claim made against any
Borrower or in connection with a Ship, or any Environmental Incident;

 

(g)                                 any claim for breach of the ISM Code or the
ISPS Code being made against any Borrower, the Approved Managers or otherwise in
connection with a Ship; or

 

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

 

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

 

14.12                 Restrictions on chartering, appointment of managers etc. 
No Borrower shall, in relation to a Ship:

 

(a)                                  (other than pursuant to a Related Party
Charter) let or allow any charterer to let that Ship on demise charter for any
period;

 

(b)                                 (other than pursuant to a Related Party
Charter) enter or allow any charterer to enter into any time or consecutive
voyage charter in respect of that Ship for a term which exceeds, or which by
virtue of any optional extensions may exceed, 13 months;

 

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

 

(d)                                 (other than pursuant to a Related Party
Charter) charter or allow any charterer to charter that Ship otherwise than on
bona fide arm’s length terms at the time when that Ship is fixed;

 

(e)                                  appoint or allow any charterer to appoint a
manager of that Ship other than the Approved Managers or agree to any alteration
to the terms of the Approved Managers’ appointment;

 

(f)                                    de-activate or lay up or allow any
charterer to de-activate or lay up that Ship; or

 

(g)                                 put or allow any charterer to put that Ship
into the possession of any person for the purpose of work being done upon it in
an amount exceeding or likely to exceed $500,000 (or the equivalent in any other
currency) unless (i) that person has first given to the Security Trustee and in
terms satisfactory to it a written undertaking not to exercise any lien on that
Ship or its Earnings for the cost of such work or for any other reason or
(ii) the cost of the work to be done on that Ship is covered by insurances and
the underwriters have agreed to make payment direct to the person who is to
carry out the work or (iii) the Agent is otherwise satisfied that the amounts
payable in respect of the cost of the work will be paid on their relevant due
date for payment.

 

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

 

14.14                 Sharing of Earnings.   Save as disclosed to the Agent, no
Borrower shall enter into any agreement or arrangement for the sharing of any
Earnings.

 

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14.15                 ISPS Code.  The Borrowers shall comply with the ISPS Code
and in particular, without limitation, shall:

 

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

 

(b)                                 maintain for each Ship an ISSC;  and

 

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

 

15                                  SECURITY COVER

 

15.1                        Minimum required security cover.  Clause 15.2
applies if the Agent notifies the Borrowers that:

 

(a)                                  the aggregate of the market values
(determined as provided in Clause 15.3) of the Ships then subject to a Mortgage;
plus

 

(b)                                 the net realisable value of any additional
security previously provided under this Clause 15;

 

is below One hundred and twenty five per cent.(125%)the Relevant Percentage of
the Loans (provided however that Loans for these purposes shall exclude prior to
the Delivery Date in respect of a Ship and the advance of its Delivery Advance,
all Advances of the Loan for such Ship).

 

15.2                        Provision of additional security; prepayment.  If
the Agent serves a notice on the Borrowers under Clause 15.1, the Borrowers
shall, within 1 month after the date on which the Agent’s notice is served,
either:

 

(a)                                  provide, or ensure that a third party
provides, additional security which, in the reasonable opinion of the Majority
Lenders, has a net realisable market value at least equal to the shortfall and
is documented in such terms as the Agent may, with the authorisation of the
Majority Lenders, approve or require; or

 

(b)                                 prepay such part (at least) of the Loan as
will eliminate the shortfall.

 

15.3                        Valuation of Ships.  The market value of a Ship at
any date is that shown by a valuation prepared:

 

(a)                                  as at a date not more than 10 Business days
previously;

 

(b)                                 by an independent international sale and
purchase shipbroker which the Agent has approved or appointed for the purpose;

 

(c)                                  with or without physical inspection of the
Ship (as the Agent may require);

 

(d)                                 on the basis of a sale for prompt delivery
for cash on normal arm’s length commercial terms as between a willing seller and
a willing buyer, free of any existing charter or other contract of employment;

 

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

 

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15.4                        Value of additional vessel security.  The net
realisable value of any additional security which is provided under Clause 15.2
and which consists of a Security Interest over a vessel shall be that shown by a
valuation complying with the requirements of Clause 15.3.

 

15.5                        Valuations binding.  Any valuation under Clause
15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrowers, as
shall be any valuation which the Majority Lenders make of any additional
security which does not consist of or include a Security Interest.

 

15.6                        Provision of information.  The Borrowers shall
promptly provide the Agent and any shipbroker or expert acting under Clause 15.3
or 15.4 with any information which the Agent or the shipbroker or expert may
reasonably request for the purposes of the valuation; and, if the Borrowers fail
to provide the information by the date specified in the request, the valuation
may be made on any basis and assumptions which the shipbroker or the Majority
Lenders (or the expert appointed by them) consider prudent.

 

15.7                        Payment of valuation expenses.  Without prejudice to
the generality of the Borrowers’ obligations under Clauses 20.2, 20.3 and 21.3,
the Borrowers shall, on demand, pay the Agent the amount of the fees and
expenses of any shipbroker or expert instructed by the Agent under this Clause
and all legal and other expenses incurred by any Creditor Party in connection
with any matter arising out of this Clause provided however that prior to the
occurrence of an Event of Default the Borrowers shall only be obliged to
reimburse the Agent such fees and expenses in relation to one valuationfour
valuations of each Ship obtained pursuant to Clause 15 per each twelve month
period. The Borrowers shall also pay to the Agent the amount of all legal and
other expenses incurred by any Creditor Party in connection with any matter
arising out of this Clause 20.

 

15.8                        Frequency of valuations.  The Agent shall obtain
valuations to test the security cover specified in Clause 15.2 on a quarterly
basis or at such other times as the Agent may reasonably require.

 

15.9                        15.8Application of prepayment.  Clause 8 shall apply
in relation to any prepayment pursuant to Clause 15.2(b).

 

15.10                 15.9Meaning of additional security.  In Clause 15.1
“security” means a Security Interest over an asset or assets (whether securing
the Borrowers’ liabilities under the Finance Documents or a guarantee in respect
of those liabilities), or a guarantee, letter of credit or other security in
respect of the Borrowers’ liabilities under the Finance Documents.

 

15.11                 15.10Requirement for additional documents.  The Borrowers
shall not be deemed to have complied with Clause 15.2(a) above until the Agent
has received in connection with the additional security certified copies of
documents of the kinds referred to in paragraphs 3, 4 and 5 of Part A of
Schedule 3 below and such legal opinions in terms acceptable to the Agent from
such lawyers as it may select.

 

16                                  PAYMENTS AND CALCULATIONS

 

16.1                        Currency and method of payments.  All payments to be
made by the Lenders or by the Borrowers under a Finance Document shall be made
to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

(a)                                 by not later than 11.00 a.m. (New York City
time) on the due date;

 

(b)                                 in same day Dollar funds settled through the
New York Clearing House Interbank Payments System (or in such other Dollar funds
and/or settled in such other manner as the Agent shall

 

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specify as being customary at the time for the settlement of international
transactions of the type contemplated by this Agreement);

 

(c)                                  in the case of an amount payable by a
Lender to the Agent or by the Borrowers to the Agent or any Lender, to the
account of the Agent at JP Morgan Chase Bank, New York (Swift Code: CHASUS33)
Account No. 400759136 for credit to the Agent (Swift Code: RBOSGB2LGLO Swift
Name: Royal Bank of Scotland GLO, London) reference “GLO re TBS”, or to such
other account with such other bank as the Agent may from time to time notify to
the Borrowers and the other Creditor Parties; and

 

(d)                                 in the case of an amount payable to the
Security Trustee, to such account as it may from time to time notify to the
Borrowers and the other Creditor Parties.

 

16.2                        Payment on non-Business Day.  If any payment by the
Borrowers under a Finance Document would otherwise fall due on a day which is
not a Business Day:

 

(a)                                  the due date shall be extended to the next
succeeding Business Day; or

 

(b)                                 if the next succeeding Business Day falls in
the next calendar month, the due date shall be brought forward to the
immediately preceding Business Day;

 

and interest shall be payable during any extension under paragraph (a) at the
rate payable on the original due date.

 

16.3                        Basis for calculation of periodic payments.  All
interest and commitment fee and any other payments under any Finance Document
which are of an annual or periodic nature shall accrue from day to day and shall
be calculated on the basis of the actual number of days elapsed and a 360 day
year.

 

16.4                        Distribution of payments to Creditor Parties. 
Subject to Clauses 16.5, 16.6 and 16.7:

 

(a)                                  any amount received by the Agent under a
Finance Document for distribution or remittance to a Lender, the Swap Bank or
the Security Trustee shall be made available by the Agent to that Lender, the
Swap Bank or, as the case may be, the Security Trustee by payment, with funds
having the same value as the funds received, to such account as the Lender, the
Swap Bank or the Security Trustee may have notified to the Agent not less than 5
Business Days previously; and

 

(b)                                 amounts to be applied in satisfying amounts
of a particular category which are due to the Lenders generally shall be
distributed by the Agent to each Lender pro rata to the amount in that category
which is due to it.

 

16.5                        Permitted deductions by Agent. Notwithstanding any
other provision of this Agreement or any other Finance Document, the Agent may,
before making an amount available to a Lender, deduct and withhold from that
amount any sum which is then due and payable to the Agent from that Lender under
any Finance Document or any sum which the Agent is then entitled under any
Finance Document to require or that Lender to pay on demand.

 

16.6                        Agent only obliged to pay when monies received. 
Notwithstanding any other provision of this Agreement or any other Finance
Document, the Agent shall not be obliged to make available to the Borrowers or
any Lender any sum which the Agent is expecting to receive for remittance or
distribution to the Borrowers or that Lender until the Agent has satisfied
itself that it has received that sum.

 

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16.7                       Refund to Agent of monies not received.  If and to
the extent that the Agent makes available a sum to the Borrowers or a Lender,
without first having received that sum, the Borrowers or the Lender concerned
(as the case may be) shall, on demand:

 

(a)                                  refund the sum in full to the Agent; and

 

(b)                                 pay to the Agent the amount (as certified by
the Agent) which will indemnify the Agent against any funding or other loss,
liability or expense incurred by the Agent as a result of making the sum
available before receiving it.

 

16.8                        Agent may assume receipt.  Clause 16.7 shall not
affect any claim which the Agent has under the law of restitution, and applies
irrespective of whether the Agent had any form of notice that it had not
received the sum which it made available.

 

16.9                        Creditor Party accounts.  Each Creditor Party shall
maintain accounts showing the amounts owing to it by the Borrowers and each
Security Party under the Finance Documents and all payments in respect of those
amounts made by the Borrowers and any Security Party.

 

16.10                 Agent’s memorandum account.  The Agent shall maintain a
memorandum account showing all sums owing to the Agent, the Security Trustee,
and each Lender from the Borrowers and each Security Party under the Finance
Documents and all payments in respect of those amounts made by the Borrowers and
any Security Party.

 

16.11                 Accounts prima facie evidence.  If any accounts maintained
under Clauses 16.9 and 16.10 show an amount to be owing by the Borrowers or a
Security Party to a Creditor Party, those accounts shall be prima facie evidence
that that amount is owing to that Creditor Party.

 

17                                  APPLICATION OF RECEIPTS

 

17.1                        Normal order of application.  Except as any Finance
Document may otherwise provide, any sums which are received or recovered by any
Creditor Party under or by virtue of any Finance Document shall be applied:-

 

(a)                                  FIRST: in or towards satisfaction of any
amounts then due and payable under the Finance Documents (or any of them), other
than the Master Agreement, in such order of application and/or such proportions
as the Agent, acting with the authorisation of the Majority Lenders, may specify
by notice to the Borrowers, the Security Parties and the other Creditor Parties;

 

(b)                                 SECONDLY: in or towards satisfaction of
amounts then due and payable under the Master Agreement, in such order of
application as the Agent, acting with the authorisation of the Majority Lenders,
may specify by notice to the Borrowers, the Security Parties and the other
Creditor Parties;

 

(c)                                  THIRDLY: in retention of an amount equal to
any amount not then due and payable under any Finance Document but which the
Agent, by notice to the Borrowers, the Security Parties and the other Creditor
Parties, states in its opinion will or may become due and payable in the future
and, upon those amounts becoming due and payable, in or towards satisfaction of
them in accordance with the foregoing provisions of this Clause; and

 

(d)                                 FOURTHLY: any surplus shall be paid to the
Borrowers or to any other person appearing to be entitled to it.

 

17.2                        Variation of order of application.  The Agent may,
with the authorisation of the Majority Lenders, by notice to the Borrowers, the
Security Parties and the other Creditor Parties

 

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provide for a different manner of application from that set out in Clause 17.1
either as regards a specified sum or sums or as regards sums in a specified
category or categories.

 

17.3                        Notice of variation of order of application.  The
Agent may give notices under Clause 17.2 from time to time; and such a notice
may be stated to apply not only to sums which may be received or recovered in
the future, but also to any sum which has been received or recovered on or after
the third Business Day before the date on which the notice is served.

 

17.4                        Appropriation rights overridden.  This Clause 17 and
any notice which the Agent gives under Clause 17.2 shall override any right of
appropriation possessed, and any appropriation made, by the Borrowers or any
Security Party.

 

18                                  EARNINGS ACCOUNT AND STANDBY EARNINGS
ACCOUNT

 

18.1                        Payment of Earnings.  The Borrowers agree that at
any time following the date of this Agreement (and whether before or after the
occurrence of an Event of Default and whether or not the same is continuing),
the Agent shall be entitled (but not bound) to give the Borrowers a notice in
writing directing the Borrowers (or any of them) to procure and ensure that the
Earnings of the Ships (or the relevant Ship referred to in such direction) are
thereafter paid to the Standby Earnings Account.  Where such a notice is given
to the Borrowers (or relevant Borrower) before the occurrence of an Event of
Default, the Borrowers (or relevant Borrower, as the case may be) shall be given
a period of 5 Business Days in which to re-direct the payments but where an
Event of Default has occurred the re-direction shall take effect immediately
upon receipt of the Agent’s notice to that effect. For the avoidance of doubt
where the Agent gives such a direction all Earnings of the relevant Ship or
Ships which are subsequently paid to TBS Pacific Liner shall (save as provided
above) be paid directly to the Standby Earnings Account.  In respect of any such
Earnings which have been paid to and are standing to the credit of the Earnings
Account the Borrowers shall procure that following the occurrence of an Event of
Default and receipt of a direction from the Agent in accordance with this clause
18.1, such amounts shall be transferred to the Standby Earnings Account as soon
as practicable after such direction.

 

18.2                        Interest accrued on the Earnings Account and the
Standby Earnings Account.  Any credit balance on the Earnings Account and the
Standby Earnings Account shall bear interest at the rate from time to time
offered by the Agent to its customers for Dollar deposits of similar amounts and
for periods similar to those for which such balances appear to the Agent likely
to remain on the Earnings Account and the Standby Earnings Account.

 

18.3                        Monies on the Earnings Account and the Standby
Earnings Account.  Following the occurrence of an Event of Default which is
continuing and a direction from the Agent under Clause 18.1 above:-

 

(i)                                     any Earnings of the Ships standing to
the credit of the Earnings Account shall be transferred to the Standby Earnings
Account; and

 

(ii)                                  any amounts standing to the credit of the
Standby Earnings Account shall only be released with the approval of the
Majority Lenders.

 

18.4                        Location of accounts.  The Borrowers shall, and
shall procure that TBS Pacific Liner shall, promptly :

 

(a)                                  comply with any requirement of the Agent as
to the location or re-location of the Earnings Account and the Standby Earnings
Account;

 

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

 

18.5                        Debits for expenses etc.  Following the occurrence
of an Event of Default which is continuing and a direction from the Agent under
Clause 18.1 above, the Agent shall be entitled (but not obliged) from time to
time to debit the Standby Earnings Account without prior notice in order to
discharge any amount due and payable under Clause 20 or 21 to a Creditor Party
or payment of which any Creditor Party has become entitled to demand under
Clause 20 or 21.

 

19                                  EVENTS OF DEFAULT

 

19.1                        Events of Default.  An Event of Default occurs if:

 

(a)                                  any Borrower or any Security Party fails to
pay when due or (if so payable) on demand any sum payable under a Finance
Document (and so that for this purpose (i) sums payable on demand shall be
treated as having been paid when due if paid within 3 Business Days of receipt
of the demand and (ii) if the failure is caused by a disruption to the payments
system referred to in Clause 16.1(b) which disruption is beyond the control of
the Borrowers, such failure shall not constitute an Event of Default if payment
is made within 3 Business Days of its due date); or

 

(b)                                 any breach occurs of Clause 9.2, 11.2, 11.3,
12.2, 12.3 or 15.1; or

 

(c)                                  any breach occurs of Clause 11.18(i); or

 

(d)                                 any breach by any Borrower or any Security
Party occurs of any provision of a Finance Document (other than a breach covered
by paragraphs (a) or (b)) and if, in the opinion of the Majority Lenders, such
default is capable of remedy (and for these purposes any breach by any Borrower
of its obligations under Clause 13 in relation to insurances will be a default
not capable of remedy), such default continues unremedied 10 Business Days after
written notice from the Agent requesting action to remedy the same; or

 

(e)                                  any representation, warranty or statement
made by, or by an officer of, any Borrower or a Security Party in a Finance
Document or in a Drawdown Notice Request or any other notice or document
relating to a Finance Document is untrue or misleading in any material respect
when it is made; or

 

(f)                                    any of the following occurs in relation
to any Financial Indebtedness of a Relevant Person:

 

(i)            any Financial Indebtedness of a Relevant Person is not paid when
due or, if so payable, on demand or in either such cases, within any applicable
grace period; or

 

(ii)           any Financial Indebtedness of a Relevant Person becomes due and
payable or capable of being declared due and payable prior to its stated
maturity date as a consequence of any event of default; or

 

(iii)          a lease, hire purchase agreement or charter creating any
Financial Indebtedness of a Relevant Person is terminated by the lessor or owner
or becomes capable of being terminated as a consequence of any termination
event; or

 

(iv)          any overdraft, loan, note issuance, acceptance credit, letter of
credit, guarantee, foreign exchange or other facility, or any swap or other
derivative contract or

 

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transaction, relating to any Financial Indebtedness of a Relevant Person ceases
to be available or becomes capable of being terminated as a result of any event
of default, or cash cover is required, or becomes capable of being required, in
respect of such a facility as a result of any event of default; or

 

(v)                                 any Security Interest securing any Financial
Indebtedness of a Relevant Person becomes enforceable;

 

provided that no Event of Default will occur under this Clause 19.1(f) in
relation to the New Corporate Guarantor if the amount of Financial Indebtedness
falling within paragraph (i) to (v) above is less than $2,500,000 (or its
equivalent in any other currency or currencies)

 

(g)                                 any of the following occurs in relation to a
Relevant Person:

 

(i)                                     a Relevant Person becomes, in the
opinion of the Majority Lenders, unable to pay its debts as they fall due; or

 

(ii)                                all or substantially all of the assets of a
Relevant Person are subject to any form of execution, attachment, arrest,
sequestration or distress in respect of a sum of, or sums aggregating, $500,000
or more or the equivalent in another currency and is not discharged within one
month of the same being levied or sued out; or

 

(iii)                             any administrative or other receiver is
appointed over any substantial part of assets of a Relevant Person; or

 

(iv)                             an administrator is appointed (whether by the
court or otherwise) in respect of a Relevant Person; or

 

(v)                                 any formal declaration of bankruptcy or any
formal statement to the effect that a Relevant Person is insolvent or likely to
become insolvent is made by a Relevant Person or by the directors of a Relevant
Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

 

(vi)                              a provisional liquidator is appointed in
respect of a Relevant Person, a winding up order is made in relation to a
Relevant Person or a winding up resolution is passed by a Relevant Person; or

 

(vii)                          a resolution is passed, an administration notice
is given or filed, an application or petition to a court is made or presented or
any other step is taken by (aa) a Relevant Person, (bb) the members or directors
of a Relevant Person, (cc) a holder of Security Interests which together relate
to all or substantially all of the assets of a Relevant Person, or (dd) a
government minister or public or regulatory authority of a Pertinent
Jurisdiction having jurisdiction over that Relevant Person for or with a view to
the winding up of that or another Relevant Person or the appointment of a
provisional liquidator or administrator in respect of that or another Relevant
Person, or that or another Relevant Person ceasing or suspending business
operations or payments to creditors, save that this paragraph does not apply to
a fully solvent winding up of a Relevant Person other than a Borrower which is,
or is to be, effected for the purposes of an amalgamation or reconstruction
previously approved by the Majority Lenders and effected not later than 3 months
after the commencement of the winding up; or

 

(viii)                      an administration notice is given or filed, an
application or petition to a court is made or presented or any other step is
taken by a creditor of a Relevant Person (other than

 

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a holder of Security Interests which together relate to all or substantially all
of the assets of a Relevant Person) for the winding up of a Relevant Person or
the appointment of a provisional liquidator or administrator in respect of a
Relevant Person in any Pertinent Jurisdiction having jurisdiction over that
Relevant Person, unless the proposed winding up, appointment of a provisional
liquidator or administration is being contested in good faith, on substantial
grounds and not with a view to some other insolvency law procedure being
implemented instead and either (aa) the application or petition is dismissed or
withdrawn within 30 days of being made or presented, or (bb) within 30 days of
the administration notice being given or filed, or the other relevant steps
being taken, other action is taken which will ensure that there will be no
administration and (in both cases (aa) or (bb)) the Relevant Person will
continue to carry on business in the ordinary way and without being the subject
of any actual, interim or pending insolvency law procedure; or

 

(ix)                              a Relevant Person or its directors take any
steps (whether by making or presenting an application or petition to a court, or
submitting or presenting a document setting out a proposal or proposed terms, or
otherwise) with a view to obtaining, in relation to that or another Relevant
Person, any form of moratorium, suspension or deferral of payments,
reorganisation of debt (or certain debt) by reason of financial difficulties or
arrangement with all or a substantial proportion (by number or value) of
creditors or of any class of them or any such moratorium, suspension or deferral
of payments, reorganisation or arrangement is effected by court order, by the
filing of documents with a court, by means of a contract or in any other way at
all; or

 

(x)                                 any meeting of the members or directors, or
of any committee of the board or senior management, of a Relevant Person is held
or summoned for the purpose of considering a resolution or proposal to authorise
or take any action of a type described in paragraphs (iv) to (ix) or a step
preparatory to such action, or (with or without such a meeting) the members,
directors or such a committee resolve or agree that such an action or step
should be taken or should be taken if certain conditions materialise or fail to
materialise; or

 

(xi)                              in a Pertinent Jurisdiction other than England
or Wales or to the jurisdiction of whose courts any part of that Relevant
Person’s assets are subject, any event occurs, any proceedings are opened or
commenced or any step is taken which, in the opinion of the Majority Lenders is
similar to any of the foregoing; or

 

(h)                                 any Borrower ceases or suspends carrying on
its business or a part of its business which, in the opinion of the Majority
Lenders, is material in the context of this Agreement; or

 

(i)                                     it becomes unlawful in any Pertinent
Jurisdiction or impossible:

 

(i)                                     for any Borrower or any Security Party
to discharge any liability under a Finance Document or to comply with any other
obligation which the Majority Lenders consider material under a Finance Document
unless provided that none of the interests of any of the Creditor Parties is
prejudiced in any way during the relevant period, the discharge of that
liability or compliance with that obligation or exercise or enforcement of those
rights ceases to be unlawful within 30 days; or

 

(ii)                                for the Agent, the Security Trustee, or the
Lenders to exercise or enforce any right under, or to enforce any Security
Interest created by, a Finance Document; or

 

(j)                                     any official consent necessary to enable
any Borrower to own, operate or charter its Ship or to enable any Borrower or
any Security Party to comply with any provision which the

 

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Majority Lenders consider material of a Finance Document or any of the
Shipbuilding Contracts is not granted, expires without being renewed, is revoked
or becomes liable to revocation or any condition of such a consent is not
fulfilled; or

 

(k)

 

(i)                                     any Bareboat Charter is terminated or
cancelled for whatever reason and, if the Ship the subject of such Bareboat
Charter is to remain parallel registered under the Philippines flag, such
Bareboat Charter is not replaced with a similar bareboat charter on terms
acceptable to the Agent within a period of 15 days; or

 

(ii)                                  any of the circumstances described in
Clause 19.1(g) or (h) occurs (mutatis mutandis) in relation to the Bareboat
Charterer or the Bareboat Charterer breaches any provision of the Multiparty
Deeds which the Agent considers material and the Borrowers fail within a period
of 15 days of them becoming aware of the occurrence of such circumstances or
breach or of the receipt of a written notification from the Agent requesting the
Borrowers to remedy such circumstances or breach either to remedy such
circumstances or breach or to substitute the Bareboat Charterer with another
bareboat charterer acceptable to the Agent and which accedes to the terms of the
Multiparty Deeds;

 

(l)                                     any Time Charter or First Sub-Time
Charter or Second Sub-Time Charter or TBS Worldwide Time Charter is terminated
or cancelled for whatever reason or any of the circumstances described in Clause
19.1(g) or (h) occurs (mutatis mutandis) in relation to the Time Charterer or
TBS Worldwide or the Time Charterer or TBS Worldwide breaches any provision of
the Multiparty Deeds which the Agent considers material and either such breach
is not remedied or the Ship the subject of such Time Charter or First Sub-Time
Charter or Second Sub-Time Charter or TBS Worldwide Time Charter is not employed
on alternative terms acceptable to the Agent within a period of 15 days of the
Borrowers becoming aware of the occurrence of such breach or the receipt of a
written notification from the Agent requesting the Borrowers to remedy such
breach; or

 

(m)                               any of the Ships ceases to be employed by the
Approved Manager on terms acceptable to the Agent or any of the circumstances
described in Clause 19.1(g) or (h) occurs (mutatis mutandis) in relation to the
Approved Managers or the Approved Managers breach any provisions of the letters
of undertaking given to the Security Trustee pursuant to Schedule 3 Part C,
3(a) which the Agent considers material and the Borrowers fails within a period
of 15 days of them becoming aware of the occurrence of such circumstances or
breach or of the receipt of a written notification from the Agent requesting the
Borrowers to remedy such circumstances or breach either to remedy such
circumstances or breach or to substitute the Approved Managers with other
Approved Managers which execute and deliver to the Security Trustee letters of
undertaking similar to those referred to in Schedule 3 Part C, 3(a); or

 

(n)                                 any of the circumstances described in Clause
19.1(g) or (h) occurs (mutatis mutandis) in relation to TBS Pacific Liner or TBS
Pacific Liner breaches any provision of the Account Security Deed which the
Agent considers material and the Borrowers fail within a period of 15 days’ of
them becoming aware of the occurrence of such circumstances or breach or of the
receipt of a written notification from the Agent requesting the Borrowers to
remedy such circumstances or breach either to remedy the circumstances or breach
or to substitute the Earnings Account and the Standby Earnings Account with a
new Earnings Account and a new Standby Earnings Account in the name of an
alternative party acceptable to the Agent and which executes and delivers in
favour of the Security Trustee a new Account Security Deed.; or

 

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(o)                                 an Event of Default (as defined in
Section 14 of the Master Agreement) occurs; or

 

(p)                                 any provision which the Majority Lenders
consider in their reasonable opinion material of a Finance Document proves to
have been or becomes invalid or unenforceable, or a Security Interest created by
a Finance Document proves to have been or becomes invalid or unenforceable or
such a Security Interest proves to have ranked after, or loses its priority to,
another Security Interest or any other third party claim or interest; or

 

(q)                                 the security constituted by a Finance
Document is in any way imperilled or in jeopardy; or

 

(r)                                  any event specified in this Agreement to be
an Event of Default (as defined in the Guarantee Facility Agreement) occurs; or

 

(s)                                  any other event occurs or any other
circumstances arise or develop including, without limitation:

 

(i)                                     a change in the financial position,
state of affairs or prospects of any Borrower; or

 

(ii)                                any accident or other event involving any
Ship or another vessel owned, chartered or operated by a Relevant Person;

 

in the light of which the Majority Lenders consider that there is a significant
risk that any Borrower is, or will later become, unable to discharge its
liabilities under the Finance Documents as they fall due.

 

19.2                        Actions following an Event of Default.  On, or at
any time after, the occurrence of an Event of Default and while the Event of
Default is continuing:

 

(a)                                  the Agent may, and if so instructed by the
Majority Lenders, the Agent shall:

 

(i)                                     serve on the Borrowers a notice stating
that the Commitments and all other obligations of each Lender to the Borrowers
under this Agreement are terminated; and/or

 

(ii)                                serve on the Borrowers a notice stating that
the Loans, all accrued interest and all other amounts accrued or owing under
this Agreement are immediately due and payable or are due and payable on demand;
and/or

 

(iii)                            take any other action which, as a result of the
Event of Default or any notice served under paragraph (i) or (ii), the Agent
and/or the Lenders are entitled to take under any Finance Document or any
applicable law; and/or

 

(b)                                 the Security Trustee may, and if so
instructed by the Agent, acting with the authorisation of the Majority Lenders,
the Security Trustee shall take any action which, as a result of the Event of
Default or any notice served under paragraph (a) (i) or (ii), the Security
Trustee, the Agent and/or the Lenders are entitled to take under any Finance
Document or any applicable law.

 

19.3                        Termination of Commitments.  On the service of a
notice under Clause 19.2(a)(i), the Commitments and all other obligations of
each Lender to the Borrower under this Agreement shall terminate.

 

19.4                       Acceleration of Liabilities.  On the service of a
notice under Clause 19.2(a)(ii), all amounts accrued or owing from the Borrowers
or any Security Party under this Agreement and every

 

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other Finance Document shall become immediately due and payable or, as the case
may be, payable on demand.

 

19.5                        Multiple notices; action without notice.  The Agent
may serve notices under Clauses 19.2(a)(i), or (ii) simultaneously or on
different dates and it and/or the Security Trustee may take any action referred
to in Clause 19.2 if no such notice is served or simultaneously with or at any
time after the service of both or either of such notices.

 

19.6                        Notification of Creditor Parties and Security
Parties.  The Agent shall send to each Lender, the Security Trustee and each
Security Party a copy or the text of any notice which the Agent serves on the
Borrowers under Clause 19.2; but the notice shall become effective when it is
served on the Borrowers, and no failure or delay by the Agent to send a copy or
the text of the notice to any other person shall invalidate the notice or
provide the Borrowers or any Security Party with any form of claim or defence.

 

19.7                        Lender’s and Swap Bank’s rights unimpaired.  Nothing
in this Clause shall be taken to impair or restrict the exercise of any right
given to individual Lenders or the Swap Bank under a Finance Document or the
general law; and, in particular, this Clause is without prejudice to Clause 3.1.

 

19.8                        Exclusion of Creditor Party liability.  No Creditor
Party, and no receiver or manager appointed by the Security Trustee, shall have
any liability to the Borrowers or a Security Party:

 

(a)                                  for any loss caused by an exercise of
rights under, or enforcement of a Security Interest created by, a Finance
Document or by any failure or delay to exercise such a right or to enforce such
a Security Interest; or

 

(b)                                 as mortgagee in possession or otherwise, for
any income or principal amount which might have been produced by or realised
from any asset comprised in such a Security Interest or for any reduction
(however caused) in the value of such an asset;

 

except that this does not exempt a Creditor Party or a receiver or manager from
liability for losses shown to have been directly and mainly caused by the
dishonesty or the wilful misconduct of such Creditor Party’s own officers and
employees or (as the case may be) such receiver’s or manager’s own partners or
employees.

 

19.9                        Relevant Persons.  In this Clause 19 a “Relevant
Person” means any Borrower and any Security Party.

 

19.10                 Interpretation.  In Clause 19.1(f) references to an event
of default or a termination event include any event, howsoever described, which
is similar to an event of default in a facility agreement or a termination event
in a finance lease; and in Clause 19.1(g)  “petition” includes an application.

 

20                                  FEES AND EXPENSES

 

20.1                        Arrangement, commitment and agency fees.  The
Borrowers shall pay to the Agent:

 

(a)                                 on the date of this Agreement, an
arrangement fee in the amount specified in the Fee Letter or Fee Letters (as the
case may be);

 

(b)                               quarterly in arrears during the period from
(and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan A Delivery Advance and (ii) 30 September 2009

 

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(or such later date as the Agent, in its sole and absolute discretion shall
agree) and on the last day of that period a commitment fee at the rate of One
point five per cent. (1.5%) per annum on the undrawn balance of Loan A;

 

(c)                                 quarterly in arrears during the period from
(and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan B Delivery Advance and (ii) 31 March 2010 (or such later
date as the Agent, in its sole and absolute discretion shall agree) and on the
last day of that period a commitment fee at the rate of One point five per cent.
(1.5%) per annum on the undrawn balance of Loan B;

 

(d)                                quarterly in arrears during the period from
(and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan C Delivery Advance and (ii) 31 August 2010 (or such later
date as the Agent, in its sole and absolute discretion shall agree) and on the
last day of that period a commitment fee at the rate of One point five per cent.
(1.5%) per annum on the undrawn balance of Loan C;

 

(e)                                 quarterly in arrears during the period from
(and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan D Delivery Advance and (ii) 30 April 2011 (or such later
date as the Agent, in its sole and absolute discretion shall agree) and on the
last day of that period a commitment fee at the rate of One point five per cent.
(1.5%) per annum on the undrawn balance of Loan D (excluding for these purposes
the Ship D Sub-Advance);

 

(f)                                   quarterly in arrears during the period
from (and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan E Delivery Advance and (ii) 31 January 2011 (or such later
date as the Agent, in its sole and absolute discretion shall agree) and on the
last day of that period a commitment fee at the rate of One point five per cent.
(1.5%) per annum on the undrawn balance of Loan E;

 

(g)                                quarterly in arrears during the period from
(and including) 27 March 2009 to the earlier of (i) the Drawdown Date in
relation to the Loan F Delivery Advance and (ii) 31 August 2011 (or such later
date as the Agent, in its sole and absolute discretion shall agree) and on the
last day of that period a commitment fee at the rate of One point five per cent.
(1.5%) per annum on the undrawn balance of Loan F (excluding for these purposes
the Ship F Sub-Advance);

 

(h)                                on the date of this Agreement and on each
anniversary thereof during the Security Period, an annual agency fee of an
amount specified in the relevant Fee Letter, such agency fee to be payable to
the Agent in advance for its own account.

 

20.2                        Costs of negotiation, preparation etc.  The
Borrowers shall pay to the Agent on its demand the amount of all expenses
reasonably incurred by the Agent or the Security Trustee in connection with the
negotiation, preparation, execution or registration of any Finance Document or
any related document or with any transaction contemplated by a Finance Document
or a related document.

 

20.3                        Costs of variations, amendments, enforcement etc. 
The Borrowers shall pay to the Agent, on the Agent’s demand, for the account of
the Creditor Party concerned the amount of all expenses incurred by a Creditor
Party (in the case of paragraphs (a), (b) and (c), such expenses to be
reasonably incurred) in connection with:

 

(a)                                  any amendment or supplement to a Finance
Document, or any proposal for such an amendment to be made;

 

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(b)                                any consent or waiver by the Lenders, the
Majority Lenders or the Creditor Party concerned under or in connection with a
Finance Document, or any request for such a consent or waiver;

 

(c)                                  the valuation of any security provided or
offered under Clause 15 or any other matter relating to such security; or

 

(d)                                 any step taken by the Creditor Party
concerned with a view to the protection, exercise or enforcement of any right or
Security Interest created by a Finance Document or for any similar purpose.

 

There shall be recoverable under paragraph (d) the full amount of all legal
expenses, whether or not such as would be allowed under rules of court or any
taxation or other procedure carried out under such rules.

 

20.4                        Extraordinary management time.  The Borrowers shall
pay to the Agent on its demand compensation in respect of the reasonable and
documented amount of time which the management of either Servicing Bank has
spent in connection with a matter covered by Clause 20.3 and which exceeds the
amount of time which would ordinarily be spent in the performance of the
relevant Servicing Bank’s routine functions.  Any such compensation shall be
based on such reasonable daily or hourly rates as the Agent may notify to the
Borrowers and is in addition to any fee paid or payable to the relevant
Servicing Bank.  Where one bank is both Agent and Security Trustee there shall
be no double charging of such compensation.

 

20.5                        Documentary taxes.  The Borrowers shall promptly pay
any tax payable on or by reference to any Finance Document, and shall, on the
Agent’s demand, fully indemnify each Creditor Party against any claims,
expenses, liabilities and losses resulting from any failure or delay by the
Borrowers to pay such a tax.

 

20.6                        Certification of amounts.  A notice which is signed
by 2 officers of a Creditor Party, which states that a specified amount, or
aggregate amount, is due to that Creditor Party under this Clause 20 and which
indicates (without necessarily specifying a detailed breakdown) the matters in
respect of which the amount, or aggregate amount, is due shall (save in the case
of manifest error) be prima facie evidence that the amount, or aggregate amount,
is due.

 

21                                  INDEMNITIES

 

21.1                        Indemnities regarding borrowing and repayment of
Loan.  The Borrowers shall fully indemnify the Agent and each Lender on the
Agent’s demand and the Security Trustee on its demand in respect of all claims,
expenses, liabilities and losses which are made or brought against or incurred
by that Creditor Party, or which that Creditor Party reasonably and with due
diligence estimates that it will incur, as a result of or in connection with:

 

(a)                                  an Advance not being borrowed on the date
specified in the Drawdown Notice for any reason other than a default by the
Lender claiming the indemnity;

 

(b)                                 the receipt or recovery of all or any part
of the Loans or an overdue sum otherwise than on the last day of an Interest
Period or other relevant period;

 

(c)                                  any failure (for whatever reason) by the
Borrowers to make payment of any amount due under a Finance Document on the due
date or, if so payable, on demand (after giving credit for any default interest
paid by the Borrowers on the amount concerned under Clause 7);

 

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(d)                                 the occurrence and/or continuance of an
Event of Default or a Potential Event of Default and/or the acceleration of
repayment of the Loans under Clause 19;

 

and in respect of any tax (other than tax on its overall net income) for which a
Creditor Party is liable in connection with any amount paid or payable to that
Creditor Party (whether for its own account or otherwise) under any Finance
Document.

 

21.2                        Breakage costs.  Without limiting its generality,
Clause 21.1 covers any claim, expense, liability or loss, including a loss of a
prospective profit, incurred by a Lender:

 

(a)                                  in liquidating or employing deposits from
third parties acquired or arranged to fund or maintain all or any part of its
Contribution and/or any overdue amount (or an aggregate amount which includes
its Contribution or any overdue amount); and

 

(b)                                 in terminating, or otherwise in connection
with, any interest and/or currency swap or any other transaction entered into
(whether with another legal entity or with another office or department of the
Lender concerned) to hedge any exposure arising under this Agreement or that
part which the Lender concerned determines is fairly attributable to this
Agreement of the amount of the liabilities, expenses or losses (including losses
of prospective profits) incurred by it in terminating, or otherwise in
connection with, a number of transactions of which this Agreement is one.

 

In the circumstances referred to in Clause 21.1(b) such costs shall include an
amount equal to the relevant Margin which would, but for receipt or recovery of
the relevant part of the Loans, have accrued on the relevant part of the Loans,
from the date of such receipt or recovery to the end of the then current
Interest Period relating thereto.

 

21.3                        Miscellaneous indemnities.  The Borrowers shall
fully indemnify each Creditor Party severally on their respective demands in
respect of all claims, expenses, liabilities and losses which may be made or
brought against or incurred by a Creditor Party, in any country, as a result of
or in connection with any action taken, or omitted or neglected to be taken,
under or in connection with any Finance Document by the Agent, the Security
Trustee or any other Creditor Party or by any receiver appointed under a Finance
Document other than claims, expenses, liabilities and losses which are shown to
have been directly and mainly caused by the dishonesty or wilful misconduct or
the reckless action with knowledge of the probable consequences of the officers
or employees of the Creditor Party concerned.

 

Without prejudice to its generality, this Clause 21.3 covers any claims,
expenses, liabilities and losses which arise, or are asserted, under or in
connection with any law relating to safety at sea, the ISM Code, the ISPS Code
or any Environmental Law.

 

21.4                        Currency indemnity.  If any sum due from the
Borrowers or any Security Party to a Creditor Party under a Finance Document or
under any order or judgment relating to a Finance Document has to be converted
from the currency in which the Finance Document provided for the sum to be paid
(the “Contractual Currency”) into another currency (the “Payment Currency”) for
the purpose of:

 

(a)                                  making or lodging any claim or proof
against the Borrowers or any Security Party, whether in its liquidation, any
arrangement involving it or otherwise; or

 

(b)                                 obtaining an order or judgment from any
court or other tribunal; or

 

(c)                                  enforcing any such order or judgment;

 

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the Borrowers shall indemnify the Creditor Party concerned against the loss
arising when the amount of the payment actually received by that Creditor Party
is converted at the available rate of exchange into the Contractual Currency.

 

In this Clause 21.4 the “available rate of exchange” means the rate at which the
Creditor Party concerned is able at the opening of business (London time) on the
Business Day after it receives the sum concerned to purchase the Contractual
Currency with the Payment Currency.

 

This Clause 21.4 creates a separate liability of the Borrowers which is distinct
from their other liabilities under the Finance Documents and which shall not be
merged in any judgment or order relating to those other liabilities.

 

21.5                        Certification of amounts.  A notice which is signed
by 2 officers of a Creditor Party, which states that a specified amount, or
aggregate amount, is due to that Creditor Party under this Clause 21 and which
indicates (without necessarily specifying a detailed breakdown) the matters in
respect of which the amount, or aggregate amount, is due shall (save in the case
of manifest error) be prima facie evidence that the amount, or aggregate amount,
is due.

 

21.6                        Sums deemed due to a Lender.  For the purposes of
this Clause 21, a sum payable by the Borrowers to the Agent or the Security
Trustee for distribution to a Lender shall be treated as a sum due to that
Lender.

 

21.7                        Environmental Indemnity.  The Borrowers shall
indemnify the Creditor Parties on demand against all costs, expenses,
liabilities and losses sustained or incurred as a result of or in connection
with any Environmental Claims being made against the Creditor Parties or
otherwise howsoever arising out of any Environmental Incident.

 

22                                  NO SET-OFF OR TAX DEDUCTION

 

22.1                        No deductions.  All amounts due from a Borrower
under a Finance Document shall be paid:

 

(a)                                  without any form of set-off, cross-claim or
condition; and

 

(b)                                 free and clear of any tax deduction except a
tax deduction which that Borrower is required by law to make.

 

22.2                        Grossing-up for taxes.  If a Borrower is required by
law to make a tax deduction from any payment:

 

(a)                                  that Borrower shall notify the Agent as
soon as it becomes aware of the requirement;

 

(b)                                 that Borrower shall pay the tax deducted to
the appropriate taxation authority promptly, and in any event before any fine or
penalty arises;

 

(c)                                  the amount due in respect of the payment
shall be increased by the amount necessary to ensure that the relevant Creditor
Parties receive and retain (free from any liability relating to the tax
deduction) a net amount which, after the tax deduction, is equal to the full
amount which they would otherwise have received.

 

No Borrower shall be obliged to pay any additional amount pursuant to paragraph
(c) above in respect of any deduction which would not have been required if the
relevant Creditor Party had completed a declaration claim, exemption or other
form which it has been requested by

 

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the Borrowers or an applicable taxation authority to complete and which it is
able to complete.

 

22.3                       Evidence of payment of taxes.  Within 1 month after
making any tax deduction, the Borrower concerned shall deliver to the Agent
documentary evidence satisfactory to the Agent that the tax had been paid to the
appropriate taxation authority.

 

22.4                        Tax credits.  A Creditor Party which receives for
its own account a repayment or obtains relief or credit in respect of tax paid
or otherwise payable by it in respect of or calculated by reference to the
increased payment made by a Borrower under Clause 22.2 shall pay to the relevant
Borrower a sum equal to the proportion of the repayment, relief or credit which
that Creditor Party allocates to the amount due from that Borrower in respect of
which that Borrower made the increased payment:

 

(a)                                  the Creditor Party shall not be obliged to
allocate to this transaction any part of a tax repayment, relief or credit which
is referable to a class or number of transactions;

 

(b)                                 nothing in this Clause 22.4 shall oblige a
Creditor Party to arrange its tax affairs in any particular manner, to claim any
type of relief, credit, allowance or deduction instead of, or in priority to,
another or to make any such claim within any particular time;

 

(c)                                  nothing in this Clause 22.4 shall oblige a
Creditor Party to make a payment which would leave it in a worse position than
it would have been in if the relevant Borrower had not been required to make a
tax deduction from a payment; and

 

(d)                                 any allocation or determination made by a
Creditor Party under or in connection with this Clause 22.4 shall (save in the
case of manifest error) be conclusive and binding on the Borrowers and the other
Creditor Parties.

 

22.5                        Exclusion of tax on overall net income.  In this
Clause 22 “tax deduction” means any deduction or withholding for or on account
of any present or future tax except tax on a Creditor Party’s overall net
income.

 

22.6                        Application of Master Agreement.  For the avoidance
of doubt, Clause 22 does not apply in respect of sums due from the Borrowers to
the Swap Bank under or in connection with the Master Agreement as to which sums
the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master
Agreement shall apply.

 

23                                  ILLEGALITY, ETC

 

23.1                        Illegality.  This Clause 23 applies if a Lender (the
“Notifying Lender”) notifies the Agent that it has become, or will with effect
from a specified date, become:

 

(a)                                  unlawful or prohibited as a result of the
introduction of a new law, an amendment to an existing law or a change in the
manner in which an existing law is or will be interpreted or applied; or

 

(b)                                 contrary to, or inconsistent with, any
regulation,

 

for the Notifying Lender to maintain or give effect to any of its obligations
under this Agreement in the manner contemplated by this Agreement.

 

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23.2                        Notification of illegality.  The Agent shall
promptly notify the Borrowers, the Security Parties, the Security Trustee, and
the other Lenders of the notice under Clause 23.1 which the Agent receives from
the Notifying Lender.

 

23.3                        Prepayment; termination of Commitment.  On the Agent
notifying the Borrowers under Clause 23.2, the Notifying Lender’s Available
Commitment shall terminate by no later than the date specified in the Notifying
Lender’s notice under Clause 23.1 as the date on which the notified event would
become effective the Borrowers shall prepay the Notifying Lender’s Contribution
in accordance with Clause 8.

 

23.4                        Mitigation.  If circumstances arise which would
result in a notification under Clause 23.1 then, without in any way limiting the
rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use
reasonable endeavours to transfer its obligations, liabilities and rights under
this Agreement and the Finance Documents to another office or financial
institution not affected by the circumstances but the Notifying Lender shall not
be under any obligation to take any such action if, in its opinion, to do would
or might:

 

(a)                                  have an adverse effect on its business,
operations or financial condition; or

 

(b)                                 involve it in any activity which is unlawful
or prohibited or any activity that is contrary to, or inconsistent with, any
regulation; or

 

(c)                                  involve it in any expense (unless
indemnified to its satisfaction) or tax disadvantage

 

24                                  INCREASED COSTS

 

24.1                        Increased costs.  This Clause 24 applies if a Lender
(the “Notifying Lender”) notifies the Agent that the Notifying Lender considers
that as a result of:

 

(a)                                  the introduction or alteration after the
date of this Agreement of a law or an alteration after the date of this
Agreement in the manner in which a law is interpreted or applied (disregarding
any effect which relates to the application to payments under this Agreement of
a tax on the Notifying Lender’s overall net income); or

 

(b)                                 complying with any regulation (including any
which relates to capital adequacy or liquidity controls or which affects the
manner in which the Notifying Lender allocates capital resources to its
obligations under this Agreement) which is introduced, or altered, or the
interpretation or application of which is altered, after the date of this
Agreement,

 

the Notifying Lender (or a parent company of it) has incurred or will incur an
“increased cost”.

 

24.2                        Meaning of “increased cost”.  In this Clause 24,
“increased cost” means, in relation to a Notifying Lender:

 

(a)                                  an additional or increased cost incurred as
a result of, or in connection with, the Notifying Lender having entered into, or
being a party to, this Agreement or a Transfer Certificate, of funding or
maintaining its Commitment or Contribution or performing its obligations under
this Agreement, or of having outstanding all or any part of its Contribution or
other unpaid sums;

 

(b)                                 a reduction in the amount of any payment to
the Notifying Lender under this Agreement or in the effective return which such
a payment represents to the Notifying Lender or on its capital;

 

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(c)                                  an additional or increased cost of funding
all or maintaining all or any of the advances comprised in a class of advances
formed by or including the Notifying Lender’s Contribution or (as the case may
require) the proportion of that cost attributable to the Contribution; or

 

(d)                                a liability to make a payment, or a return
foregone, which is calculated by reference to any amounts received or receivable
by the Notifying Lender under this Agreement;

 

but not an item attributable to a change in the rate of tax on the overall net
income of the Notifying Lender (or a parent company of it) or an item covered by
the indemnity for tax in Clause 21.1 or by Clause 22 or an item arising directly
out of the implementation by the applicable authorities having jurisdiction over
the Notifying Lender of the matters set out in the statement of the Basle
Committee on Banking Regulations and Supervisory Practices dated July 1988 and
entitled “International Convergence of Capital Measurement and Capital
Standards”, to the extent and according to the timetable provided for in the
statement.

 

For the purposes of this Clause 24.2 the Notifying Lender may in good faith
allocate or spread costs and/or losses among its assets and liabilities (or any
class of its assets and liabilities) on such basis as it considers appropriate.

 

24.3                        Notification to Borrowers of claim for increased
costs.  The Agent shall promptly notify the Borrowers and the Security Parties
of the notice which the Agent received from the Notifying Lender under Clause
24.1.

 

24.4                        Payment of increased costs.  The Borrowers shall pay
to the Agent, on the Agent’s demand, for the account of the Notifying Lender the
amounts which the Agent from time to time notifies the Borrowers that the
Notifying Lender has specified to be necessary to compensate the Notifying
Lender for the increased cost (provided that such demand is accompanied by a
certificate from the Notifying Lender confirming the amount of its increased
cost and including a calculation thereof).

 

24.5                        Notice of prepayment or cancellation.  If the
Borrowers are not willing to continue to compensate the Notifying Lender for the
increased cost under Clause 24.4, the Borrowers may give the Agent not less than
90 days’ notice of their intention to prepay the Notifying Lender’s Contribution
at the end of an Interest Period and/or to cancel the Notifying Lender’s
Available Commitment.

 

24.6                        Prepayment; termination of Commitment.  A notice
under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the
Notifying Lender of the Borrowers’ notice of intended prepayment and/or intended
cancellation; and:

 

(a)                                on the date on which the Agent serves that
notice, the Commitment of the Notifying Lender shall be cancelled; and

 

(b)                               on the date specified in its notice of
intended prepayment, the Borrowers shall prepay (without premium or penalty) the
Notifying Lender’s Contribution, together with accrued interest thereon at the
applicable rate plus the Margin.

 

24.7                        Application of prepayment.  Save to the extent
stated above Clause 8 shall apply in relation to the prepayment.

 

24.8                        Mitigation.  If circumstances arise which would
result in a notification under Clause 24.1 then, without in any way limiting the
rights of the Notifying Lender under Clause 24.3, the Notifying Lender shall use
reasonable endeavours to transfer its obligations, liabilities and rights under
this Agreement and the Finance Documents to another office or financial

 

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institution not affected by the circumstances but the Notifying Lender shall not
be under any obligation to take any such action if, in its opinion, to do so
would or might:

 

(a)                                  have an adverse effect on its business,
operations or financial condition; or

 

(b)                                 involve it in any activity which is unlawful
or prohibited or any activity that is contrary to, or inconsistent with, any
regulation; or

 

(c)                                  involve it in any expense (unless
indemnified to its satisfaction) or tax disadvantage.

 

25                                  SET-OFF

 

25.1                        Application of credit balances.  Each Creditor Party
may without prior notice following the occurrence of an Event of Default which
is continuing:

 

(a)                                  apply any balance (whether or not then due)
which at any time stands to the credit of any account in the name of any
Borrower at any office in any country of that Creditor Party in or towards
satisfaction of any sum then due from the Borrowers to that Creditor Party under
any of the Finance Documents; and

 

(b)                                 for that purpose:

 

(i)                                     break, or alter the maturity of, all or
any part of a deposit of any Borrower;

 

(ii)                                  convert or translate all or any part of a
deposit or other credit balance into Dollars;

 

(iii)                               enter into any other transaction or make any
entry with regard to the credit balance which the Creditor Party concerned
considers appropriate.

 

25.2                        Existing rights unaffected.  No Creditor Party shall
be obliged to exercise any of its rights under Clause 25.1; and those rights
shall be without prejudice and in addition to any right of set-off, combination
of accounts, charge, lien or other right or remedy to which a Creditor Party is
entitled (whether under the general law or any document).

 

25.3                        Sums deemed due to a Lender.  For the purposes of
this Clause 25, a sum payable by the Borrowers to the Agent or the Security
Trustee for distribution to, or for the account of, a Lender shall be treated as
a sum due to that Lender; and each Lender’s proportion of a sum so payable for
distribution to, or for the account of, the Lenders shall be treated as a sum
due to such Lender.

 

25.4                        No Security Interest.  This Clause 25 gives the
Creditor Parties a contractual right of set-off only, and does not create any
equitable charge or other Security Interest over any credit balance of the
Borrowers.

 

26                                  TRANSFERS AND CHANGES IN LENDING OFFICES

 

26.1                        Transfer by Borrowers.  No Borrower may, without the
consent of the Agent, given on the instructions of all the Lenders transfer any
of its rights, liabilities or obligations under any Finance Document.

 

26.2                        Transfer by a Lender.  Subject to Clause 26.4, a
Lender (the “Transferor Lender”) may at any time, with the prior written consent
of the Borrowers (not to be unreasonably withheld or delayed) or without the
consent of the Borrowers if an Event of Default or a Potential Event of Default
has occurred and is continuing, cause:

 

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(a)                                  its rights in respect of all or part of its
Contribution; or

 

(b)                                its obligations in respect of all or part of
its Commitment; or

 

(c)                                  a combination of (a) and (b);

 

to be (in the case of its rights) transferred to, or (in the case of its
obligations) assumed by, another bank or financial institution (a “Transferee
Lender”) by delivering to the Agent a completed certificate in the form set out
in Schedule 4 with any modifications approved or required by the Agent (a
“Transfer Certificate”) executed by the Transferor Lender and the Transferee
Lender Provided that a Lender may make such transfer to any wholly owned
subsidiary of it, to its parent company or to another subsidiary of its parent
company without the consent of the Borrowers and provided further that the
Borrowers may withhold their consent aforesaid if the proposed transfer would
result in the Borrowers being obliged to make a payment to the Transferee under
Clause 22 or Clause 24.

 

However any rights and obligations of the Transferor Lender in its capacity as
Agent or Security Trustee will have to be dealt with separately in accordance
with the Agency and Trust Agreement.

 

26.3                        Transfer Certificate, delivery and notification.  As
soon as reasonably practicable after a Transfer Certificate is delivered to the
Agent, it shall (unless it has reason to believe that the Transfer Certificate
may be defective):

 

(a)                                  sign the Transfer Certificate on behalf of
itself, the Borrowers, the Security Parties, the Security Trustee and each of
the other Creditor Parties;

 

(b)                                 on behalf of the Transferee Lender, send to
the Borrowers and each Security Party letters or faxes notifying them of the
Transfer Certificate and attaching a copy of it;

 

(c)                                  send to the Transferee Lender copies of the
letters or faxes sent under paragraph (b) above.

 

26.4                        Effective Date of Transfer Certificate.  A Transfer
Certificate becomes effective on the Transfer Date.

 

26.5                        No transfer without Transfer Certificate.  No
assignment or transfer of any right or obligation of a Lender under any Finance
Document is binding on, or effective in relation to, the Borrowers, any Security
Party, the Agent or the Security Trustee unless it is effected, evidenced or
perfected by a Transfer Certificate.

 

26.6                        Lender re-organisation; waiver of Transfer
Certificate.  However, if a Lender enters into any merger, de-merger or other
reorganisation as a result of which all its rights or obligations vest in
another person (the “successor”), the Agent may, if it sees fit, by notice to
the successor and the Borrowers and the Security Trustee waive the need for the
execution and delivery of a Transfer Certificate; and, upon service of the
Agent’s notice, the successor shall become a Lender with the same Commitment and
Contribution as were held by the predecessor Lender.

 

26.7                        Effect of Transfer Certificate.  A Transfer
Certificate takes effect in accordance with English law as follows:

 

(a)                                  to the extent specified in the Transfer
Certificate, all rights and interests (present, future or contingent) which the
Transferor Lender has under or by virtue of the Finance Documents are assigned
to the Transferee Lender absolutely, free of any defects in the Transferor

 

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Lender’s title and of any rights or equities which the Borrowers or any Security
Party had against the Transferor Lender;

 

(b)                                 the Transferor Lender’s Commitment is
discharged to the extent specified in the Transfer Certificate;

 

(c)                                  the Transferee Lender becomes a Lender with
the Contribution or Commitment of an amount specified in the Transfer
Certificate;

 

(d)                                 the Transferee Lender becomes bound by all
the provisions of the Finance Documents which are applicable to the Lenders
generally, including those about pro-rata sharing and the exclusion of liability
on the part of, and the indemnification of, the Agent and the Security Trustee
and, to the extent that the Transferee Lender becomes bound by those provisions
(other than those relating to exclusion of liability), the Transferor Lender
ceases to be bound by them;

 

(e)                                  any part of the Loans which the Transferee
Lender advances after the Transfer Certificate’s effective date ranks in point
of priority and security in the same way as it would have ranked had it been
advanced by the transferor, assuming that any defects in the transferor’s title
and any rights or equities of the Borrowers or any Security Party against the
Transferor Lender had not existed;

 

(f)                                    the Transferee Lender becomes entitled to
all the rights under the Finance Documents which are applicable to the Lenders
generally, including but not limited to those relating to the Majority Lenders
and those under Clause 5.7 and Clause 20, and to the extent that the Transferee
Lender becomes entitled to such rights, the Transferor Lender ceases to be
entitled to them; and

 

(g)                                 in respect of any breach of a warranty,
undertaking, condition or other provision of a Finance Document or any
misrepresentation made in or in connection with a Finance Document, the
Transferee Lender shall be entitled to recover damages by reference to the loss
incurred by it as a result of the breach or misrepresentation, irrespective of
whether the original Lender would have incurred a loss of that kind or amount.

 

The rights and equities of the Borrowers or any Security Party referred to above
include, but are not limited to, any right of set off and any other kind of
cross-claim.

 

26.8                        Maintenance of register of Lenders.  During the
Security Period the Agent shall maintain a register in which it shall record the
name, the Commitment, the Contribution and administrative details (including the
lending office) from time to time of each Lender holding a Transfer Certificate
and the effective date (in accordance with Clause 26.4) of the Transfer
Certificate; and the Agent shall make the register available for inspection by
the Security Trustee and the Borrowers during normal banking hours, subject to
receiving at least 3 Business Days prior notice.

 

26.9                        Reliance on register of Lenders.  The entries on
that register shall, in the absence of manifest error, be conclusive in
determining the identities of the Lenders and the amounts of their Commitments,
Contributions and the effective dates of Transfer Certificates and may be relied
upon by the Agent and the other parties to the Finance Documents for all
purposes relating to the Finance Documents.

 

26.10                 Authorisation of Agent to sign Transfer Certificates. 
Subject to the foregoing provisions of this Clause 26 the Borrowers, the
Security Trustee and each Lender irrevocably authorise the Agent to sign
Transfer Certificates on its behalf.

 

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26.11                 Registration fee.  In respect of any Transfer Certificate,
the Agent shall be entitled to recover a registration fee of $2,000 from the
Transferor Lender or (at the Agent’s option) the Transferee Creditor Party.

 

26.12                Sub-participation; subrogation assignment.  A Lender may
sub-participate all or any part of its rights and/or obligations under or in
connection with the Finance Documents without the consent of, or any notice to,
the Borrowers, any Security Party, the Agent, the Security Trustee or any other
Creditor Party; and the Lenders may assign, in any manner and terms agreed by
the Majority Lenders, the Agent and the Security Trustee all or any part of
those rights to an insurer or surety who has become subrogated to them.

 

26.13                 Disclosure of information.  A Lender may disclose to a
potential Transferee Lender or sub-participant any information which the Lender
has received in relation to the Borrowers, any Security Party or their affairs
under or in connection with any Finance Document.

 

26.14                 Change of lending office.  A Lender may change its lending
office by giving notice to the Agent and the change shall become effective on
the later of:

 

(a)                                  the date on which the Agent receives the
notice; and

 

(b)                                 the date, if any, specified in the notice as
the date on which the change will come into effect.

 

26.15                 Notification.  On receiving such a notice, the Agent shall
notify the Borrowers and the Security Trustee; and, until the Agent receives
such a notice, it shall be entitled to assume that a Lender is acting through
the lending office of which the Agent last had notice.

 

26.16                 Replacement of Reference Bank.  If any Reference Bank
ceases to be a Lender or is unable on a continuing basis to supply quotations
for the purposes of Clause 5 then, unless the Borrowers, the Agent and the
Majority Lenders otherwise agree, the Agent, acting on the instructions of the
Majority Lenders, and after consulting the Borrowers, shall appoint another bank
(whether or not a Lender) to be a replacement Reference Bank; and, when that
appointment comes into effect, the first-mentioned Reference Bank’s appointment
shall cease to be effective.

 

26.17                 No additional costs.  If a Lender transfers any part of
its Contribution and/or Commitment or sub-participates any part of its rights
and/or obligations under the Finance Documents or changes it lending office
pursuant to this Clause 26 and as a result of circumstances existing at the date
the transfer, sub participation or change occurs, the Borrowers would be obliged
to make an increased payment to that Lender under any applicable Clauses of this
Agreement, then that Lender is only entitled to receive payment under those
Clauses to the same extent as the Lender would have been if the transfer,
sub-participation or change of lending office had not occurred.

 

27                                  VARIATIONS AND WAIVERS

 

27.1                        Variations, waivers etc. by Majority Lenders. 
Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or
limit any provision of a Finance Document, or any Creditor Party’s rights or
remedies under such a provision or the general law, only if the document is
signed, or specifically agreed to by fax, by the Borrowers, by the Agent on
behalf of the Majority Lenders, by the Agent and the Security Trustee in their
own rights, and, if the document relates to a Finance Document to which a
Security Party is party, by that Security Party.

 

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27.2                        Variations, waivers etc. requiring agreement of all
Lenders.  However, as regards the following, Clause 27.1 applies as if the words
“by the Agent on behalf of the Majority Lenders” were replaced by the words “by
or on behalf of every Lender”:

 

(a)                                  a reduction in the Margin or in the
definition of LIBOR;

 

(b)                                 an extension of the due date for, or a
decrease in the amount of, any payment of principal, interest, fees, or other
sum payable under this Agreement;

 

(c)                                  an increase in any Lender’s Commitment;

 

(d)                                 an extension of Availability Period;

 

(e)                                  a change to the definition of “Majority
Lenders” or “Finance Documents”;

 

(f)                                    a change to the preamble or to Clause 2,
3, 4, 5.1, 17, 18 or 30;

 

(g)                                 a change to this Clause 27;

 

(h)                                 any release of, or material variation to, a
Security Interest, guarantee, indemnity or subordination arrangement set out in
a Finance Document; and

 

(i)                                     any other change or matter as regards
which this Agreement or another Finance Document expressly provides that each
Lender’s consent is required.

 

27.3                        Exclusion of other or implied variations.  Except
for a document which satisfies the requirements of Clauses 27.1 and 27.2, no
document, and no act, course of conduct, failure or neglect to act, delay or
acquiescence on the part of the Creditor Parties or any of them (or any person
acting on behalf of any of them) shall result in the Creditor Parties or any of
them (or any person acting on behalf of any of them) being taken to have varied,
waived, suspended or limited, or being precluded (permanently or temporarily)
from enforcing, relying on or exercising:

 

(a)                                  a provision of this Agreement or another
Finance Document; or

 

(b)                                 an Event of Default; or

 

(c)                                  a breach by any Borrower or a Security
Party of an obligation under a Finance Document or the general law; or

 

(d)                                 any right or remedy conferred by any Finance
Document or by the general law;

 

and there shall not be implied into any Finance Document any term or condition
requiring any such provision to be enforced, or such right or remedy to be
exercised, within a certain or reasonable time.

 

28                                  NOTICES

 

28.1                        General.  Unless otherwise specifically provided,
any notice under or in connection with any Finance Document shall be given by
letter or fax; and references in the Finance Documents to written notices,
notices in writing and notices signed by particular persons shall be construed
accordingly.

 

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28.2                        Addresses for communications.  A notice shall be
sent:

 

(a)                                  to the
Borrowers:                                                                                                   
Suite 306

Commerce Building

One Chancery Lane

Hamilton HM12

Bermuda

 

Mailing Address:

P.O. Box HM 2522

Hamilton HMGX

Bermuda

 

Attention: William J. Carr

 

Fax: +1-441-295-4957

 

With a copy to:

TBS Shipping Services Inc.

612 East Grassy Sprain Road

Yonkers, NY 10710 U.S.A.

Attention:  Ferdinand V. Lepere

 

Fax: +1-914-961-5121

 

(b)                                  to a Lender:          At the address below
its name in Schedule 1 or (as the case may require) in the relevant Transfer
Certificate.

 

(c)                                   to the Agent:        In respect of
operational matters (such as drawdowns, interest rate fixing, interest/fee
calculations and payments:

 

The Royal Bank of Scotland plc
Level 3
2½ Devonshire Square
London EC2M 4XJ

 

Fax No: +44 207 615 7673
Attention: Loans Administration/LAU

 

in respect of non operational matters (such as documentation, covenant
compliance, amendments and waivers etc)

 

The Royal Bank of Scotland plc
Shipping Business Centre
5-10 Great Tower Street
London EC3P 3HX

 

Fax No: +44 207 085 7142
Attention: Transaction and Portfolio Management

 

(d)                                  to the Security
Trustee:                                                                 
             The Royal Bank of Scotland plc

 

Level 5

135 Bishopsgate

London EC2M 3UR

 

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Fax No: +44 207 085 4564
Attention: Syndicated Loans Agency

 

or to such other address as the relevant party may notify the Agent or, if the
relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders,
and the Security Parties.

 

28.3                        Effective date of notices.  Subject to Clauses 28.4
and 28.5:

 

(a)                                  a notice which is delivered personally or
posted shall be deemed to be served, and shall take effect, at the time when it
is delivered;

 

(b)                                 a notice which is sent by fax shall be
deemed to be served, and shall take effect, 2 hours after its transmission is
completed.

 

28.4                        Service outside business hours.  However, if under
Clause 28.3 a notice would be deemed to be served:

 

(a)                                  on a day which is not a business day in the
place of receipt; or

 

(b)                                 on such a business day, but after 5 p.m.
local time;

 

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take
effect, at 9 a.m. on the next day which is such a business day.

 

28.5                        Illegible notices.  Clauses 28.3 and 28.4 do not
apply if the recipient of a notice notifies the sender within 1 hour after the
time at which the notice would otherwise be deemed to be served that the notice
has been received in a form which is illegible in a material respect.

 

28.6                        Valid notices.  A notice under or in connection with
a Finance Document shall not be invalid by reason that its contents or the
manner of serving it do not comply with the requirements of this Agreement or,
where appropriate, any other Finance Document under which it is served if:

 

(a)                                  the failure to serve it in accordance with
the requirements of this Agreement or other Finance Document, as the case may
be, has not caused any party to suffer any significant loss or prejudice;  or

 

(b)                                 in the case of incorrect and/or incomplete
contents, it should have been reasonably clear to the party on which the notice
was served what the correct or missing particulars should have been.

 

28.7                        English language.  Any notice under or in connection
with a Finance Document shall be in English.

 

28.8                        Meaning of “notice”.  In this Clause 28, “notice”
includes any demand, consent, authorisation, approval, instruction, waiver or
other communication.

 

28.9                        Electronic communication

 

(a)                                  Any communication to be made between the
Agent and a Creditor Party under or in connection with the Finance Documents may
be made by electronic mail or other electronic means, if the Agent and the
relevant Creditor Party:

 

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(i)                                     agree that, unless and until notified to
the contrary, this is to be an accepted form of communication;

 

(ii)                                  notify each other in writing of their
electronic mail address and/or any other information required to enable the
sending and receipt of information by that means; and

 

(iii)                               notify each other of any change to their
address or any other such information supplied by them.

 

(b)                                 Any electronic communication made between
the Agent and a Creditor Party will be effective only when actually received in
readable form and in the case of any electronic communication made by a Creditor
Party to the Agent only if it is addressed in such a manner as the Agent shall
specify for this purpose.

 

29                                  JOINT AND SEVERAL LIABILITY

 

29.1                        General.  All liabilities and obligations of the
Borrowers under this Agreement shall, whether expressed to be so or not, be
several and, if and to the extent consistent with Clause 29.2, joint.

 

29.2                        No impairment of Borrower’s obligations.  The
liabilities and obligations of a Borrower shall not be impaired by:

 

(a)                                  this Agreement being or later becoming
void, unenforceable or illegal as regards any other Borrower;

 

(b)                                 any Lender, Swap Bank or the Security
Trustee entering into any rescheduling, refinancing or other arrangement of any
kind with any other Borrower;

 

(c)                                  any Lender, Swap Bank or the Security
Trustee releasing any other Borrower or any Security Interest created by a
Finance Document; or

 

(d)                                 any combination of the foregoing.

 

29.3                        Principal debtors.  Each Borrower declares that it
is and will, throughout the Security Period, remain a principal debtor for all
amounts owing under this Agreement and the Finance Documents and no Borrower
shall in any circumstances be construed to be a surety for the obligations of
any other Borrower under this Agreement.

 

29.4                        Subordination.  Subject to Clause 29.5, during the
Security Period, no Borrower shall:

 

(a)                                  claim any amount which may be due to it
from any other Borrower whether in respect of a payment made, or matter arising
out of, this Agreement or any Finance Document, or any matter unconnected with
this Agreement or any Finance Document; or

 

(b)                                 take or enforce any form of security from
any other Borrower for such an amount, or in any other way seek to have recourse
in respect of such an amount against any asset of any other Borrower; or

 

(c)                                  set off such an amount against any sum due
from it to any other Borrower; or

 

(d)                                 prove or claim for such an amount in any
liquidation, administration, arrangement or similar procedure involving any
other Borrower or other Security Party; or

 

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(e)                                  exercise or assert any combination of the
foregoing.

 

29.5                        Borrower’s required action.  If during the Security
Period, the Agent, by notice to a Borrower, requires it to take any action
referred to in paragraphs (a) to (d) of Clause 29.4, in relation to any other
Borrower, that Borrower shall take that action as soon as practicable after
receiving the Agent’s notice.

 

30                                  SUPPLEMENTAL

 

30.1                        Rights cumulative, non-exclusive.  The rights and
remedies which the Finance Documents give to each Creditor Party are:

 

(a)                                  cumulative;

 

(b)                                 may be exercised as often as appears
expedient; and

 

(c)                                  shall not, unless a Finance Document
explicitly and specifically states so, be taken to exclude or limit any right or
remedy conferred by any law.

 

30.2                        Severability of provisions.  If any provision of a
Finance Document is or subsequently becomes void, unenforceable or illegal, that
shall not affect the validity, enforceability or legality of the other
provisions of that Finance Document or of the provisions of any other Finance
Document.

 

30.3                        Counterparts.  A Finance Document may be executed in
any number of counterparts.

 

30.4                        Third party rights.  A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act
1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

31                                  LAW AND JURISDICTION

 

31.1                        English law.  This Agreement and any non-contractual
obligations arising out of or in connection with it shall be governed by, and
construed in accordance with, English law.

 

31.2                        Exclusive English jurisdiction.  Subject to Clause
31.3, the courts of England shall have exclusive jurisdiction to settle any
Dispute.

 

31.3                        Choice of forum for the exclusive benefit of the
Creditor Parties.  Clause 36.2 is for the exclusive benefit of the Creditor
Parties, each of which reserves the right:

 

(a)                                  to commence proceedings in relation to any
Dispute in the courts of any country other than England and which have or claim
jurisdiction to that Dispute; and

 

(b)                                 to commence such proceedings in the courts
of any such country or countries concurrently with or in addition to proceedings
in England or without commencing proceedings in England.

 

No Borrower shall commence any proceedings in any country other than England in
relation to a Dispute.

 

31.4                        Process agent.  Each Borrower irrevocably appoints
Curtis Davis Garrard LLP at its registered office for the time being, presently
at 2 Roundwood Avenue, Stockley Park, Uxbridge UB11 1AF, to act as its agent to
receive and accept on its behalf any process or

 

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other document relating to any proceedings in the English courts which are
connected with a Dispute.

 

31.5                        Creditor Party rights unaffected.  Nothing in this
Clause 31 shall exclude or limit any right which any Creditor Party may have
(whether under the law of any country, an international convention or otherwise)
with regard to the bringing of proceedings, the service of process, the
recognition or enforcement of a judgment or any similar or related matter in any
jurisdiction.

 

31.6                        Meaning of “proceedings”.  In this Clause 31,
“proceedings” means proceedings of any kind, including an application for a
provisional or protective measure and a “Dispute” means any dispute arising out
of or in connection with this Agreement (including a dispute relating to the
existence, validity or termination of this Agreement) or any contractual
obligation arising out of or in connection with this Agreement.

 

THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.

 

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SCHEDULE 1

 

LENDERS

 

Lender

 

Lending Office

 

Commitment

 

 

 

 

 

 

 

The Royal Bank of Scotland plc

 

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

Fax No: + 44 207 085 7142

 

Attn: Transaction and Portfolio Management

 

$

35,000,000

 

 

 

 

 

 

 

Citibank, N.A.

 

750 Washington Boulevard

Stamford CT06901

USA

 

Fax No: + 1 866 772 2935203 975 6265

 

Attn: GilbertMark TorresMcElwain

 

$

15,000,000

 

 

 

 

 

 

 

Landesbank Hessen-Thüringen Girozentrale

 

420 Fifth Avenue, 24th Floor

New York, NY 100108-2729

USA

 

Fax No: +1 212 703 5256

 

Attn: Corporate Finance/ Portfolio Management

 

$

30,000,000

 

 

 

 

 

 

 

Norddeutsche Landesbank Girozentrale

 

Ship and Aircraft Finance Department

FriednichswallDepartmentFriedrichswall 10

30159 Hannover, Germany

 

Fax No: +49 511 361 4785

 

Attn: International Shipping GroupII - Sebastian SchubertGroup

 

$

30,000,000

 

 

 

 

 

 

 

Alliance & Leicester CommercialSantander Asset Finance plc

 

298 Deansgate

Manchester

M3 4HH

 

Fax No: + 44 161 953 3517

 

Attn: Corporate Administration Manager

 

$

30,000,000

 

 

 

 

 

 

 

Bank of America, N.A.

 

Bank of America

100 Federal Street

Boston MA 02110

 

Fax No: +617434 1955

 

$

10,000,000

 

 

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Attn: Transportation Division - Credit Products

 

 

 

 

 

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SCHEDULE 2

 

DRAWDOWN NOTICE

 

To:                              The Royal Bank of Scotland plc

Level 3

2½ Devonshire Square

London EC2M 4XJ

 

Attention: Loans Administration/LAU

 

[·]

 

DRAWDOWN NOTICE

 

1                                         We refer to the loan agreement (the
“Loan Agreement”) dated as of 29 March 2007 and made between Argyle Maritime
Corp., Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime
Corp., McHenry Maritime Corp. and Sunswyck Maritime Corp., as Borrowers, the
Lenders referred to therein, and The Royal Bank of Scotland plc as Mandated Lead
Arranger, Bookrunner, Agent, Security Trustee, and Swap Bank in connection with
a term loan facility of US$150,000,000.  Terms defined in the Loan Agreement
have their defined meanings when used in this Drawdown Notice.

 

2                                         We request to borrow an Advance under
the Loan Facility as follows:

 

(a)                                  Amount: US$[·];

 

(b)                                 Drawdown Date: [·];

 

(c)                                  [Duration of the first Interest Period
shall be [·] months;]

 

(d)                                 Payment instructions : account in our name
and numbered [·] with [·] of [·].

 

3                                         We represent and warrant that:

 

(a)                                  the representations and warranties in
Clause 10 of the Loan Agreement would remain true and not misleading if repeated
on the date of this notice with reference to the circumstances now existing;

 

(b)                                 no Event of Default or Potential Event of
Default has occurred and is continuing or will result from the borrowing of the
Loans.

 

4                                         This notice cannot be revoked without
the prior consent of the Majority Lenders.

 

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5                                         We authorise you to deduct the fees
referred to in Clause 20 and due to you for the account of the Lenders from the
amount of the said Advance.

 

[Name of Signatory]

 

 

 

 

 

for and on behalf of

 

 

[relevant Borrower]

 

 

[·]

[·]

 

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SCHEDULE 3

 

CONDITION PRECEDENT DOCUMENTS

 

PART A

 

The following are the documents referred to in Clause 9.1(a) required before
service of the first Drawdown Notice.

 

1                                         A duly executed original of each
Finance Document (and of each document required to be delivered by each Finance
Document) other than those referred to in Part B or Part C or Part D.

 

2                                         Copies of the certificate of
incorporation, constitutional documents and evidence of the goodstanding (or its
equivalent) of each Borrower and each Security Party.

 

3                                         Copies of resolutions of the directors
of each Borrower and each Security Party and copies of resolutions of the
shareholders of each Borrower, in each case authorising the execution of each of
the Finance Documents to which that Borrower or that Security Party is a party
and, in the case of each Borrower, authorising named officers to give the
Drawdown Notices and other notices under this Agreement and ratifying the
execution of the Shipbuilding Contracts.

 

4                                         The original of any power of attorney
under which any Finance Document is executed on behalf of a Borrower or a
Security Party.

 

5                                         Copies of all consents which any
Borrower or any Security Party requires to enter into, or make any payment
under, any Finance Document or the Shipbuilding Contracts.

 

6                                         Copies of the Shipbuilding Contracts
and the Overall Agreement.

 

7                                         Such documentary evidence as the Agent
and its legal advisers may require in relation to the due authorisation and
execution by the Seller of the Shipbuilding Contracts and the Overall Agreement.

 

8                                         Documentary evidence that the agent
for service of process named in Clause 31 has accepted its appointment.

 

9                                         Favourable legal opinions from lawyers
appointed by the Agent on such matters concerning the laws of Bermuda and
Marshall Islands.

 

10                                  A written confirmation from the Borrowers as
to which individuals are authorised to give verbal and/or written instructions
to the Agent on behalf of the Borrowers in respect of the selection of any
Interest Period pursuant to Clause 6.2 of this Agreement.

 

11                                  A written statement from a person acceptable
to the Agent confirming the identity of the ultimate beneficial owner or owners
of the shares in the Borrowers, the Corporate Guarantor and each other Security
Party and of the identity of the person or persons controlling the voting rights
attached to those shares.

 

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12                                  Such documents and evidence as the Agent
shall require in relation to each Security Party based on applicable law and
regulations, and the Agent’s own internal guidelines, relating to the Agent’s
knowledge of its customers.

 

13                                  Such documentary evidence as the Agent and
its legal advisers may require in relation to the due authorisation and
execution by the parties to the Intercreditor Agreement (other than the Creditor
Parties).

 

14                                  If the Agent so requires, in respect of any
of the documents referred to above, a certified English translation prepared by
a translator approved by the Agent.

 

Each of the documents specified in paragraphs 2, 3, 5, and 6 of Part A and every
other copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director, representative director, or the secretary (or
equivalent officer) of the relevant Borrower.

 

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PART B

 

The following are the documents referred to in Clause 9.1(b) required before the
drawdown of a Advance (other than a Delivery Advance) in respect of a Ship to be
acquired using the proceeds of such Advance:

 

1                                         evidence that the relevant stage
payment of the Contract Price payable under the Shipbuilding Contract in respect
of such Ship payable under the relevant Shipbuilding Contract has fallen due for
payment or, in the case of each of Ship D, Ship E and Ship F and the relevant
Advance to be utilised to reimburse the relevant Borrower the second instalment
of the Contract Price payable under the relevant Shipbuilding Contract that such
instalment has been paid to the Seller and that the stage of steel cutting for
such Ship has been completed;

 

2                                         the Pre-delivery Security Assignment
in respect of the Shipbuilding Contract relating to such Ship (and of each
document to be delivered thereunder); and

 

3                                         favourable legal opinions from lawyers
appointed by the Agent on such matters concerning the laws of the Marshall
Islands and China.

 

4                                         a copy of the relevant Refund
Guarantee together with such documentary evidence as the Agent, and its legal
advisers may require in relation to the due authorisation and execution by the
Refund Guarantor of that Refund Guarantee and that such Refund Guarantee has
been registered with the State Administration of Foreign Exchange in China.

 

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PART C

 

The following are the documents referred to in Clause 9.1(d) required before the
drawdown of a Delivery Advance in respect of a Ship to be acquired using the
proceeds of such Delivery Advance:

 

1

 

(a)                                  A duly executed original of the Mortgage
and Multiparty Deed relating to the Ship (and of each document to be delivered
by each of them); and

 

(b)                                 in relation to the Firstfirst Delivery
Advance a duly executed original of the Account Security Deed and the originals
of any mandates or other documents required in connection with the opening and
operation of the Earnings Account and the Standby Earnings Account.

 

2                                         Documentary evidence that:

 

(a)                                  the Ship has been or on the relevant
Delivery Date will be unconditionally delivered by the Sellers to, and accepted
by, the relevant Borrower under the relevant Shipbuilding Contract and the full
purchase price payable under the relevant Shipbuilding Contract has been duly
paid;

 

(b)                                 the Ship is or on the relevant Delivery Date
will be registered in the name of the relevant Borrower with the Panamanian ship
registry;

 

(c)                                  the Ship is or on the relevant Delivery
Date will be in the absolute and unencumbered ownership of the relevant Borrower
save as contemplated by the Finance Documents;

 

(d)                                 the Ship has or on the relevant Delivery
Date will have its Classification with its classification society, free of all
recommendations and qualifications of such classification society;

 

(e)                                  the relevant Mortgage has been or on the
Delivery Date will be duly registered against the Ship as a valid first
preferred Panamanian ship mortgage in accordance with the laws of Panama;

 

(f)                                    the Ship is insured in accordance with
the provisions of this Agreement and all requirements therein in respect of
insurances have been complied with and a certified copy of the certificate of
financial responsibility for pollution by oil or other Environmentally Sensitive
Material issued by the relevant certifying authority in relation to that Ship;

 

(g)                                 the Ship has been or on the relevant
Delivery Date will be unconditionally delivered by the relevant Borrower to, and
accepted by, the Bareboat Charterer under the relevant Bareboat Charter and the
Ship has been bareboat registered under the Philippine’s flag (with details of
the Mortgage duly noted on the Ship’s bareboat register);

 

(h)                                 the Ship has been or on the relevant
Delivery Date will be unconditionally delivered by the Bareboat Charter to, and
accepted by, the Time Charterer under the relevant Time Charter;

 

3                                         Documents establishing that the Ship
will, as from the relevant Drawdown Date, be managed by the Approved Managers on
terms acceptable to the Lenders, together with:

 

(a)                                  a letter or letters of undertaking executed
by the Approved Managers in favour of the Agent in the terms required by the
Agent agreeing certain matters in relation to the management of

 

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that Ship and subordinating the rights of the Approved Managers against the
Borrowers and that Ship to the rights of the Creditor Parties under the Finance
Documents; and

 

(b)                                 copies of the Approved Managers’ Document of
Compliance and of the Ship Safety Management Certificate (together with any
other details of the applicable safety management system which the Agent
requires).

 

4                                         A valuation of each Ship then the
subject of a Mortgage and the Ship the subject of the said Final Sub-Delivery
Advance addressed to the Agent and the Lenders stated to be for the purpose of
this Agreement and dated not earlier then 30 days before the relevant Drawdown
Date from an independent London sale and purchase shipbroker which the Agent has
approved or appointed which shows a value for such Ships acceptable to the
Agent.

 

5                                         A letter from the relevant Borrower to
the protection and indemnity association in which the Ship is or is to be
entered instructing it to provide the Agent with a copy of the certificate of
entry of the Ship and any information relating to the entry of the Ship in such
protection and indemnity association.

 

6                                         Favourable legal opinions from lawyers
appointed by the Agent on such matters concerning the law of Marshall Islands,
Panama, China and such other relevant jurisdictions as the Agent may require.

 

7                                         A favourable opinion from an
independent insurance consultant acceptable to the Agent on such matters
relating to the insurances for the Ship as the Agent may require.

 

8                                         Documents of the kind referred to in
Schedule 3 Part A 2, 3 and 4 in relation to the Bareboat Charterer, the Time
Charterer, the Approved Managers, TBS Pacific Liner and TBS Worldwide and their
execution of the Finance Documents to which they are a party.

 

9                                         If the Agent so requires, in respect
of any of the documents referred to above, a certified English translation
prepared by a translator approved by the Agent.

 

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SCHEDULE 4

 

TRANSFER CERTIFICATE

 

The Transferor and the Transferee accept exclusive responsibility for ensuring
that this Certificate and the transaction to which it relates comply with all
legal and regulatory requirements applicable to them respectively.

 

To:                              The Royal Bank of Scotland plc for itself and
for and on behalf of the Borrowers, each Security Party, the Security Trustee
and each Lender, as defined in the Loan Agreement referred to below.

 

[·]

 

1                                         This Certificate relates to a Loan
Agreement (the “Loan Agreement”) dated as of 29 March 2007 and made between
(1) Argyle Maritime Corp., Caton Maritime Corp., Dorchester Maritime Corp.,
Longwoods Maritime Corp., McHenry Maritime Corp. and Sunswyck Maritime Corp.
(the “Borrowers”), (2) the banks and financial institutions named therein as
Lenders and (3) The Royal Bank of Scotland plc as Mandated Lead Arranger,
Bookrunner, Agent, Swap Bank, Security Trustee relating to a term loan facility
of $150,000,000.

 

2                                         In this Certificate, terms defined in
the Loan Agreement shall, unless the contrary intention appears, have the same
meanings and:

 

“Relevant Parties” means the Agent, the Borrowers, each Security Party, the
Security Trustee and each Lender;

 

“Transferor” means [full name] of [lending office]; and

 

“Transferee” means [full name] of [lending office].

 

3                                         The effective date of this Certificate
is [·]  Provided that this Certificate shall not come into effect unless it is
signed by the Agent on or before that date.

 

4                                         The Transferor assigns to the
Transferee absolutely all rights and interests (present, future or contingent)
which the Transferor has as Lender under or by virtue of the Loan Agreement and
every other Finance Document in relation to [·] per cent. of its Contribution,
which percentage represents $[·].

 

5                                         By virtue of this Certificate and
Clause 26 of the Loan Agreement, the Transferor is discharged entirely from its
Commitment which amounts to $[·] [from [·] per cent. of its Commitment, which
percentage represents $[·] and the Transferee acquires a Commitment of $[·].

 

6                                         The Transferee undertakes with the
Transferor and each of the Relevant Parties that the Transferee will observe and
perform all the obligations under the Finance Documents which Clause 26 of the
Loan Agreement provides will become binding on it upon this Certificate taking
effect.

 

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7                                         The Agent, at the request of the
Transferee (which request is hereby made) accepts, for the Agent itself and for
and on behalf of every other Relevant Party, this Certificate as a Transfer
Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

 

8                                         The Transferor:

 

(a)                                  warrants to the Transferee and each
Relevant Party that:

 

(i)                                     the Transferor has full capacity to
enter into this transaction and has taken all corporate action and obtained all
consents which are in connection with this transaction; and

 

(ii)                                  this Certificate is valid and binding as
regards the Transferor;

 

(b)                                 warrants to the Transferee that the
Transferor is absolutely entitled, free of encumbrances, to all the rights and
interests covered by the assignment in paragraph 4 above; and

 

(c)                                  undertakes with the Transferee that the
Transferor will, at its own expense, execute any documents which the Transferee
reasonably requests for perfecting in any relevant jurisdiction the Transferee’s
title under this Certificate or for a similar purpose.

 

9                                         The Transferee:

 

(a)                                  confirms that it has received a copy of the
Loan Agreement and each of the other Finance Documents;

 

(b)                                 agrees that it will have no rights of
recourse on any ground against either the Transferor, the Agent, the Security
Trustee or any Lender in the event that:

 

(i)                                     any of the Finance Documents prove to be
invalid or ineffective;

 

(ii)                                  any Borrower or any Security Party fails
to observe or perform its obligations, or to discharge its liabilities, under
any of the Finance Documents;

 

(iii)                               it proves impossible to realise any asset
covered by a Security Interest created by a Finance Document, or the proceeds of
such assets are insufficient to discharge the liabilities of the Borrowers or
any Security Party under the Finance Documents;

 

(c)                                  agrees that it will have no rights of
recourse on any ground against the Agent, the Security Trustee or any Lender in
the event that this Certificate proves to be invalid or ineffective;

 

(d)                                 warrants to the Transferor and each Relevant
Party that:

 

(i)                                     it has full capacity to enter into this
transaction and has taken all corporate action and obtained all consents which
it needs to take or obtain in connection with this transaction; and

 

(ii)                                  this Certificate is valid and binding as
regards the Transferee; and

 

(e)                                  confirms the accuracy of the administrative
details set out below regarding the Transferee.

 

10                                  The Transferor and the Transferee each
undertake with the Agent and the Security Trustee severally, on demand, fully to
indemnify the Agent and/or the Security Trustee in respect of any claim,
proceeding, liability or expense (including all legal expenses) which they or
either

 

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of them may incur in connection with this Certificate or any matter arising out
of it, except such as are shown to have been mainly and directly caused by the
gross and culpable negligence or dishonesty of the Agent’s or the Security
Trustee’s own officers or employees.

 

11                                  The Transferee shall repay to the Transferor
on demand so much of any sum paid by the Transferor under paragraph 10 as
exceeds one-half of the amount demanded by the Agent or the Security Trustee in
respect of a claim, proceeding, liability or expense which was not reasonably
foreseeable at the date of this Certificate; but nothing in this paragraph shall
affect the liability of each of the Transferor and the Transferee to the Agent
or the Security Trustee for the full amount demanded by it.

 

 

[Name of Transferor]

[Name of Transferee]

 

 

By:

By:

 

 

Date:

Date:

 

 

 

 

Agent

 

 

 

Signed for itself and for and on behalf of itself

 

as Agent and for every other Relevant Party

 

 

 

[Name of Agent]

 

 

 

By:

 

 

 

Date:

 

 

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Administrative Details of Transferee

 

Name of Transferee:

 

Lending Office:

 

Contact Person

(Loan Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Contact Person

(Credit Administration Department):

 

Telephone:

 

Telex:

 

Fax:

 

Account for payments:

 

Note:       This Transfer Certificate alone may not be sufficient to transfer a
proportionate share of the Transferor’s interest in the security constituted by
the Finance Documents in the Transferor’s or Transferee’s jurisdiction.  It is
the responsibility of each Lender to ascertain whether any other documents are
required for this purpose.

 

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SCHEDULE 5

 

REPAYMENT INSTALMENTS

 

Loan A

 

Loan A will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan A as at the Final Repayment Date, the first such
instalment falling due on the Drawdown Date in respect of the Loan A Delivery
Advance, the second instalment falling due on the date falling 6 months after
the Drawdown Date in respect of the Loan A Delivery Advance and subsequent
instalments falling due at 3 month intervals thereafter and the balloon
instalment falling due on the Final Repayment Date.  The Agent shall on the
Delivery Date in respect of Ship A deliver to the Borrowers and the Creditor
Parties a revised repayment schedule setting out the dates on which each
instalment is due and the amount of each such instalment.

 

Loan B

 

Loan B will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan B as at the Final Repayment Date, the first such
instalment falling due three months from the Drawdown Date in respect of the
Loan B Delivery Advance and subsequent instalments falling due at 3 month
intervals thereafter and the balloon instalment falling due on the Final
Repayment Date.  The Agent shall on the Delivery Date in respect of Ship B
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

 

Loan C

 

Loan C will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan C as at the Final Repayment Date, the first such
instalment falling due three months from the Drawdown Date in respect of the
Loan C Delivery Advance and subsequent instalments falling due at 3 month
intervals thereafter and the balloon instalment falling due on the Final
Repayment Date.  The Agent shall on the Delivery Date in respect of Ship C
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

 

Loan D

 

Loan D will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan D as at the Final Repayment Date, the first such
instalment falling due three months from the Drawdown Date in respect of the
Loan D Delivery Advance and subsequent instalments falling due at 3 month
intervals thereafter and the balloon instalment falling due on the Final
Repayment Date.  The Agent shall on the Delivery Date in respect of Ship D
deliver to the Borrowers and the Creditor Parties a revised

 

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repayment schedule setting out the dates on which each instalment is due and the
amount of each such instalment.

 

Loan E

 

Loan E will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan E as at the Final Repayment Date, the first such
instalment falling due three months from the Drawdown Date in respect of the
Loan E Delivery Advance and subsequent instalments falling due at 3 month
intervals thereafter and the balloon instalment falling due on the Final
Repayment Date.  The Agent shall on the Delivery Date in respect of Ship E
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

 

Loan F

 

Loan F will be repaid by quarterly instalments each in an amount equal to
$417,500 together with a balloon instalment in amount equal to such amount
outstanding in respect of Loan F as at the Final Repayment Date, the first such
instalment falling due three months from the Drawdown Date in respect of the
Loan F Delivery Advance and subsequent instalments falling due at 3 month
intervals thereafter and the balloon instalment falling due on the Final
Repayment Date.  The Agent shall on the Delivery Date in respect of Ship F
deliver to the Borrowers and the Creditor Parties a revised repayment schedule
setting out the dates on which each instalment is due and the amount of each
such instalment.

 

[to be replaced by Schedule 2 to the Amending and Restating Agreement]

 

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SCHEDULE 6

 

MANDATORY COST FORMULA

 

1                                         The Mandatory Cost is an addition to
the interest rate to compensate Lenders for the cost of compliance with (a) the
requirements of the Financial Services Authority (or any other authority which
replaces all or any of its functions) or (b) the requirements of the European
Central Bank.

 

2                                         On the first day of each Interest
Period (or as soon as possible thereafter) the Agent shall calculate, as a
percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in
accordance with the paragraphs set out below.  The Mandatory Cost will be
calculated by the Agent as a weighted average of the Lenders’ Additional Cost
Rates (weighted in proportion to the percentage participation of each Lender in
the relevant Advance) and will be expressed as a percentage rate per annum.

 

3                                         The Additional Cost Rate for any
Lender lending from a lending office in Participating Member State will be the
percentage notified by that Lender to the Agent.  This percentage will be
certified by that Lender in its notice to the Agent to be its reasonable
determination of the cost (expressed as a percentage of that Lender’s
participation in all Advances made from that lending office) of complying with
the minimum reserve requirements of the European Central Bank in respect of
loans made from that lending office.

 

4                                         The Additional Cost Rate for any
Lender lending from a lending office in the United Kingdom will be calculated by
the Agent as follows:

 

[g47301km25ai001.gif]per cent. per annum

 

Where:

 

E                                         is designed to compensate Lenders for
amounts payable under the Fees Rules and is calculated by the Agent as being the
average of the most recent rates of charge supplied by the Reference Banks to
the Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

 

5                                         For the purposes of this Schedule:

 

(a)                                  “Eligible Liabilities” and “Special
Deposits” have the meanings given to them from time to time under or pursuant to
the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

 

(b)                                 “Fees Rules”  means the rules on periodic
fees contained in the FSA Supervision Manual or such other law or regulation as
may be in force from time to time in respect of the payment of fees for the
acceptance of deposits;

 

(c)                                  “Fee Tariffs”  means the fee tariffs
specified in the Fees Rules under the activity group A.1 Deposit acceptors
(ignoring any minimum fee or zero rated fee required pursuant to the Fees
Rules but taking into account any applicable discount rate);

 

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(d)                                 “Participating Member State”  means any
member state of the European Union that adopts or has adopted the euro as its
lawful currency in accordance with legislation of the European Union relating to
European Monetary Union; and

 

(e)                                  “Tariff Base”  has the meaning given to it
in, and will be calculated in accordance with, the Fees Rules.

 

6                                         If requested by the Agent, each
Reference Bank shall, as soon as practicable after publication by the Financial
Services Authority, supply to the Agent, the rate of charge payable by that
Reference Bank to the Financial Services Authority pursuant to the Fees Rules in
respect of the relevant financial year of the Financial Services Authority
(calculated for this purpose by that Reference Bank as being the average of the
Fee Tariffs applicable to that Reference Bank for that financial year) and
expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.

 

7                                         Each Lender shall supply any
information required by the Agent for the purpose of calculating its Additional
Cost Rate.  In particular, but without limitation, each Lender shall supply the
following information in writing on or prior to the date on which it becomes a
Lender:

 

(a)                                  the jurisdiction of its lending office; and

 

(b)                                 any other information that the Agent may
reasonably require for such purpose.

 

Each Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.

 

8                                         The rates of charge of each Reference
Bank for the purpose of E above shall be determined by the Agent based upon the
information supplied to it pursuant to paragraph 6 above and on the assumption
that, unless a Lender notifies the Agent to the contrary, each Lender’s
obligations in relation to cash ratio deposits and special Deposits are the same
as those of a typical bank from its jurisdiction of incorporation with a lending
office in the same jurisdiction as its lending office.

 

9                                         The Agent shall have no liability to
any person if such determination results in an Additional Cost Rate which over
or under compensates any Lender and shall be entitled to assume that the
information provided by any Lender or Reference Bank pursuant to paragraphs 3, 6
and 7 above is true and correct in all respects.

 

10                                  The Agent shall distribute the additional
amounts received as a result of the Mandatory Cost to the Lenders on the basis
of the Additional Cost Rate for each Lender based on the information provided by
each Lender and each Reference Bank pursuant to paragraphs 3, 6 and 7 above.

 

11                                  Any determination by the Agent pursuant to
this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost
Rate or any amount payable to a Lender shall, in the absence of manifest error,
be conclusive and binding on all parties.

 

12                                  The Agent may from time to time, after
consultation with the Borrowers and the Lenders, determine and notify to all
parties any amendments which are required to be made to this Schedule in order
to comply with  any change in law, regulation or any requirements from time to
time imposed by the Financial Services Authority or the European Central Bank
(or, in any case, any other authority which replaces all or any of its
functions) and any such

 

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determination shall, in the absence of manifest error, be conclusive and binding
on all parties.

 

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SCHEDULE 7

 

CLASSIFICATION OF SHIPS

 

Ship

 

Classification

 

 

 

Ship A

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

 

 

Ship B

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

 

 

Ship C

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

 

 

Ship D

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

 

 

Ship E

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

 

 

Ship F

 

LR & 100A7, Strengthened for Heavy Cargos, Container Cargoes on Twin Deck and on
Upper Deck and all hatch covers, & LMC, SCM. & IWS, UMS

 

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SCHEDULE 8

 

FINANCIAL COVENANTS

 

Pursuant to Clause 11.18 of this Agreement the Borrowers undertake that at all
times they shall not:

 

(a)                                  Minimum Cash Liquidity.  For each calendar
monthweek ending on or after the date hereof, permit the aggregate daily closing
balance of Qualified Cash of the Security PartiesTBS Group to be less than
$15,000,000 at any time during such calendar month provided that the Borrowers
shall ensure that at least $5,000,000on average in any week of which at least
$4,500,000 (excluding any restricted cash) is deposited with the Agent at all
times in any such calendar month.;

 

(b)                                 Maximum Consolidated Leverage Ratio.  Permit
the Consolidated Leverage Ratio as of the end of any fiscal quarter set forth
below and for the period of four fiscal quarters then ending of Holdings and its
Subsidiaries to be greater than the ratio set forth below opposite such time
period:

 

Four Fiscal Quarter Ending:

 

Maximum Consolidated
Leverage Ratio

 

 

 

30 June 2010

 

5.00:1.00

 

 

 

30 September 2010

 

3.75:1.00

 

 

 

31 December 2010

 

3.00:1.00

 

 

 

31 March 2011

 

3.004.00:1.00

 

 

 

30 June 2011

 

2.754.00:1.00

 

 

 

30 September 2011

 

4.00:1.00

 

 

 

31 December 2011

 

4.00:1.00

 

 

 

31 March 2012

 

3.65:1.00

 

 

 

30 June 2012

 

3.65:1.00

 

 

 

30 September 2012

 

3.65:1.00

 

 

 

31 December 2012

 

3.65:1.00

 

 

 

31 March 2013

 

3.20:1.00

 

 

 

30 June 2013

 

3.20:1.00

 

 

 

30 September 2013

 

2.75:1.00

 

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31 December 2013

 

2.75:1.00

 

 

 

30 September 201131 March 2014 and thereafter

 

2.50:1.00

 

(c)                                  Minimum Consolidated Fixed Charge Coverage
Ratio.  Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any
fiscal quarter set forth below and for the period of four fiscal quarters then
ending of Holdings and its Subsidiaries to be less than the ratio set forth
below opposite such time period:

 

Four Fiscal Quarter Ending:

 

Minimum Consolidated
Fixed Charge Coverage
Ratio

 

 

 

31 December 2010

 

1.10:1.00

 

 

 

31 March 2011

 

1.30:1.00

 

 

 

30 June 2011

 

1.50:1.00

 

 

 

30 September 2011 and thereafter

 

1.75:1.00

 

(c)                                  (d)Minimum Consolidated Interest Charges
Coverage Ratio.  Permit the Consolidated Interest Charges Coverage Ratio as of
the end of any fiscal quarter set forth below and for the period of four fiscal
quarters then ending of Holdings and its Subsidiaries to be less than the ratio
set forth below opposite such time period:

 

Four Fiscal Quarter Ending:

 

Minimum Consolidated
Interest Charges
Coverage Ratio

 

 

 

31 March 20102011

 

2.503.35:1.00

 

 

 

30 June 20102011

 

3.003.35:1.00

 

 

 

30 September 2011

 

3.35:1.00

 

 

 

31 December 2011

 

3.35:1.00

 

 

 

31 March 2012

 

3.70:1.00

 

 

 

30 June 2012

 

3.70:1.00

 

 

 

30 September 2012

 

3.70:1.00

 

 

 

31 December 2012

 

3.70:1.00

 

 

 

31 March 2013

 

4.30:1.00

 

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30 June 2013

 

4.30:1.00

 

 

 

30 September 20102013

 

3.754.75:1.00

 

 

 

31 December 2013

 

4.75:1.00

 

 

 

31 March 2014 and thereafter

 

5.20:1.00

 

For the avoidance of doubt the Consolidated Interest Charges Coverage Ratio will
not be measured for any fiscal quarter ending after 30 September 2010.

In the event that the Laguna Belle and Seminole Princess Leases are converted to
debt, they will be treated for all purposes of calculations of financial
covenants as if they remained operating leases.  The same rule will apply in the
event that GAAP requires treatment of other operating leases as debt.

 

For the purposes of this Schedule 8 the following terms shall have the following
meanings.

 

“Attributable Indebtedness”  means, on any date, (a) in respect of any
Capitalised Lease of any Person, the capitalised amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalised
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease or
other agreement or instrument were accounted for as a Capitalised Lease and
(c) all Synthetic Debt of such Person;

 

“Availability”  means the amount available for drawing under the Bank of America
Facilities;

 

“Capitalised Leases”  means all leases that have been or should be, in
accordance with GAAP, recorded as capitalised leases;

 

“Cash Equivalents”  means any of the following types of Investments, to the
extent owned by Holdings or any of their Subsidiaries free and clear of all
Security Interests (other than (i) a Security Interest in favour of the Bank of
America, N.A. in respect of the obligations arising under the Bank of America
Facilities and/or (ii)  Permitted Security Interests):

 

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(a)                                  readily marketable obligations issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof having maturities of not more than 360 days
from the date of acquisition thereof; provided that the full faith and credit of
the United States of America is pledged in support thereof;

 

(b)                                 time deposits with, or insured certificates
of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a
Lender or (B) is organised under the laws of the United States of America, any
state thereof or the District of Columbia or is the principal banking subsidiary
of a bank holding company organised under the laws of the United States of
America, any state thereof or the District of Columbia, and is a member of the
Federal Reserve System, (ii) issues (or the parent of which issues) commercial
paper rated as described in Clause (c) of this definition and (iii) has combined
capital and surplus of at least $1,000,000,000, in each case with maturities of
not more than 90 days from the date of acquisition thereof;

 

(c)                                  commercial paper issued by any Person
organised under the laws of any state of the United States of America and rated
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of not more
than 180 days from the date of acquisition thereof; and

 

(d)                                 Investments, classified in accordance with
GAAP as current assets of the Borrowers or any of their Subsidiaries, in money
market investment programs registered under the Investment Company Act of 1940,
which are administered by financial institutions that have the highest rating
obtainable from either Moody’s or S&P, and the portfolios of which are limited
solely to Investments of the character, quality and maturity described in
Clauses (a), (b) and (c) of this definition;

 

“Consolidated EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of Holdings and its Subsidiaries on a consolidated basis
for the most recently completed Measurement Period , plus (a) the following to
the extent deducted in calculating such Consolidated Net Income (and without
duplication ): (i) Consolidated Interest Charges, (ii) the provision for
Federal, state, local and foreign income taxes payable, (iii) depreciation and
amortization expense , (iv) net losses from the sales of vessels as permitted
under this Agreement, (v) any noncash impairment charges incurred during each
fiscal year of Holdings and its Subsidiaries ending December 31,31 2008,
December 31,31 2009, December 31, 201031 2010, December 31 2011, December 31
2012 and December 31, 201131 2013 in respect of any of Holdings’ or its
Subsidiaries ‘ goodwill and Vessels (in each case of or by Holdings and its
Subsidiaries for such Measurement Period), (vi) costs incurred during such
Measurement Period in connection with the redomicilation of Holdings in an
aggregate amount not to exceed $3,000,000 for all Measurement Periods , and
(vii) any non-cash compensation in the form of Equity Interests or other equity
awards made to employees of Holdings and its Subsidiaries in the fiscal years of
Holdings and its Subsidiaries ending December 31, 2010 and December 31, 2011 in
an aggregate amount not to exceed $ 10,000,000 in each such fiscal year (in each
case of or by Holdings and its Subsidiaries for such Measurement Period),and
(viii) any losses attributable to the Jamaican JV, the Logstar JV, the
Panamerican Joint Venture or the ST Logistics Joint Venture and minus (b) the
following to the extent included in calculating such Consolidated Net Income:
(i) all net gains from the sales of vessels as permitted under this Agreement
and (ii) any income or gains attributable to the Jamaican JV, the Logstar JV,
the Panamerican Joint Venture or the ST Logistics Joint Venture (in each case of
or by Holdings and its Subsidiaries for such Measurement Period); provided that,
to the extent characterized as interest on the income statements of Holdings and
its Subsidiaries for such Measurement Period pursuant to FASB Interpretation
No. 133 - Accounting for Derivative Instruments and

 

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Hedging Activities (June 1998), non-cash adjustments in connection with any
interest rate Swap Contract entered into by Holdings or any of its Subsidiaries,
shall be excluded;

 

“Consolidated Fixed Charge Coverage Ratio”  means, at any date of determination,
the ratio of:

 

(a)                                  the result of (i) Consolidated EBITDA, less
(ii) the sum of (x) federal, state, local and foreign income taxes paid in cash
and (y) Restricted Payments made, in each case, for the most recently completed
Measurement Period, to

 

(b)                                 the sum of (i) Consolidated Interest Charges
for the most recently completed Measurement Period, (ii) the aggregate principal
amount of all regularly scheduled principal payments or redemptions or similar
acquisitions for value of outstanding debt for borrowed money for the period of
twelve (12) consecutive months following such date of determination, but
excluding any principal payments to be made in respect of the Revolving Credit
Facility (as defined in the Bank of America Facilities);

 

“Consolidated Funded Indebtedness”  means, as of any date of determination, for
Holdings and its Subsidiaries on a consolidated basis, the sum of:

 

(a)                                  the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations under and as defined in the Bank of America Facilities) and all
obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

(b)                                 all purchase money Indebtedness;

 

(c)                                  all direct obligations arising under
letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

 

(d)                                 all obligations in respect of the deferred
purchase price of property or services (other than trade accounts payable in the
ordinary course of business);

 

(e)                                  all Attributable Indebtedness;

 

(f)                                    without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in Clauses
(a) through (e) above of Persons other than the Borrowers or any Subsidiary; and

 

(g)                                 all Indebtedness of the types referred to in
Clauses (a) through (f) above of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability company) in
which a Borrower or a Subsidiary is a general partner or joint venturer, unless
such Indebtedness is expressly made non-recourse to such Borrower or such
Subsidiary;

 

“Consolidated Interest Charges” means, for any Measurement Period, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including capitalized interest but
excluding capitalized interest on Permitted New Vessel Construction
Indebtedness) or in connection with the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, (b) all
interest paid or payable with respect to discontinued operations and (c) the
portion of rent expense under Capitalized Leases that is treated as interest in
accordance with

 

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GAAP, in each case, of or by Holdings and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period; provided that, to the
extent characterized as interest on the income statements of Holdings and its
Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133
— Accounting for Derivative Instruments and Hedging Activities (June 1998),
noncash adjustments in connection with any interest rate Swap Contract entered
into by Holdings or any of its Subsidiaries, shall be excluded;-, provided
further that, solely for the purposes of calculating Consolidated Interest
Charges pursuant to part (b) of the definition of Consolidated Interest Charges
Coverage Ratio, non-cash charges associated with the write-off of deferred
financing fees and expenses, incurred in connection with the transactions
contemplated by the Global Term Sheet, in an aggregate amount not to exceed
$6,500,000 shall be excluded from the calculation of Consolidated Interest
Charges. Notwithstanding the foregoing, to the extent that fees associated with
the Global Restructuring Term Sheet are treated under GAAP as Loss on
Extinguishment of Debt, such fees will be characterized and treated for covenant
calculation purposes hereunder as if they were amortised through June 30, 2014.

 

“Consolidated Interest Charges Coverage Ratio” means, at any date of
determination, the ratio of (a) the result of (i) Consolidated EBITDA less
(ii) the sums of Federal, State, local and foreign income taxes paid in cash for
the most recently completed Measurement Period to (b) Consolidated Interest
Charges for the most recently completed Measurement Period;

 

Consolidated Leverage Ratio” means, as of any date of determination, the ratio
of:

 

(a)                                  Consolidated Funded Indebtedness as of such
date to:

 

(b)                                 Consolidated EBITDA of Holdings and its
Subsidiaries on a consolidated basis for the most recently completed Measurement
Period;

 

“Consolidated Net Income”  means, at any date of determination, the net income
(or loss) of Holdings and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period; provided that Consolidated Net Income
shall exclude:

 

(a)                                  extraordinary gains and extraordinary
losses for such Measurement Period;

 

(b)                                 the net income of any Subsidiary during such
Measurement Period to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary of such income is not permitted by
operation of the terms of its Organisation Documents or any agreement,
instrument or law applicable to such Subsidiary during such Measurement Period,
except that Holdings’ equity in any net loss of any such Subsidiary for
such-Measurement Period shall be included in determining Consolidated Net
Income; and

 

(c)                                  any income (or loss) for such Measurement
Period of any Person if such Person is not a Subsidiary, except that Holdings’
equity in the net income of any such Person for such Measurement Period shall be
included in Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such Period to Holdings or a Subsidiary as a
dividend or other distribution (and in the case of a dividend or other
distribution to a Subsidiary, such Subsidiary is not precluded from further
distributing such amount to Holdings as described in Clause (b) of this
proviso);

 

“Debtor Relief Laws”  means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganisation,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally;

 

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“Equity Interests”  means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase of acquisition from such
Person of shares of capital stock of (or ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination;

 

“GAAP”  means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied;

 

“Guarantee”  means, as to any Person:

 

(a)                                  any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect,_ (i) to purchase or pay (or
advance or supply funds the purchase or payment of) such Indebtedness or other
obligation, (ii) to purchase or lease property, securities or services for the
purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or

 

(b)                                 any Security Interest on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person
(or any right, contingent or otherwise, of any holder of such Indebtedness to
obtain any such Security Interest).  The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.  The term “Guarantee” as a verb has a corresponding meaning;

 

“Holdings”  means the New Corporate Guarantor;

 

“Indebtedness”  means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a)                                  all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;

 

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(b)                                 the maximum amount of all direct or
contingent obligations of such Person arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;

 

(c)                                  net obligations of such Person under any
Swap Contract;

 

(d)                                 all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and not past due for more than 60
days after the date on which such trade account was created);

 

(e)                                  indebtedness (excluding prepaid interest
thereon) secured by a Security Interest on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;

 

(f)                                    all Attributable Indebtedness in respect
of Capitalised Lease and Synthetic Lease Obligations of such Person and all
Synthetic Debt of such Person;

 

(g)                                 all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Equity
Interest in such Person or any other Person or any warrant, right or option to
acquire such Equity Interest, valued, in the case of a redeemable preferred
interest, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends; and

 

(h)                                 all Guarantees of such Person in respect of
any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date;

 

“Intangible Assets”  means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortised deferred
charges, unamortised debt discount and capitalised research and development
costs;

 

“Investment”  means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of:

 

(a)                                  the purchase or other acquisition of Equity
Interests of another Person;

 

(b)                                 a loan, advance or capital contribution to,
Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or interest in, another Person;

 

(c)                                  the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit or all or a substantial part of the business of, such
Person; or

 

(d)                                 the acquisition or construction of a vessel.
For purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment;

 

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“Jamaican JV” means investment projects in relation to limestone mines in the
Dominican Republic and Jamaica;

 

“LOG-STAR” means LOG-STAR Navegação S.A., a corporation organised under the laws
of Brazil;

 

“Logstar JV” means the joint venture with LOG-STAR in Brazil which will/does
provide break-bulk, bulk, liner and parcel services in the Brazilian cabotage
trade;

 

“Measurement Period”  means, at any date of determination, the most recently
completed four fiscal quarters of Holdings;

 

“Moody’s”  means Moody’s Investors Service Inc., and any successor thereto;

 

“Organisation Documents”  means:

 

(a)                                  with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);

 

(b)                                 with respect to any limited liability
company, the certificate or articles of formation or organisation and operating
agreement; and

 

(c)                                  with respect to any partnership, joint
venture, trust or other form of business entity, the partnership, joint venture
or other applicable agreement of formation or organisation and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organisation with the applicable governmental authority in the
jurisdiction of its formation or organisation and, if applicable, any
certificate or articles of formation or organisation of such entity;

 

“Panamerican Joint Venture” means Panamerican Port Services S.A.C., a
corporation organised under the laws of Peru, a joint venture which owns and
operates a warehouse in Callao, Peru, 50% of the equity interests in which are
directly owned by TBS Warehouse & Distribution Group Ltd in connection with its
joint venture investment therein;

 

Permitted New Vessel Construction Indebtedness”  means Indebtedness incurred
after the date when all the conditions precedent in Section 4.01 of the Bank of
America Credit Facilities are satisfied or waived by Subsidiaries of Holdings
that are not borrowers or guarantors under the Bank of America Credit Facilities
in connection with the construction of up to twelve (12) multipurpose tweendecks
or bulkcarrier shipping vessels;

 

“Person”  means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental authority
or other entity;

 

“Qualified Cash”  means, as of any date of determination, the amount of cash and
Cash Equivalents which is freely transferable and not subject to a Security
Interest (other than (i) a Security Interest in favour of the Bank of America,
N.A. in respect of the obligations arising under the Bank of America Facilities
and/or (ii) a Permitted Security Interest) pledge, security interest,
encumbrance, escrow or cash collateral arrangement or any other restriction on
its use;

 

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“Restricted Payment”  means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment;

 

“Shareholders’ Equity”  means, as of any date of determination, consolidated
shareholders’ equity of Holdings and its Subsidiaries as of that date determined
in accordance with GAAP;

 

“S&P”  means Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies Inc., and any successor thereto;

 

“ST Logistics Joint Venture” means ST Logistics (Proprietary), a corporation
organised under the laws of South Africa, a joint venture which is in the
business of providing logistic service for cargos to and from South Africa, 50%
of the equity interests in which are directly owned by TBS Holdings Limited in
connection with its joint venture investment therein;

 

“Subsidiary”  of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.  Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
Holdings;

 

“Swap Contract”  means:

 

(a)                                  any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement; and

 

(b)                                 any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement;

 

“Swap Termination Value”  means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts:

 

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(a)                                  for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s); and

 

(b)                                 for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for such
Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognised dealer in such Swap Contracts;

 

“Synthetic Debt”  means, with respect to any Person as of any date of
determination thereof, obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds (including any minority interest transactions that function
primarily as a borrowing) but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.

 

“Synthetic Lease Obligation”  means the monetary obligation of a Person under:

 

(a)                                  a so-called synthetic, off-balance sheet or
tax retention lease; or

 

(b)                                 an agreement for the use or possession of
property (including sale and leaseback transactions), in each case, creating
obligations that do not appear on the balance sheet of such Person but which,
upon the application of any Debtor Relief Laws to such Person, would be
characterised as the indebtedness of such Person (without regard to accounting
treatment).

 

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SCHEDULE 9

 

FORM OF COMPLIANCE CERTIFICATE

 

 

To:                             The Royal Bank of Scotland plc

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

Attention:  Ship Finance Portfolio Management

 

From:TSB TBS International Public Limited Company

 

OFFICER’S CERTIFICATE

 

Financial Statement date: [·]

 

This Certificate is rendered pursuant to clause 11.18(i) of the loan agreement
dated as of 29 March 2007 as amended (the “Loan Agreement”) and entered into
between (i) Argyle Maritime Corp., Caton Maritime Corp., Dorchester Maritime
Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and Sunswyck Maritime
Corp., as joint and several Borrowers, (ii) the banks and financial institutions
listed in Schedule 1 as Lenders, (iii) The Royal Bank of Scotland plc as
Mandated Lead Arranger, Bookrunner, Agent, Security Trustee and Swap Bank,
relating to a loan facility of US$150,000,000.  Words and expressions defined in
the Loan Agreement shall have the same meanings when used herein.

 

I, the Chief Financial Officer of the New Corporate Guarantor, hereby certify
that:

 

[Use the following paragraph for fiscal year-end financial statements:

 

1                                         Attached hereto as Schedule 1 are the
annual audited accounts of the Corporate Guarantor, the New Corporate Guarantor
and each of their consolidated Subsidiaries required by Clause 11.6(a) of the
Loan Agreement for the fiscal year ended as of the above date, together with a
report and opinion of a registered public accounting firm of nationally
recognized standing.]

 

2                                         or use following paragraph for fiscal
quarter-end financial statements:

 

3                                         [Attached hereto as Schedule 1 are:

 

(i)                                     1              Attached to this
Certificate are the latest [audited][the unaudited] accounts of therequired by
11.6(b)(i) of the Loan Agreement for the fiscal quarter of the Corporate
Guarantor and itsthe New Corporate Guarantor and each of their consolidated
subsidiaries for the financial year [quarter] ending on [Subsidiaries ended as
of the above date; and

 

(ii)                                  management accounts in respect of the
[name of Vessels] showing the results of the operation thereof during the
preceding financial quarter. ]

 

4                                         The accounts attached hereto as
Schedule 1:

 

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(i)                                     have been prepared in accordance with
all applicable laws and GAAP;

 

(ii)                                  give a true and fair view of the financial
condition of the relevant Borrower at the date of such accounts and of its
profit for the period to which such accounts relate; and

 

(iii)                               fully disclose or provide for all
significant liabilities of the relevant Borrower.

 

5                                         The undersigned has reviewed and is
familiar with the terms of the Loan Agreement and has made, or has caused to be
made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of the New Corporate Guarantor and each of
its consolidated Subsidiaries during the accounting period covered by the
attached financial statements.

 

6                                         A review of the activities of the New
Corporate Guarantor and each of its consolidated Subsidiaries during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the New Corporate Guarantor and
each Subsidiary performed and observed all their obligations under the Loan
Agreement.

 

[select one:]

 

7                                         [no Event of Default or Potential

 

8                                         Event of Default has occurred and is
continuing.]

 

—or—

 

9                                         [no Event of Default or Potential
Event of Default has occurred and is continuing, except as follows:

 

10                                  [·].(1)]

 

2                                         Set out below are the respective
amounts, in US Dollars, of Cash Equivalents, Consolidated EBITDA, Consolidated
Interest Charges, Consolidated Net Income and Qualified Cash:

 

 

 

US Dollars

 

 

 

Cash Equivalents

 

[·]

 

 

 

Consolidated EBITDA

 

[·]

 

 

 

Consolidated Interest Charges

 

[·]

 

 

 

Consolidated Net Income

 

[·]

 

 

 

Qualified Cash

 

[·]

 

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

(1) Insert all material details of specified event or matter.

 

110

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

 

11                                  The representations and warranties of each
Borrower contained in Clause 10 of the Loan Agreement and all representations
and warranties of any Security Party that are contained in any Finance Document
are true and correct on and as of the date hereof, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date, and except that
for purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Clause 11.6 of the Loan Agreement shall
be deemed to refer to the most recent statements furnished pursuant to
paragraphs (a) and (b), respectively, of Clause 11.6 of the Loan Agreement,
including the statements in connection with which this Compliance Certificate is
delivered.

 

3                                         Accordingly, as atThe financial
covenant analyses and information set forth on Schedule 2 attached hereto are
true and accurate on and as of the date of this Certificate the financial
covenants set out in Appendix 8 of the Loan Agreement [are][are not] complied
with, in that as at [·]:.

 

(a)                                 Minimum Cash Liquidity  US$[·];

 

(b)                                 Maximum Consolidated Leverage Ratio      
[x.xx]

 

1

 

2

 

3

 

(i)

 

(ii)

 

4

 

(i)

 

(ii)

 

(iii)

 

5

 

6

 

7

 

(c)                                 Minimum Consolidated Fixed Charge Coverage
Ratio               [x.xx]

 

8                                         4              As at [] no Event of
Default has occurred and is continuing [or, specify / identify any Event of
Default].  The Borrowers are in compliance with Clause 15.1 of the Loan
Agreement.

 

111

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

 

9

 

10

 

11

 

12

 

[If not, specify this and what is proposed as regards Clause 15.2.]

 

……………………………..

 

15.2……………………………..

Chief financial officerFinancial Officer

TBS International Public Limited Company

 

112

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

 

For the Quarter/Year/Month ended                                       ,
         (“Statement Date”)

 

SCHEDULE 2
to the Compliance Certificate

 

 

1. Minimum Cash Liquidity (Schedule 8, item (a) of the Loan Agreement) for the
calendar month ending                                          .

 

 

 

 

 

 

 

 

 

A. Qualified Cash: (the amount of cash and Cash Equivalents (other than amounts
(i) deposited in the Special Account, (ii) reserved for the equity portion of
any construction advances pursuant to the terms of the Loan Agreement or
(iii) pledged to support any letters of credit, cash management obligations or
obligations under any Swap Contract) which is freely transferable and not
subject to a Security Interest (other than a Permitted Security Interest and/or
a Security Interest in favour of the Bank of America), pledge, encumbrance,
escrow or cash collateral arrangement or any other restriction on its use):

 

$

 

 

 

 

 

 

 

 

B. Item A above shall not be less than:

 

$

15,000,000

 

 

 

 

 

 

 

C. Compliance

 

Yes

 

No

 

2.  Maximum Consolidated Leverage Ratio (Schedule 8, item (a) of the Loan
Agreement) for the four fiscal quarters ending
                                         .

 

A. Consolidated Funded Indebtedness of Holdings and its Subsidiaries (for the
purpose of calculating the Consolidated Leverage Ratio, Consolidated Funded
Indebtedness shall not include (i) PIK Interest (as defined in the Bank of
America Facilities) or (ii) debt arrangements in respect of Capitalised Leases
and the Laguna Belle and Seminole Princess Leases):

 

 

 

 

 

 

 

 

 

 

 

1. The outstanding principal amount of all obligations, whether current or
long-term, for borrowed money (includes outstanding Indebtedness under the Loan
Agreement), and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instrument and debt arrangements with respect to
Capitalized Leases and the Laguna Belle and Seminole Princess Leases:

 

$

 

 

 

 

 

 

 

 

 

2. plus, all purchase money Indebtedness:

 

$

 

 

 

 

 

 

 

 

 

3. plus, all direct obligations arising under letter of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments:

 

$

 

 

 

 

113

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

 

4. plus, all obligations in respect of the deferred purchase price of property
or services (other than trade accounts payable in the ordinary course of
business):

 

$

 

 

 

 

 

 

 

 

 

5. plus, Attributable Indebtedness:

 

$

 

 

 

 

 

 

 

 

 

6. plus, without duplication, all Guarantees with respect to outstanding
indebtedness of the types specified in Item A(1) through Item A(5) above of
persons other than the Borrowers or any Subsidiary:

 

$

 

 

 

 

 

 

 

 

 

7. plus, all Indebtedness of the types referred to in Item A(1) though Item
A(6) of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company) in which a Borrower or a
Subsidiary is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Borrower or such Subsidiary:

 

$

 

 

 

 

 

 

 

 

 

8. Total Items B(1) through B(8) above:

 

$

 

 

 

 

 

 

 

 

 

9. minus, Indebtedness in respect of any debt arrangements with respect to
Capitalized Leases and the Laguna Belle and Seminole Princess Leases existing
during such Measurement Period:

 

$

 

 

 

 

 

 

 

 

 

10. Total (Items A(8) minus A(9) above):

 

$

 

 

 

 

B. Consolidated EBITDA of Holdings and its Subsidiaries for the Measurement
Period (for the purpose of calculating the Consolidated Leverage Ratio and the
Consolidated Interest Charges Coverage Ratio (below), all principal, interest or
other payments in respect of debt arrangements in respect of Capitalised Leases
and the Laguna Belle and Seminole Princess Leases in such Measurement Period
shall be deducted from Consolidated EBITDA):

 

 

 

 

 

 

1. Consolidated Net Income of Holdings and its Subsidiaries:

 

$

 

 

 

 

 

 

 

 

 

To the extent deducted in calculating Consolidated Net Income (and without
duplication):

 

 

 

 

 

 

 

 

 

 

 

2. plus, Consolidated Interest Charges:

 

$

 

 

 

 

 

 

 

 

 

3. plus, the provision for federal, state, local and foreign income taxes
payable:

 

$

 

 

 

 

 

 

 

 

 

4. plus, depreciation and amortization expense:

 

$

 

 

 

 

114

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

 

5. plus, net losses from the sales of vessels as permitted under the Loan
Agreement (in each case of or by Holdings and its Subsidiaries for such
Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

6. plus, any noncash impairment charges incurred during any fiscal year of
Holdings and its Subsidiaries in respect of any of Holdings’ and its
Subsidiaries’ ending December 31 2008, December 31 2009, December 31 2010,
December 31 2011, December 31 2012 and December 31 2013 in respect of any of
Holdings’ and its Subsidiaries goodwill and Vessels (in each case of or by
Holdings and its Subsidiaries for such Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

7. plus costs incurred during the relevant Measurement Period in connection with
the redomiciliation of Holdings in an aggregate amount not to exceed US3,000,000
for all Measurement Periods;

 

$

 

 

 

 

 

 

 

 

 

8. plus, any noncash compensation in the form of Equity Interests or other
equity awards made to employees of Holdings and its Subsidiaries in any fiscal
year of Holdings and its Subsidiaries ending December 31, 2010 and December 31,
2011 in an aggregate amount not to exceed $10,000,000 in the fiscal years of
Holdings and its Subsidiaries (in each case of or by Holdings and its
Subsidiaries for such Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

9. plus, any losses attributable to the Jamaican JV, the Logstar JV, the
Panamerican Joint Venture, or the ST Logistics Joint Venture (in each case of or
by Holdings and its Subsidiaries for such Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

10. Total Items B(1) through B(9) above:

 

$

 

 

 

 

 

 

 

 

 

To the extent included in calculating Consolidated Net Income (and without
duplication):

 

 

 

 

 

 

 

 

 

 

 

11. minus, the following to the extent included in calculating such Consolidated
Net Income, all net gains from the sale of vessels as permitted under this Loan
Agreement (in each case of or by Holdings and its Subsidiaries for such
Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

12. minus, any gains or income attributable to the Jamaican JV, the Logstar JV,
the Panamerican Joint Venture, or the ST Logistics Joint Venture (in each case
of or by Holdings and its Subsidiaries for such Measurement Period):

 

$

 

 

 

 

 

 

 

 

 

13. Total Items B(11) through B(12) above:

 

$

 

 

 

 

115

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

 

14. Total Item B(10) less Item B(13) above(2):

 

$

 

 

 

 

 

 

 

15. minus, all principal, interest or other payments in respect of any debt
arrangements with respect to Capitalized Leases and the Laguna Belle and
Seminole Princess Leases existing during such Measurement Period:

 

$

 

 

 

 

 

 

 

16. Total Item B(14) less Item B(15) above:

 

$

 

 

 

 

 

 

 

C. The Ratio of Item A(10) to Item B(16):

 

 

 

 

 

 

 

 

 

D. Shall not be greater than the ratio set forth in the table below opposite the
applicable Measurement Period:

 

 

 

 

 

 

Four Fiscal Quarters Ending

 

Maximum Consolidated
Leverage Ratio

 

 

March 31, 2011 - December 31, 2011

 

4.00 to 1.00

 

 

March 31, 2012 - December 31, 2012

 

3.65 to 1.00

 

 

March 31, 2013 - June 30, 2013

 

3.20 to 1.00

 

 

September 30, 2013 - December 31, 2013

 

2.75 to 1.00

 

 

March 31, 2014 and thereafter

 

2.50 to 1.00

 

E

 

 

E. Compliance

 

Yes

 

No

 

3. Minimum Consolidated Interest Charges Coverage Ratio (Schedule 8, item (c) of
the Loan Agreement) for the          fiscal quarters ending
                                         .

 

 

 

 

 

A. Consolidated EBITDA of Holdings and its Subsidiaries (please see Item
2(B)(15) above):

 

$

 

 

 

 

 

 

 

B. Consolidated Interest Charges(3) for the most recently completed Measurement
Period(4):

 

$

 

 

 

 

 

 

 

To the extent included in calculating Consolidated Interest Charges:

 

 

 

 

 

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

(2) To the extent characterized as interest on the income statements of Holdings
and its Subsidiaries for such Measurement Period pursuant to FASB Interpretation
No. 133 — Accounting for Derivative Instruments and Hedging Activities
(June 1998), noncash adjustments in connection with any interest rate Swap
Contract entered into by Holdings or any of its Subsidiaries shall be excluded.

 

(3) Please provide an itemization of interest expenses to be excluded relating
to (x) Permitted New Vessel Construction Indebtedness and (y) PIK Interest (as
defined in the Bank of America Facilities) and (z) non-cash charges associated
with the write-off of deferred financing fees and expenses incurred in
connection with the transactions contemplated by the TBS Shipping - Global Bank
Restructuring Term Sheet referred to in the Loan Agreement.

 

(4) To the extent characterized as interest on the income statements of Holdings
and its Subsidiaries for such Measurement Period pursuant to FASB Interpretation
No. 133 — Accounting for Derivative Instruments and Hedging Activities
(June 1998), noncash adjustments in connection with any interest rate Swap
Contract entered into by Holdings or any of its Subsidiaries shall be excluded.

 

116

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

 

C. Minus, the interest portion of rent expense in respect of any Excluded
Arrangements existing during such Measurement Period:

 

$

 

 

 

D. Total Item B less Item C above:

 

$

 

 

 

E. Ratio of Item A to Item D above:

 

 

 

 

 

F.  Shall not be less than the ratio set forth in the table below opposite the
applicable Measurement Period:

 

 

 

 

Four Consecutive Fiscal Quarters Ending:

 

Minimum Consolidated
Interest Charges Coverage
Ratio:

 

 

March 31, 2011 - December 31, 2011

 

3.35 to 1.00

 

 

March 31, 2012 - December 31, 2012

 

3.70 to 1.00

 

 

March 31, 2013 - June 30, 2013

 

4.30 to 1.00

 

 

September 30, 2013 - December 31, 2013

 

4.75 to 1.00

 

 

March 31, 2014 and thereafter

 

5.20 to 1.00

 

 

G.  Compliance:

 

Yes

 

No

 

117

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

 

 

BANK USE ONLY

 

Received by:

 

 

 

 

Date:

 

 

 

 

Reviewed by:

 

 

 

 

Date:

 

 

 

 

Financial Compliance Status:

 

YES/NO

 

 

 

 

 

 

Date:

 

 

 

 

 

 

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

 

EXECUTION PAGES

 

[Intentionally omitted]

 

2

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

 

APPENDIX 2

 

FORM OF CORPORATE GUARANTEE SUPPLEMENTS

 

1

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

 

CORPORATE GUARANTEE SUPPLEMENT

 

To:                              The Royal Bank of Scotland plc

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

in its capacity as Security Trustee

 

January 2011

 

Dear Sirs

 

We refer to:

 

(i)                                     the loan agreement dated 29 March 2007
as amended and supplemented by a side letter dated 24 July 2007, a supplemental
letter agreement dated 26 March 2008, a supplemental agreement dated 27
March 2009, further side letters each dated 27 May 2009, 3 September 2009 and 31
December 2009 respectively, a further supplemental agreement dated 7
January 2010, further side letters each dated 28 February 2010 and 31 March 2010
respectively, an amending and restating agreement dated 6 May 2010 and a side
letter dated 16 August 2010 as further amended and supplemented by letter
agreements dated 30 September 2010, 12 November 2010 and 23 December 2010 (the
“Loan Agreement”) and each made (inter alia) between Argyle Maritime Corp.,
Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp.,
McHenry Maritime Corp. and Sunswyck Maritime Corp., as joint and several
borrowers (the “Borrowers”), the banks and financial institutions listed therein
as lenders (the “Lenders”), The Royal Bank of Scotland plc as mandated lead
arranger, bookrunner, agent, security trustee and swap bank pursuant to which
the Lenders have made available to the Borrowers a loan facility of One hundred
and fifty million Dollars (US$150,000,000) upon the terms and conditions
specified therein;

 

(ii)                                  the master agreement (on the 1992 ISDA
Master Agreement (Multicurrency-Crossborder) form) dated 29 March 2007 (the
“Master Agreement”) made between the Borrowers and The Royal Bank of Scotland
plc as swap bank pursuant to which the Borrowers entered into or may enter into
certain Transactions (as such term is defined in the said Master Agreement)
pursuant to separate Confirmations (as such term is defined in the said Master
Agreement) upon the terms and conditions therein contained;

 

(iii)                               the Guarantee dated 7 January 2010 as
amended and supplemented from time to time (the “Corporate Guarantee”) executed
in your favour in your capacity as security trustee whereby we have guaranteed
all the obligations of the Borrowers under the Loan Agreement and the Master
Agreement.

 

Words and expressions defined in the Loan Agreement shall have the same meanings
when used herein.

 

We have been advised by the Borrowers that the Creditor Parties have agreed to
(i) amend certain provisions of the Loan Agreement and (ii) to certain
consequential amendments to the Loan Agreement, the Master Agreement and the
other Finance Documents subject to the terms and conditions contained in an
amending and restating agreement substantially in the form annexed hereto (the
“Amending and Restating Agreement”).

 

In consideration of US$1 and other good and valuable consideration provided by
the Security Trustee (the receipt and sufficiency of which we hereby
acknowledge) we hereby agree to the amendments to the Loan Agreement, the Master
Agreement and the Finance Documents as contained in the Amending and Restating
Agreement and agree that the Corporate Guarantee

 

2

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

 

shall apply to all the obligations of the Borrowers under the Amending and
Restating Agreement as if the Amending and Restating Agreement were referred to
in the Corporate Guarantee (in addition to the Loan Agreement, the Master
Agreement and the Finance Documents) and that all references to the Loan
Agreement, the Master Agreement and the Finance Documents in the Corporate
Guarantee and the other Finance Documents to which we are party shall be read
and construed as references to the Loan Agreement, the Master Agreement and the
Finance Documents as supplemented and amended by the Amending and Restating
Agreement.  Save as provided herein the Corporate Guarantee shall remain in full
force and effect.

 

The provisions of Clause 18 of the Corporate Guarantee shall apply to this
letter.

 

Yours faithfully

 

 

TBS INTERNATIONAL PLC

 

3

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

 

CORPORATE GUARANTEE SUPPLEMENT

 

To:                              The Royal Bank of Scotland plc

Shipping Business Centre

5-10 Great Tower Street

London EC3P 3HX

 

in its capacity as Security Trustee

 

January 2011

 

Dear Sirs

 

We refer to:

 

(iv)                              the loan agreement dated 29 March 2007 as
amended and supplemented by a side letter dated 24 July 2007, a supplemental
letter agreement dated 26 March 2008, a supplemental agreement dated 27
March 2009, further side letters each dated 27 May 2009, 3 September 2009 and 31
December 2009 respectively, a further supplemental agreement dated 7
January 2010, further side letters each dated 28 February 2010 and 31 March 2010
respectively, an amending and restating agreement dated 6 May 2010 and a side
letter dated 16 August 2010 as further amended and supplemented by letter
agreements dated 30 September 2010, 12 November 2010 and 23 December 2010 (the
“Loan Agreement”) and each made (inter alia) between Argyle Maritime Corp.,
Caton Maritime Corp., Dorchester Maritime Corp., Longwoods Maritime Corp.,
McHenry Maritime Corp. and Sunswyck Maritime Corp., as joint and several
borrowers (the “Borrowers”), the banks and financial institutions listed therein
as lenders (the “Lenders”), The Royal Bank of Scotland plc as mandated lead
arranger, bookrunner, agent, security trustee and swap bank pursuant to which
the Lenders have made available to the Borrowers a loan facility of One hundred
and fifty million Dollars (US$150,000,000) upon the terms and conditions
specified therein;

 

(v)                                 the master agreement (on the 1992 ISDA
Master Agreement (Multicurrency-Crossborder) form) dated 29 March 2007 (the
“Master Agreement”) made between the Borrowers and The Royal Bank of Scotland
plc as swap bank pursuant to which the Borrowers entered into or may enter into
certain Transactions (as such term is defined in the said Master Agreement)
pursuant to separate Confirmations (as such term is defined in the said Master
Agreement) upon the terms and conditions therein contained;

 

(vi)                              the Guarantee dated 29 March 2007 as amended
and supplemented from time to time (the “Corporate Guarantee”) executed in your
favour in your capacity as security trustee whereby we have guaranteed all the
obligations of the Borrowers under the Loan Agreement and the Master Agreement.

 

Words and expressions defined in the Loan Agreement shall have the same meanings
when used herein.

 

We have been advised by the Borrowers that the Creditor Parties have agreed to
(i) amend certain provisions of the Loan Agreement and (ii) to certain
consequential amendments to the Loan Agreement, the Master Agreement and the
other Finance Documents subject to the terms and conditions contained in an
amending and restating agreement substantially in the form annexed hereto (the
“Amending and Restating Agreement”).

 

In consideration of US$1 and other good and valuable consideration provided by
the Security Trustee (the receipt and sufficiency of which we hereby
acknowledge) we hereby agree to the amendments to the Loan Agreement, the Master
Agreement and the Finance Documents as contained in the Amending and Restating
Agreement and agree that the Corporate Guarantee

 

4

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

 

shall apply to all the obligations of the Borrowers under the Amending and
Restating Agreement as if the Amending and Restating Agreement were referred to
in the Corporate Guarantee (in addition to the Loan Agreement, the Master
Agreement and the Finance Documents) and that all references to the Loan
Agreement, the Master Agreement and the Finance Documents in the Corporate
Guarantee and the other Finance Documents to which we are party shall be read
and construed as references to the Loan Agreement, the Master Agreement and the
Finance Documents as supplemented and amended by the Amending and Restating
Agreement.  Save as provided herein the Corporate Guarantee shall remain in full
force and effect.

 

The provisions of Clause 18 of the Corporate Guarantee shall apply to this
letter.

 

Yours faithfully

 

 

TBS INTERNATIONAL LIMITED

 

5

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

 

APPENDIX 3

 

FORM OF MORTGAGE ADDENDUM

 

6

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

 

FORM OF PANAMANIAN MORTGAGE ADDENDUM

 

THIS [FIRST][SECOND][THIRD] ADDENDUM is made the [·] day of [·] 2011 between THE
ROYAL BANK OF SCOTLAND PLC, a company incorporated in Scotland having its
registered office at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting
through its office at the Shipping Business Centre at 5-10 Great Tower Street,
London EC3P 3HX, (hereinafter called the “Mortgagee”) and
[ARGYLE][CATON][DORCHESTER][McHENRY] MARITIME CORP. (the “Mortgagor”) being a
corporation organised and existing under the laws of the Marshall Islands and
having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960.

 

THIS [FIRST][SECOND][THIRD] ADDENDUM IS SUPPLEMENTAL to a First Preferred Ship
Mortgage dated [23 September 2009 as amended by a first addendum dated 26
March 2010 and a second addendum dated 6 May 2010] [26 March 2010 as amended by
a first addendum dated 6 May 2010][dated 2 September 2010][dated 5 January 2011]
(the “Mortgage”) by which the Mortgagor mortgaged to and in favour of the
Mortgagee on the terms therein contained the vessel [“ROCKAWAY BELLE”] [“DAKOTA
PRINCESS”] [“MONTAUK MAIDEN”] [“OMAHA BELLE”] of the following tonnages and
dimensions:

 

Length:

 

[175.79] [175.80] [175.81] metres

Breadth:

 

28.39 metres

Depth:

 

15.29 metres

Gross tonnage:

 

[22,946] [22,998]

Net tonnage:

 

[12,316] [12,317] [12,308] [12,319]

 

registered in the name of the Mortgagor under the laws and flag of the Republic
of Panama having International Call Sign [3FPZ3][3EVA4][3EVB2][3FKD5] and more
particularly described in the Patente of Navigation
[40838-09][39914-PEXT][40516-PEXT][40962-PEXT] (the “Ship”).

 

WHEREAS

 

(A)                            The Mortgagor is the registered and (save for the
Mortgage) unencumbered owner of the Ship.

 

(B)                              By, and subject to the terms and conditions of,
a Loan Agreement dated 29 March 2007 as amended and supplemented by a side
letter dated 24 July 2007, a supplemental letter agreement dated 26 March 2008,
a supplemental agreement dated 27 March 2009, further side letters each dated 27
May 2009, 3 September 2009 and 31 December 2009 respectively, a further
supplemental agreement dated 7 January 2010, further side letters each dated 28
February 2010 and 31 March 2010 respectively, an amending and restating
agreement dated 6 May 2010 and a side letter dated 16 August 2010 and as further
supplemented and/or amended by letter agreements dated 30 September 2010, 12
November 2010 and 23 December 2010 each made (inter alia) between (i) the
Mortgagor, [Argyle] [Caton] [Dorchester] [McHenry] Maritime Corp., [Argyle]
[Caton] [Dorchester] [McHenry] Maritime Corp., Longwoods Maritime Corp.,
[Argyle] [Caton] [Dorchester] [McHenry] Maritime Corp. and Sunswyck Maritime
Corp., each a corporation organised and existing under the laws of the Marshall
Islands and having its registered office at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as joint and several
borrowers (the “Borrowers”) (ii) the banks and financial institutions listed in
schedule 1 as lenders (the “Lenders”) (iii) the Mortgagee as mandated lead
arranger (the “Mandated Lead Arranger”), (iv) me Mortgagee as agent (the
“Agent”), (v) the Mortgagee as security trustee (the “Security Trustee”),
(vi) the Mortgagee as swap bank (the “Swap Bank”) and the Mortgagee as
bookrunner (the “Bookrunner”), the Lenders agreed, amongst other things, to make
available to the

 

7

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

 

Borrowers a term loan facility in an amount of One hundred and fifty million
United States Dollars (US$150,000,000).

 

(C)                                By an ISDA master agreement dated 29
March 2007 (the “Master Agreement”) made between the Borrowers and the Swap
Bank, the Borrowers have entered into or will enter into certain Transactions
(as such term is defined in the said Master Agreement) pursuant to separate
Confirmations (as such term is defined in the said Master Agreement).

 

(D)                               As security for its obligations under the Loan
Agreement and the Master Agreement, the Mortgagor has granted and did execute
and register the Mortgage in favour of the Mortgagee and the Mortgage appears
registered at the Public Registry Office, Microfilm (Mercantile) Section, at
Microjacket [N-33447][N-34102][N-34665], [·] Document Number
[1689768][1748208][1836252][·] as of [23 September 2009 as amended on 26
March 2010 and on 6 May 2010][26 March 2010 as amended on 6 May 2010][2
September 20l0][5 January 2011].

 

(E)                                 The Mortgagor has requested and the Creditor
Parties have agreed, subject to and upon the terms and conditions contained in
an agreement dated [·] 2011 amending and restating, inter alia, the Loan
Agreement (the “Amending and Restating Agreement”, the form of which is attached
hereto marked “A” and made a part hereof) to make certain amendments to the
terms and conditions of the Loan Agreement and the Finance Documents.

 

(F)                                 This Addendum is entered into pursuant to
the Amending and Restating Agreement referred to at (E) above and in
consideration of and as a condition, inter alia, of the agreement of the
Creditor Parties at the request of, inter alia, the Mortgagor contained in the
Amending and Restating Agreement.

 

NOW IT IS HEREBY AGREED as follows:-

 

1                                          With effect as and from the date
hereof the Mortgage shall be and is hereby amended as follows:

 

(a)                                  by construing all references therein to the
“Loan Agreement” and as references to the Loan Agreement as amended and restated
by the Amending and Restating Agreement; and

 

(b)                                 by construing all references therein to
“this Mortgage” as references to the Mortgage as supplemented and amended by
this Addendum.

 

2                                          Save for the amendments contained in
Clause 1 above and save for such further amendments and modifications as may be
required in order to make the Mortgage consistent therewith, the Mortgage shall
remain in full force and effect and shall continue to stand as security for the
obligations thereby secured as further supplemented and amended by this
Addendum.

 

3                                          The Mortgagor hereby undertakes at
its own expense to execute, sign, perfect and do and (if relevant) register
every such further assurance, document, act or thing desirable for the purposes
of perfecting the security constituted or intended to be constituted by the
Mortgage as amended and supplemented by this Addendum.

 

IN WITNESS WHEREOF the Mortgagor has caused this Addendum to be duly executed
the day and year first above written.

 

 

SIGNED as a DEED

)

 

on behalf of

)

 

 

8

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

 

[ARGYLE][CATON] [DORCHESTER]

)

 

[McHENRY] MARITIME CORP.

)

 

by

)

 

its duly authorised attorney-in-fact

)

 

in the presence of:

)

 

 

ACCEPTANCE OF MORTGAGE

 

THE ROYAL BANK OF SCOTLAND PLC of 36 St. Andrew Square, Edinburgh EH2 2YB,
Scotland acting through its office at the Shipping Business Centre at 5-10 Great
Tower Street, London EC3P 3HX, does hereby accept the annexed
[First][Second][Third] Addendum to a First Preferred Mortgage executed in its
favour by [ARGYLE][CATON][DORCHESTER][McHENRY] MARITIME CORP. a Marshall Islands
corporation dated the [·] day of [·] 2011 covering the Panamanian Ship
[“ROCKAWAY BELLE”][“DAKOTA PRINCESS”][“MONTAUK MAIDEN”][“OMAHA BELLE”] and does
hereby accept the said Mortgage Addendum in all respects and agree to all terms
and conditions of the said Mortgage Addendum.

 

IN WITNESS whereof THE ROYAL BANK OF SCOTLAND PLC has caused this acceptance of
Mortgage to be executed this [·] day of [·] 2011.

 

 

SIGNED by

)

 

and by

)

 

duly authorised for and on

)

 

behalf of

)

 

THE ROYAL BANK OF SCOTLAND PLC

)

 

in the presence of:

)

 

 

9

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

 

APPENDIX 4

 

JOINT VENTURE INVESTMENT SCHEDULES

 

10

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

 

TBS International PLC

January 2011 Restructuring

Permitted Investments

 

1.                                 Log- Star Brazil $3.5 Million

 

·                  Funds to be used for outstanding Accounts payable MACAU
repairs, funding January Operating Loss.

 

·                  Funds will be incremented by $1.5 million from our partner
(70% TBS 30% Log-In).

 

·                  To be disbursed as necessary in $1 million increments during
February 2011.

 

·                  Funds from TBS and our partner will initially be classified
as a loan but may subsequently be re-characterized as equity.

 

2.                                 Jamaica Mine Joint Venture $3.0 million for
50% ownership in the mine

 

·                  Funds to be used for various repairs to sheds, conveyor belts
and crushing plant upgrades.

 

·                  Disbursements to the Joint Venture to be made at the rate of
$1 million per year in 2011, 2012 and 2013.

 

11

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

 

Roymar - 2011 Drydock Cost Report - Updated as of

Updated on 12/21/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dock Yard Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual/Budget/Current Estimate

 

 

 

 

 

Steel Budget

 

Dock Yard
Cost

 

Dock Yard

 

All Other

 

 

 

Original
Budget

 

NO

 

Vessel Name

 

Fleet

 

Staff
Acct

 

Drop Dead
Drydock Date

 

Start Date

 

End Date

 

Days

 

Upcoming
DD

 

Amort
mos

 

Quantity
(kg)

 

$/kg

 

Cost

 

Excluding
Steel

 

Cost
Summary

 

Cost
Summary

 

Savings

 

Cost
Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

ARAPAHO BELLE

 

C

 

TW

 

1/16/2011

 

1/8/2011

 

1/28/2011

 

20

 

11/15/12

 

22

 

10,000

 

1.85

 

18,500

 

329,000

 

347,500

 

415,100

 

(69,416

)

693,184

 

2

 

LA JOLLA BELLE

 

D

 

EL

 

3/10/2011

 

1/8/2011

 

2/12/2011

 

35

 

10/1/12

 

20

 

200,000

 

2.00

 

400,000

 

627,000

 

1,027,000

 

443,000

 

(115,581

)

1,354,419

 

3

 

WICHITA BELLE

 

B

 

MCW

 

3/26/2011

 

3/15/2011

 

4/9/2011

 

25

 

1/11/14

 

33

 

50,000

 

2.00

 

100,000

 

427,500

 

527,500

 

493,000

 

(80,239

)

940,261

 

4

 

ONEIDA PRINCESS

 

B

 

MPB

 

3/26/2011

 

3/23/2011

 

4/13/2011

 

21

 

1/30/13

 

22

 

30,000

 

2.00

 

60,000

 

351,500

 

411,500

 

423,000

 

(65,614

)

768,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter - Sub Total

 

 

 

 

 

 

 

 

 

 

 

101

 

 

 

96

 

290,000

 

1.99

 

578,500

 

1,735,000

 

2,313,500

 

1,774,100

 

(330,849

)

3,756,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

ALABAMA BELLE

 

B

 

JC

 

6/26/2011

 

4/1/2011

 

5/1/2011

 

30

 

3/24/14

 

35

 

125,000

 

2.00

 

250,000

 

484,500

 

734,500

 

460,000

 

(93,920

)

1,100,580

 

6

 

MOHAWK PRINCESS

 

A

 

CAO

 

3/30/2011

 

3/15/2011

 

4/19/2011

 

35

 

3/26/14

 

35

 

350,000

 

2.00

 

700,000

 

560,000

 

1,260,000

 

430,000

 

(132,879

)

1,557,121

 

7

 

TAMOYO MAIDEN

 

C

 

TW

 

8/4/2011

 

5/10/2011

 

6/4/2011

 

25

 

10/21/14

 

41

 

50,000

 

2.00

 

100,000

 

608,000

 

708,000

 

400,000

 

(87,118

)

1,020,882

 

8

 

AZTEC MAIDEN

 

D

 

MPB

 

1/5/2011

 

6/15/2011

 

7/20/2011

 

35

 

10/5/13

 

27

 

175,000

 

2.00

 

350,000

 

608,000

 

958,000

 

433,000

 

(109,370

)

1,281,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter - Sub Total

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

137

 

700,000

 

2.00

 

1,400,000

 

2,260,500

 

3,660,500

 

1,723,000

 

(423,287

)

4,960,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

INCA MAIDEN

 

C

 

MPB

 

8/10/2011

 

8/10/2011

 

9/4/2011

 

25

 

4/24/14

 

32

 

50,000

 

2.00

 

100,000

 

608,500

 

708,500

 

400,000

 

(87,158

)

1,021,342

 

10

 

ZUNI PRINCESS

 

A

 

DG

 

10/27/2011

 

7/27/2011

 

8/21/2011

 

25

 

10/27/13

 

26

 

150,000

 

2.00

 

300,000

 

515,000

 

815,000

 

450,000

 

(99,463

)

1,165,537

 

11

 

OTTAWA PRINCESS

 

C

 

EL

 

2/20/2011

 

8/2/2011

 

9/6/2011

 

35

 

8/20/13

 

23

 

200,000

 

2.00

 

400,000

 

631,750

 

1,031,750

 

400,000

 

(112,574

)

1,319,176

 

12

 

CARIBE MAIDEN

 

B

 

MCW

 

11/11/2011

 

8/11/2011

 

9/10/2011

 

30

 

9/11/13

 

24

 

80,000

 

2.00

 

160,000

 

484,500

 

644,500

 

464,000

 

(87,158

)

1,021,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter - Sub Total

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

105

 

480,000

 

2.00

 

960,000

 

2,239,750

 

3,199,750

 

1,714,000

 

(386,352

)

4,527,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

HOPI PRINCESS

 

D

 

MCW

 

10/15/2011

 

10/15/2011

 

11/4/2011

 

20

 

7/15/13

 

20

 

125,000

 

2.00

 

250,000

 

636,500

 

886,500

 

435,000

 

(103,905

)

1,217,595

 

14

 

MAORI MAIDEN

 

D

 

CAO

 

1/24/2012

 

10/24/2011

 

11/18/2011

 

25

 

4/24/14

 

29

 

50000

 

2.00

 

100,000

 

631,750

 

731,750

 

425,000

 

(90,951

)

1,065,799

 

15

 

MANHATTAN PRINCESS

 

B

 

MCW

 

12/30/2011

 

10/1/2011

 

11/6/2011

 

36

 

10/1/14

 

35

 

225,000

 

2.00

 

450,000

 

498,750

 

948,750

 

463,000

 

(111,001

)

1,300,749

 

16

 

NANTICOKE BELLE

 

B

 

JC

 

2/11/2012

 

11/1/2011

 

11/28/2011

 

27

 

1/20/14

 

26

 

50,000

 

2.00

 

100,000

 

427,500

 

527,500

 

478,000

 

(79,059

)

926,441

 

17

 

SEMINOLE PRINCESS

 

A

 

DG

 

1/30/2012

 

10/30/2011

 

11/19/2011

 

20

 

11/19/14

 

36

 

20,000

 

2.00

 

40,000

 

580,000

 

620,000

 

450,000

 

(84,131

)

985,869

 

18

 

TAYRONA PRINCESS

 

D

 

TW

 

3/25/2012

 

11/25/2011

 

12/25/2011

 

30

 

3/1/14

 

26

 

130,000

 

2.00

 

260,000

 

612,750

 

872,750

 

405,000

 

(100,465

)

1,177,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter - Sub Total

 

 

 

 

 

 

 

 

 

 

 

158

 

 

 

172

 

600,000

 

2.00

 

1,200,000

 

3,387,250

 

4,587,250

 

2,656,000

 

(569,513

)

6,673,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total

 

 

 

 

 

 

 

 

 

 

 

499

 

 

 

511

 

2,070,000

 

2.00

 

4,138,500

 

9,622,500

 

13,761,000

 

7,867,100

 

(1,710,000

)

19,918,100

 

 

Fleet A = Ajoy, Fleet B = Tarun, Fleet C = PK and Fleet D = Calvern

 

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