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**USD****138,100,000** **reducing revolving and term loan facilities Agreement** for **OBO Holdings Ltd.** **BHOBO One Ltd.**** ** **BHOBO Two Ltd.** **BHOBO Three Ltd.** **RMJ OBO Shipping Ltd.** **Sagamore Shipping Ltd.** as Borrowers provided by **The Financial Institutions** **listed in Schedule 1** as Lenders with **Nordea Bank Finland Plc****.**** ** as Swap Bank and **Nordea Bank Norge ASA** as Agent and **Nordea Bank Norge ASA** as Mandated Lead Arranger      **Dated****October 2005**     **TABLE OF CONTENTS**  1DEFINITIONS AND INTERPRETATION 2THE FACILITY 3PURPOSE 4CONDITIONS PRECEDENT 5DRAWDOWN 6REPAYMENT 7PREPAYMENT AND CANCELLATION 8INTEREST 9INTEREST PERIODS 10CHANGES TO THE CALCULATION OF INTEREST 11FEES 12TAX GROSS-UP AND INDEMNITIES 13INCREASED COSTS 14OTHER INDEMNITIES 15MITIGATION BY THE LENDERS 16COSTS AND EXPENSES 17SECURITY 18REPRESENTATIONS AND WARRANTIES 19INFORMATION UNDERTAKINGS 20FINANCIAL COVENANTS 21GENERAL UNDERTAKINGS 22FIRST VESSEL COVENANTS 23EVENTS OF DEFAULT 24CHANGES TO THE PARTIES 25ROLE OF THE AGENT AND THE ARRANGER 26SHARING AMONG THE FINANCE PARTIES 27PAYMENT MECHANICS 28SET-OFF 29NOTICES 30CALCULATIONS 31MISCELLANEOUS 32GOVERNING LAW AND ENFORCEMENT  **SCHEDULES** 1 Lenders and Commitments 2 Conditions Precedent 3 Form of Drawdown Notice 4 Form of Selection Notice 5 Form of Compliance Certificate 6 Form of Transfer Certificate 7 Form of Assignment Agreement 8 Form of Guarantee  9 Prepayment Allocation 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **THIS REVOLVING REDUCING TERM LOAN FACILITIES AGREEMENT**is dated October 2005 and made between: (1)**OBO Holdings Ltd.**, of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960;  **BHOBO One Ltd.**, of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960;   **BHOBO Two Ltd**., of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960; and  **BHOBO Three Ltd**., of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960,  **RMJ OBO Shipping Ltd.**, of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960; and  **Sagamore Shipping Ltd.**, of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960, as joint and several borrowers (the “**Borrowers**”); (2) **The banks and financial institutions listed in****Schedule 1**, as original lenders (together, the “**Lenders**”); (3) **Nordea Bank Finland Plc.** of TO1, FIN-00020 Nordea, Helsinki, Finland, as swap bank, (the “**Swap Bank**”);  (4) **Nordea Bank Norge ASA** of Middelthunsgate 17, N-0368 Oslo, Norway, organisation number 911 044 110, as facility agent (the “**Agent**”); and (5) **Nordea Bank Norge ASA** of Middelthunsgate 17, N-0368 Oslo, Norway, organisation number 911 044 110, as mandated lead arranger (the “**Arranger**”) and underwriter (the “**Underwriter**”). **IT IS AGREED** as follows:  **1  ****DEFINITIONS AND INTERPRETATION** **1.1  ****Definitions** In this Agreement, unless the context otherwise requires: “**Account Charge**” means the account charge collateral to this Agreement for the first priority charge over the Earnings Accounts to be made between the Borrowers and the Agent (on behalf of the Finance Parties and the Swap Bank) as security for the Borrowers’ obligations under the Finance Documents and any Swap Agreement, in form and acceptance acceptable to the Agent. “**Agreement**” means this revolving reducing facilities agreement, as it may be amended, supplemented and varied from time to time, including its Schedules and any Transfer Certificate. “**Applicable** **Margin**” means: a)  in respect of Facility A: one per cent (1.00%) per annum; and b)  in respect of Facility B: two point twenty-five per cent (2.25%) per annum. “**Assignment Agreement**” means the assignment agreement collateral to this Agreement for the first priority assignment of the Earnings, the Insurances, certain bank accounts with the Agent and the Charter Guarantees to be made between the Borrowers and the Agent (on behalf of the Finance Parties and the Swap Bank) as security for the Borrowers’ obligations under the Finance Documents and any Swap Agreement, substantially in the form set out in Schedule 7 (Form of Assignment Agreement) or such other form as is acceptable to the Agent. “**Availability Period**” means: a)  in respect of Facility A, the period from and including the date of this Agreement to and including the day falling one (1) month prior to the Final Maturity Date, however so that the full amount under Facility A shall have been drawn within 15 December 2005; and b)  in respect of Facility B, the period from and including the date of this Agreement up to and including 31 December 2005. “**Available Commitment**” means in relation to a Facility, a Lender’s Commitment less: a)  the amount of its participation in any outstanding Loans under that Facility; and b)  in relation to any proposed Drawdown, the amount of its participation in any other Loans that are due to be made under that Facility on or before the proposed Drawdown Date, other than, in relation to any proposed Drawdown under Facility A, that Lender’s participation in any Facility A Loans that are due to be repaid or repaid on or before the proposed Drawdown Date. “**BHOBO One**” means BHOBO One Ltd. of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960. “**BHOBO Two**” means BHOBO Two Ltd. of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960. “**BHOBO Three**” means BHOBO Three Ltd. of Trust Company Complex, Ajeltake Island, Majuro, Marshall Islands, MH96960. “**Break Costs**” means the amount (if any) by which: a)  the interest which a Lender should have received for the period from the date of receipt of all or part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of a Loan or Unpaid Sum, had the principal amount or Unpaid Sum been paid on the last day of that Interest Period; exceeds b)  the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the relevant interbank market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. “**Business Day**” means a day (other than a Saturday or Sunday) on which banks are open for business in Oslo, New York and London (or any other relevant place of payment under Clause 27 (Payment mechanics).  “**Charter Guarantee**” means each of the guarantees granted by the relevant Charter Guarantor in favour of the relevant Borrower as security for the due performance of all of the relevant Charterers’ obligations under the relevant Charterparty. “**Charter Guarantor**” means: a)  in respect of (i) MV “Rip Hudner”, (ii) MV “Bonnie Smithwick” and (iii) MV “Searose G”, Sempra Energy of 101 Ash Street, San Diego, U.S.A.; b)  in respect of MV “Roger M. Jones” Clearwater Advisors Corporation of Tortola, BVI; and c) in respect of MT “Challenge Express” (tbr “Sagamore”) ENOC Supply & Trading LLC of Dubai, however only to the extent that the ENOC Supply & Trading LLC has nominated another company as charterers under the Charterparty for MT “Challenge Express” (tbr “Sagamore”). “**Charterers**”** **means: a)  in respect of each of (i) MV “Rip Hudner”, MV “Bonnie Smithwick” and MV “Searose G”, TTMI Sarl. of Geneva, Switzerland; b)  in respect of MV “Roger M. Jones”, Clearlake Shipping Ltd. of Tortola, BVI; and c)  in respect of MT “Challenge Express” (tbr “Sagamore”) ENOC Supply & Trading LLC of Dubai. “**Charterparty**” means: a)  in respect of each of MV “Rip Hudner” and MV “Bonnie Smithwick”, the time charterparties dated 4 February 2005, respectively, made between BHOBO Two and BHOBO One (as owners), respectively, and TTMI Sarl. (as charterers), for a period of five (5) years at a net daily charter rate of not less than USD 26,600 during year 1, USD 24,600 during year 2, USD 22,600 during year 4 and USD 20,600 during year 5; b)  in respect of MV “Searose G”, the time charterparty dated 4 February 2005 made between BHOBO Three (as owner) and TTMI Sarl. (as charterers), for a charter period of five (5) years at a net daily charter rate of not less than USD 26,000 during year 1, USD 24,000 during year 2, USD 23,000 during year 3, USD 22,000 during year 4 and USD 20,000 during year 5 and with a 35.00% profit share in years 2 - 5; c)  in respect of MV “Roger M. Jones”, the time charterparty made or to be made between RMJ OBO Shipping Ltd. (as owner) and Clearlake Shipping Ltd. (as charterers), for a period of three (3) years commencing on the relevant Drawdown Date, at a daily charter rate of not less than USD 23,500 (less 3.75% commission); and d)  in respect of MV “Challenge Express” (tbr “Sagamore”), the time charterparty made or to be made between Sagamore Shipping Ltd. (as owner) and ENOC Supply & Trading LLC (as charterers), for a charter period of three (3) years commencing at the relevant Drawdown Date, at a daily charter rate of not less than USD 23,500 (less 3.75% commission), in any event, in form and substance as approved by the Agent (on behalf of the Finance Parties). “**Charterparty Assignment**” means each of the deeds of assignment collateral to this Agreement for the first priority assignments of the Charterparties to be made between the Borrowers and the Agent (on behalf of the Finance Parties and the Swap Bank) as security for the Borrowers’ obligations under the Finance Documents and any Swap Agreement(s), in form and substance as approved by the Agent (on behalf of the Finance Parties and the Swap Bank). “**Commercial Management Agreement**” means the agreement made between the Commercial Manager and the Guarantor (and all of its Subsidiaries) for the management of the Guarantor (and its Subsidiaries, hereunder (but not limited to) the Borrowers and the First Vessels.  “**Commercial Manager**” means B+H Management Ltd. of Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM JX, Bermuda. “**Commitment**” means: a)  in relation to a Lender, the amount set opposite its name under the heading “Commitments” in Schedule 1 (Lenders and Commitments) and the amount of any other Commitment transferred to it pursuant to Clause 24.2 (Assignments and transfers by the Lenders); and  b)  in relation to any New Lender, the amount of any Commitment transferred to it pursuant to Clause 24.2 (Assignments and transfers by the Lenders), to the extent not cancelled, reduced or transferred by it under this Agreement. “**Compliance Certificate**” means a certificate substantially in the form as set out in Schedule 5 (Form of Compliance Certificate). “**Co-ordination Agreement**” means the intercreditor agreement between Nordea Bank Norge ASA, New York Branch (in its capacity as security agent for the banks, financial institutions and persons listed on Schedule 1 to that certain restated and amended loan agreement as of 29 April 2004) and the Agent (in its capacity as facility agent under the Finance Documents), in form and substance satisfactory to the Agent (on behalf of the Finance Parties).  “**Default**” means an Event of Default or any event or circumstance specified in Clause 23 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.  “**DOC**” means in relation to the Technical Manager a valid document of compliance issued to the Technical Manager pursuant to paragraph 13.2 of the ISM Code. “**Drawdown**” means a utilisation under a Facility. “**Drawdown Date**” means the Business Day on which the Borrowers have requested a Drawdown pursuant to this Agreement or, as the context requires, the date on which the relevant Loan is actually made. “**Drawdown Notice**” means the notice substantially in the form set out in Schedule 3 (Form of Drawdown Notice). “**Earnings**” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to any of the Borrowers and which arise out of the use of or operation of any of the First Vessels, including (but not limited to): a)  all freight, hire and passage moneys payable to any of the Borrowers, including (without limitation) payments of any nature under any of the Charterparties or any other charter or agreement for the employment, use, possession, management and/or operation of any of the First Vessels; b)  any claim under any guarantees related to freight and hire payable to any of the Borrowers as a consequence of the operation of any of the First Vessels; c)  compensation payable to any of the Borrowers in the event of any requisition of any of the First Vessels or for the use of any of the First Vessels by any government authority or other competent authority; d)  remuneration for salvage, towage and other services performed by any of the First Vessels payable to any of the Borrowers; e)  demurrage and retention money receivable by any of the Borrowers in relation to any of the First Vessels;  f)  all moneys which are at any time payable under the Insurances in respect of loss of earnings;  g)  if and whenever any of the First Vessels is employed on terms whereby any moneys falling within litra a) to f) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to such First Vessel; and  h)  any other money whatsoever due or to become due to any of the Borrowers from third parties in relation to any of the First Vessels, or otherwise. “**Earnings Accounts**” means: a)  account no. 52861102 in the name of OBO Holdings Ltd. with Nordea Bank Finland plc, London Branch; b)  account no. 52862102 in the name of BHOBO One with the Nordea Bank Finland Plc. London Branch; c)  account no. 52863102 in the name of BHOBO Two with the Nordea Bank Finland Plc. London Branch;  d)  account no. 52864102 in the name of BHOBO Three with Nordea Bank Finland Plc. London Branch; e)  account no. 53182102 in the name of RMJ OBO Shipping Ltd. with Nordea Bank Finland Plc. London Branch; and f)  account no. 53272102 in the name of Sagamore Shipping Ltd. with Nordea Bank Finland Plc. London Branch,  or any such other accounts of any of the Borrowers with the Agent and/or Nordea Bank Finland Plc. London Branch to which all the Earnings shall be paid, pledged in favour of the Agent (on behalf of the Finance Parties and the Swap Bank) under the Assignment Agreement.  “**Environmental Approval**” means any permit, licence, consent, approval and other authorisations and the filing of any notification, report or assessment required under any Environmental Law for the operation of the First Vessels. “**Environmental Claim**” means any claim, proceeding or investigation by any party in respect of any Environmental Law or Environmental Approval. “**Environmental Law**” means any applicable law, regulation, convention or treaty in any jurisdiction in which any of the Borrowers and/or the Charterers conduct business which relates to the pollution or protection of the environment or to the carriage of material which is capable of polluting the environment. “**Event of Default**” means any event or circumstance specified as such in Clause 23 (Events of Default). “**Existing Credit Facility**” means the credit facility granted to OBO Holding Ltd., BHOBO One, BHOBO Two and BHOBO Three under the USD 102,000,000 term loan facility agreement dated 23 February 2005. “**Facility**” means Facility A or Facility B, as the context requires. “**Facility A**” means the reducing revolving credit facility made available under this Agreement as described in Clause 2.1a) (The Total Facilities). “**Facility A Commitment**” means: a)  in relation to a Lender, the amount set out opposite its name under the heading “Facility A Commitments” in Schedule 1 (Lenders and Commitments) and the amount of any other Facility A Commitment transferred to it under this Agreement; and b)  in relation to any New Lender, the amount of any Facility A Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. “**Facility A Loan**” means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan. “**Facility B**” means the term loan facility made available under this Agreement as described in Clause 2.1b) (The Total Facilities). “**Facility B Commitment**” means: a)  in relation to a Lender, the amount set out opposite its name under the heading “Facility B Commitments” in Schedule 1 (Lenders and Commitments) and the amount of any other Facility B Commitment transferred to it under this Agreement; and b)  in relation to any New Lender, the amount of any Facility B Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. “**Facility B Loan**” means a loan made or to be made under Facility B or the principal amount outstanding for the time being of that loan. “**Fee Letter**” means any letter or letters dated on or about the date of this Agreement between the Arranger and the Borrowers (or the Agent and the Borrowers) setting out any fees referred to in Clause 11 (Fees). “**Final Maturity Date**” means: a)  in respect of Facility A: 15 December 2010; and  b)  in respect of Facility B: the day falling four (4) years after the first Drawdown Date hereunder. “**Finance Documents**” means this Agreement, the Security Documents, the Co-ordination Agreement, any Fee Letters and any other document (whether creating a Security Interest or not) which is executed at any time by any of the Borrowers or any other person as security for, or to establish any form of subordination to the Finance Parties under this Agreement or any of the other documents referred to herein or therein. “**Finance Party**” means the Agent, the Arranger and the Lenders. “**Financial Indebtedness**” means any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent. “**Financial Securities Act**” means the Norwegian Act on Financial Securities of 26 March 2004 No. 17. “**First Deeds of Covenants**” means each of the first priority deeds of covenants collateral to the First Mortgages, to be entered into between the respective Borrower and the Agent (on behalf of the Finance Parties and the Swap Bank), in form and substance satisfactory to the Agent (on behalf of the Finance Parties and the Swap Bank). “**First** **Mortgages**” means each of the first priority mortgages to be executed and recorded by the relevant Borrowers against the First Vessels in the Bahamas Ship Registry in favour of the Agent (on behalf of the Finance Parties and the Swap Bank), in form and substance satisfactory to the Agent (on behalf of the Finance Parties and the Swap Bank). “**First Vessels**” means:  a)  M/V “Bonnie Smithwick”, a 83,000 dwt OBO tanker built in 1993, with IMO number 9050084, registered in the name of BHOBO One in the Bahamas Ship Register;  b)  M/V “Rip Hudner”, a 83,000 dwt OBO tanker built in 1994, with IMO number 9077111, registered in the name of BHOBO Two in the Bahamas Ship Register;  c)  M/V “Searose G”, a 83,000 dwt OBO tanker built in 1994, with IMO number 9050096, registered in the name of BHOBO Three in the Bahamas Ship Register; d)  M/V “Roger M. Jones”, a 75,000 dwt OBO tanker built in 1992, with IMO number 9009396 to be registered in the name of RMJ OBO Shipping Ltd. in the Bahamas Ship Registry; and e)  MT “Challenge Express” (tbr “Sagamore”), a 68,000 dwt product tanker built in 1991, with IMO number 9002192 to be registered in the name of Sagamore Shipping Ltd. in the Bahamas Ship Registry. “**GAAP**” means the generally accepted accounting principles in Norway, Bermuda and the United States (as the case may be). “**Guarantee**” means an on-demand guarantee (*selvskyldnerkausjon*) to be provided by the Guarantor in favour of the Agent (on behalf of the Finance Parties and the Swap Bank) as security for the Borrowers’ obligations under the Finance Documents and any Swap Agreement(s), substantially in the form set out in Schedule 8 (Form of Guarantee). “**Guarantor**” means B + H Ocean Carriers Ltd. of 80 Broad Street, Monrovia, Liberia. “**Insurances**” means, in relation to the First Vessels, all policies and contracts of insurance (which expression includes all entries of the First Vessels in a protection and indemnity or war risk association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of any of the Borrowers and/or the Charterers (whether in the sole name of the Borrowers or in the joint names of the Borrowers and any other person) in respect of the First Vessels or otherwise in connection with the First Vessels and all benefits thereunder (including claims of whatsoever nature and return of premiums). “**Interest Payment Date**” means the last Business Day of each Interest Period. “**Interest Period**” means, in relation to a Loan, each of the successive periods determined in accordance with Clause 9.1 (Selection of Interest Periods), and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).  “**ISM Code**” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevent.  “**ISPS Code**” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002. “**Lenders**” means the banks and financial institutions listed in Schedule 1 (Lenders and Commitments) and any New Lender, which in each case has not ceased to be a Party in accordance with the terms of this Agreement. “**LIBOR**” means in relation to any Loan: a)  the rate per annum equal to the offered quotation for deposits in USD for the relevant Interest Period ascertained by the Agent to be the rate as displayed on the Reuters' screen, page LIBOR01, at or about 11:00 hours (London time) on the applicable Quotation Day; or b)  if no such rate is available, the arithmetic means of the rate per annum at which the Lenders are able to acquire USD in the amount and for the relevant Interest Period of the Loan in the London interbank market at or about 11:00 hours (London time) on the applicable Quotation Day, as (in the absence of manifest error) conclusively certified by the Agent to the Borrowers. “**Loan**” means a Facility A Loan or a Facility B Loan. “**Majority Lenders**” means: a)  if there are no Loans outstanding, a Lender or Lenders whose Commitments aggregate more than 66.67% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66.67% of the Total Commitments immediately prior to the reduction); or b)  at any other time, a Lender or Lenders whose participations in the Loan then outstanding aggregate more than 66.67% of the Loan then outstanding.  “**Managers**” means the Commercial Manager and the Technical Manager. “**Market Value**” means the fair market value of the First Vessels in USD, being the average of valuations of the First Vessels obtained from two (2) reputable and independent shipbrokers, to be appointed by the Agent. Such valuations to be made for the account of the Borrowers, semi-annually, with or without physical inspection of the First Vessels (as the Agent may require) on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing buyer and seller, on an “as is, where is” basis, free of any existing charter or other contract of employment and/or pool arrangement. “**Material Adverse** **Effect**” means a material adverse effect on: a)  the business, operation, assets or condition (financial or otherwise) of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor (as the case may be); or b)  the ability of any of the Borrowers and/or the Guarantor (as the case may be) to perform any of their obligations under the Finance Documents. “**MOAs**” means each of the Memoranda of Agreements (and any addenda thereto) being made between the Seller and Sagamore Shipping Ltd. (in respect of MT “Challenge Express” (tbr “Sagamore”)). “**New Lender**” has the meaning set out in Clause 24 (Changes to the Parties). “**Original Financial Statements**” means the unaudited consolidated financial statements of the Guarantor for the year ended 31 December 2004 and the opening balance sheets of the Borrowers. “**Party**” means a party to this Agreement (including its successors and permitted transferees).  “**Quotation Day**” means the day occurring two (2) Business Days prior to the commencement of an Interest Period.  “**Reduction Instalment**” means each instalment for reduction of the Total Facility A Commitment referred to in Clause 6.2 (Reduction of Facility A). “**Revolving Loan**” means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan. “**Second Deeds of Covenants**” means each of the second priority deeds of covenants collateral to the Second Mortgages (save in respect of MT “Peqoud” ), entered or to be entered into between the owner of the respective Second Vessel and the Agent (on behalf of the Finance Parties and the Swap Bank), in form and substance satisfactory to the Agent (on behalf of the Finance Parties and the Swap Bank). “**Second** **Mortgages**” means each of the second priority mortgages executed or to be executed and recorded by the relevant owner against the Second Vessels in the Bahamas or Liberian Ship Registry (as the case may be) in favour of the Agent (on behalf of the Finance Parties and the Swap Bank), in form and substance satisfactory to the Agent (on behalf of the Finance Parties and the Swap Bank). “**Second** **Vessels**” means: a)  MT “Pequod”, a 40,632 dwt product tanker built in 1982 with IMO number 8011304, registered in the name of Isabelle Shipholdings Corp. in the Liberian Ship Registry;  b)  MT “Acushnet”, a 40,554 dwt product tanker built in 1981 with IMO number 7929683, registered in the name of Acushnet Shipping Corp. in the Bahamas Ship Registry;  c)  MT “Agawam”, a 40,554 dwt product tanker built in 1982 with IMO number 8004973, registered in the name of Agawam Shipping Corp. in the Bahamas Ship Registry;  d)  MT “Algonquin”, a 40,552 dwt product tanker built in 1983 with IMO number 8005006, registered in the name of Algonquin Shipping Corp. in the Bahamas Ship Registry;  e)  MT “Anawan”, a 40,554 dwt product tanker built in 1981 with IMO number 7929671, registered in the name of Anawam Shipping Corp. in the Bahamas Ship Registry;  f)  MT “Aquidneck”, a 40,556 dwt product tanker vessel built in 1981 with IMO number 8004985, registered in the name of Aquidneck Shipping Corp. in the Bahamas Ship Registry; and g)  MT “Sachuest”, a 98,358 dwt OBO tanker built in 1986 with IMO number 7915632, registered in the name of Sachuest Shipping Ltd. in the Bahamas Ship Registry. “**Security Documents**” means all or any security documents as may be entered into from time to time pursuant to Clause 17 (Security). “**Security Interest**” means any mortgage, charge (whether fixed or floating), encumbrance, pledge, lien, assignment by way of security, finance lease, sale and repurchase or sale and leaseback arrangement, sale of receivables on a recourse basis or other security interest or any other agreement or arrangement having the effect of conferring security. “**Security Period”** means the period commencing on the first Drawdown Date hereunder and ending the date on which the Agent notifies the Borrowers, the other Finance Parties and the Swap Bank that: a)  all amounts which have become due for payment by any of the Borrowers or any other party under the Finance Documents and any Swap Agreement(s) have been paid; b)  no amount is owing or has accrued (without yet having become due for payment) under any of the Finance Documents or any Swap Agreement(s); c)  none of the Borrowers has any future or contingent liability under any provision of this Agreement, the other Finance Documents or any Swap Agreement(s); and d)  none of the Agent, the Majority Lenders and the Swap Bank do consider that there is a significant risk that any payment or transaction under a Finance Document or any Swap Agreement(s) would be set aside, or would have to be reversed or adjusted, in any present or possible future proceeding relating to a Finance Document or any Swap Agreement or any asset covered (or previously covered) by a Security Interest created by a Finance Document or any Swap Agreement. “**Selection Notice**” means a notice substantially in the form set forth in Schedule 4 (Form of Selection Notice) given in accordance with Clause 9.1 (Selection of Interest Periods). “**Seller**” means in respect of MT “Challenge Express” (tbr “Sagamore”); Perennial Transport Inc. “**SMC**” means a valid safety management certificate issued for each the First Vessels pursuant to paragraph 13.7 of the ISM Code. “**SMS**” means a safety management system for the First Vessels developed and implemented in accordance with the ISM Code and including the functional requirements duties and obligations that follow from the ISM Code. “**Subsidiaries**” means any business entity of which more than fifty per cent (50.00%) of the outstanding voting stock or other equity interest is owned directly of indirectly by such person and/or one or more other Subsidiaries of such person. “**Swap Agreement**” means any interest rate swap agreement or agreements, hereunder any ISDA Master Agreement and schedules thereto, to be made between the Borrowers and the Swap Bank in relation to the Facility. “**Tax on Overall Net** **Income**” means a Tax imposed on a Finance Party by the jurisdiction under the laws of which it is incorporated, or in which it is located or treated as resident for tax purposes, on: a)  the net income, profits or gains of that Finance Party world wide; or  b)  such of the net income, profits or gains of that Finance Party as are considered to arise in or relate to or are taxable in that jurisdiction. “**Taxes**” means all present and future taxes, levies, imposts, duties, charges, fees, deductions and withholdings, and any restrictions and or conditions resulting in a charge together with interest thereon and penalties in respect thereof and “**tax**” and “**taxation**” shall be construed accordingly. “**Technical Management Agreements**” means the agreement made or to be made between the relevant Borrower and the Technical Manager for the technical management of the First Vessels. “**Technical Manager**” means V-Ships Management Limited, Eaglehurst, Belmont Hill, Douglas, Isle of Man or the Commercial Manager (in its capacity as technical manager).  “**Total Commitments**” means the aggregate of the Total Facility A Commitments and the Total Facility B Commitments, being USD 138,100,000 at the date of this Agreement.  “**Total Facility A Commitments**” means the aggregate of the Facility A Commitments, being USD 122,100,000 at the date of this Agreement. “**Total Facility B Commitments**” means the aggregate of the Facility B Commitments, being USD 16,000,000 at the date of this Agreement. “**Total Loss**” means, in relation to any of the First Vessels: a)  the actual, constructive, compromised, agreed, arranged or other total loss of such First Vessel; b)  any expropriation, confiscation, requisition or acquisition of such First Vessel, 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 governmental or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to extension) unless it is within one (1) month from the Total Loss Date redelivered to the full control of the relevant Borrower; and c)  any arrest, capture, seizure or detention of such First Vessel (including any hijacking or theft) unless it is within one (1) month from the Total Loss Date redelivered to the full control of the relevant Borrower. “**Total Loss Date**” means: a)  in the case of an actual total loss of any of the First Vessels, the date on which it occurred or, if that is unknown, the date when the relevant First Vessel was last heard of; b)  in the case of a constructive, compromised, agreed or arranged total loss of any of the First Vessels, the earlier of: (i) the date on which a notice of abandonment is given to the insurers (provided a claim for total loss is admitted by such insurers) or, if such insurers do not forthwith admit such a claim, at the date at which either a total loss is subsequently admitted by the insurers or a total loss is subsequently adjudged by a competent court of law or arbitration panel to have occurred or, if earlier, the date falling six (6) months after notice of abandonment of the relevant First Vessel was given to the insurers; and (ii) the date of compromise, arrangement or agreement made by or on behalf of the relevant Borrower with the relevant First Vessel’s insurers in which the insurers agree to treat such First Vessel as a total loss; or 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 Documents**” means the Finance Documents, the MOAs, the Tripartite Agreements, the Charterparties, the Charter Guarantees, the Technical Management Agreements, the Swap Agreement(s) and any letter of quiet enjoyment in respect of any of the First Vessels, together with the other documents contemplated herein or therein. “**Transfer Certificate**” means a certificate substantially in the form as set out in Schedule 6 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrowers. “**Transfer Date**” means, in respect of a Transfer (as defined in Clause 24.2 (Assignments and transfers by Lenders), the proposed Transfer Date as set out in the Transfer Certificate relating to the Transfer. “**Tripartite Agreements**” means: a)  the agreement dated 28 February 2005 in respect of MV “Rip Hudner” made between K/S Danskib (as initial seller), Sibonancy Inc. (as second seller) and BHOBO Two Ltd. (as end buyer); b)  the agreement dated 7 March 2005 in respect of MV “Bonnie Smithwick” made between K/S Burmeister & Wain 1 (as initial seller), Sibowain 1 Inc. (as second seller) and BHOBO One Ltd. (as end buyer); and c)  the agreement dated 14 March 2005 in respect of MV “Searose G” made between K/S OBO (a initial seller), Sibonata Inc. (as second seller) and BHOBO Three Ltd. (as end buyer). “**Unpaid Sum**” means any sum due and payable but unpaid by any of the Borrowers and/or the Guarantor under the Finance Documents. “**USD**” means United States Dollars, being the lawful currency of the United States of America. “**VAT**” means value added tax and any other tax of similar nature. **1.2  ****Construction** In this Agreement, unless the context otherwise requires: a)  Clause and Schedule headings are for ease of reference only; b)  words denoting the singular number shall include the plural and vice versa. In particular, for so long as Nordea Bank Norge ASA is the only Lender, references to “Lenders” or “Majority Lenders” shall be construed as a reference to Nordea Bank Norge ASA; c)  references to Clauses and Schedules are references, respectively, to the Clauses and Schedules of this Agreement; d)  references to a provision of law is a reference to that provision as it may be amended or re-enacted, and to any regulations made by the appropriate authority pursuant to such law;  e)  references to “**control**” means the power to appoint a majority of the board of directors or to direct the management and policies of an entity, whether through the ownership of voting capital, by contract or otherwise; f)  references to “**indebtedness**” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; and g)  references to a “**person**” shall include any individual, firm, partnership, joint venture, company, corporation, trust, fund, body, corporate, unincorporated body of persons, or any state or any agency of a state or association (whether or not having separate legal personality).  **2  ****THE FACILITY**** ** **2.1  ****The Total Facilities** Subject to the terms of this Agreement, the Lenders make available to the Borrowers: a)  a reducing revolving credit facility up to an aggregate amount not exceeding the Total Facility A Commitments, which will be drawn as follows:  (i)  in one (1) drawing of USD 79,100,000;  (ii)  in one (1) drawing of USD 25,000,000; and (iii)  in one (1) drawing of USD 18,000,000; and  b)  a term loan facility up to an aggregate amount not exceeding the Total Facility B Commitments, which will be drawn in one (1) amount. **2.2  ****Finance Parties’ rights and obligations** The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents. The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from the Borrowers shall be a separate and independent debt. A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.  **2.3  ****Nature of rights and obligations of the Borrowers** a)  The obligations of the Borrowers under this Agreement and the other Finance Documents shall be joint and several. Any Loans shall, once drawn, be deemed to have been made by the Lenders to the Borrowers jointly and severally, and the obligations of the Borrowers to repay a Loan and to perform all other obligations pursuant to this Agreement and the other Finance Documents shall be owed to the Lenders jointly and severally. The liability of a Borrower for Loans actually made to any of the other Borrowers shall not exceed USD 138,100,000 plus interest, fees and expenses under this Agreement and the Finance Documents. b)  Each of the Borrowers hereby specifically agrees and accepts that the nature of their liability hereunder being joint and several shall not be affected by any reason or circumstances of legal or factual nature, including, but not limited to: (i)  any waiver granted to the other Borrowers, the Guarantor or any third party; (ii)  any failure to enforce any rights, remedy or security against any of the other Borrowers, the Guarantor or any third party; (iii)  any legal limitation, incapacity or other circumstances relating to any of the other Borrowers, the Guarantor or any third party; (iv)  the liquidation, bankruptcy, insolvency or dissolution or the appointment of receiver for any of the other Borrowers, the Guarantor or any third party; or (v)  this Agreement or any of the Finance Documents becoming invalid or unenforceable against any of the other Borrowers and/or the Guarantor.  c)  Each of the Borrowers specifically waives all rights under the provisions of the Norwegian Financial Agreements Act of 25 June 1999 No. 46 not being mandatory provisions, including (but not limited to) the relevant provisions of §§ 62, 63, 65, 66, 67, 70, 71, 72, 73 and 74.   **3  ****PURPOSE**** ** **3.1  ****Purpose** The Borrowers shall apply all amounts borrowed by them as follows: a)  in respect of Facility A: (i) towards the refinancing of the senior tranche under the Existing Credit Facility (USD 79,100,000), (ii) towards refinancing parts of the purchase price for MV “Roger M. Jones” (USD 25,000,000) and (iii) towards part-financing the purchase price for MT “Challenge Express” (tbr “Sagamore”) (USD 18,000,000); and b)  in respect of Facility B: towards refinancing of the junior tranche under the Existing Credit Facility (USD 16,000,000). **3.2  ****Monitoring** Without prejudice to the obligations of the Borrowers under this Clause 3, no Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.  **4  ****CONDITIONS PRECEDENT** **4.1  ****Initial conditions precedent** The Borrowers may not deliver a Drawdown Notice unless the Agent has received originals or certified copies of all of the documents and other evidence listed in Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Borrowers and the Lenders promptly upon being so satisfied. **4.2  ****Further conditions precedent** The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on the date of a Drawdown Notice and on the proposed Drawdown Date: a)  no Default is continuing or would result from the proposed Loan; and b)  the representations and warranties contained in Clause 18 (Representations and warranties) deemed to be repeated on those dates are true and correct in all respects. **4.3  ****Maximum number of drawings** The Borrower may not deliver a Drawdown Notice if, as a result of the proposed Drawdown: a)  in respect of Facility A, more than five (5) Facility A Loans (or such other number as may be agreed by the Lenders) would be outstanding; and b)  in respect of Facility B, more than one (1) Facility B Loan would be outstanding. **4.4  ****Waiver of conditions precedent** The conditions specified in this Clause 4 are solely for the benefit of the Lenders and may be waived on their behalf in whole or in part and with or without conditions by the Agent (acting on the instructions of the Majority Lenders).  **5  ****DRAWDOWN** **5.1  ****Delivery of the Drawdown Notice** The Borrowers may utilise a Facility by delivering to the Agent a duly completed Drawdown Notice no later than 10:00 hours (London time) three (3) Business Days prior to the proposed Drawdown Date.  **5.2  ****Completion of the Drawdown Notice** Each Drawdown Notice is irrevocable and will not be regarded as having been duly completed unless: a)  it identifies the Facility to be utilised; b)  it is substantially in the form set out in Schedule 4 (Form of Drawdown Notices); c)  the proposed Drawdown Date is a Business Day within the Availability Period for that Facility; d)  the currency specified is USD and the amount of the proposed Loan is an amount which is not more than the Total A Commitments or Total B Commitments (as the case may be); and e)  the proposed Interest Period complies with Clause 9 (Interest Periods). **5.3  ****Availability** Any amount of the Total Commitments not utilised by the expiry of the Availability Period shall automatically be cancelled at close of business in Oslo on such date. **5.4  ****Lenders’ participation** Upon receipt of a Drawdown Notice, the Agent shall notify each Lender of the details of the requested Loan and the amount of each Lender’s participation in such Loan. If the conditions set out in this Agreement have been met, each Lender shall no later than 10:00 hours (London time) on the Drawdown Date make available to the Agent for the account of the relevant Borrower an amount equal to its participation in the Loan to be advanced pursuant to the Drawdown Notice.  **6  ****REPAYMENT** **6.1  ****Repayment and roll-over of Revolving Loans** The Borrowers shall repay each Revolving Loan in full on the last day of its Interest Period, however so that where a Loan (the “**New Loan**”) is, subject to and in accordance with the other terms of this Agreement, to be made on a day which another Revolving Loan (the “**Maturing Loan**”) is due to be repaid, then: a)  the Maturing Loan shall be deemed to be repaid on the last day of its Interest Period to the extent that the amount of the New Loan is equal to or greater than the amount of the Maturing Loan; and b)  to that extent, the amount of the New Loan shall be deemed to have been credited to the account of the Borrower, and the Lenders shall only be obliged to make available an amount equal to the amount by which amount the New Loan exceeds the Maturing Loan. **6.2  ****Reduction of Facility A** *6.2.1  **Reduction of Facility A* Subject to Clause 7 (Prepayment and cancellation), on the dates set out in Column A below (each a “**Facility A Reduction Date**”), the Total Facility A Commitments shall be reduced in instalments by an amount equal to the amounts set out in Column B below (each a “**Facility A Reduction Instalment**”): **Column A****Column B****Facility A Reduction Date:****Facility A Reduction Instalment:**15 December 2005USD 2,900,00015 March 2006USD 4,463,00015 June 2006USD 4,463,00015 September 2006USD 4,463,00015 December 2006USD 4,463,00015 March 2007USD 4,775,00015 June 2007USD 4,775,00015 September 2007USD 4,775,00015 December 2007USD 4,775,00015 March 2007USD 4,775,00015 June 2008USD 4,775,00015 September 2008USD 4,775,00015 December 2008USD 4,775,00015 March 2009USD 4,275,00015 June 2009USD 4,275,00015 September 2009USD 4,275,00015 December 2009USD 4,275,00015 March 2010USD 4,275,00015 June 2010USD 4,275,00015 September 2010USD 4,275,00015 December 2010USD 1,375,000 *6.2.2  **Reductions* a)  The Borrowers shall ensure that sufficient Loans are repaid on a Reduction Date to the extent necessary so that the aggregate amount of the outstanding Loans (after that repayment) is equal to or less than the reduced amount of Total Facility A Commitments. b)  Any reduction of the Total Facility A Commitments shall reduce rateably each Lender’s Facility A Commitment. c)  If the Commitment of any Lender is reduced under Clause 7.3 (Mandatory prepayment - Illegality), then the amount of the Reduction Instalment for each Reduction Date falling after that cancellation will be reduced pro rata by the amount cancelled. **6.3  ****Repayment - Facility B** The Borrowers shall repay Facility B in fourteen (14) quarterly consecutive instalments, as follows: a)  instalment no. 1 - 2: USD 2,000,000 ; b)  instalment no. 3 - 6: USD 1,250,000; c)  instalment no. 7 - 10: USD 1,000,000; and d)  instalment no. 11 - 14: USD 750,000, the first instalment falling due 15 December 2005. **6.4  ****Final repayment** On the Final Maturity Date applicable to each Facility the Borrowers shall repay all Loans then outstanding under this Agreement in full, together with all other sums due and outstanding under the Finance Documents at such date (if any).  **7  ****PREPAYMENT AND CANCELLATION** **7.1  ****Mandatory prepayment****- Total Loss or sale** *7.1.1  **First Vessels* If any of the First Vessels is sold or becomes a Total Loss, the Borrowers shall be obliged to prepay the Loan by an amount as set out in Schedule 9 (Prepayment Allocation): a)  in case of a sale, on or before the date on which the sale is completed by delivery of the relevant First Vessel to the buyer; or b)  in the case of a Total Loss, on the earlier of the date falling ninety (90) days after the Total Loss Date and the receipt by the Agent (on behalf of the Lenders) of the proceeds of Insurance relating to such Total Loss (or in the event of a requisition for title of the relevant First Vessel, immediately upon receipt of the requisition proceeds relating to such requisition of title). *7.1.2  **Second Vessels* If any of the Second Vessels is sold or becomes a Total Loss, the Borrowers shall procure that Facility B shall be repaid by an amount equal to the remaining proceeds from such sale or Total Loss following payment of the first mortgagee under the first mortgage over the relevant Second Vessel or as otherwise agreed by the Agent, however always in accordance with the Co-ordination Agreement, at such times as set out under Clause 7.1.1 (First Vessels) above. **7.2  ****Mandatory prepayment - Market Value** If the Market Value falls below: a)  one hundred and ten per cent (110.00%) of Facility A in year 1 to 3 (including) and one hundred and twenty per cent (120.00%) of Facility A thereafter; and b)  one hundred per cent (100.00%) of the Loans at any time after the third anniversary of this Agreement, the Borrowers shall within fifteen (15) Business Days, either: (i)  prepay the Loans by such amount; or  (ii)  provide the Lenders with such additional security, in form and substance satisfactory to the Agent (on behalf of the Lenders), required to restore the aforesaid ratio.  **7.3  ****Mandatory prepayment - illegality** If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in a Loan:  a)  that Lender shall promptly notify the Agent upon becoming aware of that event;  b)  the Agent shall promptly notify the Borrowers (specifying the obligations the performance of which is thereby rendered unlawful and the law giving rise to the same) upon receipt of notification in accordance with litra a) above;  c)  upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and  d)  the Borrowers shall prepay that Lender’s participation in such Loan made to the Borrowers on the last day of the Interest Period occurring after the Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law). **7.4  ****Voluntary prepayment** The Borrowers may, if they give the Agent not less than fourteen (14) Banking Days prior written notice, prepay the whole or any part of a Loan (but if in part, being an amount of minimum USD 100,000).  **7.5  ****Terms and conditions for prepayments and cancellation** *7.5.1  **Irrevocable notice* Any notice of prepayment or cancellation by the Borrowers under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date upon which the prepayment or cancellation is to be made. *7.5.2  **Additional payments* Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty. *7.5.3  **No re-borrowing* The Borrowers may not re-borrow any part of any Facility B Loans which is prepaid.  *7.5.4  **Time of prepayment and cancellation* The Borrowers shall not repay or prepay all or any part of a Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement. *7.5.5  **No reinstatement* No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated. *7.5.6  **Forwarding of notice of prepayment and cancellation* If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to the Borrowers or the affected Lender, as appropriate. *7.5.7  **Application* Any amount prepaid shall: a)  in respect of a prepayment pursuant to Clause 7.1 (Mandatory prepayment - Total Loss or sale), (i) in respect of “Rip Hudner”, “Bonnie Smithwick” and “Searose G”, be used to reduce the remaining Reduction Instalments as set out in Clause 6.2 (Reduction of Facility A) and the repayment obligations under Clause 6.3 (Repayment of Facility B) and (ii) in respect of “Roger M. Jones” and “Sagamore”, be used to reduce the remaining Reduction Instalments set out in Clause 6.2 (Reduction of Facility A), and shall in any event reduce ratably each Lender’s participation in the Facilities;  b)  in respect of a prepayment pursuant to Clause 7.2 (Mandatory prepayment - Market Value), be used to reduce the remaining Reduction Instalments as set out in Clause 6.2 (Reduction of Facility A) and shall reduce ratably each Lender’s participation in Facility A; c)  in respect of a prepayment pursuant to Clause 7.3 (Mandatory prepayment - illegality), be used to reduce the remaining Reduction Instalments under Clause 6.2 (Reduction of Facility A) in inverse order of maturity and shall reduce rateably each Lender’s participation in the relevant Loan; and d)  in respect of a prepayment pursuant to Clause 7.4 (Voluntary prepayment), be used to reduce the remaining Reduction Instalments set forth in Clause 6.2 (Repayment of Facility A) in inverse order of maturity.  **8  ****INTEREST** **8.1  ****Calculation of interest** The rate of interest for a Loan for each Interest Period is the percentage rate per annum which is the aggregate of: a)  the Applicable Margin; and b)  LIBOR.  Effective interest pursuant to the Norwegian Financial Agreement Act 1999 has been calculated by the Agent as set out in a separate notice from the Agent to the Borrowers.  **8.2  ****Payment of interest** The Borrowers shall pay accrued interest on a Loan on each Interest Payment Date (and if the Interest Period is longer than three (3) months, on the date falling at three (3) monthly intervals after the first day of the Interest Period).  **8.3  ****Default interest** If any of the Borrowers fails to pay any amount payable by any of them under the Finance Documents on its due date, interest shall accrue on the overdue amount from the due date and up to the date of actual payment (both before and after judgment) at a rate determined by the Agent to be two per cent (2.00%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrowers on demand by the Agent. Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.  **8.4  ****Notification of rates of interest** The Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.  **9  ****INTEREST PERIODS** **9.1  ****Selection of Interest Periods** a)  The Borrowers may select an Interest Period for a Loan in the Drawdown Notice or (if a Loan has already been borrowed) in a Selection Notice. b)  Each Selection Notice for Facility B is irrevocable and must be received by the Agent not later than 11:00 hours (London time) one (1) Business Day before the Quotation Day for that Interest Period. c)  If the Borrowers fail to deliver a Selection Notice to the Agent in accordance with litra b) above, the relevant Interest Period will be three (3) months. d)  The Borrowers may select an Interest Period of three (3) or six (6) months or any such other period agreed between the Borrowers and the Agent (on behalf of the Lenders). In addition, the Borrowers may select an Interest Period of a period of less than one (1) month, if necessary to ensure that there are sufficient Revolving Loans with an aggregate amount equal to or greater than the Reduction Instalment which have an Interest Period ending on a Repayment Date for the scheduled reduction to occur. e)  An Interest Period for a Loan shall not extend beyond the Final Maturity Date, but shall be shortened so that it ends on the Final Maturity Date. f)  Each Interest Period for a Loan shall start on the Drawdown Date or (if already made) on the last day of its preceding Interest Period. g)  Each Revolving Loan may have one (1) Interest Period only. **9.2  ****Non-Business Day** If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).  **9.3  ****Notification of Interest Periods** The Agent will notify the Borrowers and the Lenders of the Interest Periods determined in accordance with this Clause 9.   **10  ****CHANGES TO THE CALCULATION OF INTEREST**** ** **10.1  ****Market disruption** a)  If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of such Loan for the Interest Period shall be the rate per annum which is the sum of:  (i)  the Applicable Margin; and (ii)  the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in such Loan from whatever source it may reasonably select. b)  In this Agreement, “**Market Disruption Event**” means: (i)  at or about 11:00 hours (London time) on the Quotation Day for the relevant Interest Period LIBOR is not available; or (ii)  before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed fifty per cent (50.00%) of the Loan) that the cost to it or them of obtaining matching deposits in the London interbank market would be in excess of LIBOR. **10.2  ****Alternative basis of interest or funding** If a Market Disruption Event occurs and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest. Any alternative basis agreed pursuant to this Clause 10.2 shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties. **10.3  ****Break Costs** The Borrowers shall, within three (3) Business Days of demand by a Finance Party, pay to that Finance Party its Break Cost attributable to all or any part of a Loan or Unpaid Sum being paid by any of the Borrowers on a day other than the last day of an Interest Period for a Loan or Unpaid Sum. Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Cost for any Interest Period in which they accrue.   **11  ****FEES** **11.1  ****Agency fee** The Borrowers shall pay to the Agent (for its own account) a non-refundable annual agency fee in the amount of USD 15,000, the first fee being payable on 28 February 2006 and thereafter on each anniversary of such date. **11.2  ****Other fees** The Borrowers shall pay to the Agent and the Arranger (as the case may be) (for distribution among the Lenders according to a separate agreement/invitation) the fees in the amount and at the times agreed in the Fee Letter.* *  **12  ****TAX GROSS-UP AND INDEMNITIES** **12.1  ****Taxes** *12.1.1  **No withholding* All payments by the Borrowers under the Finance Documents shall be made free and clear of and without deduction or withholding for or on account of any Tax or any other governmental or public payment imposed by the laws of any jurisdiction from which or through which such payment is made, unless a Tax deduction or withholding is required by law.  *12.1.2  **Tax gross-up* a)  The Borrowers shall promptly upon becoming aware that any of them must make a Tax deduction or withholding (or that there is any change in the rate or the basis of a Tax deduction or withholding) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrowers and that Lender. b)  If a Tax deduction or withholding is required by law to be made by any of the Borrowers: (i)  the amount of the payment due from the Borrowers shall be increased to an amount which (after making any Tax deduction or withholding) leaves an amount equal to the payment which would have been due if no Tax deduction or withholding had been required; and (ii)  the Borrowers shall make that Tax deduction or withholding within the time allowed and in the minimum amount required by law. c)  Within thirty (30) days of making either a Tax deduction or withholding or any payment required in connection with that Tax deduction or withholding, the Borrowers shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax deduction or withholding has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.  **12.2  ****Tax indemnity** The Borrowers shall (within three (3) Business Days of demand by the Agent) pay to the Agent for the account of the relevant Finance Party an amount equal to the loss, liability or cost which a Finance Party determines will be or has been (directly or indirectly) suffered for or on account of any Tax by such Finance Party in respect of a Finance Document, save for any Tax on Overall Net Income assessed on a Finance Party or to the extent such loss, liability or cost is compensated under Clause 12.1 (Tax gross-up). **12.3  ****VAT** All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Document shall be deemed to be exclusive of any VAT. If VAT is chargeable, the Borrowers shall pay to the Agent for the account of such Finance Party (in addition to the amount required pursuant to the Finance Documents) an amount equal to such VAT.  **13  ****INCREASED COSTS** **13.1  ****Increased Costs** a)  The Borrowers shall, upon demand from the Agent, pay for the account of a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation (including any laws and regulations implementing new or modified capital adequacy requirements) or (ii) compliance with any law or regulation made after the date of this Agreement. b)  In this Agreement, the term “**Increased Costs**” means: (i)  a reduction in the rate of return from the Facility or on a Finance Party’s (or its affiliate’s) overall capital;  (ii)  an additional or increased cost; or (iii)  a reduction of any amount due and payable under any Finance Document,  which is incurred or suffered by a Finance Party or any of its affiliates to the extent that it is attributable to that Finance Party having entered into its Commitments or funding or performing its obligations under any Finance Document.  c)  A Finance Party intending to make a claim pursuant to this Clause 13.1 shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrowers. Each Finance Party shall as soon as practicable after a demand by the Agent, provide a confirmation showing the amount of its Increased Costs. **13.2  ****Exceptions** Clause 13.1 (Increased Costs) does not apply to the extent any Increased Cost is: a)  attributable to a Tax deduction or withholding required by law to be made by any of the Borrowers;  b)  compensated for by Clause 12.1 (Tax gross-up) or Clause 12.2 (Tax Indemnity); or c)  attributable to the wilful breach by the relevant Finance Party or its affiliates of any law or regulation.  **14  ****OTHER INDEMNITIES**** ** **14.1  ****Currency indemnity** a)  If any sum due from any of the Borrowers under the Finance Documents (a “**Sum**”), or any order, judgement or award given or made in relation to a Sum, has to be converted from the currency (the “**First Currency**”) in which that Sum is payable into another currency (the “**Second Currency**”) for the purpose of: (i)  making or filing a claim or proof against any of the Borrowers; (ii)  obtaining or enforcing an order, judgement or award in relation to any litigation or arbitration proceedings, the Borrowers shall as an independent obligation, within three (3) Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum. b)  The Borrowers waive any right they may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.  **14.2  ****Other indemnities** The Borrowers shall within three (3) Business Days of demand, indemnify each Finance Party against any costs, loss or liability incurred by that Finance Party as a result of: a)  the occurrence of any Event of Default;  b)  a failure by any of the Borrowers and/or the Guarantor to pay any amount due under the Finance Documents on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 26 (Sharing among the Finance Parties); c)  the funding, or making arrangements to fund, its participation in a Drawing or the Loan (as the case may be) requested by the Borrowers in the Drawdown Notice but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Lender alone); or  d)  a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.  **14.3  ****Indemnity to the Agent** The Borrowers shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:  a)  investigating any event which it reasonably believes is a possible Event of Default; or b)  acting or verifying any notice, request or instruction which it reasonably believes to be genuine, correct or appropriately authorised.  **15  ****MITIGATION BY THE LENDERS** **15.1  ****Mitigation** Without in any way limiting the obligations of the Borrowers hereunder, each Finance Party shall, in consultation with the Borrowers, take all reasonable steps for a period of fifteen (15) Business Days) to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of: a)  Clause 7.1 (Mandatory prepayment - Total Loss or sale); b)  Clause 7.2 (Mandatory prepayment - Market Value); c)  Clause 7.3 (Mandatory prepayment - Illegality); d)  Clause 12 (Tax gross-up and indemnities); and  e)  Clause 13 (Increased Costs),  including (but not limited to) transferring its rights and obligations under the Finance Documents to another affiliate. A Finance Party is not obliged to take any steps under this Clause 15.1 if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. **15.2  ****Indemnity** The Borrowers shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).  **16  ****COSTS AND EXPENSES** **16.1  ****Transaction expenses** The Borrowers shall promptly on demand pay to the Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, perfection, execution, registration and syndication of: a)  this Agreement and any other documents referred to in this Agreement; and  b)  any other Finance Documents executed after the date of this Agreement.  **16.2  ****Amendment and enforcement costs, etc** The Borrowers shall, within three (3) Business Days of demand, reimburse the Agent or another Finance Party for the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with: a)  the granting of any release, waiver or consent under the Finance Documents; b)  any amendment or variation of any of the Finance Documents; and c)  the preservation, protection, enforcement or maintenance of, or attempt to preserve or enforce, any of the rights of the Finance Parties under the Finance Documents.   **17  ****SECURITY** **17.1  ****Security - Loans** The Borrowers’ obligations and liabilities under the Finance Documents, including (without limitation) the Borrowers’ obligation to repay the Loans together with all unpaid interest, default interest, commissions, charges, expenses and any other derived liability whatsoever of any of the Borrowers towards the Lenders and the Agent in connection with this Agreement, shall at any time until all amounts due to the Lenders and the Agent hereunder have been paid and/or repaid in full, be secured by: a)  the First Mortgages;  b)  the First Deeds of Covenants; c)  the Second Mortgages (however, only securing the amount outstanding under Facility B from time to time); d)  the Second Deeds of Covenants (however, only securing the amount outstanding under Facility B from time to time); e)  the Assignment Agreement; f)  the Charterparty Assignments;  g)  the Account Charge; and h)  the Guarantee. The Borrowers undertake to ensure that the above Security Documents are being duly executed by the parties thereto in favour of the Agent (on behalf of the Finance Parties) on or about the date of this Agreement, legally valid and in full force and effect, and to execute or procure the execution of such further documentation as the Agent may reasonable require in order for the relevant Finance Parties to maintain the security position envisaged hereunder. **17.2  ****Security and subordination - Facility B** The Borrowers’ obligations under Facility B shall be secured by the Security Documents with the rights of the Agent (on behalf of the Finance Parties) being fully subordinated to and ranking in priority in all respects after the rights of the Agent (on behalf of the Finance Parties) under the Security Documents set out in Clause 17.1 (Security Loans) in respect of Facility A. **17.3  ****Security and subordination - Swap Agreement(s)** The Agent and the Lenders have agreed that the Borrowers’ obligations under the Swap Agreement(s), if any, shall be secured by the Security Documents with the rights of the Swap Bank: a)  in respect of Facility A, ranking pari passu with the rights of the Agent (on behalf of the Finance Parties) under the Security Documents as set out in Clause 17.1 (Security - Loans); and b)  in respect of Facility B, being fully subordinated to and ranking in all respects after the rights of the Agent (on behalf of the Finance Parties under the Security Documents set out in Clause 17.1 (Security - Loans) in respect of Facility A. **17.4  ****Enforcement of Security Documents relating to Facility B** The Agent (on behalf of the Finance Parties) will notify the Swap Bank as soon as practicable possible if it intends to enforce any of its rights under the Security Documents whereupon the Swap Bank shall have the option (to be exercised immediately upon receipt of such notification if there is a case of emergency and the Agent (on behalf of the Finance Parties) has to act without delay, or otherwise within ten (10) Business Days from receipt of such notification during which period the Agent (on behalf of the Finance Parties) will not complete enforcement of any if its said rights and powers) of paying to the Agent (on behalf of the Finance Parties) within the said period of ten (10) Business Days all monies then due to the Agent and the Finance Parties under the Agreement and the Security Documents relating to Facility B against an assignment and transfer (on a non-recourse basis) of this Agreement and the Security Documents that may be transferable to, and at the expense of, the Swap Bank in respect of all of the rights and powers of the Agent and the Finance Parties under this Agreement and the Security Documents. Such assignment and transfer shall be without any express of implied warranty or representation by the Agent and the Finance Parties as to the validity and enforceability of the Agreement and/or the Security Documents and/or such related documents or as to the recoverability of any moneys thereunder. The Agent shall not be liable to the Swap Bank for any failure or delay in giving notice of its intention to enforce and shall not be liable to the Swap Bank in respect of any loss, damage, or liability incurred by the Swap Bank arising out of or in connection with the Agent’s failure or delay in giving such notice. Without prejudice to this Clause 17.3, nothing herein shall preclude the right of the Agent to demand payment of any money secured by the Security Documents or preclude the Agent from taking any action whatsoever in accordance with the Security Documents. **17.5  ****Swap Bank’s undertakings** The Swap Bank undertakes that: a)  at the same time as giving any formal notice to the Borrowers that an event of default (as defined in the relevant Swap Agreement) has occurred, notify the Agent hereof; b)  in the event that the Agent declares an Event of Default under the Agreement and following receipt by the Swap Bank of a notice from the Agent pursuant to Clause 17.3 (Enforcement of the Security Documents), any monies received thereafter by the Swap Bank, shall forthwith be paid to the Agent until all sums due to the Finance Parties under the Agreement and/or the Security Documents have been fully paid; c)  it will not make or allow to be made any material variation, amendment or supplement to the Swap Agreement(s) without the prior written consent of the Borrowers and the Agent; and d)  it shall not assign, transfer or otherwise dispose of its rights or obligations under the Swap Agreement(s) to any other party unless such party has first entered into an agreement with the Agent relating to the subordination of its rights under the Security Documents in form and substance satisfactory to the Agent and the Finance Parties.  **18  ****REPRESENTATIONS AND WARRANTIES** **18.1  ****Representations and warranties by the Borrowers** Each of the Borrowers represents and warrants to each Finance Party as follows: *18.1.1  **Status* Each of the Borrowers is a corporation, duly incorporated and validly existing under the laws of the Marshall Island and has the power to own its assets and carry on its business as it is currently being conducted. Each of BHOBO One, BHOBO Two, BHOBO Three, RMJ OBO Shipping Ltd. and Sagamore Shipping Ltd. is one hundred per cent (100.00%) owned by OBO Holdings Ltd. which is one hundred per cent (100.00%) owned by the Guarantor. The Guarantor is a corporation, duly incorporated and validly existing under the laws of Liberia and has the power to own its assets and carry on its business as it is currently being conducted. *18.1.2  **Binding obligations* The Transaction Documents to which any of the Borrowers and/or the Guarantor are a party constitute legal, valid, binding and enforceable obligations, and save as provided herein or therein and/or as have been or shall be completed prior to the relevant Drawdown Date, no registration, filing, payment of tax or fees or other formalities are necessary or desired to render the Transaction Documents enforceable against any of the Borrowers and/or the Guarantor, and in respect of the First Vessels, for the First Mortgages to constitute valid and enforceable first priority mortgages over the First Vessels. *18.1.3  **No conflict with other obligations* The entry into and performance by any of the Borrowers or the Guarantor of, and the transactions contemplated by, the Transaction Documents do not and will not conflict with: a)  any law or regulation or any order or decree of any governmental agency or court by which it is bound; b)  any constitutional documents of any of the Borrowers and/or the Guarantor (as the case may be); or c)  any agreement or document to which it is a party or by which it or any of its assets are bound. *18.1.4  **Power and authority* Each of the Borrowers and the Guarantor have the power to enter into, perform and deliver, and have taken all necessary actions to authorise their entry into, performance and delivery of, the Transaction Documents to which any of them is a party and the transactions contemplated by those Transaction Documents.  *18.1.5  **Authorisations and consents* All authorisations, approvals, consents and other matters, official or otherwise, required by any of the Borrowers and/or the Guarantor in connection with the entering into, performance, validity and enforceability of the Transaction Documents and the transactions contemplated hereby and thereby have been obtained or effected and are in full force and effect. *18.1.6  **T**axes* Each of the Borrowers and the Guarantor have complied with all material taxation laws in all jurisdictions where any of them is subject to taxation and has paid all material Taxes and other amounts due to governments and other public bodies. No claims are being asserted against any of them with respect to any Taxes or other payments due to public or governmental bodies. None of the Borrowers or the Guarantor is required to make any withholdings or deductions for or on account of Tax from any payment any of them may make under any of the Finance Documents. *18.1.7  **No Default* No Event of Default is continuing or might reasonably be expected to result from the making of a Drawing or the Loan (as the case may be). No other event or circumstances is outstanding which constitutes a default or (with the expiry of a grace period, giving of notice or the making of any determination or any combination of the foregoing) might constitute a default under any other agreement or instrument which is binding on any of the Borrowers, the Guarantor or any of their subsidiaries or to which any of the Borrowers’, the Guarantor’s (or any of their subsidiaries’) assets are subject which might have a Material Adverse Effect.  *18.1.8  **No misleading information* Any factual information, documents, exhibits or reports relating to any of the Borrowers and/or the Guarantor and which have been furnished to the Finance Parties by or on behalf of the Borrowers and/or the Guarantor are complete and correct in all material respects and do not contain any misstatement of fact or omit to state a fact making such information, exhibits or reports misleading in any material respect. *18.1.9  **Original Financial Statements* *a)  **Complete and correct*. The Original Financial Statements fairly and accurately represent the assets, liabilities and the financial condition of the Borrowers and the Guarantor and have been prepared in accordance with GAAP consistently applied.  *b)  **No undisclosed liabilities*. As of the date of the Original Financial Statements, the Borrowers and the Guarantor had no material liabilities, direct or indirect, actual or contingent, and there is no material, unrealised or anticipated losses from any unfavourable commitments not disclosed by or reserved against in the Original Financial Statements or in the notes thereto. *c)  **No material change*. Since the date of the Original Financial Statements, there has been no material adverse change in the business, operations, assets or condition (financial or otherwise) of the Borrowers and the Guarantor. *18.1.10  **Pari passu ranking* The Borrowers’ and the Guarantor’s respective payment obligations under the Finance Documents rank at least *pari passu* with the claims of all their other unsecured and unsubordinated creditors, except for obligations preferred by mandatory law applying to companies generally. *18.1.11  **No proceedings pending or threatened* No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency, which if adversely determined, might reasonably be expected to have a Material Adverse Effect, have (to the best of the Borrowers’ knowledge and belief) been started or threatened against any of the Borrowers and/or the Guarantor. *18.1.12  **No existing Security Interest* Save as described in Clause 17 (Security), no Security Interest exists over all or any of the present or future revenues or assets of any of the Borrowers. *18.1.13  **No immunity* The execution and delivery by the Borrowers and/or the Guarantor of each Transaction Document to which they are a party constitute, and their exercise of their respective rights and performance of their obligations under each Transaction Document will constitute, private and commercial acts performed for private and commercial purposes, and the Borrowers and/or the Guarantor will not (except for bankruptcy or any similar proceedings) be entitled to claim for themselves or any or all of their assets immunity from suit, execution, attachment or other legal process in any other proceedings taken in Norway and/or the Marshall Islands and/or the Bermuda (as the case may be) in relation to any Transaction Document. *18.1.14  **No winding-up* Neither of the Borrowers nor the Guarantor has taken any corporate action nor have any other steps been taken or legal proceedings been started or threatened against any of them for their reorganisation, winding-up, dissolution or administration or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of any of them or any or all of their assets. *18.1.15  **Environmental compliance* The Borrowers have performed and observed in all material respects all Environmental Laws, Environmental Approvals and all other material covenants, conditions, restrictions or agreements directly or indirectly concerned with any contamination, pollution or waste or the release or discharge of any toxic or hazardous substance in connection with the First Vessels. *18.1.16  **Environmental Claims* No Environmental Claim has been commenced or (to the best of the Borrowers’ knowledge and belief) is threatened against any of the Borrowers or the Charterers where that claim would be reasonably likely, if adversely determined, to have a Material Effect on the Borrowers. *18.1.17  **ISM Code and ISPS Code compliance* All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers and/or the Guarantor, the Managers, the Charterers and the First Vessels have been complied with in all material respects. *18.1.18  **The First Vessels* The First Vessels will on the relevant Drawdown Date be: a)  in the absolute ownership of the relevant Borrower free and clear of all encumbrances (other than current crew wages and the relevant First Mortgage) and the relevant Borrower will be the sole, legal and beneficial owner of the relevant First Vessel; b)  registered in the name of the relevant Borrower with the Bahamas Ship Registry under the laws and flag of The Bahamas; c)  operationally seaworthy in every way and fit for service; and d)  classed with Det norske Veritas, free of all overdue requirements and recommendations. *18.1.19  **No money laundering* The Borrowers are acting for their own account in relation to the Loan and in relation to the performance and the discharge of their obligations and liabilities under the Finance Documents and the transactions and other arrangements effected or contemplated by the Finance Documents to which any of the Borrowers and/or the Guarantor is a party, and the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat money laundering (as defined in Article 1 of the Directive (91/308/EEC) and Directive 2001/97 of the European Parliament and of 4 December 2001 amending Council Directive 91/308). **18.2  ****Repetition** The representations and warranties set out in this Clause 18 are deemed to be made by the Borrowers on the date of this Agreement and shall be deemed to be repeated: a)  on the date of a Drawdown Notice; b)  on a Drawdown Date; c)  on the first day of each Interest Period; and d)  in each Compliance Certificate forwarded to the Agent pursuant to Clause 19.2 (Compliance certificate) (or, if no such Compliance Certificate is forwarded, on each day such certificate should have been forwarded to the Agent at the latest).   **19  ****INFORMATION UNDERTAKINGS** **19.1  ****General** Each of the Borrowers gives the undertakings set out in this Clause 19 to each Finance Party and such undertakings shall remain in force throughout the Security Period. *19.1.1  **Financial statements* The Borrowers shall supply to the Agent in sufficient copies for all of the Lenders: a)  as soon as available, but no later than ninety (90) days after the end of each of their fiscal years, complete copies of the financial reports of each of the Borrowers, all in reasonable detail, which shall include at least the balance sheet of each of the Borrowers as of the end of such year and the related statements of income and sources and uses of funds for such year, all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Guarantor;  b)  as soon as available, but not less than forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Borrowers, a quarterly interim balance sheet of each of the Borrowers and the related profit and loss statements and sources and uses of funds, all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Guarantor; c)  as soon as available but not later than one hundred eighty (180) days after the end of each fiscal year of the Guarantor, complete copies of the consolidated financial reports of the Guarantor and its Subsidiaries, all in reasonable detail, which shall include at least the consolidated balance sheet of the Guarantor and its Subsidiaries as of the end of such year and the related consolidated statements of income and sources and uses of funds for such year, which shall be audited reports prepared by an accounting firm acceptable to the Agent; d)  as soon as available but not less than forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Guarantor, a quarterly interim consolidated balance sheet of the Guarantor and its Subsidiaries and the related consolidated profit and loss statements and sources and uses of funds, all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Guarantor; e)  within ten (10) days of the filing thereof, copies of all registration statements and reports on Forms 20-F and 8-K (or their equivalent) and other material filings which the Guarantor shall have filed with the Securities and Exchange Commission or any similar governmental authority; f)  promptly upon the mailing thereof to the shareholders of the Guarantor, copies of all financial statements, reports, proxy statements and other communications provided to the Guarantor’s shareholders; g)  within ten (10) days of any of the Borrowers’ or the Guarantor’s receipt thereof, copies of all audit letters or other correspondence from any external auditors including material financial information in respect of any of the Borrowers or the Guarantor, as the case may be; and h)  such other statements (including, without limitation, monthly consolidated statements of operating revenues and expenses), lists of assets and accounts, budgets, forecasts, reports and other financial information with respect to theirs or the Guarantor’s business as the Agent may from time to time reasonably request, certified to be true and complete by the chief financial officer of the Guarantor. *19.1.2  **Compliance Certificate* The Borrowers shall supply to the Agent, with each set of financial statements delivered pursuant to Clause 19.1.1 (Financial statements), a Compliance Certificate signed by an authorised officer of the Borrowers setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial covenants) as at the date at which those financial statements were drawn up.  *19.1.3  **Requirements as to financial statements* The Borrowers shall procure that each set of financial statements delivered pursuant to Clause 19.1.1 (Financial statements) is prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for the Borrowers and/or the Guarantor unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors (or, if applicable, the auditors of the Guarantor) deliver to the Agent: a)  a description of any change necessary for those financial statements to reflect GAAP, accounting practices and reference periods upon which the Borrowers’ and/or the Guarantor’s Original Financial Statements were prepared; and b)  sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 20 (Financial covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Borrowers’ and/or the Guarantor’s Original Financial Statements. Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared. *19.1.4  **Information - miscellaneous* The Borrowers shall notify the Agent and/or supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): a)  all material documents dispatched by the Borrowers to their shareholders or their creditors generally at the same time as they are dispatched; b)  promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any of the Borrowers and/or the Guarantor and/or the Charterers, and which might, if adversely determined, have a Material Adverse Effect; and c)  promptly, such further information regarding the business, assets and operations (financial or otherwise) of any of the Borrowers and/or the Guarantor as any Finance Party (through the Agent) may reasonably request. *19.1.5  **Notification of default* The Borrowers shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. *19.1.6  **Notification of Environmental Claims* The Borrowers shall inform the Agent in writing as soon as reasonably practicable upon becoming aware of the same: a)  if any Environmental Claim has been commenced or (to the best of the Borrowers’ knowledge and belief) is threatened against any of the Borrowers or any of the First Vessels; and b)  of any fact and circumstances which will or are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Borrowers or any of the First Vessels, where the claim would be reasonably likely, if determined against any of the Borrowers or the First Vessels, to have a Material Adverse Effect.  **20  ****FINANCIAL COVENANTS** **20.1  ****Definitions** For the purposes of the financial covenants set out herein, the following definitions shall apply: “**EBITDA**” means, always in accordance with GAAP, the aggregate of operating profits of the Borrowers or the Guarantor (on a consolidated basis) (as the case may be) for a Measurement Period before Taxes, financial items, depreciations and amortisations, excluding: a)  the profit or loss attributable to any extraordinary or exceptional items or any write-offs on investments during that Measurement Period; and  b)  the profit and loss arising on any disposal of fixed assets during that Measurement Period save for any disposals made in the ordinary course of business. “**Fixed Charges**” means:  a)  Net Interest for any Measurement Period, plus b)  the amount of scheduled repayments of the Facilities and/or any other credit facilities and the interest and repayment element under capitalised charterparties in accordance with GAAP which fall due for repayment or payment during the Measurement Period, other than any amount prepaid under this Agreement, less free and available cash (at the relevant Quarter Date) and marketable securities (acceptable to the Agent (on behalf of the Lenders)) in excess of the minimum requirement.  “**Measurement Period**” means a rolling period of twelve (12) calendar months ending on a Quarter Date. “**Quarter Date**” means each 31 March, 30 June, 30 September and 31 December. “**Net Interest**” means all interest, arrangement fees and capitalised commissions and periodic fees (whether, in each case, paid or payable) as reported in accordance with GAAP being incurred by the Guarantor (on a consolidated basis) during a Measurement Period.  “**Total Debt**” means, on a consolidated basis, the aggregate book value of all provisions, other long term liabilities and current liabilities of the Guarantor (on a consolidated basis).  “**Value Adjusted Equity**” means Value Adjusted Total Assets less Total Debt. “**Value Adjusted Equity Ratio**” means Value Adjusted Equity divided by Value Adjusted Total Assets. “**Value Adjusted Total Assets**” means, on a consolidated basis, the total market value of all of the assets of the Guarantor (on a consolidated basis). **20.2  ****Financial covenants** *20.2.1  **Minimum Value Adjusted Equity Ratio* The Borrowers shall procure that the Guarantor (on a consolidated basis) shall at all times during the Security Period maintain a minimum Value Adjusted Equity Ratio of minimum thirty per cent (30.00%). *20.2.2  **Minimum Value Adjusted Equity* The Borrowers shall procure that the Guarantor (on a consolidated basis) shall at all times during the Security Period maintain a minimum Value Adjusted Equity of USD 30,000,000. *20.2.3  **Ratio of EBITDA to Fixed Charges* The Borrowers shall and shall procure that the Guarantor (on a consolidated basis) shall ensure that the ratio of EBITDA to Fixed Charges shall be 1.25:1.00 or greater on a twelve (12) months rolling basis on assumptions approved by the Agent.  *20.2.4  **Positive working capital* The Borrowers shall and shall procure that the Guarantor (on a consolidated basis) shall at all times ensure that their current assets exceed their current liabilities (excluding the portion of long term debt) and of which an amount of the higher of six per cent (6.00%) of the long-term debt and USD 5,000,000 shall be in cash or money market investments, all as determined in accordance with GAAP. *20.2.5  **Minimum value* The Borrowers shall ensure that the Market Value of the First Vessels be at least: a)  one hundred and ten per cent (110.00%) of Facility A in year 1 to 3 (including) and one hundred and twenty per cent (120.00%) of Facility A at any time thereafter; and b)  one hundred per cent (100.00%) of the Facilities at any time, however so that the Market Value as set out in this Clause 20.2.5 shall be measured first time three (3) years after the date of this Agreement.   **21  ****GENERAL UNDERTAKINGS** **21.1  ****General** Each of the Borrowers gives the undertakings set out in this Clause 21 to each Finance Party and such undertakings shall remain in force throughout the Security Period. *21.1.1  **Authorisations etc.* The Borrowers shall, and shall procure that the Guarantor shall, promptly: a)  obtain, comply and do all that is necessary to maintain in full force and effect; and b)  supply certified copies to the Agent (if so requested) of, any authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration required under any law or regulation of its jurisdiction of incorporation to enable them to perform their respective obligations under the Transaction Documents and to ensure the legality, validity, enforceability or admissibility in evidence in their respective jurisdiction of incorporation of any Transaction Document. *21.1.2  **Compliance with laws* The Borrowers shall comply and shall procure the compliance by the Guarantor in all respects with all laws to which any of them may be subject, if failure so to comply would materially impair their ability to perform their respective obligations under the Transaction Documents. *21.1.3  **Pari passu ranking* The Borrowers shall and shall procure that the Guarantor shall, ensure that their obligations under the Finance Documents do and will rank at least *pari passu* with all their other present and future unsecured and unsubordinated obligations, except for those obligations which are preferred by mandatory law applying to companies generally in the jurisdictions of their incorporation or in the jurisdiction in the ports of calls. *21.1.4  **Title* The Borrowers will hold legal title to and own the entire beneficial interest in the First Vessels, the Insurances and the Earnings, free of all Security Interest and other interests and rights of any kind, except for those created by the Financial Documents and as set out in Clause 21.5 (Negative pledge). *21.1.5  **Negative pledge* The Borrowers shall not create or permit to subsist any Security Interest over any of the First Vessels nor upon any of their present or future undertakings, property, assets, rights or revenues, other than: a)  Security Interest under the Security Documents; b)  Security Interests arising in the ordinary course of business; and c)  Security Interests consented to in writing by the Agent (acting upon instructions from the Majority Lenders). *21.1.6  **Borrowings and guarantees* None of the Borrowers shall enter into any new Financial Indebtedness or assume or grant any guarantee liabilities, other than current liabilities related to the day to day operation of the First Vessels. *21.1.7  **Interest hedging* The Borrowers shall enter into interest hedging arrangements with the Swap Bank only and minimum fifty per cent (50.00%) of the total interest rate risk under the Finance Documents shall be hedged in a manner acceptable in the sole discretion of the Agent prior to the first Drawdown Date. *21.1.8  **Disposals* None of the Borrowers shall sell, transfer or otherwise dispose of the whole or any part of their respective interest in the First Vessels, the Earnings nor otherwise dispose of all or any substantial part of their assets without the prior written consent of the Agent (on behalf of the Lenders). *21.1.9  **Distributions* Provided that the Borrowers and the Guarantor are in compliance with the provisions of the Facility Documents to which they are respective parties (including, but not limited to, the financial covenants set out in Clause 20 (Financial covenants)) both before and following such distributions, the Borrowers and the Guarantor may distribute dividends and make other distributions in whatever form to their shareholder(s) or any other person(s) without the prior written consent of the Agent (on behalf of the Lenders). *21.1.10  **Investm**ent restrictions* Provided that the Borrowers are in compliance with the provisions of the Finance Documents (including, but not limited to, the financial covenants in Clause 20 (Financial covenants)) both before and following such investments, the Borrowers may make new investments without the prior written consent of the Agent (on behalf of the Lenders). *21.1.11  **Bank accounts* The Borrowers shall hold and maintain all their bank accounts (hereunder the Earnings Account) with the Agent and/or Nordea Bank Finland Plc London Branch and ensure that all Earnings are paid to the Earnings Account.  *21.1.12  **Shareholders and change of control* The Borrowers shall and shall procure that their shareholder(s) do not agree to any transfer of shares, the granting of options of ownership or change in ownership of any of the Borrowers without the prior written consent of the Agent (on behalf of the Lenders). The Borrowers shall procure that the Guarantor at all times during the Security Period shall be controlled by Mr. Michael S. Hudner. *21.1.13  **Change of business* The Borrowers shall and shall procure that the Guarantor shall ensure that no substantial change is made to the general nature of the business of the Borrowers or the Guarantor (as the case may be) from that carried out at the date of this Agreement (for the Borrowers being single-purpose companies having no other business that owning and commercial ownership of the First Vessels). *21.1.14  **No mergers etc.* The Borrowers shall not and shall procure that the Guarantor shall not, enter into any merger, amalgamation, de-merger, split-up, divest, consolidation with or into any other person or be the subject of any reconstruction without the prior consent of the Agent (on behalf of the Lenders). *21.1.15  **Environmental compliance* The Borrowers shall comply in all material respects with all Environmental Laws subject to the terms and conditions of any Environmental Approval and obtain and maintain any Environmental Approval. *21.1.16  **Commercial management* The Borrowers shall procure that the Commercial Manager shall continue to be commercial manager of the Borrowers and the First Vessels and there shall be no change to such commercial management without the prior written consent of the Agent. *21.1.17  **Transaction Documents* The Borrowers shall procure that none of the Transaction Documents are amended (save for immaterial amendments which will have no impact of the Borrowers’ ability to fulfil their obligations under the Finance Documents) or terminated, or any waiver or any material terms thereof are agreed thereunder without the prior written consent of the Agent (on behalf of the Finance Parties).  **22  ****FIRST VESSELS’ COVENANTS** **22.1  ****General** Each of the Borrowers gives the undertakings set out in this Clause 22 to each Finance Party and such undertakings shall remain in force throughout the Security Period. *22.1.1  **Insurance* a)  The Borrowers shall maintain or ensure that the First Vessels are insured against such risks, including but not limited to, Hull and Machinery, Protection & Indemnity (including maximum cover for pollution liability as normally adopted by the industry for similar vessels), Hull Interest and/or Freight Interest, Loss of Hire and War Risk insurances, in such amounts, on such terms and with such insurers as the Agent shall approve. b)  The value of the Hull and Machinery insurance shall cover at least eighty per cent (80.00%) of the Market Value, and the aggregate insurance value of the First Vessels (except Protection & Indemnity and Loss of Hire) shall be at least equal to the higher of the Market Value and one hundred and twenty per cent (120.00%) of the Loan. c)  The Borrowers shall procure that the Agent (on behalf of the Finance Parties and the Swap Bank) is noted as first priority mortgagee in the insurance contracts, together with the confirmation from the underwriters to the Agent thereof that the notice of assignment with regards to the Insurances and the loss payable clauses are noted in the insurance contracts and that standard letters of undertaking are executed by the insurers. d)  Not later than fourteen (14) days prior to the expiry date of the relevant Insurances the Borrowers shall procure the delivery to the Agent of a certificate from the insurance broker(s) through whom the Insurances referred to in litra a) have been renewed and taken out in respect of the First Vessels with insurance values as required by litra b), that such Insurances are in full force and effect and that the Agent (on behalf of the Finance Parties and the Swap Bank) have been noted by the relevant insurers. e)  The Agent will, for the account of the Borrowers, take out a Mortgagee’s Interest Insurance and a Mortgagee’s Interest - Additional Perils Pollution Insurance (covering one hundred and ten per cent (110.00%) of the Loan) relevant to the First Vessels. f)  If any of the Insurances referred to in litra a) form part of a fleet cover, the Borrowers shall procure that the insurers shall undertake to the Agent that they shall neither set-off against any claims in respect of the First Vessels any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel this Insurance for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances, and shall undertake to issue a separate policy in respect of the First Vessels if and when so requested by the Agent. g)  The Borrowers shall procure that the First Vessels always are employed in conformity with the terms of the instruments of Insurances (including any warranties expressed or implied therein) and comply with such requirements as to extra premium or otherwise as the insurers may prescribe. h)  The Borrowers will not make any change to the Insurances described under litra a) and b) above without the prior written consent of the Agent (on behalf of the Lenders). *22.1.2  **Classification and repairs* The Borrowers shall keep the First Vessels in a good, safe and efficient condition consistent with first class ownership and management practice and in particular: a)  so as to maintain its class at the highest level with Det norske Veritas or another classification society approved by the Agent, free of overdue recommendations and qualifications; and b)  so as to comply with the laws and regulations (statutory or otherwise) applicable to vessels registered under the flag state of the First Vessels or to vessels trading to any jurisdiction to which any of the First Vessels may trade from time to time.  *22.1.3  **Restrictions on chartering, appointment of Managers etc.* The Borrowers shall not without the prior written consent of the Agent (on behalf of the Majority Lenders): a)  let the First Vessels on bareboat charter for any period; b)  enter into any agreement related to the chartering and operation of any of the First Vessels exceeding twelve (12) months or any pooling arrangements related to the Earnings of the First Vessels; c)  appoint a technical manager for the First Vessels other than the Technical Manager or agree to any alteration to the terms of the Technical Management Agreement; d)  change the classification society of any of the First Vessels; or e)  neither terminate, cancel, amend (save for immaterial amendments which will have no impact on the Borrowers’ ability to fulfil their obligations under the Finance Documents) or supplement any of the Charterparties nor assign any of the Charterparties to any other person. *22.1.4  **Notification of certain events* The Borrowers shall immediately notify the Agent of: a)  any accident to any of the First Vessels involving repairs where the costs will or is likely to exceed USD 500,000 (or the equivalent in any other currency); b)  any requirement or recommendation made by any insurer or classification society or by any competent authority which is not, or cannot be, immediately complied with; c)  any exercise or purported exercise of any lien on any of the First Vessels, the Earnings or the Insurances; d)  any occurrence as a result of which any of the First Vessels has become or is, by the passing of time or otherwise, likely to become a Total Loss; and e)  any claim for a material breach of the ISM Code or the ISPS Code being made against any of the Borrowers, the Managers, the Charterers or otherwise in connection with the First Vessels. *22.1.5  **Operation of the First Vessels* a)  The Borrowers shall comply, or procure the compliance in all material respects with the ISM Code and the ISPS Code, all Environmental Laws and all other laws or regulations relating to the First Vessels, their ownership, operation and management or to the business of any of the Borrowers and shall not employ any of the First Vessels nor allow their employment: (i)  in any manner contrary to law or regulation in any relevant jurisdiction including but not limited to the ISM Code; and (ii)  in the event of hostilities in any part of the world (whether war is declared or not), in any zone which is declared a war zone by any government or by the war risk insurers of the First Vessels unless the Borrowers have (at their expense) effected any special, additional or modified insurance cover which shall be necessary or customary for first class shipowners trading vessels within the territorial waters of such country at such time and has provided evidence of such cover to the Agent. Without limitation to the generality of this Clause 22.1.5, the Borrowers shall comply or procure compliance, with, as applicable, all requirements of the International Convention for the Safety of Life at Sea (SOLAS) 1974 as adopted, amended or replaced from time to time including, but not limited to, the STCW 95, the ISM Code or the ISPS Code. b)  The First Vessels shall be employed under the Charterparties or such other charterparty as approved by the Agent (on behalf of the Finance Parties) in writing. *22.1.6  **ISM Code compliance* The Borrowers will: a)  procure that the First Vessels remain subject to a SMS for the duration of the Facility; b)  procure that a valid and current SMC is maintained for each of the First Vessels for the duration of the Facility; c)  if not themselves, procure that the Technical Manager of the First Vessels maintains a valid and current DOC for the duration of the Facility; d)  immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of any of the First Vessels or of the DOC of the Technical Manager; and e)  immediately notify the Agent in writing of any “accident” or “major non-conformity”, each as those terms is defined in the Guidelines in the application of the IMO International Safety Management Code issued by the International Chamber of Shipping and International Shipping Federation. *22.1.7  **Inspections and class records* a)  The Borrowers shall permit, and shall procure that any charterers permit, one person appointed by the Agent to inspect the First Vessels once a year for the account of the Borrowers upon the Agent giving prior written notice. b)  The Borrowers shall instruct the classification society to send to the Agent, following a written request from the Agent, copies of all class records held by the classification society in relation to the First Vessels. *22.1.8  **Surveys* The Borrowers shall submit to or cause the First Vessels to be submitted to such periodic or other surveys as may be required for classification purposes and to ensure full compliance with regulations of the flag state of the First Vessels and to supply or to cause to be supplied to the Agent copies of all survey reports and confirmations of class issued in respect thereof whenever such is required by the Agent, however limited to once a year. *22.1.9  **Arrest* The Borrowers shall promptly pay and discharge: a)  all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against any of the First Vessels, the Earnings or the Insurances; b)  all tolls, taxes, dues, fines, penalties and other amounts charged in respect of any of the First Vessels, the Earnings or the Insurances; and c)  all other outgoings whatsoever in respect of any of the First Vessels, the Earnings and the Insurances,  and forthwith upon receiving a notice of arrest of any of the First Vessels, or their detention in exercise or purported exercise of any lien or claim, the Borrowers shall or shall procure that the Charterers shall procure their release by providing bail or providing the provision of security or otherwise as the circumstances may require. *22.1.10  **Total Loss* In the event that any of the First Vessels shall suffer a Total Loss, the Borrowers shall, within a period of ninety (90) days after the Total Loss Date, obtain and present to the Agent, a written confirmation from the relevant insurers that the claim relating to the Total Loss has been accepted in full, and the insurance proceeds shall be applied in prepayment of the Loan in accordance with Clause 7.1 (Mandatory prepayment - Total Loss or sale). *22.1.11  **Flag, name and registry* The Borrowers shall not, without the prior written consent of the Agent (on behalf of the Lenders), change the flag, name or registry of any of the First Vessels.   **23  ****EVENTS OF DEFAULT** **23.1  ****General** Each of the events or circumstances set out in this Clause 23 is an Event of Default. *23.1.1  **Non-payment* The Borrowers do not pay on the due date any amount payable pursuant to a Finance Document at the place and in the currency in which it is expressed to be payable unless: a)  their failure to pay is caused by administrative or technical error affecting the transfer of funds despite timely payment instructions by the Borrowers; and b)  payment is made within three (3) Business Days of its due date.  *23.1.2  **Financial covenants* Any requirement in Clause 20 (Financial covenants) is not satisfied. *23.1.3  **Other obligations* a)  The Borrowers do not comply with any provision of the Finance Documents (other than those referred to in Clause 23.1 (Non-payment) and Clause 23.1.2 (Financial covenants)). b)  No Event of Default under litra a) above in relation to Clause 22.1.9 (Arrest) will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days of the Agent giving notice to the Borrowers or any of the Borrowers becoming aware of the failure to comply. *23.1.4  **Misrepresentations* Any representation or statement made or deemed to be made by the Borrowers and/or the Guarantor in the Finance Documents or any other document delivered by or on behalf of any of the Borrowers and/or the Guarantor under or in connection with any of the Finance Documents is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.  *23.1.5  **Cross default* a)  Any Financial Indebtedness of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor is not paid when due nor within any originally applicable grace period. b)  Any Financial Indebtedness of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).  c)  Any commitment for any Financial Indebtedness of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor is cancelled or suspended by a creditor of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor as a result of an event of default (however described). d)  Any creditor of any of the Borrowers and/or the Guarantor and/or the Charteres and/or the Charter Guarantor becomes entitled to declare any Financial Indebtedness of any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor due and payable prior to its specified maturity as a result of an event of default (however described). However so that any event or circumstance as set out in this Clause 23.1.5 litra a) - d) with regard to the Charteres only, shall not constitute an Event of Default unless such event or circumstance may (in the reasonable opinion of the Agent) interfere with or effect the ability of the Charterers to comply with any and all of its obligations under the Charterparties (hereunder the obligation to pay charter hire) in any manner whatsoever.  *23.1.6  **Insolvency* a)  Any of the Borrowers and/or the Guarantor are unable or admits inability to pay their debts as they fall due, suspends making payments on any of their respective debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of their respective creditors with a view to rescheduling any of their indebtedness. b)  The value of the assets of any of the Borrowers or the Guarantor (as the case may be) is less than their respective liabilities (taking into account contingent and prospective liabilities). c)  A moratorium is declared in respect of any indebtedness of any of the Borrowers or the Guarantor (as the case may be). *23.1.7  **Insolvency proceedings* Any corporate action, legal proceedings or other procedure or step is taken in relation to: a)  the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme or arrangement or otherwise) of any of the Borrowers and/or the Guarantor;  b)  a composition, compromise, assignment or arrangement with any creditor of any of the Borrowers and/or the Guarantor; c)  the appointment of a liquidator, receiver, administrative receiver, administrator or other similar officer in respect of any of the Borrowers and/or the Guarantor; or d)  enforcement of any Security Interest over any assets of any of the Borrowers and/or the Guarantor.  *23.1.8  **Creditor’s process* Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of any of the Borrowers and/or the Guarantor having an aggregate value of USD 500,000 and is not discharged within 30 days. *23.1.9  **Unlawfulness* It is or becomes unlawful for any of the Borrowers and/or the Guarantor to perform any of their obligations under the Finance Documents.  *23.1.10  **Material adverse change* Any event or series of events occur which, in the opinion of the Agent (on behalf of the Lenders), might have a Material Adverse Effect on any of the Borrowers and/or the Guarantor and/or the Charterers and/or the Charter Guarantor.  *23.1.11  **Permits* Any licence, consent, permission or approval required in order to enforce, complete or perform any of the Transaction Documents is revoked, terminated or modified having a Material Adverse Effect on any of the Borrowers and/or the Guarantor (as the case may be). *23.1.12  **Litigation* There is current, pending or threatened any claims, litigation, arbitration or administrative proceedings against any of the Borrowers and/or the Guarantor which might, if adversely determined, have a Material Adverse Effect on any of the Borrowers and/or the Guarantor. **23.2  ****Acceleration** Upon the occurrence of an Event of Default, the Agent may, and shall if so directed by the Majority Lenders, by written notice to the Borrowers: a)  cancel the Total Commitments whereupon they shall immediately be cancelled; b)  declare that all or part of the Loan together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents, be either immediately due and payable and/or payable upon demand, whereupon they shall become either immediately due and payable or payable on demand; and/or c)  start enforcement in respect of the Security Interests established by the Security Documents; and/or  d)  take any other action, with or without notice to the Borrowers, exercise any other right or pursue any other remedy conferred upon the Agent or the Finance Parties by any of the Finance Documents or by any applicable law or regulation or otherwise as a consequence of such Event of Default.  **24  ****CHANGES TO THE PARTIES**** ** **24.1  ****No assignment by the Borrowers** The Borrowers may not assign or transfer or have assumed any part of, or any interest in, their rights and/or obligations under the Finance Documents. **24.2  ****Assignments and transfers by the Lenders** A Lender (the “**Existing Lender**”) may at any time assign, transfer or have assumed its rights or obligations under the Finance Documents relating to Facility A (a “**Transfer**”) to: a)  another Existing Lender or an affiliate of an Existing Lender; or b)  another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “**New Lender**”), provided that the minimum amount of such transfer shall be USD 10,000,000 and in multiples of USD 5,000,000. **24.3  ****Limitations of responsibility of Existing Lenders** *24.3.1  **Borrowers’ performance, etc* Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to the New Lender for: a)  the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents; b)  the financial condition of the Borrowers; c)  the performance and observance by the Borrowers of their obligations under the Finance Documents or any other documents; or d)  the accuracy of any statements (whether written or oral) made in or in connection with the Finance Documents or any other document. *24.3.2  **New Lender’s own credit appraisal, etc* Each New Lender confirms to the Existing Lender and the other Finance Parties that it: a)  has made (and will continue to make) its own independent investigation and assessment of the financial condition and affairs of the Borrowers and their related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and b)  will continue to make its own independent appraisal of the creditworthiness of the Borrowers and their related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force. *24.3.3  **Re-transfer to an Existing Lender, etc* Nothing in any Finance Document obliges an Existing Lender to: a)  accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or b)  support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by the Borrowers of their obligations under the Finance Documents or otherwise. **24.4  ****Procedure for transfer** Any Transfer shall be effected as follows: a)  the Existing Lender must notify the Agent of its intention to Transfer all or part of its rights and obligations by delivering a duly completed Transfer Certificate to the Agent duly executed by the Existing Lender and the New Lender; b)  subject to Clause 24.2 (Assignments and transfers by the Lenders), the Agent shall as soon as reasonable possible after receipt of a Transfer Certificate execute the Transfer Certificate and deliver a copy of the same to each of the Existing Lender and the New Lender; and c)  subject to Clause 24.2 (Assignments and transfers by the Lenders), the Transfer shall become effective on the Transfer Date. **24.5  ****Effects of the Transfer** On the Transfer Date: a)  to the extent that in the Transfer Certificate the Existing Lender seeks to transfer its rights and obligations under the Finance Documents, the Borrowers and the Existing Lender shall be released from further obligations to one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (the “**Discharged Rights and Obligations**”); b)  the Borrowers and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrowers and the New Lender have assumed and/or acquired the same in place of the Borrowers and the Existing Lender; c)  the Agent, the Arranger, the New Lender and the other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an original Lender hereunder with the rights and/or obligations acquired or assumed by it as a result of the Transfer and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and d)  the New Lender shall become a Party as a “Lender”. **24.6  ****Further assurances** The Borrowers undertake to procure that in relation to any Transfer, the Borrowers shall (at their own cost) at the request of the Agent execute such documents as may in the discretion of the Agent be necessary to ensure that the New Lender attains the benefit of the Finance Documents. **24.7  ****Disclosure of information** Any Lender may disclose: a)  to any of its affiliates and a potential assignee;  b)  to whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or the Borrowers; and c)  to whom, to the extent that, information is required to be discloses by any applicable law, such information about the Borrowers and the Finance Documents as that Lender shall consider appropriate. **24.8  ****Assignment or transfer fee** The New Lender shall, on the date upon which a Transfer takes effect, pay to the Agent (for its own account) a fee of USD 2,000.  **25  ****ROLE OF THE AGENT AND THE ARRANGER** **25.1  ****Appointment and authorisation of the Agent** a)  Each other Finance Party and the Swap Bank appoints the Agent to act as its agent under and in connection with the Finance Documents.  b)  Each other Finance Party and the Swap Bank authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. **25.2  ****Duties of the Agent** The Agent shall not have any duties or responsibilities except those expressly set forth in the Finance Documents, and the Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. The Agent shall: a)  promptly forward to a Party the original or a copy of any document which is delivered to it in its capacity as Agent for the attention of that Party by another Party; b)  supply the other Finance Parties and the Swap Bank with all material information which the Agent receives from the Borrowers; c)  if it receives notice from a Party referring to this Agreement, describing an Event of Default and stating that the circumstance is an Event of Default, promptly notify the Finance Parties and the Swap Bank; and d)  from it receives sufficient information; promptly notify the Lenders of the occurrence of any Event of Default arising under Clause 23 (Events of Default). **25.3  ****Role of the Arranger** Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document. **25.4  ****Relationship** Except as regards the Second Mortgage over MT “Pequod”, the relationship between the Agent and the other Finance Parties and the Swap Bank is that of agent and principal only. Except as regards its holding title to the Second Mortgage on MT “Pequod” as security trustee for the Finance Parties and the Swap Bank, nothing in this Agreement shall be construed as to constitute the Agent or the Finance Parties as trustee or fiduciary for any other person, and neither the Agent nor the Finance Parties or the Swap Bank shall be bound to account to any Finance Party for any sum or the profit element of any sum received by it for its own account. With respect to the Second Mortgage over MT “Pequod”, each of the Finance Parties and the Swap Bank hereby appoint the Agent as its security trustee/mortgage holder with full power to receive, hold, administer and enforce the Second Mortgage on MT “Pequod” for the benefit of the Finance Parties and the Swap Bank. **25.5  ****Business with the Borrowers** The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any of the Borrowers. **25.6  ****Rights and discretions of the Agent** a)  The Agent may rely on: (i)  any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and (ii)  any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify. b)  The Agent may assume (unless it has received notice to the contrary in its capacity as Agent for the Lenders) that: (i)  no Event of Default has occurred (unless it has actual knowledge of an Event of Default under Clause 23.1 (Non-payment)); and (ii)  any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.  c)  The Agent may engage, pay for and rely on the advise or services of any lawyers, accountants, surveyors or other experts. d)  The Agent may act in relation to the Finance Documents through its personnel and agents. e)  The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement. f)  Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of duty of confidentiality or render it liable to any person. **25.7  ****Majority Lenders’ instructions** a)  Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts in accordance with an instruction of the Majority Lenders. b)  Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties. c)  The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions. d)  In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders) the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders. e)  The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document. **25.8  ****Responsibility for documentation** Neither the Agent nor the Arranger: a)  is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, the Borrowers or any other person in or in connection with any Finance Document; or b)  is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made in anticipation of or in connection with any Finance Document. **25.9  ****Exclusion of liability** a)  Without limiting litra b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. b)  No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee and agent of the Agent may rely on this Clause. c)  The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose. d)  Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arranger that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arranger. **25.10  ****Lenders’ indemnity to the Agent** Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then reduced to zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three (3) Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by the Borrowers or the Guarantor pursuant to a Finance Document). **25.11  ****Resignation of the Agent** a)  The Agent may resign and appoint one of its affiliates as successor by giving notice to the other Finance Parties, the Swap Bank and the Borrowers.  b)  Alternatively the Agent may resign by giving notice to the other Finance Parties, the Swap Bank and the Borrowers in which case the Majority Lenders (after consultation with the Borrowers) may appoint a successor Agent. c)  If the Majority Lender have not appointed a successor Agent in accordance with litra b) above within thirty (30) days after notice of resignation was given, the Agent (after consultation with the Borrowers) may appoint a successor Agent. d)  The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. e)  The Agent’s resignation notice shall only take effect upon appointment of a successor. f)  Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 25. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. g)  After consultation with the Borrowers, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with litra b) above. In this event, the Agent shall resign in accordance with litra b) above. **25.12  ****Confidentiality** a)  In acting as agent for the Finance Parties and the Swap Bank, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.  b)  If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it. **25.13  ****Credit appraisal by the Lenders** Without affecting the responsibility of the Borrowers for information supplied by any of them or on their behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document, including (without limitation): a)  the financial condition, status and nature of the Borrowers and/or the Guarantor; b)  the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and c)  whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document, entered into, made or executed in anticipation of, under or in connection with any Finance Document. **25.14  ****Conduct of business of the Finance Parties** No provision of this Agreement will: a)  interfere with the right of any Finance Party or the Swap Bank to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; b)  oblige any Finance Party or the Swap Bank to investigate or claim any credit, relief, remission or repayment available to it or to the extent, order or manner of any claim; or c)  oblige any Finance Party or the Swap Bank to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.  **26  ****SHARING AMONG THE FINANCE PARTIES** **26.1  ****Payment to Finance Parties** If a Finance Party (a “**Recovering Finance Party**”) receives or recovers any amount from the Borrowers other than in accordance with Clause 27 (Payment mechanics) and applies that amount to a payment due under the Finance Documents then: a)  the Recovering Finance Party shall promptly, within three (3) Business Days, notify details of the receipt or recovery to the Agent; b)  the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received by or made by the Agent and distributed in accordance with Clause 27 (Payment mechanics), without taking account of Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and c)  the Recovering Finance Party shall, within three (3) Business Days of demand by the Agent, pay to the Agent an amount (the “**Sharing Payment**”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 27.5 (Partly payments). **26.2  ****Redistribution of payments** The Agent shall treat the Sharing Payment as if it had been paid by the Borrowers and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 27.5 (Partial payments). **26.3  ****Recovering Finance Party’s rights** a)  On a distribution by the Agent under Clause 26.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution.  b)  If and to the extent that the Recovering Finance Party is not able to rely on its rights under litra a) above, the Borrowers shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable. **26.4  ****Reversal of redistribution** If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then: a)  each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 26.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and b)  that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the Borrowers will be liable to the reimbursing Finance Party for the amount so reimbursed. **26.5  ****Exceptions** a)  This Clause 26 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the Borrowers. b)  A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal proceedings, if: (i)  it notified that other Finance Party of the legal proceedings; and (ii)  that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.  **27  ****PAYMENT MECHANICS** **27.1  ****Payments to the Agent** All payments by the Borrowers or a Lender under the Finance Documents shall be made: a)  to the Agent to its account with such office or bank as the Agent may from time to time designate in writing to the Borrowers or a Lender for this purpose; and b)  for value on the due date at such times and in such funds as the Agent may specify to the Party concerned as being customary at the time for settlement of transactions in the relevant currency in the place of payment. **27.2  ****Distributions by the Agent** Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 27.3 (Distributions to the Borrowers) and 27.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement, to such account as that Party may notify to the Agent by not less than five (5) Business Days’ notice. **27.3  ****Distributions to the Borrowers** The Agent may (with the consent of the Borrowers or in accordance with Clause 28 (Set-off)), apply any amount received by it for the Borrowers in or towards payment (on the date and in the currency and funds of receipt) of any amount due from the Borrowers under the Finance Documents or in or towards purchase of any amount of currency to be so applied. **27.4  ****Clawback** a)  Where a sum is to be paid to the Agent under the Finance Documents for distribution to another Party, the Agent is not obliged to pay that sum to that other Party until it has been able to establish to its satisfaction that it has actually received that sum.  b)  If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount was paid by the Agent shall on demand refund the same amount to the Agent, together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds. **27.5  ****Partial payments** If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by any of the Borrowers under the Finance Documents, the Agent shall apply that payment towards the obligations of the Borrowers under the Finance Documents in the following order: a)  firstly, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent under the Finance Documents; b)  secondly, in or towards payment pro rata of any accrued interest (including default interest), fee or commissions due but unpaid under this Agreement; c)  thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and d)  fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. **27.6  ****Application following an Event of Default** On either (i) the completion of a sale of the Vessel, either by forced auction or private treaty, or (ii) the receipt of any monies by the Agent pursuant to the sale proceeds of a First Vessel (as the case may be), such monies shall be applied in the following order: a)  firstly, in respect of all costs and expenses whatsoever incurred in connection with or about incidental to the said sale; b)  secondly, in or towards satisfaction of all prior claims (being any claims, liabilities or debts owed or taking priority in respect of such proceeds over the Security Interests constituted by the Security Documents) secured on the relevant First Vessel; c)  thirdly, in or towards payment pro rata of all sums owed to the Finance Parties under the Finance Documents; d)  fourthly, in or towards payment of all sums owed to the Swap Bank under any Swap Agreement(s) at the time of default; and e)  fifthly, the balance, if any to the Borrowers or to their order. **27.7  ****No set-off by the Borrowers** All payments to be made by the Borrowers under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. **27.8  ****Payment on non-Business Days** a)  Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).  b)  During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date. **27.9  ****Currency of account** The Borrowers shall pay: a)  any amount payable under this Agreement, except as otherwise provided for herein, in USD; and b)  all payments of Costs and Taxes in the currency in which the same were incurred.  **28  ****SET-OFF**** ** A Finance Party may, to the extent permitted by applicable law, set off any matured obligation due from the Borrowers under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligations owed by that Finance Party to the Borrowers, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.  **29  ****NOTICES**** ** **29.1  ****Communication in writing** Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by telefax or letter. Any such notice or communication addressed as provided in Clause 29.2 (Addresses) will be deemed to be given or made as follows: a) if by letter, when delivered at the address of the relevant Party; b) if by telefax, when received. However, a notice given in accordance with the above but received on a day which is not a Business Day or after 16:00 hours in the place of receipt will only be deemed to be given at 9:00 hours on the next Business Day in that place. **29.2  ****Addresses** Any communication or document to be made under or in connection with the Finance Documents shall be made or delivered to the address and telefax number of each Party and marked for the attention of the department or persons set out below and, in case of any New Lender, to the address notified to the Agent: If to the Agent: Nordea Bank Norge ASA Att: Shipping, Offshore and Oil Services Middelthuns gate 17 P.O. Box 1166 Sentrum N-0107 Oslo, Norway Telefax No: +47 22 48 66 68  If to the Borrowers: c/o B + M Management Ltd.  Par-la-Ville Place 14 Par-la-Ville Road Hamilton HMJX Bermuda Telefax No: + 1 441 295 6796 or any substitute address and/or telefax number and/or marked for such other attention as the Party may notify to the other Agent (or the Agent may notify the other Parties if a change is made by the Agent) by not less than five (5) Business Days’ prior notice. **29.3  ****Communication with the Borrowers** All communication from or to the Borrowers shall be sent through the Agent. **29.4  ****Language** Communication to be given by one Party to another under the Finance Documents shall be given in the English language or, if not in English and if so required by the Agent, be accompanied by a certified English translation and, in this case, the English translation shall prevail unless the document is a statutory or other official document.  **30  ****CALCULATIONS** All sums falling due by way of interest, fees and commissions under the Finance Documents accrue from day-to-day and shall be calculated on the basis of the actual number of days elapsed and a calendar year of 360 days (or 365 days where applicable) and for the actual number of days elapsed. The calculations made by the Agent of any interest rate or any amount payable pursuant to this Agreement shall be conclusive and binding upon the Borrowers in the absence of any manifest error.  **31  ****MISCELLANEOUS** **31.1  ****Partial invalidity** If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provisions under any law of any other jurisdiction will in any way be affected or impaired. **31.2  ****Remedies and waivers** No failure to exercise, nor any delay in exercising on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law. **31.3  ****Amendments and waivers** *31.3.1  **Required consents* a)  Subject to Clause 31.3.2 (Exceptions), any term of the Finance Documents may be amended or waived only with the written consent of the Majority Lenders and the Borrowers and any such amendment will be binding on all Parties.  b)  The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause. *31.3.2  **Exceptions* An amendment to or waiver that has the effect of changing or which relates to: a)  the definition of “Majority Lenders”; b)  an extension of the date of any payment of any amount under the Finance Documents; c)  a reduction in Applicable Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable; d)  an increase in or extension of any Commitment; e)  a term of the Finance Documents which expressly requires the consent of all the Lenders; f)  a proposed substitution or replacement of any of the Borrowers; or g)  a change of Clauses 2.2 (Nature of a Finance party’s rights and obligations), 17 (Security), 22.1.1 (Insurance), 24 (Changes to the Parties) and this Clause 31.3, shall not be made without the prior written consent of all the Lenders. An amendment or waiver which relates to the rights or obligations of the Agent or the Arranger may not be effected without the consent of the Agent or the Arranger. **31.4  ****Disclosure of information and confidentiality** Each of the Finance Parties may disclose to each other or to their professional advisers any kind of information which the Finance Parties have acquired under or in connection with any Finance Document. The Parties are obliged to keep confidential all information in respect of the terms and conditions of this Agreement. This confidentiality obligation shall not apply to any information which:  a)  is publicised by a Party as required by applicable laws and regulations;  b)  has entered the public domain or is publicly known, provided that such information is not made publicly known by the receiving Party of such information; or  c)  was or becomes, as the Party is able to demonstrate by supporting documents, available to the such Party on a non-confidential basis prior to the disclosure thereof.  **31.5  ****Conflicting provisions** In case of conflict between this Agreement and the terms of any of the Security Documents, the terms and conditions of this Agreement shall prevail.  **32  ****GOVERNING LAW AND ENFORCEMENT** **32.1  ****Governing law** This Agreement shall be governed by Norwegian law. **32.2  ****Jurisdiction** a)  For the benefit of each Finance Party, the Borrowers agree that the courts of Oslo, Norway, have jurisdiction to settle any disputes arising out of or in connection with the Finance Documents including a dispute regarding the existence, validity or termination of this Agreement, and each of the Borrowers accordingly submit to the non-exclusive jurisdiction of the Oslo District Court (*Oslo* *tingrett*).  b)  Nothing in this Clause 32.2 shall limit the right of the Finance Parties to commence proceedings against any of the Borrowers in any other court of competent jurisdiction. To the extent permitted by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. **32.3  ****Service of process** Without prejudice to any other mode of service, each of the Borrowers: a)  irrevocably appoints Wikborg Rein & Co., Kronprinsesse Märthas plass 1, P.O. Box 1513 Vika, N-0117 Oslo, Norway as its agent for service of process in relation to any proceedings before Norwegian courts in connection with any Finance Document; and b)  agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned. * * * 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 1** **LENDERS AND COMMITMENTS**  **Lenders** **Commitments**  **Facility A Commitments****Facility B Commitments****Total Commitments**    Nordea Bank Norge ASAUSD 122,100, 000USD 16,000,000USD 138,100,000     Total: USD 122,100,000 USD 16,000,000 **USD 138,100,000**    99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 2** **CONDITIONS PRECEDENT**  **1  ****CORPORATE AUTHORISATION** **1.1  ****In respect of****each of the Borrowers, the Guarantor, the Charterers, the Charter Guarantor and the owning companies for each of the Second Vessels:** a)  Certificate of Incorporation/Certificate of Registration; b)  Memorandum and Articles of Association/Bye-laws; c)  Resolutions passed at a board meeting of the relevant Borrower evidencing: (i)  the approval of the terms of, and the transactions contemplated by, the Transaction Documents and the registration the First Mortgage; and (ii)  the authorisation of its appropriate officer or officers or other representatives to execute the Transaction Documents and any other documents necessary for the transactions contemplated by the Transaction Documents, on its behalf;  d)  Power of Attorney (notarised and legalised);  e)  Updated Good Standing Certificate/Certificate of Compliance; and f)  Secretary’s Certificate (notarised and legalised).  **1.2  ****In respect of the Sellers:** a)  Corporate resolutions to the sale and delivery of the relevant First Vessel; and b)  Power of Attorney.  **2  ****AUTHORISATIONS** All approvals, authorisations and consents required by any government or other authorities for the Borrowers, the Guarantor and the Charterers to enter into and perform their obligations under this Agreement and/or any of the Transaction Documents.   **3  ****THE****FIRST VESSEL****S** In respect of MT “Challenge Express” (tbr “Sagamore”): a)  The Bill of Sale; b)  The MOA; c)  The Protocol of Delivery and Acceptance under the MOA; d)  The Charterparty; e)  The Protocol of Delivery and Acceptance under the Charterparty; f)  Evidence (by way of transcript of registry) that the relevant First Vessel is, or will be, registered in the name of the relevant Borrower in the Bahamas Ship Registry, that the relevant First Mortgage has been, or will in connection with the utilisation of the relevant Drawdown be, executed and recorded with its intended first priority against the relevant First Vessel and that no other encumbrances, maritime liens, mortgages or debts whatsoever are registered against the relevant First Vessel; g)  An updated class certificate related to the relevant First Vessel from the relevant classification society, confirming that such First Vessel is classed with the highest class in accordance with Clause 22.1.2 (Classification and repairs), free of extensions and overdue recommendations; h)  Copies of confirmations from the insurers (copies of the insurance policies/cover notes to follow) documenting that insurance cover has been taken out in respect of the relevant First Vessel in accordance with Clause 22.1.1 (Insurance), and evidencing that the Agent’s (on behalf of the Finance Parties and the Swap Bank) Security Interest in the insurance policies have been noted in accordance with the relevant notices as required under the Assignment Agreement; i)  The relevant First Vessel’s current SMC; j)  The Technical Manager’s current DOC; k)  The ISPS Certificate; and l)  Deletion Certificate from the relevant ship registry.  **4  ****FINANCE DOCUMENTS** a)  The Agreement; b)  The Assignment Agreement; c)  Notice of Assignment and Acknowledgement in respect of the Earnings; d)  Notice of Assignment and Acknowledgement in respect of the Insurances; e)  Notice of Assignment and Acknowledgement in respect of the Charter Guarantees; f)  The Charterparty Assignments; g)  Notice of Assignment and Acknowledgement in respect of the Charterparty; h)  The Account Charge; i)  The First Mortgages; j)  The First Deeds of Covenants; k)  The Second Mortgages (or an amendment thereto);  l)  The Second Deeds of Covenants (or an amendment thereto);  m)  The Guarantee; and n)  The Co-ordination Agreement.  **5  ****TRANSACTION DOCUMENTS** a)  The Charter Guarantees; b)  The Technical Management Agreements; and c)  The Fee Letter(s).  **6  ****MISCELLANEOUS** a)  The Drawdown Notice at least three (3) Business Days prior to the Drawdown Date; b)  Evidence that “Rip Hudner”, “Bonnie Smithwick” and “Searose G” are still employed under the respective Charterparites; c)  Evidence that all fees referred to in Clause 11 (Fees), as are payable on or prior to the relevant Drawdown Date, have or will be paid on its due date; d)  A Compliance Certificate confirming that the Borrowers and the Guarantor are in compliance with the financial covenants as set out in Clause 20 (Financial covenants);  e)  The effective interest letter. f)  Evidence (by way of transcript of registry) that the relevant Second Mortgage has been, or will in connection with the utilisation of the first Drawing, be executed and recorded with its intended second priority against the relevant Second Vessel in the Bahamas or the Liberian Ship Registry (as the case may be); g)  Evidence of capital structure of the Borrowers and the Guarantor satisfactory to the Agent; h)  Appointment of Wikborg Rein & Co. and the acceptance by Wikborg Rein & Co. as the Borrowers’ process agent in Norway under the Finance Documents; i)  Appointment of Wikborg Rein & Co. and the acceptance by Wikborg Rein & Co. as the Guarantor’s process agent in Norway under the Guarantee; and j)  Any other documents as reasonably requested by the Agent.  **7  ****LEGAL OPINIONS** a)  A legal opinion from Thommessen Krefting Greve Lund AS related to Norwegian law issues;  b)  A legal opinion from Higgs & Johnson related to Bahamas law issues; c)  A legal opinion from Seward & Kissel LLP related to Marshall Island law issues; d)  A legal opinion from Seward & Kissel LLP related to Liberian law issues; e)  A legal opinion from Prettys related to English law issues; and f)  Any such other favourable legal opinions in form and substance satisfactory to the Agent from lawyers appointed by the Agent on matters concerning all relevant jurisdictions. 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 3** **FORM OF DRAWDOWN NOTICE**  To: Nordea Bank Norge ASA, as Agent From: OBO Holdings Ltd., BHOBO One Ltd., BHOBO Two Ltd., BHOBO Three Ltd., RMJ OBO Shipping Ltd. and Sagamore Shipping Ltd.  Date: [•] 2005  **USD 138,100,000 REVOLVING REDUCING AND TERM LOAN FACILITIES AGREEMENT DATED OCTOBER 2005 (THE “AGREEMENT”)** We refer to Clause 5.1 (Delivery of the Drawdown Notice) of the Agreement. Terms defined in the Agreement shall have the same meaning when used in this Drawdown Notice. a)  You are hereby irrevocably notified that we wish to make the following drawdown of a Drawdown under: Facility:   [ ]  Proposed Drawdown Date: [ ]  Principal Amount:  [ ] Interest Period:  [ ] b)  The proceeds of the Loan shall be credited to [•] [*insert name and number of account*]. c)  We confirm that, as of the date hereof (i) each condition specified in Clause 4 (Conditions Precedent) of the Agreement is satisfied; (ii) each of the representations and warranties set out in Clause 18 (Representations and warranties) of the Agreement is true and correct; and (iii) no event or circumstances has occurred and is continuing which constitute or may constitute an Event of Default.  99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   Yours sincerely for and on behalf of  **OBO HOLDINGS LTD.** **BHOBO ONE LTD.** **BHOBO TWO LTD.** **BHOBO THREE LTD.** **RMJ OBO SHIPPING LTD.** **SAGAMORE SHIPPING LTD.**   By: __________________________________ Name: Title: [authorised officer]   99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 4** **FORM OF SELECTION NOTICE**  To: Nordea Bank Norge ASA, as Agent From: OBO Holdings Ltd., BHOBO One Ltd., BHOBO Two Ltd., BHOBO Three Ltd., RMJ OBO Shipping Ltd. and Sagamore Shipping Ltd. Date: [•] 2005  **USD 138,100,000 REVOLVING REDUCING AND TERM LOAN FACILITIES AGREEMENT DATED OCTOBER 2005 (THE “AGREEMENT”)** We refer to the Agreement. Terms defined in the Agreement shall have the same meaning when used in this Selection Notice. a)  We refer to the Facility B Loan with an Interest Period ending on [•]. b)  We request that the next Interest Period for the above Facility B Loan is [•]. c)  We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Selection Notice.  This Selection Notice is irrevocable.  Yours sincerely for and on behalf of  **OBO HOLDINGS LTD.** **BHOBO ONE LTD.** **BHOBO TWO LTD.** **BHOBO THREE LTD.** **RMJ OBO SHIPPING LTD.** **SAGAMORE SHIPPING LTD.**   By: ____________________________________ Name: Title: 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 5** **FORM OF COMPLIANCE CERTIFICATE** To: Nordea Bank Norge ASA, as Agent From: OBO Holdings Ltd., BHOBO One Ltd., BHOBO Two Ltd., BHOBO Three Ltd., RMJ OBO Shipping Ltd. and Sagamore Shipping Ltd. Date: [•] [*To be delivered no later than [ninety (90)/sixty (60)] days after each Reporting Date*]  **USD 138,100,000 REVOLVING REDUCING AND TERM LOAN FACILITIES AGREEMENT DATED OCTOBER 2005 (THE “AGREEMENT”)** We refer to the Agreement. Terms defined in the Agreement shall have the same meaning when used in this Compliance Certificate. With reference to Clauses 19.2.2 (Compliance certificate) and 20 (Financial covenants) of the Agreement, we confirm that as at [•] [insert relevant Reporting Date]: **a)  ****Minimum Value Adjusted Equity Ratio**. The Minimum Value Adjusted Equity Ratio of the Guarantor (on a consolidated basis) was [•]. The Borrowers shall procure that the Guarantor at all times maintain a minimum Value Adjusted Equity Ratio of thirty per cent (30.00%). The covenant in Clause 20.2.1 (Minimum Value Adjusted Equity Ratio) is thus [not] satisfied. **b)  ****Minimum Value Adjusted Equity Ratio**. The Minimum Value Adjusted Equity of the Guarantor (on a consolidated basis) was USD [•]. The Borrowers procure that the Guarantor at all times maintains a Minimum Value Adjusted Equity of USD 30,000,000. The covenant set out in Clause 20.2.2 (Minimum cash balance) is thus [not] satisfied. **c)  ****Ratio EBITDA to Fixed Charges**. The ratio of EBITDA to Fixed Charges of the Guarantor (on a consolidated basis) was [•]. The Borrowers shall and shall procure that the Guarantor (on a consolidated basis) at all times ensure that ratio of EBITDA to Fixed Charges 1.125:1.00 or greater on a twelve (12) months rolling basis up until the Final Maturity Date. The covenant in Clause 20.2.3 (Ratio EBITDA to Fixed Charges) is thus [not] satisfied.  **d)  ****Positive working capital.**The working capital of the Borrowers was [•] and of the Guarantor (on a consolidated basis) was [·]. The Borrower shall and shall procure that the Guarantor shall at all times ensure that their current assets exceeds their current liabilities (excluding the current portion of long term debt) and of which an amount of the higher of six per cent (6.00%) of the long-term debt and USD 5,000,000 shall be in cash or money market investments, all as determined in accordance with GAAP. The covenant set out in Clause 20.2.4 (Positive working capital) is thus [not] satisfied. **e)  ****[To be measured first time three (3) years after the date of the Agreement] Minimum value**. The Market Value of the First Vessels pursuant to the attached survey is [•]. The Borrowers shall ensure that the Market Value of the First Vessels shall be at least (i) one hundred and ten per cent (110.00%) of Facility A for year 1 to 3 (including) and one hundred and twenty per cent (120.00%) of Facility A at any time thereafter and (ii) one hundred per cent (100.00%) of the Facilities at any time. The covenant in Clause 20.2.4 (minimum value) is thus [not] satisfied. **f)  ****Insurance.** We confirm that each of the First Vessels is insured against such risks and in such amounts as set out in Appendix 1 hereto.  g)  We confirm that, as of the date hereof (i) each of the representations and warranties set out in Clause 18 (Representations and warranties) of the Agreement is true and correct; and (ii) no event or circumstances has occurred and is continuing which constitute or may constitute an Event of Default. Yours sincerely for and on behalf of  **OBO HOLDINGS LTD.** **BHOBO ONE LTD.** **BHOBO TWO LTD.** **BHOBO THREE LTD.** **RMJ OBO SHIPPING LTD.** **SAGAMORE SHIPPING LTD.**   By: __________________________________ Name: Title: [authorised officer]  99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 1**  **Name of Vessel** **Hull & Machinery** **Increased Value** **Loss of Hire** **Protection & Indemnity** **War Risk** M/V “-Rip Hudner ” **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** Groupama* 25.0% Lloyds* 80.0% Gerling* 100.0% Steamship Mutual*100.0% Lloyds** 100.0% HSBC, Singapore* 10.0%Bluewater*20.0%       Gerling*12.5%         Bluewater*7.5%         Lloyds**20.0%         Mitsui**10.0%         American Hull Insurance Syndicate***15.0%         MV “Bonnie Smithwick” **Insurer:****Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** Groupama*25.0% Lloyds* 80.0% Gerling* 100.0% UK Club* 100.0% Lloyds** 100.0% HSBC, Singapore*10.0%Bluewater*20.0%       Gerling*12.5%         Bluewater*7.5%         Lloyds**20.0%         Mitsui**10.0%         American Hull Insurance Syndicate***15.0%         MV “Searose G” **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** **Insurer:** **Amount:** Groupama*25.0%Lloyds*80.0%Gerling*100.0%UK Club*100.0%Lloyds**100.0%HSBC, Singapore*10.0%Bluewater*20.0%       Gerling*12.5%         Bluewater*7.5%         Lloyds**20.0%         Mitsui**10.0%         American Hull Insurance Syndicate***15.0%         MV “Roger M. Jones”                                            MT “Saga-more”                                             * Placed by Marsh, Oslo ** Placed by Willis, London *** Placed by Seaborne International, New York       99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 6** **FORM OF TRANSFER CERTIFICATE**  To: Nordea Bank Norge ASA, as Agent From: [•] (the ”**Existing Lender**” and [•] (the ”**New Lender**”) Date: [•]  **USD 138,100,000 REVOLVING REDUCING AND TERM LOAN FACILITIES AGREEMENT DATED OCTOBER 2005 (THE “AGREEMENT”)** We refer to the Agreement. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate. With reference to Clause 24 (Changes to the Parties): a)  The Existing Lender, in its capacity as Lender under the Agreement, confirms that it participates with [] per cent of the Total Commitments. b)  The Existing Lender hereby transfers to the New Lender [] per cent of the Total Commitments as specified in the Schedule hereto, and of the equivalent rights and interest in all Finance Documents, and the New Lender hereby accepts such transfer from the Existing Lender in accordance with the terms set out herein and Clause 24 (Changes to the Parties) of the Agreement and assumes the same obligations to the other Finance Parties as it would have been under if it was an original Lender. c)  The proposed Transfer Date is [], as from which date the Transfer of such portion of the Total Commitments shall take full legal effect.  d)  The New Lender confirms that it has received a copy of the Agreement, together with such other information as it has required in connection with this transaction. The New Lender expressly acknowledges and agrees to the limitations on the Existing Lender’s responsibility set out in Clause 24.3 (Limitations of responsibility of Existing Lenders) of the Agreement. e)  The New Lender hereby undertakes to the Existing Lender and the Borrowers that it will perform in accordance with the terms and conditions of the Agreement all those obligations which will be assumed by it upon execution of this Transfer Certificate. f)  The address, telefax number and attention details for notices, as well as the account details of the New Lender, are set out in the Schedule.  g)  This Transfer Certificate is governed by Norwegian law, with Oslo City Court (*Oslo tingrett*) as legal venue.   99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **The Schedule** **Commitments/rights and obligations to be transferred** **I****Existing Lender:**[ ]   **II****New Lender:**[ ]   **III****Total Commitments of Existing Lender:**USD [ ]   **IV****Aggregate amount transferred:**USD [ ]   **V****Total Commitments of New Lender:**USD [ ]   **VI****Transfer Date:**[ ] **Administrative Details / Payment Instructions of New Lender** Notices to New Lender:  [ ]  [ ] Att: [ ] Telefax no:  + [ ] [Insert relevant office address, telefax number and attention details for notices and payments to the New Lender.] Account details of New Lender: [Insert relevant account details of the New Lender.]  **Existing Lender**:     **New Lender**: [•]      [•]  By: __________________________________ By: ________________________________ Name:      Name: Title:      Title: This Transfer Certificate is accepted and agreed by the Agent (on behalf of the Majority Lenders) and the Borrowers and the Transfer Date is confirmed as [  ]. **Agent:**      **Borrowers**: Nordea Bank Norge ASA    [ ]  By: __________________________________ By: ________________________________ Name:      Name: Title:      Title:     **SCHEDULE 7** **FORM OF ASSIGNMENT AGREEMENT**  **THIS ASSIGNMENT AGREEMENT**(the “**Assignment Agreement**”) is made on October 2005 between: (1) **OBO Holdings Ltd.**,** **of Trust Company Complex, Ajeltake Island, Marshall Islands, MH9696;,  **BHOBO One Ltd.** of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960;  **BHOBO Two Ltd.**of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960;  **BHOBO Three Ltd.** of Trust Company Complex, Ajeltake Island, Marshall Islands, MH96960; **RMJ OBO SHIPPING LTD.** of Trust Company Complex, Ajeltake Island, Marshall Islands MH96960; and **SAGAMORE SHIPPING LTD.** of Trust Company Complex, Ajeltake Island, Marshall Islands MH96960,  as joint and several borrowers (the “**Borrowers**”); and  (2) **Nordea Bank Norge ASA**of Middelthunsgate 17, N-0368 Oslo, Norway, organisation number 911 044 110 as agent on behalf of the Finance Parties and the Swap Bank (as defined in the Agreement as referred to below) (the “**Agent**”). **Background**: (A) Pursuant to the terms and conditions of a loan agreement dated October 2005 (the “**Agreement**”) between the Borrowers as joint and several borrowers, the banks and financial institutions listed in schedule 1 thereto as lenders (the “**Lenders**”), Nordea Bank Finland Plc., as swap bank (the “**Swap Bank**”) and Nordea Bank Norge ASA as agent for the Lenders (the “**Agent**”) and mandated lead arranger (the “**Arranger**”), the Lenders have agreed to make available to the Borrowers (i) a revolving reducing facility in the aggregate amount of USD 122,100,000 and (ii) a term loan facility in the aggregate amount of up to USD 16,000,000 (the “**Loans**”); and (B) it is a condition precedent to the Lenders making the Loans available to the Borrowers that the Borrowers execute and deliver, inter alia, this Assignment Agreement and grant the Security Interests set out herein as security for their obligations towards (i) the Finance Parties under the Agreement and (ii) the Swap Bank under any Swap Agreement(s). **NOW THEREFORE**:  **1  ****INTERPRETATION** **1.1  ****Definitions** In this Assignment Agreement, including the preamble hereto (unless the context otherwise requires), any term or expression defined in the preamble shall have the meanings ascribed to it therein. In addition, terms and expressions not defined herein but whose meanings are defined in the Agreement shall have the meanings set out therein. **1.2  ****Construction** In this Assignment Agreement, unless the context otherwise requires: a)  reference to Clauses or Appendices are to be construed as references to clauses or appendices of this Assignment Agreement unless otherwise stated; b)  references to (or to any specified provision of) this Assignment Agreement or any other document shall be construed as references to this Assignment Agreement, that provision or that document as from time to time amended; and c)  words importing the plural shall include the singular and vice versa.  **2  ****ASSIGNMENT OF EARNINGS, INSURANCES****AND CHARTER GUARANTEE****S** **2.1  ****Assignment** To secure the payment and the discharge of the Borrowers’ obligations under the Agreement and any Swap Agreement and the payment of all sums which from time to time may become due thereunder, and to secure the performance and observance of and compliance with all the covenants, terms and conditions contained in the Agreement and any Swap Agreement, the Borrowers hereby assign to the Agent (on behalf of the Finance Parties and the Swap Bank) on first priority: a)  the Earnings;  b)  the Insurances, and c)  any and all rights to receive any monies under the Charter Guarantee (the “**Charter Guarantees**”). **2.2  ****Notice and acknowledgement, etc.** a)  The Borrowers undertake promptly to give notice of the assignment of the Earnings to the Charterers and any other third party from which any of the Earnings or amounts may become payable in the form set out in Appendix 1 hereto and procure that any recipient of such notice acknowledges receipt of the notice as set out therein.  b)  The Borrowers undertake to insure and keep the First Vessels fully insured in accordance with Clause 22.1.1 (Insurance) of the Agreement; and (i)  in the event that the Insurances, or any one of them, have been taken out on conditions other than the Norwegian Marine Insurance Plan of 1996, version 2003 (as amended from time to time) (the “**Plan**”), to give all the relevant insurers notice in the form of Appendix 2 (A) hereto, and procure that the said insurers acknowledge receipt of such notice in the form of Appendix 2 (B) hereto or give such other form of notice and procure such other form of acknowledgement as the Agent shall require in writing to the Borrowers; and (ii)  in the event that the Insurances, or any one of them, have been taken out according to the Plan, to procure written statements from all the relevant insurers and/or approved brokers confirming that the Agent (on behalf of the Finance Parties and the Swap Bank) has been duly registered as co-insured first priority mortgagee on all such insurance policies taken out for the First Vessels and that notice according to the Plan has been duly received by all the relevant insurers. c)  The Borrowers undertake promptly to give notice of the assignment of the Charter Guarantees to the Charter Guarantors in the form set out in Appendix 3 hereto and procure that the Charter Guarantor acknowledged receipt of the notice as set out in therein  **2.3  ****Loss Payable** Claims related to the Insurances in respect of an actual or constructive or agreed or arranged or compromised total loss or requisition for title or other compulsory acquisition of any of the First Vessels and claims payable in respect of a major casualty, that is to say any claim (or the aggregate of which) exceeding USD 500,000, shall be payable to the Agent. Subject thereto all other claims, unless and until the insurers have received notice from the Agent of an Event of Default which is unremedied under the Agreement in which event all claims shall be payable directly to the Agent up to the Lenders’ and the Swap Bank’s mortgage interest, shall be released directly for the repair, salvage or other charges involved or to the Borrowers as reimbursement if it has fully repaired the damage and paid all of the salvage or other charges or otherwise in respect of Borrowers’ actual costs in connection with repair, salvage and/or other charges. Any amounts paid to any of the Borrowers directly shall be paid to the Earnings Account.  **3  ****PLEDGE OF ACCOUNT****S** **3.1  ****Pledge** The Borrowers have opened the account as listed in Appendix 4 hereto (the “**Pledged Accounts**”). To secure payment and discharge of the Borrowers’ obligations under the Agreement and any Swap Agreement and to secure the performance and observance of and compliance with all of the covenants, terms and conditions contained in the Agreement and any Swap Agreement, the Borrowers hereby pledge to the Agent (on behalf of the Finance Parties and the Swap Bank) on first priority, the Pledged Accounts or such other account or accounts as may be agreed from time to time between the Agent and the Borrowers and any and all amounts deposited into and standing to the credit of any of the Pledged Accounts or such other account and accounts from time to time. The Agent confirms, in its capacity as account holder and debtor of the Pledged Accounts, that the pledge of the Pledged Accounts is duly noted in its records. **3.2  ****Drawings** The Borrowers may draw funds from the Pledged Accounts as long as no Default has been declared by the Agent. **3.3  ****Blocking upon Event of Default** The Pledged Accounts shall, following an Event of Default, be blocked in favour of the Finance Parties, and any subsequent monies paid to any of the Pledged Accounts or paid directly to the Agent shall be applied towards the Borrowers’ obligations to the Lenders or the Swap Bank (as the case may be) under the Agreement and/or any Swap Agreement, respectively, with any balance to be promptly released.  **4  ****MAXIMUM LIABILITY** The liability of each Borrower hereunder shall be limited to USD 138,100,000, plus any unpaid amount of interest, fees, liability and expenses under the Finance Documents and the Swap Agreement(s).  **5  ****WAIVER OF RIGHTS** Each Borrower specifically waives all rights under the provisions of the Norwegian Financial Agreements Act 1999 (as amended) not being mandatory provisions.  **6  ****PERFECTION** The Borrowers agree that at any time and from time to time upon the written request of the Agent, they will promptly and duly execute and deliver to the Agent any and all such further instruments and documents as the Agent (on behalf of the Finance Parties and the Swap Bank) may reasonably deem necessary or desirable to register this Assignment Agreement in any applicable registry, and to maintain and/or perfect the Security Interest created by this Assignment Agreement and the rights and powers herein granted.  **7  ****ENFORCEMENT** Upon the occurrence of an Event of Default, the Agent is, to the extent possible and permitted under Norwegian law, entitled to: a)  immediately sell, dispose, collect, transfer ownership to all or any of the claims pledged in favour of the Agent (on behalf of the Finance Parties and the Swap Bank) under this Assignment Agreement (the “**Claims**”), as provided for in the Financial Securities Act; and b)  apply any and all proceeds from the Claims in satisfaction of all amounts owing to the Finance Parties in accordance with the Agreement and to the Swap bank in accordance with the relevant Swap Agreement, and keep and hold any surplus as security for any amount owing (actual or contingent) in accordance with the Agreement but not yet due.   **8  ****ASSIGNMENT** The Agent may assign or transfer its rights hereunder to any person to whom the rights and obligations of the Agent and the Lenders under the Agreement are wholly or partially assigned in accordance with Clause 24 (Changes to the Parties) of the Agreement.  **9  ****NO FURTHER ASSIGNMENT OR PLEDGE** The Borrowers shall not, unless prior written consent has been obtained from the Agent, be entitled to further assign or pledge the Earnings, the Insurances, the Charter Guarantees and/or the Pledged Accounts.  **10  ****ADDITIONAL AND CONTINUING SECURITY** The Security Interest contemplated by this Assignment Agreement shall be in addition to any other Security Interest granted in accordance with the Agreement and/or any Swap Agreement, and shall be a continuing security in full force and effect as long as any obligations are outstanding under the Agreement or any Swap Agreement (as the case may be).  **11  ****MISCELLANEOUS** a)  The liability of each of the Borrowers hereunder shall not exceed USD 102,000,000 plus interest, fees and expenses under the Agreement and the Finance Documents. b)  Each of the Borrowers hereby specifically agrees and accepts that the nature of their liability hereunder being joint and several shall not be affected by any reason or circumstances of legal or factual nature, including, but not limited to: (i)  any waiver granted to the other Borrowers, the Guarantor or any third party; (ii)  any failure to enforce any rights, remedy or security against any of the other Borrowers, the Guarantor or any third party; (iii)  any legal limitation, incapacity or other circumstances relating to any of the other Borrowers, the Guarantor or any third party; (iv)  the liquidation, bankruptcy, insolvency or dissolution or the appointment of receiver for any of the other Borrowers, the Guarantor or any third party; or (v)  the Agreement or any of the Finance Documents becoming invalid or unenforceable against any of the other Borrowers and/or the Guarantor.  c)  Each of the Borrowers specifically waives all rights under the provisions of the Norwegian Financial Agreements Act of 25 June 1999 No. 46 not being mandatory provisions, including (but not limited to) the relevant provisions of §§ 62, 63, 65, 66, 67, 70, 71, 72, 73 and 74.  d)  Each of the Borrowers acknowledges and agrees that it has full knowledge of the cross-default provision in the Agreement, and of the security which is to be granted in respect of the amounts outstanding under the Agreement and as listed in Clause 17 (Security) of the Agreement.  **12  ****NOTICES** Any notice, demand or other communication to be made or delivered by any party pursuant to this Assignment Agreement shall (unless the addressee has by five (5) Business Days’ written notice to that party specified another address) be made or delivered as set out in Clause 29 (Notices) of the Agreement.  **13  ****GOVERNING LAW - JURISDICTION**** ** This Assignment Agreement shall be governed by and construed in accordance with the laws of Norway. The Borrowers and the Finance Parties accept Oslo City Court (*Oslo tingrett*) as non-exclusive venue, but this choice shall not prevent the Agent (on behalf of the Finance Parties) to enforce any of the Finance Documents against any of the First Vessels or other assets of any of the Borrowers wherever they may be found. 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Borrowers**:     **Agent**: OBO Holdings Ltd.     Nordea Bank Norge ASA  By: ____________________________  By:______________________________ Name:      Name: Title:      Title: BHOBO One Ltd.  By: ____________________________ Name: Title: BHOBO Two Ltd.  By: ___________________________ Name: Title:  BHOBO Three Ltd.  By: ___________________________ Name: Title:  RMJ OBO Shipping Ltd.  By: ___________________________ Name: Title:  Sagamore Shipping Ltd.  By: ___________________________ Name: Title_ 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC    **Appendix 1 (A)** **FORM OF NOTICE OF ASSIGNMENT** **(Assignment of Earnings)** To: [ ]   **M/V “[** **]”** We refer to the time charter party dated [•], (the “**Charterparty**”) made between you and us, whereby we agreed to let and you agreed to take on time charter for the period and upon the terms and conditions therein mentioned M/V “[ ]” (the “**Vessel**”). We hereby give you notice that: a)  by an agreement dated October 2005 (the “**Assignment Agreement**”) made between among others us and Nordea Bank Norge ASA, Middelthunsgt. 17, N-0368 Oslo, Norway, acting as agent on behalf of certain other banks and swap bank (the “**Agent**”), related to a loan agreement of even date (the “**Agreement**”) and any Swap Agreement (as defined in the Agreement) made or to be entered into with the Swap Bank (as defined in the Agreement), we have assigned absolutely and have agreed to assign absolutely to and in favour of the Agent all our rights, title and interest, present and future, to all payments to be made to us under the Charterparty, including in respect of any breach by you thereunder; b)  you are herby irrevocably authorised and instructed to make all payments under the Charterparty to our account with the Agent [] account no [•] (free of any set-off or other deduction) until such time as the Agent shall direct to the contrary whereupon all instructions or demands for actions shall be made by the Agent and payments are due to the Agent or as it may direct; and c)  the Agreement includes provisions that no amendments, termination or cancellation shall be made to the Charterparty (nor shall you be released from any of your obligations thereunder without the prior written consent of the Agent) and that we shall remain liable to perform all our obligations under the Charterparty and that the Agent shall be under no obligations of any kind whatsoever in respect thereof. The authority and instructions herein contained cannot be revoked or varied by us without the written consent of the Agent. The provisions of this notice shall be governed by Norwegian law. 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   [Place and date:] [•], [•]  Yours sincerely for and on behalf of  **[** **]**   By: __________________________________ Name: Title: [authorised officer] 99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 1 (B)** **FORM OF ACKNOWLEDGEMENT** **(Assignment of Earnings)**  To: Nordea Bank Norge ASA Middelthunsgate 17 N-0368 Oslo Norway Attn: Shipping, Offshore and Oil Services  We acknowledge receipt of the above Notice of Assignment dated [•] October 2005 from [ ]. Terms used herein shall have the same meaning as defined therein. We agree to the assignment set out therein and undertake to be bound by the terms thereof. We confirm that we have received no notice of any previous assignment or pledge of all or any part of the charter hire and any monies payable thereunder. We further confirm that all written statements containing instructions or demanding actions or payments under the Charterparty may until further notice from the Agent to the contrary be made by [ ] and after such notice these instructions shall be given or demands shall be made by the Agent. This acknowledgement and confirmation shall be governed by Norwegian law. Place and date: [•] Yours sincerely for and on behalf of  [ ]   By: __________________________________ Name: Title: [authorised officer]    99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 2 (A)** **FORM OF NOTICE OF ASSIGNMENT** **(Assignment of Insurances)** To: The Insurers **M/V [** **]** [ ] as owner (the “**Owner**”) of M/V [ ] (the “**Vessel**”) hereby gives you notice that all payments due to us from you in respect of the Vessel have been (by way of security) assigned to Nordea Bank Norge ASA, Middelthuns gate 17, N-0368 Oslo, Norway, as Agent for certain other banks and swap bank (the “**Mortgagee**”) according to an Assignment Agreement dated October 2005 (the “**Assignment Agreement**”) related to a loan agreement of even date (the “**Agreement**”) and any Swap Agreements (as defined in the Agreement) made or to be made with the Swap Bank (as defined in the Agreement), and that all payments due to us under our policy(-ies) with yourselves must be made in accordance with the instruction, from time to time, of the Mortgagee. Please note that all claims related to the insurances in respect of claims payable in respect of a major casualty, that is to say any claim (or the aggregate of which) exceeding USD 500,000, shall be payable to the Mortgagee and be applied by the Mortgagee in accordance with the terms of the Agreement. Subject thereto all other claims, unless and until the insurers have received notice from the Mortgagee of a default which is unremedied under the Agreement in which event all claims shall be payable directly to the Mortgagee up to their mortgage interest, shall be released directly for the repair or other charges involved or to the Owner as reimbursement if it has fully repaired the damage and paid all of the charges or otherwise in respect of the Owner’s actual costs in connection with repair and/or other charges. Any amounts paid to the Owner directly shall be paid to the Earnings Account, account no. [ ] with the Mortgagee. Please note that this instruction may not be varied except with the prior written consent of the Mortgagee. Please confirm your acknowledgement of the terms of this notice by completing the Acknowledgement attached hereto. Please return the signed and dated Acknowledgement to the Mortgagee at the address set out above. Place and date: [•], [•]  Yours sincerely for and on behalf of  **[** **]**   By: __________________________________ Name: Title: [authorised officer]    99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 2 (B)**  **FORM OF ACKNOWLEDGEMENT** **(Assignment of Insurances)**  To:  Nordea Bank Norge ASA Middelthunsgate 17 N-0368 Oslo Norway Att.: Shipping, Offshore and Oil Services  We hereby acknowledge receipt of a Notice of Assignment (the “**Notice**”) from [ ] (the “**Owner**”) dated [•] 2005 related to [ ] (the “**Vessel**”).  We have duly noted and do accept that our payments due to the Owner, under the insurance policy(-ies) taken out for the Vessel as an Owners’ Entry pursuant to our rules, shall be made in accordance with the instructions set out in the Notice, including the Loss Payable clause therein, and payment due to the mortgagees will be made to such account as from time to time instructed by Nordea Bank Norge ASA, Middelthunsgate 17, N-0368 Oslo, Norway, which bank has been duly noted by ourselves as the first priority mortgagee of the said Vessel on its own behalf and on behalf of certain other banks and swap bank as agent therefore. Place and date: [•] Yours sincerely for and on behalf of  [INSURERS]   By: __________________________________ Name: Title: [authorised officer]  99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 3 (A)** **FORM OF NOTICE OF ASSIGNMENT** **(Assignment of Charter Guarantee)** To: [ ]   **M/V “[** **]”** We refer to the charter guarantee dated [•], (the “**Charter Guarantee**”) made by you in our favour, whereby you have guaranteed the due performance of TTMI Sarl. (the “**Charterers**”) of all of the Charterers’ obligations under the time charterparty dated [ ] related to M/V “[ ]” (the “**Vessel**”). We hereby give you notice that: a)  by an agreement dated October 2005 (the “**Assignment Agreement**”) made between among others us and Nordea Bank Norge ASA, Middelthunsgt. 17, N-0368 Oslo, Norway, acting as agent on behalf of certain other banks and swap bank (the “**Agent**”), related to a loan agreement of even date (the “**Agreement**”) and any Swap Agreement (as defined in the Agreement) made or to be entered into with the Swap Bank (as defined in the Agreement), we have assigned absolutely and have agreed to assign absolutely to and in favour of the Agent all our rights, title and interest, present and future, to all payments to be made to us under the Charter Guarantee, including in respect of any breach by you thereunder; b)  you are herby irrevocably authorised and instructed to make all payments under the Charter Guarantee to our account with the Agent [] account no [•] (free of any set-off or other deduction) until such time as the Agent shall direct to the contrary whereupon all instructions or demands for actions shall be made by the Agent and payments are due to the Agent or as it may direct; and c)  the Agreement includes provisions that no amendments, termination or cancellation shall be made to the Charter Guarantee (nor shall you be released from any of your obligations thereunder without the prior written consent of the Agent). The authority and instructions herein contained cannot be revoked or varied by us without the written consent of the Agent. The provisions of this notice shall be governed by Norwegian law. [Place and date:] [•], [•]  Yours sincerely for and on behalf of  **[** **]**   By: __________________________________ Name: Title: [authorised officer] **Appendix 3 (B)** **FORM OF ACKNOWLEDGEMENT** **(Assignment of Charter Guarantee)**  To: Nordea Bank Norge ASA Middelthunsgate 17 N-0368 Oslo Norway Attn: Shipping, Offshore and Oil Services  We acknowledge receipt of the above Notice of Assignment dated [•] October 2005 from [ ]. Terms used herein shall have the same meaning as defined therein. We agree to the assignment set out therein and undertake to be bound by the terms thereof. We confirm that we have received no notice of any previous assignment or pledge of all or any part of any monies payable thereunder. We further confirm that all written statements containing instructions or demanding actions or payments under the Charter Guarantee may until further notice from the Agent to the contrary be made by [ ] and after such notice these instructions shall be given or demands shall be made by the Agent. This acknowledgement and confirmation shall be governed by Norwegian law. Place and date: [•] Yours sincerely for and on behalf of  [ ]   By: __________________________________ Name: Title: [authorised officer]     99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **Appendix 4** **LIST OF PLEDGED ACCOUNTS**  **Account Holder** **Account Number** **Bank** OBO Holdings Ltd. 6019.04.44107 Nordea Bank Norge ASA BHOBO One Ltd. 6019.04.44115 Nordea Bank Norge ASA BHOBO Two Ltd. 6019.04.44123 Nordea Bank Norge ASA BHOBO Three Ltd. 6019.04.44131 Nordea Bank Norge ASA RMJ OBO Shipping Ltd. 6012.04.43049 Nordea Bank Norge ASA Sagamore Shipping Ltd. 6012.04.43057 Nordea Bank Norge ASA   99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 8** **FORM OF GUARANTEE** This Guarantee (this “**Guarantee**”) is made on [•] between: (1) **B+H Ocean Carriers Ltd.**, of 80 Broad Street, Monrovia, Liberia (the “**Guarantor**”); and (2) **Nordea Bank Norge ASA**, organisation no. 911 044 110, Middelthunsgt. 17, N-0368 Oslo, Norway (the “**Agent**”), acting on behalf of itself and on behalf of the Finance Parties and the Swap Bank (as defined in the Agreement referred to below).  **WHEREAS** (A) By a Term Loan Facility Agreement (the “**Agreement**”) dated October 2005 and made between OBO Holdings Ltd., BHOBO One Ltd., BHOBO Two Ltd., BHOBO Three Ltd., RMJ OBO Shipping Ltd. and Sagamore Shipping Ltd. as joint and several borrowers (the “**Borrowers**”), the Lenders (each as defined therein), the Swap Bank (as defined therein), the Arranger (as defined therein) and the Agent, the Lenders have agreed to make available to the Borrowers (i) a revolving reducing facility in the maximum aggregate amount of USD 122,100,000 and (ii) a term loan facility in the maximum aggregate amount of USD 16,000,000 (the “**Loan**”); (B) subject to the terms and conditions of the Agreement, the Loan will be made available to the Borrowers for the purpose of refinancing the loans under the Existing Credit Facility, for refinancing of part of the purchase price for MV Roger M. Jones” and for part-financing the purchase price for MT “Challenge Express” (tbr “Sagamore”); and  (C) it is a condition of the Agreement that the Guarantor enters into this Guarantee. A similar guarantee agreement may also be executed by other parties pursuant to the Agreement, but the execution and enforceability of such other guarantee agreements shall not be a condition to the effectiveness or enforceability of this Guarantee. **IT IS AGREED AS FOLLOWS:**  **1  ****DEFINITIONS** Capitalised terms used herein shall, save as expressly defined herein, have the same meanings as ascribed thereto in the Agreement.  **2  ****GUARANTEE** **2.1  ****Guarantee obligations** The Guarantor hereby unconditionally and irrevocably guarantees, as primary obligor as and for its own debt (as *selvskyldnerkausjonist*) and not merely as surety to the Agent (on behalf of the Finance Parties and the Swap Bank): a)  the due and punctual payment by the Borrowers of any and all sums which are now or at any time hereafter will be payable by any of the Borrowers under or in respect of the Finance Documents in accordance with the terms and provisions thereof (including, without limitation, principal, interest, default interest, legal fees and other fees, Break Costs, transaction and enforcement costs and any other costs, expenses, Taxes and Tax indemnities, currency indemnities and any other indemnities, claims for damages and any other costs and expenses in respect of any Event of Default or any other breach by any of the Borrowers under the Finance Documents or any Swap Agreement); b)  the due and punctual performance by the Borrowers of all of the Borrowers’ obligations under or in respect of the Finance Documents and any Swap Agreement; and c)  to indemnify each Finance Party and the Swap Bank immediately upon the Agent’s first written demand against any loss, liability, costs and expenses suffered, incurred or paid by that Finance Party or the Swap Bank if any obligation of the Guarantor is or becomes unenforceable, invalid or illegal, (such amounts together referred to as the “**Outstanding Indebtedness**”).  **2.2  ****Payment upon first demand** If any of the Borrowers shall fail to pay any sum under the Finance Documents or any Swap Agreement as and when such sum shall become due and payable, the Guarantor shall immediately upon the Agent’s first written demand pay to the Agent for the account of the relevant Finance Party or the Swap Bank an amount equal to such sum which any of the Borrowers shall not have paid, such payment to be made in immediately available funds to the account of the Agent, as the Agent may designate, without set-off or counter-claim and free and clear of and without deduction for or on account of any present or future Taxes. **2.3  ****No limitation on number of demands** Demands under this Guarantee may be made by the Agent from time to time and there shall be no limitation in the number of demands which can be made hereunder. **2.4  ****Maximum guarantee liability** The total liability of the Guarantor under this Guarantee shall, in the aggregate, always be limited to USD 138,100,000 (in principal only) plus all unpaid interest, default interest, fees, costs and expenses.  **3  ****SURVIVAL OF THE GUARANTOR’S LIABILITY** **3.1  ****Continuing guarantee** This Guarantee shall be a continuing guarantee which shall be effective as of the date hereof and shall remain in full force and effect until payment in full has been received by the Agent (on behalf of the Finance Parties and the Swap Bank) of the Outstanding Indebtedness. **3.2  ****No discharge** The obligations of the Guarantor under this Guarantee shall not be discharged, impaired or otherwise affected by reason of any of the following events or circumstances regardless of whether any such events or circumstances occur with or without the Guarantor’s knowledge and consent: a)  any total or partial invalidity, irregularity, illegality, unenforceability, imperfection or avoidance of or any defect in any security granted by, or the obligation of the Borrowers, the Finance Parties, the Swap Bank or any other person under the Finance Documents, any Swap Agreement or any other document or security; b)  any time, waiver, consent or other indulgence granted to any of the Borrowers or any other person or any composition or arrangement made by any Finance Party, the Swap Bank or any other person with the Borrowers or any other person; c)  any increase or reduction of the amount of the Loan, or variation of the terms and conditions for its repayment (including without limitation, the rate and/or method of calculation of interest payable on the Loan); d)  any amendment, modification, replacement, supplement, variation, compromise, extension or renewal of any Finance Document or any Swap Agreement or any right against any security over any assets of any of the Borrowers or any other person; e)  any refusal or neglect to take up or perfect or enforce or any release, indulgence or other relief granted under any Finance Document or any Swap Agreement or any rights against or any security over any assets of any of the Borrowers or any other person or any failure to realize the full value of any security; f)  any transfer, assignment, assumption or novation of rights and obligations under the Finance Documents by any of the Borrowers, a Lender or any other person; g)  any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any of the Borrowers, a Lender, the Swap Bank or any other person; h)  any corporate reorganisation, reconstruction, amalgamation, dissolution, merger, acquisition or any other alteration in the corporate existence or structure of any of the Finance Parties, the Swap Bank, the Borrowers or any other person; or i)  any insolvency or similar proceedings concerning any of the Borrowers, a Lender, the Swap Bank or any other person. **3.3  ****Waiver** The Guarantor specifically waives all rights under the provisions of the Norwegian Financial Agreements Act of 25 June 1999 no. 46 not being mandatory provisions, including the following provisions (the main contents of the relevant provisions being as indicated in the brackets): **a)  ****§ 62 (1) (a)** (to be notified of any security the giving of which was a precondition for the advance of the Loan, but which has not been validly granted or has lapsed); **b)  ****§ 63 (1) - (2)** (to be notified of any Event of Default under the Agreement or any Swap Agreement and to be kept informed thereof); **c)  ****§ 63 (3)** (to be notified of any extension granted to any of the Borrowers in payment of principal and/or interest); **d)  ****§ 63 (4)** (to be notified of any of the Borrowers’ bankruptcy proceedings or debt reorganisation proceedings and/or any application for the latter); **e)  ****§ 65 (3)**(that the consent of the Guarantor is required for the Guarantor to be bound by amendments to the Agreement and any Swap Agreement that may be detrimental to its interest); **f)  ****§ 66 (1) - (2)**(that the Guarantor shall be released from liabilities hereunder if security which was given, or the giving of which was a precondition for the advance of the Loan, is released by any of the Finance Parties without the consent of the Guarantor); **g)  ****§ 66 (3)** (that the Guarantor shall be released from its liabilities hereunder if, without its consent, security the giving of which was a precondition for the advance of the Loan or the execution of the Guarantee, was not validly granted); **h)  ****§ 67 (2)** (about reduction of the Guarantor’s liabilities hereunder); **i)  ****§ 67 (4)** (that the Guaran’or's liabilities hereunder shall lapse after ten (10) years, as the Guarantor shall remain liable hereunder as long as any amount is outstanding under the Agreement, any Swap Agreement or the Security Documents); **j)  ****§ 70**(as the Guarantor shall have no right of subrogation into the rights of the Finance Parties and the Swap Bank under the Agreement, any Swap Agreement or the Security Documents until and unless the Finance Parties and the Swap Bank shall have received all amounts due or to become due to them under the Agreement, any Swap Agreement and the Security Documents); **k)  ****§ 71**(as the Finance Parties and the Swap Bank shall have no liability first to make demand upon or seek to enforce remedies against any of the Borrowers or any other security provided in respect of the Borrowers’ liabilities under the Agreement and/or any Swap Agreement and/or the Security Documents before seeking to enforce the security created hereunder); **l)  ****§ 72**(as all interest and default interest due under the Agreement and/or any Swap Agreement and/or the Security Documents shall be secured hereunder); **m)  ****§ 73 (1) - (2)**(as all costs and expenses related to a default under the Agreement and/or the Swap Agreement and/or the Security Documents shall be secured hereunder); and **n)  ****§ 74 (1) - (2)**(as the Guarantor shall make no claim against any of the Borrowers for payment until and unless the Finance Parties and the Swap Bank first shall have received all amounts due or to become due to them under the Agreement, any Swap Agreement and the Security Documents). **3.4  ****Reinstatement** If any payment by any of the Borrowers, any other guarantor or any other provider of security under the Finance Documents or any Swap Agreement must be repaid, or any discharge given by a Lender or the Swap Bank (whether in respect of the obligations of the Borrowers, another guarantor or any security for those obligations or otherwise) is avoided or reduced, as a result of insolvency or any similar event:  a)  the liability of the Guarantor shall continue as if such payment, discharge, avoidance or reduction had not occurred; and b)  the Finance Parties and the Swap Bank shall be entitled to recover the value or amount of that security or payment from the Guarantor, as if such payment, discharge, avoidance or reduction had not occurred.  **4  ****UNDERTAKINGS** The Guarantor undertakes to the Agent that as long as this Guarantee is effective: a)  it shall at all times comply with all its obligations, covenants, undertakings and representations under the Finance Documents (to which it is a party), and undertakes to comply with and perform all such obligations, covenants, undertakings and representations with relates to the Guarantor in the Agreement, hereunder (but not limited to) the financial covenants set out in Clause 20 (Financial covenants) of the Agreement; b)  following receipt of a notice from the Agent of the occurrence of any Event of Default, the Guarantor will not make a demand for any claim of moneys due to the Guarantor from any of the Borrowers or any other guarantor, or exercise any other right or remedy to which any of the Borrowers or any other guarantor are entitled to in respect of such moneys unless and until all moneys due and payable by any of the Borrowers have been irrevocably paid in full; c)  if any of the Borrowers or any other guarantor becomes the subject of an insolvency proceeding or shall be wound up or liquidated, the Guarantor shall not (unless so instructed by the Agent and then only on condition that the Guarantor holds the benefit of any claim in such insolvency or liquidation to pay any amounts recovered thereunder to the Agent) make any claim in such insolvency, winding-up or liquidation until all the Outstanding Indebtedness owing or due has been irrevocably paid in full; d)  if the Guarantor being in breach of litra b) and c) above receives or recovers any money pursuant to such exercise, claim or proof as therein referred to, such moneys shall be held by the Guarantor for the Agent to apply the same as if they were money received or recovered by the Agent under this Guarantee; and e)  it will not take or has not taken from any of the Borrowers any security whatsoever for the obligations guaranteed hereunder.   **5  ****REPRESENTATIONS AND WARRANTIES** The Guarantor represents and warrants to the Agent (for the benefit of each Finance Party and the Swap Bank) as follows: a)  the Guarantor is duly organised and validly existing as a private limited liability company under the laws of Bermuda and has the corporate power and authority to own its assets and carry on its business as it is presently being conducted in each jurisdiction in which it owns assets or carry on business; b)  the Guarantor has the power to enter into, perform and deliver, and has taken all necessary actions to authorise its entry into, performance and delivery of this Guarantee; and c)  the Guarantee constitutes the legal, valid and binding obligations of the Guarantor, enforceable against the Guarantor in accordance with its terms and will be so treated in any relevant courts and this Guarantee is in proper form for enforcement in such courts.  **6  ****ENFORCEMENT** **6.1  ****Immediate recourse** The Agent shall not be required to take any action against any of the Borrowers, any other guarantor or any other person before claiming from the Guarantor under this Guarantee. **6.2  ****No right of recourse and no security** The Guarantor shall have no right of recourse against any of the Borrowers, any other guarantor or any of their respective bankruptcy estate for any amount paid by the Guarantor under this Guarantee for so long as any part of the Outstanding Indebtedness remains outstanding, and the Guarantor shall not be entitled to obtain from any of the Borrowers any security for any such right of recourse which the Guarantor may have after such time. Any such security which the Guarantor might obtain shall be regarded as supplementary security in favour of the Finance Parties and the Swap Bank. The Guarantor hereby renounces any and all such claims it has or may get against any of the Borrowers or any other guarantor for as long as any part of the Outstanding Indebtedness remains outstanding. **6.3  ****No subrogation in Finance Parties’ or Swap Bank’s security** The Guarantor shall have no right to subrogate, wholly or partly, in any security provided to the Finance Parties or the Swap Bank pursuant to the Finance Documents or any Swap Agreement or in any other way until all of the Outstanding Indebtedness has been fully and finally paid. **6.4  ****Action** Without affecting the obligations of the Guarantor hereunder, the Agent, the other Finance Parties and the Swap Bank may take such action as the Agent, the other Finance Parties and the Swap Bank, as the case may be, in their own discretion may consider appropriate against the Borrowers, the Guarantor or any other persons or parties or securities to recover monies due and payable in respect of the obligations under the Agreement and/or any Swap Agreement and/or the other Finance Documents. **6.5  ****Knowledge of the Agreement and additional security** The Guarantor acknowledges and agrees that: a)  it has received a copy of and has full knowledge of the terms and provisions of the Agreement hereunder, but not limited to the cross-default provision therein, and that it has been informed of the security which is to be granted in respect of the amounts outstanding under the Agreement and as listed in Clause 17 (Security) of the Agreement;  b)  it has been informed by the Borrowers that no Event of Default under the Agreement has occurred as per today; and c)  this Guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party or the Swap Bank as security for the Borrowers’ obligations under the Agreement and any Swap Agreement(s).  **7  ****ASSIGNMENT** The Agent and the Finance Parties may assign or transfer the rights hereunder to any person to whom the rights and obligations of such Finance Party under the Agreement are wholly or partly assigned or transferred to in accordance with Clause 24 (Changes to the Parties) of the Agreement.  **8  ****EXPENSES** The Guarantor shall pay to the Agent on demand on a full indemnity basis all charges, costs and expenses (including the legal fees) properly incurred by the Finance Parties in connection with the preservation and enforcement of any of the rights of the Finance Parties and the Swap Bank hereunder.  **9  ****MISCELLANEOUS** **9.1  ****No implied waivers** No delay or failure by the Agent, any other Finance Party or the Swap Bank to exercise any right or remedy under this Guarantee shall operate or be construed as a waiver of such rights or remedies unless otherwise expressly stated in writing by the Agent, such Finance Party or the Swap Bank. No partial exercise of any right or remedy shall prevent any further or other exercise of such right or remedy or any other right or remedy. No express waiver of any rights or remedies in respect of an Event of Default or any other event by the Agent, any other Finance Party or the Swap Bank shall operate or be construed as a waiver of any rights or remedies in respect of any similar or other Event of Default or events. **9.2  ****Separable provisions** The provisions of this Guarantee are separable and, if any provision of this Guarantee is or becomes illegal, invalid or unenforceable in any respect in any jurisdiction, this shall not affect the legality, validity or enforceability of such provisions in any other jurisdiction or the legality, validity or enforceability of the remaining provisions of the Guarantee in that or any other jurisdiction. **9.3  ****Borrowers as agent for the Guarantor** The Borrowers shall be the agent of the Guarantor and any notice, statement or agreement by the Borrowers to or with the any of the Finance Parties or the Swap Bank shall be binding on the Guarantor. **9.4  ****Law and jurisdiction** *9.4.1  **Governing law* This Guarantee shall be governed by and construed in accordance with Norwegian law. *9.4.2  **Main jurisdiction* The Guarantor hereby irrevocably submits to the non-exclusive jurisdiction of the Norwegian courts, the venue to be Oslo City Court (*Oslo tingrett*) and the Guarantor agrees for the benefit of the Finance Parties and the Swap Bank that any legal action or proceedings arising out of or in connection with this Guarantee against the Guarantor or any of its assets may be brought in the said court. *9.4.3  **Alternative jurisdiction* This Clause 9.4.3 is for the exclusive benefit of the Finance Parties and the Swap Bank each of which have the right: a)  to commence proceedings against the Guarantor or its assets both in any court in Norway and any other jurisdiction; and b)  to commence enforcement proceedings in any jurisdiction concurrently with or in addition to proceedings in Norway or without commencing proceedings in Norway. The parties agree that only the courts of Norway and not those of any other state shall have jurisdiction to determine any claim which the Guarantor may have against the Agent, any other Finance Party or the Swap Bank and that the Guarantor shall only be entitled to commence legal action or proceedings against the Agent, any such other Finance Party and the Swap Bank in relation to this Guarantee in Oslo City Court (*Oslo tingrett*).  **10  ****NOTICES** Every notice or demand under this Guarantee shall be made by letter or telefax.  Any such notice or communication given by the Guarantor shall be addressed to the Agent at the following address: If to the Agent: Nordea Bank Norge ASA Middelthunsgt. 17 P.O. Box 1166 Sentrum N-0107 Oslo, Norway Att: Shipping, Offshore and Oil Services  Telefax No: + 47 22 48 66 68 Any notice, demand or other communication to be given to the Guarantor shall be sent to the Guarantor at the following address: If to the Guarantor: B + H Ocean Carriers Ltd.  c/o B + H Management Ltd.  Par-la-Ville Place 14 Par-la-Ville Road Hamilton HMJX Bermuda Att.:  Telefax: + 1 441 295 6796 **10.1  ****Service of process** Without prejudice to any other mode of service, the Guarantor: a)  irrevocably appoints Wikborg Rein & Co., Kronprinsesse Märthas plass 1, P.O. Box 1513 Vika, N-0017 Oslo, Norway as its agent for service of process relating to any proceedings before Norwegian courts in connection with this Agreement; and b)  agrees that failure by its process agent to notify it of the process will not invalidate the proceedings concerned.  **IN WITNESS WHEREOF**, the parties hereto have duly executed this Guarantee in two (2) original copies on the date and year first written above.  **The Guarantor**:     **The Agent**: B+ H Ocean Carriers Ltd.    Nordea Bank Norge ASA  By: _____________________________  By: ____________________________ Name:      Name: Title:      Title:  99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SCHEDULE 9** **PREPAYMENT ALLOCATION**  In the event of a prepayment pursuant to Clause 7.1 (Mandatory prepayment - Total Loss or sale), the Loan shall be repaid with an amount as set out in as follows:    To the extent any of the Borrowers has made any prepayments, scheduled repayments under Clause 6 (Repayment) and/or cancellations in accordance with Clause 7 (Prepayment and cancellation) the amounts as set out above shall be adjusted to reflect any such prepayments and/or cancellations made.    99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   **SIGNATORIES** Borrowers: **OBO Holdings Ltd.**   By:   R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact **BHOBO One Ltd.**   By: R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact **BHOBO Two Ltd.**   By: /s/R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact **BHOBO Three Ltd.**   By: /s/R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact **RMJ OBO Shipping Ltd.**   By: /s/R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact **Sagamore Shipping Ltd.**   By: /s/R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact   Lenders:  **Nordea Bank Norge ASA**   By: /s/ Olav Ringdal       Name: Olav Ringdal Title: Attorney-in-Fact  Agent:  **Nordea Bank Norge ASA**   By: /s/ Olav Ringdal       Name: Olav Ringdal Title: Attorney-in-Fact Arranger:  **Nordea Bank Norge ASA**   By: /s/ Olav Ringdal       Name: Olav Ringdal Title: Attorney-in-Fact   Swap Bank:  **Nordea Bank Finland Plc.**   By: /s/ Torbjorn Nulsund     Name:  Torbjorn Nulsund Title: Attorney-in-Fact  99DOCS-979089-v2-BHO_-_loan_agreement_-_051005.DOC   We, B+H Ocean Carriers Ltd., hereby acknowledge and agree to the terms of this Agreement and agree to be bound by Clauses 18 (representations and warranties), 19 (Information undertakings), 20 (Financial Covenants), 21 (General undertakings) and 23 (Events of Default) of this Agreement to the extent applicable to the Guarantor as if we were a party to this Agreement.   18 October 2005  Guarantor: **B+H Ocean Carriers Ltd.**  By: /s/ R. Anthony Dalzell     Name: R. Anthony Dalzell Title: Attorney-in-Fact    
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