Exhibit
10.1


 




 


 





Up to


 


$200,000,000


 


SENIOR SECURED REVOLVING CREDIT
FACILITY AGREEMENT


 


AMONG


 


OSG AMERICA OPERATING COMPANY
LLC,

as Borrower


 


AND


 


The banks and financial
institutions


identified on Schedule II,


as Lenders


 


AND


 


ING BANK N.V., London Branch


as Facility Agent, Security
Trustee and Issuing Lender


 


AND


 


ING BANK N.V., London Branch
and DNB NOR BANK ASA,


as Mandated Lead Arrangers and
Bookrunners


 


AND


 


OSG AMERICA L.P. and the
Vessel-Owning Guarantors identified on Schedule III,


as Joint and Several Guarantors


 


Dated as of            ,
2007


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  2

  
	
   

  	
  1.1

  	
  Defined Terms

  	
   

  	
  2

  
	
   

  	
  1.2

  	
  Computation of Time Periods; Other Definitional
  Provisions

  	
   

  	
  22

  
	
   

  	
  1.3

  	
  Accounting Terms

  	
   

  	
  22

  
	
   

  	
  1.4

  	
  Certain Matters Regarding Materiality

  	
   

  	
  22

  
	
   

  	
  1.5

  	
  Forms of Documents

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  THE FACILITY

  	
   

  	
  22

  
	
   

  	
  2.1

  	
  Purposes

  	
   

  	
  22

  
	
   

  	
  2.2

  	
  Extension Option

  	
   

  	
  23

  
	
   

  	
  2.3

  	
  Making of the Advances

  	
   

  	
  23

  
	
   

  	
  2.4

  	
  Advance Availability Period

  	
   

  	
  23

  
	
   

  	
  2.5

  	
  Drawdown Notice

  	
   

  	
  23

  
	
   

  	
  2.6

  	
  Effect of Drawdown Notice

  	
   

  	
  24

  
	
   

  	
  2.7

  	
  Notation of Advances

  	
   

  	
  24

  
	
   

  	
  2.8

  	
  Several Obligations

  	
   

  	
  24

  
	
   

  	
  2.9

  	
  Pro Rata Treatment

  	
   

  	
  24

  
	
   

  	
  2.10

  	
  Letters of Credit

  	
   

  	
  24

  
	
   

  	
  2.11

  	
  Letter of Credit Request

  	
   

  	
  25

  
	
   

  	
  2.12

  	
  Letter of Credit Participation

  	
   

  	
  25

  
	
   

  	
  2.13

  	
  Letter of Credit Payments Deemed Advances

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS

  	
   

  	
  27

  
	
   

  	
  3.1

  	
  Conditions Precedent to the Availability of the
  Facility

  	
   

  	
  27

  
	
   

  	
   

  	
  (a)

  	
  Corporate Authority

  	
   

  	
  27

  
	
   

  	
   

  	
  (b)

  	
  This Agreement

  	
   

  	
  28

  
	
   

  	
   

  	
  (c)

  	
  The Note

  	
   

  	
  28

  
	
   

  	
   

  	
  (d)

  	
  Fees

  	
   

  	
  28

  
	
   

  	
   

  	
  (e)

  	
  Environmental Claims

  	
   

  	
  28

  
	
   

  	
   

  	
  (f)

  	
  Legal Opinions

  	
   

  	
  28

  
	
   

  	
   

  	
  (g)

  	
  Officer’s Certificate

  	
   

  	
  28

  
	
   

  	
   

  	
  (h)

  	
  Financial Information

  	
   

  	
  28

  
	
   

  	
   

  	
  (i)

  	
  Vessel Documents

  	
   

  	
  28

  
	
   

  	
   

  	
  (j)

  	
  Security Documents

  	
   

  	
  29

  
	
   

  	
   

  	
  (k)

  	
  IAPPC, ISM and ISPS Code

  	
   

  	
  29

  
	
   

  	
   

  	
  (l)

  	
  Know Your Customer Information

  	
   

  	
  29

  
	
   

  	
   

  	
  (m)

  	
  Vessel Appraisals

  	
   

  	
  30

  
	
   

  	
   

  	
  (n)

  	
  Loan to Value Ratio

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Further Conditions Precedent

  	
   

  	
  30

  
	
   

  	
   

  	
  (a)

  	
  Drawdown Notice; Letter of Credit Request

  	
   

  	
  30

  



 


i

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Representations and Warranties

  	
   

  	
  30

  
	
   

  	
   

  	
  (c)

  	
  No Default

  	
   

  	
  30

  
	
   

  	
   

  	
  (d)

  	
  No Material Adverse Change

  	
   

  	
  30

  
	
   

  	
   

  	
  (e)

  	
  NYSE Listing; IPO Proceeds

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Breakfunding Costs

  	
   

  	
  30

  
	
   

  	
  3.4

  	
  Satisfaction after Drawdown

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPAYMENT AND PREPAYMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Mandatory Repayment

  	
   

  	
  30

  
	
   

  	
  4.2

  	
  Voluntary Prepayment

  	
   

  	
  31

  
	
   

  	
  4.3

  	
  Optional Permanent Reduction of Facility

  	
   

  	
  31

  
	
   

  	
  4.4

  	
  Borrower’s Obligations Absolute

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  INTEREST AND RATE

  	
   

  	
  32

  
	
   

  	
  5.1

  	
  Payment of Interest; Interest Rate

  	
   

  	
  32

  
	
   

  	
  5.2

  	
  Calculation of Interest

  	
   

  	
  32

  
	
   

  	
  5.3

  	
  Maximum Interest

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  PAYMENTS

  	
   

  	
  33

  
	
   

  	
  6.1

  	
  Place of Payments; No Set Off

  	
   

  	
  33

  
	
   

  	
  6.2

  	
  Federal Income Tax Credits

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  GUARANTEE

  	
   

  	
  34

  
	
   

  	
  7.1

  	
  The Guarantee

  	
   

  	
  34

  
	
   

  	
  7.2

  	
  Obligations Unconditional

  	
   

  	
  34

  
	
   

  	
  7.3

  	
  Reinstatement

  	
   

  	
  35

  
	
   

  	
  7.4

  	
  Subrogation

  	
   

  	
  35

  
	
   

  	
  7.5

  	
  Subordination

  	
   

  	
  35

  
	
   

  	
  7.6

  	
  Remedies

  	
   

  	
  35

  
	
   

  	
  7.7

  	
  Instrument for the Payment of Money

  	
   

  	
  36

  
	
   

  	
  7.8

  	
  Continuing Guarantee

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  36

  
	
   

  	
   

  	
  (a)

  	
  Due Organization and Power

  	
   

  	
  36

  
	
   

  	
   

  	
  (b)

  	
  Authorization and Consents

  	
   

  	
  36

  
	
   

  	
   

  	
  (c)

  	
  Binding Obligations

  	
   

  	
  36

  
	
   

  	
   

  	
  (d)

  	
  No Violation

  	
   

  	
  37

  
	
   

  	
   

  	
  (e)

  	
  Filings; Stamp Taxes

  	
   

  	
  37

  
	
   

  	
   

  	
  (f)

  	
  Approvals; Consents

  	
   

  	
  37

  
	
   

  	
   

  	
  (g)

  	
  Litigation

  	
   

  	
  37

  
	
   

  	
   

  	
  (h)

  	
  No Default

  	
   

  	
  37

  
								



 


ii

















 


	
   

   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  ERISA

  	
   

  	
  37

  
	
   

  	
   

  	
  (j)

  	
  Vessels

  	
   

  	
  38

  
	
   

  	
   

  	
  (k)

  	
  Financial Statements

  	
   

  	
  38

  
	
   

  	
   

  	
  (l)

  	
  Tax Returns and Payments

  	
   

  	
  38

  
	
   

  	
   

  	
  (m)

  	
  Chief Executive Office

  	
   

  	
  39

  
	
   

  	
   

  	
  (n)

  	
  Insurance

  	
   

  	
  39

  
	
   

  	
   

  	
  (o)

  	
  Foreign Trade Control Regulations

  	
   

  	
  39

  
	
   

  	
   

  	
  (p)

  	
  Investment Company Act

  	
   

  	
  39

  
	
   

  	
   

  	
  (q)

  	
  Equity Ownership

  	
   

  	
  39

  
	
   

  	
   

  	
  (r)

  	
  Environmental Matters and Claims

  	
   

  	
  39

  
	
   

  	
   

  	
  (s)

  	
  Compliance with ISM Code, the ISPS Code, the MTSA
  and Annex VI

  	
   

  	
  40

  
	
   

  	
   

  	
  (t)

  	
  Threatened Withdrawal of DOC, SMC, ISSC or IAPPC

  	
   

  	
  40

  
	
   

  	
   

  	
  (u)

  	
  Liens

  	
   

  	
  41

  
	
   

  	
   

  	
  (v)

  	
  Indebtedness

  	
   

  	
  41

  
	
   

  	
   

  	
  (w)

  	
  Payment Free of Taxes

  	
   

  	
  41

  
	
   

  	
   

  	
  (x)

  	
  No Material Adverse Change

  	
   

  	
  41

  
	
   

  	
   

  	
  (y)

  	
  No Proceedings to Dissolve

  	
   

  	
  41

  
	
   

  	
   

  	
  (z)

  	
  Compliance with Laws

  	
   

  	
  41

  
	
   

  	
   

  	
  (aa)

  	
  Survival

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  COVENANTS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Affirmative Covenants

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Performance of Agreements

  	
   

  	
  41

  
	
   

  	
   

  	
  (b)

  	
  Notice of Default

  	
   

  	
  41

  
	
   

  	
   

  	
  (c)

  	
  Consents

  	
   

  	
  42

  
	
   

  	
   

  	
  (d)

  	
  Preservation of Corporate Existence, Etc

  	
   

  	
  42

  
	
   

  	
   

  	
  (e)

  	
  Books and Records

  	
   

  	
  42

  
	
   

  	
   

  	
  (f)

  	
  Inspection

  	
   

  	
  42

  
	
   

  	
   

  	
  (g)

  	
  Payment of Obligations

  	
   

  	
  42

  
	
   

  	
   

  	
  (h)

  	
  Compliance with Agreements, Statutes, etc

  	
   

  	
  42

  
	
   

  	
   

  	
  (i)

  	
  Environmental Matters

  	
   

  	
  43

  
	
   

  	
   

  	
  (j)

  	
  Maintenance of Assets

  	
   

  	
  43

  
	
   

  	
   

  	
  (k)

  	
  Book Value

  	
   

  	
  44

  
	
   

  	
   

  	
  (l)

  	
  Pari Passu

  	
   

  	
  44

  
	
   

  	
   

  	
  (m)

  	
  Brokerage Commissions,
  etc

  	
   

  	
  44

  
	
   

  	
   

  	
  (n)

  	
  IPO Proceeds

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Negative Covenants

  	
   

  	
  48

  
	
   

  	
  9.3

  	
  Substitution of Vessels

  	
   

  	
  52

  
	
   

  	
  9.4

  	
  Inspection and Survey Reports

  	
   

  	
  52

  
	
   

  	
  9.5

  	
  Inspection of Vessels

  	
   

  	
  52

  
							



 


iii

















 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  EVENTS OF DEFAULT

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Events of Default

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Principal Payments

  	
   

  	
  52

  
	
   

  	
   

  	
  (b)

  	
  Interest and other Payments

  	
   

  	
  53

  
	
   

  	
   

  	
  (c)

  	
  Representations, etc

  	
   

  	
  53

  
	
   

  	
   

  	
  (d)

  	
  Impossibility, Illegality

  	
   

  	
  53

  
	
   

  	
   

  	
  (e)

  	
  Certain Covenants

  	
   

  	
  53

  
	
   

  	
   

  	
  (f)

  	
  Covenants

  	
   

  	
  53

  
	
   

  	
   

  	
  (g)

  	
  Indebtedness and Other Obligations

  	
   

  	
  53

  
	
   

  	
   

  	
  (h)

  	
  Bankruptcy

  	
   

  	
  53

  
	
   

  	
   

  	
  (i)

  	
  Judgments

  	
   

  	
  54

  
	
   

  	
   

  	
  (j)

  	
  Inability to Pay Debts

  	
   

  	
  54

  
	
   

  	
   

  	
  (k)

  	
  Cessation of Business

  	
   

  	
  54

  
	
   

  	
   

  	
  (l)

  	
  Change of Ownership or Control

  	
   

  	
  54

  
	
   

  	
   

  	
  (m)

  	
  Change of Commercial and Technical Manager

  	
   

  	
  54

  
	
   

  	
   

  	
  (n)

  	
  ERISA Debt

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Indemnification

  	
   

  	
  55

  
	
   

  	
  10.3

  	
  Application of Moneys

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  ASSIGNMENTS; PARTICIPATIONS;

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Assignments

  	
   

  	
  56

  
	
   

  	
  11.2

  	
  Participations

  	
   

  	
  57

  
	
   

  	
  11.3

  	
  Security Interest

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Illegality

  	
   

  	
  57

  
	
   

  	
  12.2

  	
  Increased Cost

  	
   

  	
  57

  
	
   

  	
  12.3

  	
  Nonavailability of Funds

  	
   

  	
  58

  
	
   

  	
  12.4

  	
  Determination of Losses

  	
   

  	
  59

  
	
   

  	
  12.5

  	
  Compensation for Losses

  	
   

  	
  59

  
	
   

  	
  12.6

  	
  Compensation for Breakage Costs

  	
   

  	
  59

  
	
   

  	
  12.7

  	
  Currency Indemnity

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  FEES, EXPENSES AND INDEMNIFICATION

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Fees

  	
   

  	
  60

  
	
   

  	
  13.2

  	
  Expenses

  	
   

  	
  61

  
	
   

  	
  13.3

  	
  Indemnification

  	
   

  	
  61

  
	
   

  	
  13.4

  	
  Time of Payment

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  APPLICABLE LAW, JURISDICTION AND WAIVER

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Applicable Law

  	
   

  	
  62

  
								



 


iv

















 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Jurisdiction

  	
   

  	
  62

  
	
   

  	
  14.3

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  THE FACILITY AGENT AND THE SECURITY TRUSTEE

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Appointment and Authorization

  	
   

  	
  63

  
	
   

  	
  15.2

  	
  Agents and Affiliates

  	
   

  	
  63

  
	
   

  	
  15.3

  	
  Action by Agents

  	
   

  	
  63

  
	
   

  	
  15.4

  	
  Consultation with Experts

  	
   

  	
  64

  
	
   

  	
  15.5

  	
  Liability of the Agents

  	
   

  	
  64

  
	
   

  	
  15.6

  	
  Indemnification

  	
   

  	
  64

  
	
   

  	
  15.7

  	
  Credit Decision

  	
   

  	
  65

  
	
   

  	
  15.8

  	
  Successor Agents

  	
   

  	
  65

  
	
   

  	
  15.9

  	
  Distribution of Payments

  	
   

  	
  65

  
	
   

  	
  15.10

  	
  Holder of Interest in Note

  	
   

  	
  65

  
	
   

  	
  15.11

  	
  Assumption re Event of Default

  	
   

  	
  66

  
	
   

  	
  15.12

  	
  Notification of Event of Default

  	
   

  	
  66

  
	
   

  	
  15.13

  	
  Limitations of Liability of Creditors

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  NOTICES AND DEMANDS

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  LIMITATION OF LIABILITY/SURVIVAL OF
  LIABILITY/CONTINUING INDEMNITIES

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  MISCELLANEOUS

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.1

  	
  Time of Essence

  	
   

  	
  68

  
	
   

  	
  18.2

  	
  Severability

  	
   

  	
  68

  
	
   

  	
  18.3

  	
  References

  	
   

  	
  68

  
	
   

  	
  18.4

  	
  Further Assurances

  	
   

  	
  68

  
	
   

  	
  18.5

  	
  Prior Agreements, Merger

  	
   

  	
  69

  
	
   

  	
  18.6

  	
  Entire Agreement, Amendments

  	
   

  	
  69

  
	
   

  	
  18.7

  	
  Headings

  	
   

  	
  69

  
	
   

  	
  18.8

  	
  Survival

  	
   

  	
  69

  
	
   

  	
  18.9

  	
  Confidentiality

  	
   

  	
  69

  
	
   

  	
  18.10

  	
  Counterparts

  	
   

  	
  70

  
	
   

  	
  18.11

  	
  WAIVER OF IMMUNITY

  	
   

  	
  70

  



 


v

















 


	
  SCHEDULE I

  	
   

  	
  VESSELS

  
	
  SCHEDULE II

  	
   

  	
  LENDERS

  
	
  SCHEDULE III

  	
   

  	
  VESSEL-OWNING GUARANTORS

  
	
  SCHEDULE IV

  	
   

  	
  ACCEPTABLE BROKERS

  
	
  SCHEDULE V

  	
   

  	
  CLASSIFICATION SOCIETY

  
	
  SCHEDULE VI

  	
   

  	
  LIENS & INDEBTEDNESS

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

  
	
  EXHIBIT B

  	
   

  	
  FORM OF PROMISSORY NOTE

  
	
  EXHIBIT C

  	
   

  	
  FORM OF DRAWDOWN NOTICE

  
	
  EXHIBIT D

  	
   

  	
  FORM OF LETTER OF CREDIT REQUEST

  
	
  EXHIBIT E

  	
   

  	
  FORM OF COMPLIANCE CERTIFICATE

  
	
  EXHIBIT F

  	
   

  	
  FORM OF EARNINGS ASSIGNMENT

  
	
  EXHIBIT G

  	
   

  	
  FORM OF INSURANCES ASSIGNMENT

  
	
  EXHIBIT H

  	
   

  	
  FORM OF SHIPBUILDING CONTRACT ASSIGNMENT

  
	
  EXHIBIT I

  	
   

  	
  FORM OF UNITED STATES MORTGAGE

  



 


vi

















 


SENIOR SECURED REVOLVING CREDIT
FACILITY AGREEMENT


 


THIS SENIOR
SECURED REVOLVING CREDIT FACILITY AGREEMENT (this “Agreement”)
is made as of the                               
day of November, 2007 by and among (1) OSG AMERICA OPERATING COMPANY LLC,
a limited liability company organized and existing under the laws of the State
of Delaware, as borrower (the “Borrower”),
(2) OSG AMERICA L.P., a limited partnership organized and existing under
the laws of the State of Delaware (the “Parent”),
as guarantor, (3) the Parent and each of the companies listed on Schedule III
(the “Vessel-Owning  Guarantors”), as joint and several guarantors (the Vessel
Owning Guarantors together with the Parent, the “Guarantors”
and each a “Guarantor”), (4) the banks and
financial institutions listed on Schedule II, as lenders (together with the
Issuing Lender and any assignee pursuant to Section 11, the “Lenders” and each a “Lender”), (5) ING BANK N.V.,
London Branch (“ING”), as
agent for the Lenders (in such capacity, the “Facility Agent”),
as security trustee for the Lenders (in such capacity, the “Security Trustee”) and as issuing
lender (in such capacity, the “Issuing Lender”),
and (6) ING and DNB NOR BANK ASA (“DnB NOR”),
as mandated lead arrangers (in such capacity, each a “MLA”
and, collectively the “MLAs”) and
as bookrunners (in such capacity, each a “Bookrunner”
and, collectively, the “Bookrunners”).


 


WITNESSETH THAT:


 


WHEREAS, (1)
the Parent is a limited partnership formed by Overseas Shipholding Group, Inc.
(“OSG”), (2) the Borrower is a
wholly-owned subsidiary of the Parent and (3) the Vessel-Owning Guarantors are
each a wholly-owned subsidiary of the Borrower; and


 


WHEREAS, each
of the Guarantors have agreed to provide a joint and several guarantee of the
obligations of the Borrower with respect to the transactions contemplated by
this Agreement;


 


WHEREAS, at
the request of the Borrower, the Agent, the Security Trustee, the MLAs and the
Bookrunners have agreed to act in their respective capacities as set forth
herein and the Lenders have agreed to provide to the Borrower a senior secured
revolving credit facility in an amount of up to $200,000,000 with a $25,000,000
sub limit for the issuance of Letters of Credit on the terms and subject to the
conditions set forth herein for the purposes of (1) refinancing in whole or in
part the Parent’s outstanding debt to OSG, (2) financing the pre-delivery and
post-delivery costs of Hull 8015 and Hull 8016, and the cost of retrofitting Barge
OSG 243 (each as defined herein) and (3) providing funds for general corporate
purposes;


 


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


 


1.                                       DEFINITIONS


 


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


 

















 


	
  “Adjusted
  Net Worth”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 17;

  
	
   

  	
   

  	
   

  
	
  “Advance(s)”

  	
   

  	
  shall mean,
  as the context may require, (i) any amount advanced to the Borrower with
  respect to the Facility pursuant to Section 2, or (ii) the aggregate amount
  of all Advances outstanding at the applicable time;

  
	
   

  	
   

  	
   

  
	
  “Advance
  Availability Period”

  	
   

  	
  shall mean
  the period commencing the date hereof and ending the earlier of (i) the
  date that is one (1) month prior to the Payment Date, or (ii) the date on
  which the Facility is permanently reduced to zero and the Lenders are no
  longer required to made Advances hereunder;

  
	
   

  	
   

  	
   

  
	
  “Affiliate”

  	
   

  	
  shall mean,
  with respect to any Person, (i) any Person that directly, or indirectly
  through one or more intermediaries, Controls such Person or (ii) any
  Person (other than such Person or a subsidiary of such Person) which is
  Controlled by or is under common Control with a Controlling Person;

  
	
   

  	
   

  	
   

  
	
  “Agents”

  	
   

  	
  shall mean
  the Facility Agent and the Security Trustee;

  
	
   

  	
   

  	
   

  
	
  “Agreement”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Annex VI”

  	
   

  	
  shall mean
  the Regulations for the Prevention of Air Pollution from Ships to the
  International Convention for the Prevention of Pollution from Ships 1973 (as
  modified in 1978 and 1997);

  
	
   

  	
   

  	
   

  
	
  “Applicable
  Law”

  	
   

  	
  shall mean
  any Law of any Authority, including, without limitation, all national,
  Federal, state and local banking or securities laws, to which the Person in
  question is subject or by which it or any of its material property is bound;

  
	
   

  	
   

  	
   

  
	
  “Applicable
  Rate”

  	
   

  	
  shall mean,
  in respect of any Advance, the rate of interest on such Advance from time to
  time pursuant to Section 5.1;

  
	
   

  	
   

  	
   

  
	
  “Assignment
  and Assumption Agreement(s)”

  	
   

  	
  shall mean
  the Assignment and Assumption Agreement(s) executed pursuant to
  Section 11.1 substantially in the form of Exhibit A;

  
	
   

  	
   

  	
   

  
	
  “Assignment
  Notices”

  	
   

  	
  shall mean
  (i) notices with respect to the Earnings Assignments substantially in the
  form set out in Exhibit 1 to Exhibit F hereto, (ii) notices with respect
  to the Insurances Assignments substantially in the form set out in
  Exhibit 3 to Exhibit G hereto, and (iii) notices with respect to the
  Shipbuilding Contract Assignments substantially in the form set out in
  Exhibit 1 to Exhibit H hereto;

  



 


2

















 


	
  “Assignments”

  	
   

  	
  shall mean
  the Earnings Assignments, the Insurances Assignments and the Shipbuilding
  Contracts Assignments;

  
	
   

  	
   

  	
   

  
	
  “Authority”

  	
   

  	
  shall mean
  any governmental or quasi-governmental authority, whether executive,
  legislative, judicial, administrative or other, or any combination thereof,
  including, without limitation, any national, Federal, state, local,
  territorial, county, municipal or other government or governmental or
  quasi-governmental agency, arbitrator, board, body, branch, bureau,
  commission, corporation, court, department, instrumentality, master,
  mediator, panel, referee, system or other political unit or subdivision or
  other entity of any of the foregoing, whether domestic or foreign;

  
	
   

  	
   

  	
   

  
	
  “Banking
  Day(s)”

  	
   

  	
  shall mean
  day(s) on which banks are open for the transaction of business in London,
  England and New York, United States of America;

  
	
   

  	
   

  	
   

  
	
  “Barge
  OSG 243”

  	
   

  	
  shall mean
  that certain Vessel currently being retrofitted, the details of which are set
  forth on Schedule I hereto;

  
	
   

  	
   

  	
   

  
	
  “Book
  Value”

  	
   

  	
  shall mean,
  as of the date of any determination thereof, for any asset of the Parent, the
  value net of depreciation at which the asset of the Parent and its Subsidiary
  is recorded and reported by the Parent in its consolidated financial
  statements in accordance with GAAP, consistently applied;

  
	
   

  	
   

  	
   

  
	
  “Bookrunners”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Borrower”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Capitalized
  Lease”

  	
   

  	
  of any
  Person shall mean any lease or other arrangement conveying the right to use
  real or personal property where the obligations for Rentals are required to
  be capitalized on a balance sheet of the lessee in accordance with GAAP;

  
	
   

  	
   

  	
   

  
	
  “Capitalized
  Rentals”

  	
   

  	
  of any
  Person shall mean, as of the date of any determination thereof, the
  capitalized amount of all Rentals due and to become due under all Capitalized
  Leases of such Person, as lessee, reflected as a liability on the balance
  sheet of such Person;

  
	
   

  	
   

  	
   

  
	
  “Cash”

  	
   

  	
  shall mean
  as of the date of any determination thereof, the total amount of all cash and
  Cash Equivalents of a Person as determined in accordance with GAAP;

  
	
   

  	
   

  	
   

  
	
  “Cash
  Equivalents”

  	
   

  	
  shall mean
  (i) securities issued or directly and fully guaranteed or insured by the
  United States of America or any agency or instrumentality thereof (provided
  that the full faith and credit of the United States of America is pledged in
  support thereof), and

  



 


3

















 


	
   

  	
   

  	
  (ii) time
  deposits, certificates of deposit or deposits in the interbank market of any
  commercial bank of recognized standing organized under the laws of the United
  States of America, any state thereof or any foreign jurisdiction having
  capital and surplus in excess of $500,000,000, and rated at least A or the
  equivalent thereof by S&P in respect of (ii) above, in each case having
  maturities of less than one year from the date of acquisition;

  
	
   

  	
   

  	
   

  
	
  “Classification
  Society”

  	
   

  	
  shall mean a
  classification society listed on Schedule V;

  
	
   

  	
   

  	
   

  
	
  “Closing
  Date”

  	
   

  	
  shall mean
  the date on which each of the conditions precedent to the availability of the
  Facility set forth in Section 3.1 shall have been met or waived, provided
  that the Closing Date shall, in any event, occur no later than 30 November
  2007, unless otherwise agreed by the Lenders;

  
	
   

  	
   

  	
   

  
	
  “Code”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Commitment”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Commitment
  Fee”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 13.1(a);

  
	
   

  	
   

  	
   

  
	
  “Compliance
  Certificate”

  	
   

  	
  shall mean a
  certificate in the form set out in Exhibit E, or in such other form as the
  Facility Agent may agree, certifying the compliance by each of the Security
  Parties with all of its covenants contained herein and showing the calculations
  thereof, which certificate shall be executed and delivered by the chief
  executive officer, the chief operating officer, the chief financial officer
  or the controller of the general partner of the Parent or the designee
  thereof to the Facility Agent;

  
	
   

  	
   

  	
   

  
	
  “Consolidated
  Tangible Net Worth”

  	
   

  	
  shall mean,
  as of the date of any determination thereof, the total of stockholders’
  equity (as shown on the most recent consolidated balance sheet of such
  Person) less Intangible Assets of such Person and its subsidiaries;

  
	
   

  	
   

  	
   

  
	
  “Contingent
  Obligations”

  	
   

  	
  shall mean,
  as to any Person, without duplication, any obligation of such Person
  guaranteeing or intending to guarantee any Indebtedness of any other Person
  (the “primary obligor”) in any manner, whether directly or indirectly,
  including, without limitation, any obligation of such Person, whether or not
  contingent, (a) to purchase any such Indebtedness or any property
  constituting direct or indirect security therefor, (b) to

  



 


4

















 


	
   

  	
   

  	
  advance or
  supply funds (i) for the purchase or payment of any such Indebtedness or (ii)
  to maintain working capital or equity capital of the primary obligor or
  otherwise to maintain the net worth or solvency of the primary obligor, (c)
  to purchase property, securities or services primarily for the purpose of
  assuring the owner of any such Indebtedness or the ability or the primary
  obligor to make payment of such Indebtedness or (d) otherwise to assure or
  hold harmless the owner of such Indebtedness against loss in respect thereof,
  provided, however, that the term Contingent Obligation shall
  not include endorsements of instruments for deposit or collection in the
  ordinary course of business. The amount of any Contingent Obligation shall be
  deemed to be an amount equal to the stated or determinable amount of the
  Indebtedness in respect of which such Contingent Obligation is made or, if
  not stated or determinable, the maximum reasonably anticipated liability in
  respect thereof (assuming such Person is required to perform thereunder) as
  determined by such Person in good faith;

  
	
   

  	
   

  	
   

  
	
  “Control”

  	
   

  	
  shall mean,
  for purposes of the definition of “Affiliate,” with respect to any Person,
  possession, directly or indirectly, of the power to direct or cause the direction
  of the management or policies of such Person, whether through the ownership
  of voting securities, by contract or otherwise (for purposes of the aforesaid
  definition, the term “Control” used as a verb has a corresponding
  meaning);

  
	
   

  	
   

  	
   

  
	
  “Conversion
  Date”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 12.7(a);

  
	
   

  	
   

  	
   

  
	
  “Creditor(s)”

  	
   

  	
  shall mean
  the Facility Agent, the Security Trustee and the Lenders (each, a “Creditor”
  and, collectively, the “Creditors”);

  
	
   

  	
   

  	
   

  
	
  “Debt”

  	
   

  	
  shall mean,
  as to any Person, without duplication, (i) all indebtedness of such Person
  for borrowed money or for the deferred purchase price of property or
  services, (ii) the maximum amount available to be drawn under all letters of
  credit, bankers’ acceptances and similar obligations issued for the account
  of such Person and all unpaid drawings in respect of such letters of credit,
  bankers’ acceptances and similar obligations, (iii) all indebtedness of the
  types described in clause (i), (ii), (iv), (v), or (vi) of this definition
  secured by any Lien on any property owned by such Person, whether or not such
  indebtedness has been assumed by such Person (provided that, if the Person
  has not assumed or otherwise become liable in respect of such indebtedness,
  such indebtedness shall be deemed to be in an amount equal to the lesser of
  (i) the amount of such indebtedness and (ii) the fair market value of the
  property to which such Lien

  



 


5

















 


	
   

  	
   

  	
  relates as
  determined in good faith by such Person), (iv) the aggregate amount of all
  Capitalized Rentals of such Persons, (v) all Contingent Obligations of such
  Person, and (vi) all obligations under any interest rate protection
  agreement, any other hedging agreement or under any similar type of agreement
  which, in accordance with GAAP, are required to be reflected as liabilities
  on the balance sheet of such Person. Notwithstanding the foregoing, Debt
  shall not include trade payables and accrued expenses incurred by any Person
  in accordance with customary practices and in the ordinary course of business
  of such Person;

  
	
   

  	
   

  	
   

  
	
  “Default”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Default
  Rate”

  	
   

  	
  shall mean a
  rate per annum equal to the aggregate of (i) two percent (2%) plus (ii) the
  Applicable Rate then in effect;

  
	
   

  	
   

  	
   

  
	
  “Derivatives
  Obligations”

  	
   

  	
  of any
  Person shall mean all obligations of such Person in respect of any rate swap
  transaction, basis swap, forward rate transaction, commodity swap, commodity
  option, equity or equity index swap, equity or equity index option, bond
  option, interest rate option, foreign exchange transaction, cap transaction,
  floor transaction, collar transaction, currency swap transaction,
  cross-currency rate swap transaction, currency option or any other similar
  transaction (including any option with respect to any of the foregoing
  transactions) or any combination of the foregoing transactions;

  
	
   

  	
   

  	
   

  
	
  “Determination
  Date”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 17;

  
	
   

  	
   

  	
   

  
	
  “DOC”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Dollars”
  or “$”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Drawdown
  Date(s)”

  	
   

  	
  shall mean
  the date(s), each being a Banking Day, upon which the Borrower has requested
  that (i) an Advance be made available to the Borrower and such Advance is
  made, or (ii) an Advance is deemed to have been made due to a drawing under
  any Letter of Credit, as provided in Section 2.13;

  



 


6

















 


	
  “Drawdown
  Notice”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.5;

  
	
   

  	
   

  	
   

  
	
  “Earnings
  Assignments”

  	
   

  	
  shall mean
  the assignments of earnings and charterparties in respect of (i) the earnings
  of each Vessel from any and all sources (including requisition compensation),
  (ii) any charter or other contract relating to each Vessel and (iii) the
  prorated portion of any pooled monies which are attributable to (i) and (ii)
  above, to be executed by the relevant Vessel-Owning Guarantor in favor of the
  Facility Agent pursuant to Section 3.1(j)(iii) substantially in the form
  set out in Exhibit F;

  
	
   

  	
   

  	
   

  
	
  “EBITDA”

  	
   

  	
  shall mean,
  in respect of a Person, consolidated net income, plus Interest Charges,
  taxes, depreciation, amortization and other non-cash charges, to the extent
  deducted in calculating net income, in each case as determined in accordance
  with GAAP;

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Affiliate”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 9.1(A)(i);

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Approvals”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 8(r);

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Claim”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 8(r);

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Laws”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 8(r);

  
	
   

  	
   

  	
   

  
	
  “ERISA”

  	
   

  	
  shall mean
  the Employee Retirement Income Security Act of 1974, as amended;

  
	
   

  	
   

  	
   

  
	
  “ERISA
  Affiliate”

  	
   

  	
  shall mean a
  trade or business (whether or not incorporated) which is under common control
  with the Borrower within the meaning of Sections 414(b),(c),(m) or (o) of the
  Code;

  
	
   

  	
   

  	
   

  
	
  “ERISA
  Group”

  	
   

  	
  shall mean
  the Parent and its subsidiaries within the meaning of Section 424(f) of the
  Code;

  
	
   

  	
   

  	
   

  
	
  “Event(s)
  of Default”

  	
   

  	
  shall mean
  any of the events set out in Section 10.1;

  
	
   

  	
   

  	
   

  
	
  “Exchange
  Act”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Extending
  Lender(s)”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.2;

  
	
   

  	
   

  	
   

  
	
  “Extension
  Option”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.2;

  
	
   

  	
   

  	
   

  
	
  “Facility”

  	
   

  	
  shall mean
  the senior secured revolving credit facility to be made available by the
  Lenders to the Borrower hereunder in multiple Advances and Letters of Credit
  (i) in the maximum aggregate principal amount of Two Hundred Million Dollars
  ($200,000,000) if the Parent receives gross proceeds from the IPO in an
  amount equal to or greater than $125,000,000, (ii) in

  



 


7

















 


	
   

  	
   

  	
  the maximum
  aggregate principal amount of One Hundred Fifty Million Dollars
  ($150,000,000) if the Parent receives gross proceeds from the IPO in an
  amount equal to or greater than $100,000,000 but less than $125,000,000 or
  (iii) if the Parent receives gross proceeds from the IPO in an amount less
  than $100,000,000 the Facility and the total Commitments will be nil;
  provided, however, that the Facility may also be reduced from time to time
  pursuant to the terms of this Agreement and the Facility, in respect of
  Letters of Credit, shall not exceed Twenty Five Million Dollars
  ($25,000,000);

  
	
   

  	
   

  	
   

  
	
  “Facility
  Agent”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Facility
  Amount”

  	
   

  	
  shall mean,
  as of the date of determination, the aggregate amount of the Commitments on
  such date;

  
	
   

  	
   

  	
   

  
	
  “Facility
  Balance”

  	
   

  	
  shall mean,
  as of the date of determination, the Dollar amount of the Facility
  outstanding at such time;

  
	
   

  	
   

  	
   

  
	
  “Facility
  Period”

  	
   

  	
  shall mean
  the period from the date hereof to the date which is five (5) years from the
  date hereof, unless otherwise extended pursuant to the Extension Option;

  
	
   

  	
   

  	
   

  
	
  “Fair
  Market Value”

  	
   

  	
  shall mean,
  in respect of any Vessel, the appraised value of such Vessel as determined by
  any two (2) brokers chosen by the Borrower from the list set forth on
  Schedule IV , such Vessel to be valued on a “as is”, “where is”, “willing
  buyer, willing seller”, stand alone basis, free and clear of any liens,
  charters or other encumbrances and with no value given to any pooling
  arrangements;

  
	
   

  	
   

  	
   

  
	
  “Fee
  Letters”

  	
   

  	
  shall mean
  those certain fee letters dated October 18, 2007 and November
                      ,
  2007, each entered into by the Borrower and the MLAs in respect of the
  Facility;

  
	
   

  	
   

  	
   

  
	
  “Final
  Availability Date”

  	
   

  	
  shall mean
  the Drawdown Date in relation to the final Advance, which shall not fall
  later than the day occurring one (1) month prior to the Payment Date;

  
	
   

  	
   

  	
   

  
	
  “Fronting
  Fee”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 13.1(b);

  
	
   

  	
   

  	
   

  
	
  “Funded
  Indebtedness”

  	
   

  	
  shall mean,
  as at any date of determination, the aggregate stated balance sheet amount of
  all Indebtedness of a Person and its subsidiaries on a consolidated basis;
  and with respect to the Parent and the Subsidiaries (including the Facility);

  
	
   

  	
   

  	
   

  
	
  “GAAP”

  	
   

  	
  shall mean,
  at any time, generally accepted accounting principles

  



 


8

















 


	
   

  	
   

  	
  at the time
  in the United States of America;

  
	
   

  	
   

  	
   

  
	
  “Guaranteed
  Obligations”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 7.1;

  
	
   

  	
   

  	
   

  
	
  “Guarantors”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Hull
  8015”

  	
   

  	
  shall mean
  that certain Vessel under construction, the details of which are set forth on
  Schedule I hereto;

  
	
   

  	
   

  	
   

  
	
  “Hull
  8016”

  	
   

  	
  shall mean
  that certain Vessel under construction, the details of which are set forth on
  Schedule I hereto;

  
	
   

  	
   

  	
   

  
	
  “IAPPC”

  	
   

  	
  shall mean a
  valid international air pollution prevention certificate for a Vessel issued
  under Annex VI;

  
	
   

  	
   

  	
   

  
	
  “Indebtedness”

  	
   

  	
  of any
  Person shall mean and include all obligations of such Person which in
  accordance with GAAP shall be classified upon a balance sheet of such Person
  as liabilities of such Person, and in any event shall include all Debt of
  such Person;

  
	
   

  	
   

  	
   

  
	
  “Initial
  Advance”

  	
   

  	
  shall mean
  the first Advance to be made under the Facility pursuant to Section 2;

  
	
   

  	
   

  	
   

  
	
  “Initial Payment Date”

  	
   

  	
  means November   , 2012;

  
	
   

  	
   

  	
   

  
	
  “Insurances
  Assignments”

  	
   

  	
  shall mean
  the assignments in respect of the insurances of each Vessel to be executed by
  the relevant Vessel-Owning Guarantor in favor of the Facility Agent pursuant
  to Section 3.1(j)(ii) substantially in the form set out in
  Exhibit G;

  
	
   

  	
   

  	
   

  
	
  “Intangible
  Assets”

  	
   

  	
  shall mean,
  as of the date of any determination thereof, goodwill, patents, trade names,
  trademarks, copyrights, franchises and such other assets as are properly
  classified as “intangible assets” in accordance with GAAP plus unamortized
  debt issuance costs;

  
	
   

  	
   

  	
   

  
	
  “Interest
  Charges”

  	
   

  	
  for any
  period shall mean all interest and all amortization of debt discount and
  expense on any particular Indebtedness;

  
	
   

  	
   

  	
   

  
	
  “Interest
  Election Request”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 5.4;

  
	
   

  	
   

  	
   

  
	
  “Interest
  Period”

  	
   

  	
  shall mean
  with respect to any Advance (a) each one (1), three (3) or six (6) month
  period, commencing on the date such Advance is made or the last day of the
  next preceding Interest Period with respect to such Advance and ending on the
  same day in the first, third or sixth calendar month thereafter, in each
  case, as selected by the Borrowers or (b) in the Lenders’ discretion, such
  other period(s) in excess of six (6) months as may be agreed; provided,
  however, (x) in each case, that each such

  



 


9

















 


	
   

  	
   

  	
  Interest
  Period (if such Interest Period is a whole number of months) which commences
  on the last Banking Day of a calendar month (or on any day for which there is
  no numerically corresponding day in the appropriate subsequent calendar
  month) shall end on the last Banking Day of the appropriate subsequent
  calendar month, (y) that the Borrower may not choose more than six (6) one
  month interest periods in any twelve month period;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding
  the foregoing, (i) each Interest Period which would otherwise end on a
  day which is not a Banking Day shall end on the next succeeding Banking Day
  (or, if such next succeeding Banking Day falls in the next succeeding
  calendar month, on the next preceding Banking Day), and (ii) each
  Interest Period which would otherwise end after the Payment Date shall end on
  the Payment Date;

  
	
   

  	
   

  	
   

  
	
  “Interest
  Rate Agreements”

  	
   

  	
  shall mean
  any interest rate protection agreement, interest rate future agreement,
  interest rate option agreement, interest rate swap agreement, interest rate
  cap agreement, interest rate collar agreement, interest rate hedge agreement
  or other similar agreement or arrangement entered into by the Borrower, the
  Guarantors or any Subsidiary, which is designed to protect the Borrower, the
  Guarantors or any of the Subsidiaries against fluctuations in interest rates
  applicable under this Agreement, to or under which the Borrower, the
  Guarantors or any of the Subsidiaries is a party or a beneficiary on the date
  of this Agreement or becomes a party or a beneficiary hereafter;

  
	
   

  	
   

  	
   

  
	
  “Investments”

  	
   

  	
  shall mean
  all investments in any Person, regardless of the form of consideration paid
  therefor, directly or indirectly, whether by acquisition of shares of capital
  stock, indebtedness or other obligations or Securities or by loan, advance,
  capital contribution or otherwise; provided, however, that “Investments”
  shall not mean or include routine investments in property to be used or
  consumed in the ordinary course of business;

  
	
   

  	
   

  	
   

  
	
  “IPO”

  	
   

  	
  shall mean the initial public offering of the Parent’s limited
  partnership interests;

  
	
   

  	
   

  	
   

  
	
  “ISM Code”

  	
   

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

  



 


10

















 


	
  “ISPS
  Code”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “ISSC”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Issuing
  Lender”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Judgment
  Currency”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 12.7(a);

  
	
   

  	
   

  	
   

  
	
  “Law”

  	
   

  	
  shall mean
  any law, rule, regulation or official code, consent decree, constitution,
  decree, directive, enactment, guideline, injunction, interpretation,
  judgment, order, ordinance, policy statement, proclamation, promulgation,
  requirement, rule of law, rule of public policy, settlement agreement,
  statute, or writ, of any Authority;

  
	
  “L/C
  Supportable Obligation(s)”

  	
   

  	
  means such
  obligations of the Borrower as are not inconsistent with the issuance
  policies of the Issuing Lender; no Letter of Credit may be payable (1) to any
  entity or person who is subject to sanctions issued by the United States
  Department of Commerce or to whom payment is prohibited by the Foreign Asset
  Control Regulations of the Department of the Treasury or (2) which otherwise
  is in contravention of applicable laws and regulations;

  
	
   

  	
   

  	
   

  
	
  “Lender(s)”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Letter(s)
  of Credit”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.10;

  
	
   

  	
   

  	
   

  
	
  “Letter
  of Credit Availability Period”

  	
   

  	
  the period
  from the Closing Date until the date that is 30 days prior to the Payment
  Date.

  
	
   

  	
   

  	
   

  
	
  “Letter of
  Credit Fee”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 13.1(b);

  
	
   

  	
   

  	
   

  
	
  “Letter
  of Credit Outstandings”

  	
   

  	
  means, at
  any time, the aggregate stated amount of all Letters of Credit issued that
  have not expired or otherwise been terminated, less any drawings previously
  made thereunder;

  
	
   

  	
   

  	
   

  
	
  “Letter
  of Credit Participant”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.12;

  
	
   

  	
   

  	
   

  
	
  “Letter
  of Credit Request”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.11;

  



 


11

















 


	
  “LIBOR
  Rate”

  	
   

  	
  shall mean,
  with respect to any Interest Period for any Advance, the rate per annum
  determined by the Facility Agent to be (i) the rate of interest as published
  on page 3750 of the Telerate Service (or such other service as may be elected
  by the British Bankers’ Association as the information vendor for purposes of
  displaying British Bankers’ Association Interest Settlement Dates) as the
  rate per annum at which deposits are being quoted to prime banks in Dollars
  for the relevant Interest Period at the London Interbank Market as of 11:00
  A.M. London time, on the day that is two Banking Days prior to the first day
  of such Interest Period, or (ii) if such rate does not appear on such
  page or such service for the purposes of paragraph (i) or the Facility Agent
  determines that no rate for the relevant period of time appears on such page
  or service, the annual rate of interest which is the arithmetic mean (rounded
  upwards, if necessary, to four decimal places) of the rates of interest
  supplied by the Reference Banks to the Facility Agent, at its request, as
  being the rates quoted by the Reference Banks to leading banks in the London
  Interbank Market in the ordinary course of business as of 11:00 A.M. London
  time, on the day that is two Banking Days prior to the first day of such
  Interest Period;

  
	
   

  	
   

  	
   

  
	
  “Lien”

  	
   

  	
  shall mean,
  with respect to any asset, any interest in such asset securing an obligation
  owed to, or a claim by, a Person other than the owner of the asset, whether
  such interest is based on the common law, statute or contract, and including
  but not limited to the security interest or lien arising from a mortgage,
  encumbrance, pledge, conditional sale, title retention agreement or trust
  receipt or a lease, consignment or bailment for security purposes or any
  arrangement having substantially the same economic effect as any of the
  foregoing. The term “Lien” shall include reservations, exceptions,
  encroachments, easements, rights-of-way, covenants, conditions, restrictions,
  leases and other title exceptions and encumbrances (including, with respect
  to stock, any purchase options or calls, stockholder agreements, voting trust
  agreements, buy-back agreements and all similar arrangements) affecting
  property. For the purposes of this Agreement, a Person shall be deemed to be
  the owner of any property which it has acquired or holds subject to a
  conditional sale agreement, Capitalized Lease or other arrangement pursuant
  to which title to the property has been retained by or vested in some other Person
  for security purposes and such retention or vesting shall constitute a Lien;

  
	
   

  	
   

  	
   

  
	
  “Majority
  Lenders”

  	
   

  	
  shall mean
  Lenders whose aggregate Commitments exceed fifty percent (50%) of the total
  Commitments or if the Commitments have terminated, Lenders holding in the
  aggregate in excess of

  



 


12

















 


	
   

  	
   

  	
  fifty
  percent (50%) of the Facility Balance;

  
	
   

  	
   

  	
   

  
	
  “Mandatory
  Costs”

  	
   

  	
  means the
  cost of complying with any applicable regulatory requirements of any relevant
  regulatory authority;

  
	
   

  	
   

  	
   

  
	
  “Margin”

  	
   

  	
  shall mean
  during the period from the date hereof up to the fifth (5th)
  anniversary hereof seventy hundredths of one percent (0.70%) per annum and,
  if the Extension Option is exercised, seventy-five hundredths of one percent (0.75%)
  per annum thereafter;

  
	
   

  	
   

  	
   

  
	
  “Material
  Adverse Change”

  	
   

  	
  shall mean
  the occurrence of an event or condition which (a) materially impairs the
  ability of the Borrower and/or the Guarantors to meet or perform any of their
  obligations with regard to (i) this Agreement and the financing
  arrangements established in connection therewith or (ii) any of their
  respective other obligations that are material to the Borrower and the
  Guarantors considered as a whole or (b) materially impairs the rights of or benefits
  or remedies available to the Lenders under the Facility;

  
	
   

  	
   

  	
   

  
	
  “Material
  Financial  Obligation”

  	
   

  	
  means with
  respect to any Security Party a principal or face amount of Debt (in the case
  of Derivatives Obligations, determined in respect of any counterparty on a
  net basis), and arising in one or more related or unrelated transactions,
  exceeding in the aggregate $20,000,000 (or its equivalent in any other
  currency);

  
	
   

  	
   

  	
   

  
	
  “Materials
  of Environmental Concern”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 8(r);

  
	
   

  	
   

  	
   

  
	
  “Maximum
  Liability Amount”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 17;

  
	
   

  	
   

  	
   

  
	
  “MLA(s)”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Moody’s”

  	
   

  	
  shall mean
  Moody’s Investors Service, Inc.;

  
	
   

  	
   

  	
   

  
	
  “Mortgages”

  	
   

  	
  shall mean,
  collectively, the first preferred United States ship mortgages on the Vessels
  to be executed by the respective Vessel-Owning Guarantor which is the
  registered owner of such Vessel in favor of the Security Trustee pursuant to
  Section 3.1(j)(i) substantially in the forms set out in Exhibit I;

  
	
   

  	
   

  	
   

  
	
  “MTSA”

  	
   

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

  



 


13

















 


	
  “Multiemployer
  Plan”

  	
   

  	
  shall mean a
  “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) to which the
  Borrower or any ERISA Affiliate is making or accruing an obligation to make
  contributions or has within any of the preceding five plan years made or
  accrued an obligation to make contributions;

  
	
   

  	
   

  	
   

  
	
  “Multiple
  Employer Plan”

  	
   

  	
  shall mean
  an employee benefit plan, other than a Multiemployer Plan, subject to Title
  IV of ERISA to which the Borrower or ERISA Affiliate, and one or more
  employers other than the Borrower or ERISA Affiliate, is making or accruing
  an obligation to make contributions or, in the event that any such plan has
  been terminated, to which the Borrower or ERISA Affiliate made or accrued an
  obligation to make contributions during any of the five plan years preceding
  the date of termination of such plan;

  
	
   

  	
   

  	
   

  
	
  “Net Debt”

  	
   

  	
  shall mean
  Debt minus Cash and Cash Equivalents;

  
	
   

  	
   

  	
   

  
	
  “Net
  Interest Expense”

  	
   

  	
  shall mean
  for any period, all cash interest and cash commitment fees incurred by the a
  Person less all interest and other financing income received by such Person;

  
	
   

  	
   

  	
   

  
	
  “Non-Extending
  Lenders”

  	
   

  	
  any
  Lender(s) who does not extend its respective Commitment(s) at the Borrower’s
  exercise of the Extension Option;

  
	
   

  	
   

  	
   

  
	
  “Note”

  	
   

  	
  shall mean
  the promissory note, to be executed by the Borrower to the order of the
  Facility Agent pursuant to Section 3.1(c), to evidence the Facility,
  substantially in the form set out in Exhibit B or in such other form as the
  Facility Agent may agree;

  
	
   

  	
   

  	
   

  
	
  “Operator”

  	
   

  	
  shall mean,
  in respect of any Vessel, the Person who is concerned with the operation of
  such Vessel and falls within the definition of “Company” set out in rule
  1.1.2 of the ISM Code;

  
	
   

  	
   

  	
   

  
	
  “OSG”

  	
   

  	
  shall have
  the meaning ascribed thereto in the Recitals;

  
	
   

  	
   

  	
   

  
	
  “OSG Ship
  Management”

  	
   

  	
  shall mean
  OSG Ship Management, Inc., a Delaware corporation;

  
	
   

  	
   

  	
   

  
	
  “Parent”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Participant”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 11.2;

  
	
   

  	
   

  	
   

  
	
  “Payment
  Date”

  	
   

  	
  shall mean
  (i) the date which falls on the fifth anniversary of the date hereof, or (ii)
  if the Extension Option is exercised by the Borrower pursuant to Section 2.2,
  the date which falls on the seventh anniversary of the date hereof. If such
  day is not a Banking Day, the Payment Date shall be the immediately

  



 


14

















 


	
   

  	
   

  	
  preceding
  Banking Day;

  
	
   

  	
   

  	
   

  
	
  “Permitted
  Country(ies)”

  	
   

  	
  shall mean
  any or all of the following: United States of America, United Kingdom,
  Ireland, France, Belgium, the Netherlands, Germany, Sweden, Denmark, Norway,
  Switzerland, Finland, Austria, Spain, Portugal, Italy, Luxembourg, Greece,
  Canada, the Cayman Islands, Republic of Barbados, Japan, China, Hong Kong and
  Bermuda;

  
	
   

  	
   

  	
   

  
	
  “Permitted
  Debt”

  	
   

  	
  shall mean,
  without duplication,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)      Capital
  Leases;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)      Indebtedness
  owing to any Creditor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c) existing
  Indebtedness described in Schedule VI which do not have the effect of
  increasing the principal amount thereof or changing the amortization thereof
  (other than to extend the same) and which are otherwise on terms and
  conditions no less favorable to any Security Party, the Facility Agent or any
  Lender, as determined by the Facility Agent, than the terms of the Debt being
  refinanced, amended or modified; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d) Debt
  consisting of intercompany loans and advances made by any Security Party to
  any other Security Party.

  
	
   

  	
   

  	
   

  
	
  “Permitted
  Lien”

  	
   

  	
  has the
  meaning ascribed thereto in Section 9.2(A)(a)

  
	
   

  	
   

  	
   

  
	
  “Permitted
  Investments”

  	
   

  	
  shall mean with respect to any Person any of the following: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Investments in commercial paper maturing in 270 days or less from the
  date of issuance which, at the time of acquisition, is rated one of the two
  highest ratings by S&P or by Moody’s or any substantially similar
  commercial paper or short-term ratings by any other nationally recognized
  credit rating agency domiciled in the United States of America or the United
  Kingdom which in the reasonable opinion of the Majority Lenders is of similar
  standing and with comparable rating categories and methodologies (a “Substitute
  Rating Agency”);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Investments in obligations directly issued by or fully and
  unconditionally guaranteed as to principal and interest by the United States
  of America or any agency or instrumentality of the United States of America,
  in either case, maturing in three (3) years or less from the date of

  



 


15

















 


	
   

  	
   

  	
   

  	
  acquisition thereof;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Investments in certificates of deposit, time deposits or bankers’
  acceptances issued by a Lender or any other bank or trust company organized
  under the laws of any Permitted Country or any state thereof, having capital,
  surplus and undivided profits aggregating at least $500,000,000 maturing in
  270 days or less from the date of acquisition thereof;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Investments in indebtedness of any governmental body of the United
  States of America or any State or political subdivision thereof, which
  indebtedness is at all times accorded one of the two highest ratings by
  S&P, Moody’s, or a Substitute Rating Agency maturing not later than three
  (3) years from the date of acquisition thereof (or, if maturing more than
  three (3) years after the date of acquisition, which is subject to a put at
  par by the holder thereof on a weekly or more frequent basis);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Investments in money market investment programs which are classified
  as a current asset in accordance with GAAP and which are administered by
  reputable financial institutions having capital, surplus and undivided
  profits of at least $500,000,000 and which are registered under the
  Investment Company Act of 1940, as amended; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)

  	
  investments in money market and auction rate preferred stocks rated
  “A” or better by S&P or Moody’s or a similar category by a Substitute
  Rating Agency;

  
	
   

  	
   

  	
   

  	
   

  
	
  “Person”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Plan”

  	
   

  	
  shall mean
  any employee benefit plan (other than a Multiemployer Plan or a Multiple
  Employer Plan) covered by Title IV of ERISA or Section 302 of ERISA;

  
	
   

  	
   

  	
   

  
	
  “Reference
  Banks”

  	
   

  	
  shall mean
  DnB NOR and ING;

  
	
   

  	
   

  	
   

  
	
  [“Register”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 11.4;]

  



 


16

















 


	
  “Rentals”

  	
   

  	
  shall mean
  and include as of the date of any determination thereof all fixed payments (including
  as such all payments which the lessee is obligated to make to the lessor on
  termination of the lease or surrender of the property) payable by a Person,
  as lessee or sublessee under a lease of real or personal property (excluding
  (i) fixed payments on any item of personal property involving rentals of less
  than $1,000 per month each and $10,000 per month in the aggregate and (ii)
  hire and other amounts payable under any time charter of a vessel for a
  remaining period less than twelve (12) months, including any optional
  extensions or renewals) but shall be exclusive of any amounts required to be
  paid by such Person, directly or indirectly (whether or not designated as
  rents or additional rents), on account of maintenance, repairs, insurance,
  taxes and similar charges incurred by such lessee or sublessee. Fixed rents
  under any so-called “percentage leases” shall be computed solely on the basis
  of the minimum rents, if any, required to be paid by the lessee regardless of
  sales volume or gross revenues;

  
	
   

  	
   

  	
   

  
	
  “Revised
  Facility Amount”

  	
   

  	
  shall have
  the meaning ascribed thereto in Section 2.2;

  
	
   

  	
   

  	
   

  
	
  “S&P”

  	
   

  	
  shall mean
  Standard & Poor’s Ratings Services, a division of McGraw-Hill Inc.;

  
	
   

  	
   

  	
   

  
	
  “Sale and
  Leaseback Transaction”

  	
   

  	
  shall mean any arrangement with any Person providing for the leasing
  by the Parent or a Subsidiary for a period, including renewals, in excess of
  three years of any asset which has been or is to be sold or transferred more
  than 180 days after the acquisition or occupancy thereof or the completion or
  construction and commencement of full operation thereof, whichever is later,
  by the Parent or any Subsidiary to such Person;

  
	
   

  	
   

  	
   

  
	
  “Securities”

  	
   

  	
  shall have
  the same meaning as in Section 2(1) of the Securities Act of 1933, as
  amended;

  
	
   

  	
   

  	
   

  
	
  “Securities
  and Exchange  Commission”

  	
   

  	
  shall mean
  the United States Securities and Exchange Commission or any other
  governmental authority of the United States of America at the time
  administrating the Securities Act of 1933, as amended, the Investment Company
  Act of 1940, as amended, or the Exchange Act;

  
	
   

  	
   

  	
   

  
	
  “Security
  Documents”

  	
   

  	
  shall mean
  the Mortgages, the Assignments and any other documents that may be executed
  as security for the Facility and the Borrower’s and each of the Guarantors’
  obligations in connection therewith;

  



 


17

















 


	
  “Security
  Party”

  	
   

  	
  shall mean
  each of the Borrower and the Guarantors;

  
	
   

  	
   

  	
   

  
	
  “Security
  Trustee”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Shipbuilding
  Contract Assignment(s)”

  	
   

  	
  shall mean
  the first priority assignments over the shipbuilding contracts for Hull 8015
  and Hull 8016;

  
	
   

  	
   

  	
   

  
	
  “Shipping
  and Related Businesses”

  	
   

  	
  shall mean
  any one or all of the following: owning, chartering, leasing, crewing,
  navigating, managing, supplying or operating or repairing commercial vessels
  of all kinds, including but not limited to cargo ships, liners, container
  ships, passenger vessels, tugs, barges and ferries; owning, operating or
  managing transportation assets ancillary to or in furtherance of the
  transportation of freight and passengers by water; owning, operating or
  managing terminals and other facilities of any kind incidental or ancillary
  to or in furtherance of the transportation of freight and passengers by
  water; and owning, managing or operating terminals, docks, piers, quays,
  wharves, dry docks, storage facilities and port facilities incidental or
  ancillary to or in furtherance of the transportation of freight and
  passengers by water;

  
	
   

  	
   

  	
   

  
	
  “SMC”

  	
   

  	
  means the
  safety management certificate issued in respect of any of the Vessel in
  accordance with rule 13 of the ISM Code;

  
	
   

  	
   

  	
   

  
	
  “Stated
  Amount”

  	
   

  	
  means with
  respect to each Letter of Credit, the maximum amount available to be drawn
  thereunder (regardless of whether any conditions for drawing could then be
  met);

  
	
   

  	
   

  	
   

  
	
  “subsidiary”

  	
   

  	
  shall mean
  as to any particular Person, at any date, any corporation, limited liability
  company, partnership or other entity of which more than 50% (by number of
  votes of the Voting Stock or other ownership interests having ordinary voting
  power) are beneficially owned or controlled, directly or indirectly, by such
  Person and/or one or more other subsidiaries of such Person;

  
	
   

  	
   

  	
   

  
	
  “Subsidiary(ies)”

  	
   

  	
  shall mean
  a/the subsidiary(ies) of the Parent;

  
	
   

  	
   

  	
   

  
	
  “Taxes”

  	
   

  	
  shall mean
  any present or future income or other taxes, levies, duties, charges, fees,
  deductions or withholdings of any nature now or hereafter imposed, levied,
  collected, withheld or assessed by any taxing authority whatsoever, except
  for taxes on or measured by the overall net income, net profits or any
  franchise or similar tax based on the net income, net profits or net worth of
  any Lender imposed by the United States of America, the State or the City of
  New York or any governmental subdivision or taxing authority of any thereof
  or by any other taxing authority

  



 


18
















 


	
   

  	
   

  	
  having
  jurisdiction over such Lender (unless such jurisdiction is asserted solely by
  reason of the activities of the Borrower or any of the Subsidiaries);

  
	
   

  	
   

  	
   

  
	
  “Termination
  Event”

  	
   

  	
  shall mean
  (i) a “reportable event,” as such term is defined in Section 4043 of
  ERISA, (ii) the withdrawal of the Borrower or any ERISA Affiliate from a
  Multiple Employer Plan during a plan year in which it was a “substantial
  employer,” as such term is defined in Section 4001(a)(2) of ERISA, or the
  incurrence of liability by the Borrower or any ERISA Affiliate under Section
  4064 of ERISA upon the termination of a Multiple Employer Plan,
  (iii) the filing of a notice of intent to terminate a Plan under Section
  4041 of ERISA or the termination or the treatment of a Multiemployer Plan
  amendment as a termination under Section 4041A of ERISA, (iv) the
  institution of proceedings to terminate a Plan or a Multiemployer Plan or
  (v) any other event or condition which might constitute grounds under
  Section 4042 of ERISA for the termination of, or the appointment of a trustee
  to administer, any Plan or Multiemployer Plan;

  
	
   

  	
   

  	
   

  
	
  “Total
  Capitalization”

  	
   

  	
  shall mean
  the sum of (i) Funded Indebtedness plus (ii) Consolidated Tangible Net Worth;

  
	
   

  	
   

  	
   

  
	
  “Transaction
  Documents”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Vessels”

  	
   

  	
  shall mean
  the Vessels listed in Schedule I hereto, registered in the name of the
  relevant Vessel-Owning Guarantor or any vessel acquired by the Borrower or a
  Vessel-Owning Guarantor in accordance with Section 9.3;

  
	
   

  	
   

  	
   

  
	
  “Vessel-Owning
  Guarantor(s)”

  	
   

  	
  shall have
  the meaning ascribed thereto in the preamble;

  
	
   

  	
   

  	
   

  
	
  “Voting
  Stock”

  	
   

  	
  shall mean,
  with respect to any Person, Securities of any class or classes, the holders
  of which are ordinarily, in the absence of contingencies, entitled to elect a
  majority of the corporate directors (or Persons performing similar functions)
  of such Person; and

  
	
   

  	
   

  	
   

  
	
  “Withdrawal
  Liability”

  	
   

  	
  shall have
  the meaning given to such term under Part 1 of Subtitle E of Title IV of ERISA.

  



 


1.2   Computation
of Time Periods; Other Definitional Provisions.  In this Agreement and the other Transaction
Documents, in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including” and the words “to”
and “until” each mean “to but excluding”; words importing either gender include
the other gender; references to “writing” include printing, typing, lithography
and other means of


 


19

















 


reproducing words in a tangible visible form; the
words “including,” “includes” and “include” shall be deemed to be followed by
the words “without limitation”; references to agreements and other contractual
instruments (including this Agreement and the other Transaction Documents)
shall be deemed to include all subsequent amendments, amendments and
restatements, supplements, extensions, replacements and other modifications to
such instruments (without, however, limiting any prohibition on any such amendments,
extensions and other modifications by the terms of this Agreement or the other
Transaction Documents); references to any matter that is “approved” or requires
“approval” of a party shall mean approval given in the sole and absolute
discretion of such party unless otherwise specified; words importing the
singular number only shall include the plural and vice versa (except as
indicated), as may be appropriate; references to any Person shall include such
Person, its successors and permitted assigns and transferees.


 


1.3   Accounting
Terms.  Unless otherwise specified
herein, all accounting terms used in this Agreement, the Note and in the
Security Documents shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Facility Agent or to the Lenders under this Agreement shall be prepared, in
accordance with GAAP; provided that, if the Borrower notifies the Facility
Agent that the Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the Closing Date in GAAP or
in the application thereof on the operation of such provision (or if the
Facility Agent notifies the Borrower that the Majority Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.


 


1.4   Certain
Matters Regarding Materiality.  To
the extent that any representation, warranty, covenant or other undertaking of
the Borrowers in this Agreement is qualified by reference to those which are
not reasonably expected to result in a “Material Adverse Change” or language of
similar import, no inference shall be drawn therefrom that the Facility Agent,
the Security Trustee or any Lender has knowledge or approves of any
noncompliance by such Borrower with any governmental rule.


 


1.5   Forms of
Documents.  Except as otherwise
expressly provided in this Agreement, references to documents or certificates “substantially
in the form” of exhibits to another document shall mean that such documents or
certificates are duly completed in the form of the related exhibits with
substantive changes subject to the provisions of Section 18.6 of this
Agreement, as the case may be, or the correlative provisions of the Transaction
Documents.


 


2.                                       THE
FACILITY


 


2.1   Purposes.
 The Lenders shall make the Facility
available to the Borrower for the purposes of (1) refinancing in whole or in
part the Parent’s outstanding debt to OSG, (2) financing the pre-delivery and
post-delivery costs of Hull 8015 and Hull 8016, and the cost of retrofitting Barge
OSG 243, (3) providing funds for general and working capital purposes


 


20

















 


of the Borrower and its subsidiaries and (4) at the
request of the Borrower, to issue Letter(s) of Credit as provided for in this Section
2.


 


2.2   Extension
Option.  At any time on or after the
second anniversary of the Closing Date until the date which is ninety (90) days
prior to the Initial Payment Date, the Borrower may request, by at least sixty
(60) days written notice to the Facility Agent, that the Lenders extend the Initial
Payment Date by an additional 24 months from the fifth anniversary of the
Closing Date to the seventh anniversary of the Closing Date (the “Extension
Option”).  The Lenders who agree to
extend their Commitment (the “Extending Lenders”) shall do so at their
Closing Date Commitment level.  Once a
Lender agrees to extend its Commitment, the request of the Borrower is irrevocable.  If less than all of the Lenders agree to
extend their Commitments, the Facility Agent shall notify the Extending Lenders
and each Extending Lender shall inform the Facility Agent within 30 days of
such notice of the amount, if any, of the Non-Extending Lenders’ Commitments it
is willing to accept and assume on the Initial Payment Date and shall enter
into an Assignment and Assumption Agreement with such Non-Extending Lender(s)
with respect to such Commitment or portion thereof, which shall be effective on
the Initial Payment Date.  If, after
giving effect to the assignments described above all of the Lenders’
Commitments have not been extended and or assumed, the Borrower may arrange for
one or more Extending Lenders or other assignees eligible to become Lenders to
the Facility to accept and assume the unassigned amounts of the commitments of
the Non-Extending Lenders or reduce the Facility on the Initial Payment Date to
the aggregate amount of the commitments of the Extending Lenders (the “Revised
Facility Amount”).  For the avoidance
of doubt the parties hereto agree that the Commitment of a Non-Extending Lender
shall not terminate until the Initial Payment Date.  Amounts outstanding on the Initial Payment
Date in excess of the Revised Facility Amount shall be repaid on the Initial Payment
Date.


 


2.3   Making of the Advances.  Each of the Lenders, relying upon each of the
representations and warranties set out in Section 8, hereby severally, and
not jointly, agrees with the Borrower that, subject to and upon the terms of
this Agreement, it will on each Drawdown Date make its ratable portion of the
relevant Advance available through the Facility Agent, to the Borrower in an
amount not to exceed its Commitment.


 


2.4   Advance
Availability Period.  Subject to
satisfaction of the terms and conditions set forth herein, the Facility will be
available for drawings on a revolving basis until the earlier of (i) one (1)
month prior to the Payment Date or (ii) the date on which the Facility is
permanently reduced to zero and the Lenders are no longer required to make
Advances hereunder.  The maximum number
of Advances that may be outstanding at any one time is ten (10).


 


2.5   Drawdown
Notice.  When the Borrower seeks to
draw an Advance hereunder, it shall serve a written notice (a “Drawdown
Notice”) on the Facility Agent (which shall promptly furnish a copy to each
Lender) no later than 11:00 A.M., New York time, at least three (3) Banking
Days prior to the date of the proposed Advance except in the case of the
initial Advance in which case the Borrower shall give at least one (1) Banking
Day prior notice.  Each Drawdown Notice
shall specify (a) the date of the proposed borrowing (which shall be a
Banking Day), (b) the principal amount of the Advance to be made by the Lenders
on that


 


21

















 


date, (c) the Interest Period requested by the
Borrower, which period may end no later than the Payment Date, and (d) the
disbursement instructions for the proceeds of such Advance.  Each Drawdown Notice shall be effective upon
receipt by the Facility Agent, shall be irrevocable and shall be in the form
set out in Exhibit C.


 


2.6   Effect
of Drawdown Notice.  Each Drawdown
Notice shall be deemed to constitute a warranty by the Borrower:  (a) that the representations and
warranties stated in Section 8 are true and correct on the date of such
Drawdown Notice and will be true and correct on the applicable Drawdown Date as
if made on such date except for such representations and warranties that relate
to a specific earlier date, (b) that no Default or Event of Default has
occurred and is continuing on such Drawdown Date or would result from the
making of a Advance, and (c) that the Conditions Precedent stated in Sections
3.1 and 3.2 have been satisfied.


 


2.7   Notation
of Advances.  Each Advance made by
the Lenders to the Borrower may be evidenced by a notation of the same made by
the Facility Agent on the grid attached to the Note, which notation, absent
manifest error, shall be prima facie evidence of the amount of the relevant
Advance.


 


2.8   Several
Obligations.  The failure of any
Lender to make its pro rata portion of the relevant Advance on the date
specified therefore shall not relieve any other Lender of its obligation to
make its pro  rata portion of such Advance on such date, and neither
the Facility Agent nor any Lender shall be responsible for the failure of any
other Lender to make its pro rata portion of an Advance.


 


2.9   Pro Rata
Treatment.  Each borrowing from the
Lenders hereunder shall be made from the Lenders, each payment of fees and
expenses under Section 13 shall be made for account of the Lenders, and each
termination or reduction of the amount of the Commitments shall be applied to
the Commitments of the Lenders, pro rata according to the amounts of their
respective Commitments; each payment or prepayment of principal of any portion
of the Facility Balance by the Borrower shall be made for account of the
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Facility Balance held by the Lenders; and each payment of interest on the Facility
Balance by the Borrower shall be made for the account of the Lenders pro rata
in accordance with the amounts of interest due and payable to the respective
Lenders.


 


2.10 Letters
of Credit.  (a) Subject to and upon
the terms and conditions herein set forth, the Borrower may request that the
Issuing Lender at any time during the Letter of Credit Availability Period,
issue for the account of the Borrower and for the purposes of the Borrower, the
Parent or any Subsidiary and in support of L/C Supportable Obligations, and
subject to and upon the terms and conditions herein set forth, and the Issuing
Lender agrees to issue from time to time, irrevocable standby letters of credit
denominated in Dollars in such form as may be approved by the Issuing Lender
(singly, a “Letter of Credit” and collectively, the “Letter(s) of
Credit”).  The maximum number of
Letters of Credit that may be outstanding at any one time is ten (10).


 


22

















 


(b)           Subject to and upon the terms and
conditions set forth herein, the Issuing Lender agrees that following its
receipt of the respective Letter of Credit Request (by 11:00 A.M., New York
time), it will issue on behalf of the Borrower, one or more Letters of Credit
as are permitted to remain outstanding hereunder without giving rise to a Default
or an Event of Default.


 


(c)           Notwithstanding anything to the
contrary contained in this Agreement, no Letter of Credit shall be issued, the
Stated Amount of which, (i) is greater than Twenty Five Million Dollars
($25,000,000), or (ii) when added to the Letter of Credit Outstandings would
exceed Twenty Five Million Dollars ($25,000,000), or (iii) when added to the
Letter of Credit Outstandings and the Facility Balance, would exceed the
maximum principal amount available under the Facility.


 


(d)           Each Letter of Credit shall terminate
within 12 months after the date of issuance but any such Letter of Credit shall
be extendable upon the agreement of the Borrower and the Issuing Lender for
successive periods of up to 12 months. 
No Letter of Credit shall be issued, which would exceed the Payment
Date.


 


2.11 Letter of
Credit Request.  (a) At any time
during the Letter of Credit Availability Period, whenever the Borrower wishes
that a Letter of Credit be issued, the Borrower shall give the Issuing Lender
written notice (a “Letter of Credit Request”) substantially in the form
of Exhibit D prior to 11:00 A.M., New York time, at least three (3)
Banking Days prior to the proposed date of issuance (which shall be a Banking
Day), which Letter of Credit Request shall include any documents that the
Letter of Credit Issuer may reasonably require in connection therewith.  The Letter of Credit Request shall be
irrevocable.  The Issuing Lender shall
promptly notify each Lender of each Letter of Credit Request and the Issuing
Lender shall, on the date of each issuance of a Letter of Credit by it, give
each Lender and the Borrower written notice of the issuance of such Letter of
Credit.


 


(b)           The making of each Letter of Credit
Request shall be deemed to be a representation and warranty by the Borrower to
the Lenders that such Letter of Credit may be issued in accordance with, and
will not violate the requirements of, Section 2.10.  Unless the Issuing Lender has received notice
from the Borrower, any other Security Party or the Lenders before it issues a
Letter of Credit that one or more of the conditions specified in Section 3 has
not been satisfied, or that the issuance of such Letter of Credit would violate
Section 2.10, then the Issuing Lender shall, subject to the terms and
conditions of this Agreement, issue the requested Letter of Credit on behalf of
the Borrower in accordance with the Issuing Lender’s usual and customary
practices.


 


2.12 Letter of
Credit Participation.  (a) Immediately
upon the issuance by the Issuing Lender of a Letter of Credit, the Issuing
Lender shall be deemed to have sold and transferred to each Lender, and each
Lender (each a “Letter of Credit Participant”) shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty, an undivided interest and participation,
in proportion to such Lender’s Commitment, in such Letter of Credit, each
substitute letter of credit, each drawing or payment made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
the Letter of Credit Fee shall be payable directly to the Facility


 


23

















 


Agent for the account of the Letter of Credit
Participants as provided in Section 13.1(b)) and any security therefor or
guaranty pertaining thereto.  Upon any
change in a Lender’s Commitment pursuant to Section 11.1 or 11.2, it is hereby
agreed that, with respect to all outstanding Letters of Credits and unpaid
drawings relating thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 2.12 to reflect the adjusted obligations
in respect of the Letter of Credits of the assignor and assignee Lender, as the
case may be.


 


(b)           In determining whether to pay under
any Letter of Credit, the Issuing Lender shall not have any obligation relative
to the other Lenders other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to substantially comply on their face with the requirements of such
Letter of Credit.  Any action taken or
omitted to be taken by the Issuing Lender under or in connection with any
Letter of Credit issued by it shall not create for the Issuing Lender any
resulting liability to the Borrower, any other Security Party, any Lender or
any other Person unless such action is taken or omitted to be taken with gross
negligence or willful misconduct on the part of the Issuing Lender (as
determined by a court of competent jurisdiction in a final and non-appealable
decision).


 


(c)           The obligations of the Letter of
Credit Participants to make payments to the Issuing Lender with respect to
Letters of Credit shall be irrevocable and not subject to any qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:


 


(i)            any lack of validity or
enforceability of this Agreement or any of the other Transaction Documents;


 


(ii)           the existence of any claim, setoff,
defense or other right which the Borrower, the Parent or any of the
Subsidiaries may have at any time against a beneficiary named in a Letter of
Credit, any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Facility Agent, any Letter of Credit
Participant, or any other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower, the
Parent or any of the Subsidiaries and the beneficiary named in any such Letter
of Credit);


 


(iii)          any draft, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;


 


(iv)          the surrender or impairment of any
security for the performance or observance of any of the terms of any of the
Credit Documents; or


 


(v)           the occurrence of any Default or
Event of Default.


 


24

















 


2.13 Letter of
Credit Payments Deemed Advances.  The
Borrower hereby agrees that any payment or disbursement made by the Issuing
Lender under any Letter of Credit shall be deemed an Advance in Dollars and
shall bear interest for each day from the date of such payment or disbursement
at the Applicable Rate.  The Issuing
Lender shall give prompt notice to the Borrower and the Lenders of each payment
or disbursement and the amount thereof in Dollars under a Letter of
Credit.  The Borrower’s obligation to
repay any Advance deemed made under this Section 2.13 (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender or
any Lender, including, without limitation, any defense based upon the failure
of any drawing under a Letter of Credit to conform to the terms of the Letter
of Credit (other than the failure of the Issuing Lender to determine that any
documents required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit) or any non-application or misapplication by the beneficiary
of the proceeds of such drawing; provided, however, that the Borrower shall not
be obligated to reimburse the Issuing Lender for any wrongful payment made by
the Issuing Lender with respect to a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of
the Issuing Lender.


 


3.                                       CONDITIONS


 


3.1   Conditions
Precedent to the Availability of the Facility.  The obligation of the Lenders to make the
Facility available to the Borrower to make the initial Advance or the issuance of
any Letter of Credit on the Closing Date under this Agreement shall be
expressly subject to the following conditions precedent:


 


(a)           Authority.  The Facility Agent shall have received the
following documents in form and substance satisfactory to the Facility Agent
and its legal advisers no later than the Drawdown Date of the initial Advance:


 


(i)            copies, certified as true and
complete by an officer of each of the Security Parties, of the resolutions of
its board of directors and, with respect to the Borrower and the Vessel-Owning
Guarantors, and, if necessary, shareholders evidencing approval of the
Transaction Documents to which each is a party and authorizing an appropriate
officer or officers or attorney-in-fact or attorneys-in-fact to execute the
same on its behalf;


 


(ii)           copies, certified as true and
complete by an officer of each of the Security Parties, of all documents
evidencing any other necessary action, approvals or consents with respect to
the Transaction Documents to which each is a party and the transactions
contemplated hereby and thereby;


 


(iii)          copies, certified as true and complete
by an officer of each of the Security Parties, of the constitutional documents
of each Security Party and all amendments thereto;


 


25

















 


(iv)          certificate of the jurisdiction or
formation, as the case may be, of each Security Party as to the good standing
thereof; and


 


(v)           a certificate signed by an authorized
officer of each of the Security Parties to the effect that (A) no Default or
Event of Default shall have occurred and be continuing, (B) the representations
and warranties of such Security Party contained in this Agreement are true and
correct as of the Drawdown Date of the Initial Advance, except for such
representations and warranties that relate to a specific earlier date and (C) sets
out specimen signatures for the officers who are authorized to be signatories
to this Agreement or any of the other Transaction Documents or any documents
related thereto.


 


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


 


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


 


(d)           Fees.  The Creditors shall have received payment in
full of all other fees and expenses due to each thereof pursuant to the terms
hereof on the date when due including, without limitation, all fees and
expenses due under the Fee Letters and Sections 13.1 and 13.2.


 


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


 


(f)            Legal Opinions.  The Facility Agent shall have received
opinions addressed to the Agents and the Lenders from James I. Edelson, Esq., general
counsel to OSG and Seward & Kissel LLP, special counsel to the Facility Agent,
in such form as the Facility Agent may agree, as well as such other legal opinions
as the Lenders shall have reasonably required as to all or any matters under
the laws of the State of Delaware, the United States of America and the State
of New York covering the conditions and representations and warranties which
are the subjects of Sections 3 and 8, respectively.


 


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


 


(h)           Financial Information.  The Facility Agent shall have received the Parent’s
most recent consolidated financial statements prior to the Drawdown Date as
such have been filed on Form S-1 with the SEC.


 


(i)            Vessel Documents.  The Facility Agent shall have received
evidence satisfactory to it and its counsel that each Vessel (other than Hull
8015 and Hull 8016):


 


26

















 


(i)            is registered in the name of the
relevant Vessel-Owning Guarantor as set forth in Schedule III under the United
States flag, free of all liens and encumbrances of record other than the
Mortgage and the other Permitted Liens, which Mortgage shall have been
submitted to the National Vessel
Documentation Center for recordation on or prior to the Closing Date;


 


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


 


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


 


(iv)          the technical and/or operational
management for each Vessel is being provided by OSG Ship Management.


 


(j)            Security Documents.  Each of the Vessel-Owning Guarantors shall
have executed and delivered to the Security Trustee:


 


(i)            the Mortgage on the Vessel owned
thereby, except for Hull 8015 and Hull 8016 which Mortgages shall be executed
and delivered upon delivery of the respective Vessel to the relevant
Vessel-Owning Guarantor, which shall have been recorded in accordance with the
laws of the United States of America so as to constitute a first preferred
mortgage lien under United States law;


 


(ii)           the Insurances Assignment in respect
of the Vessel owned thereby, except for Hull 8015 and Hull 8016 which
Insurances Assignment shall be executed and delivered upon delivery of the
respective Vessel to the relevant Vessel-Owning Guarantor;


 


(iii)          the Earnings Assignment in respect of
the Vessel owned thereby, except for Hull 8015 and Hull 8016 which Earnings
Assignment shall be executed and delivered upon delivery of the respective
Vessel to the relevant Vessel-Owning Guarantor;


 


(iv)          the Assignment of Shipbuilding
Contracts in respect of the Hull 8015 and Hull 8016 Shipbuilding Contracts;


 


(v)           the Assignment Notices with respect
to the Vessel owned thereby; and


 


(vi)          such Uniform Commercial Code Financing
Statements (Forms UCC-1) as the Security Trustee shall require.


 


27

















 


(k)           IAPPC, ISM and ISPS Code.  The Facility Agent shall have received a copy
of the DOC, SMC, ISSC and IAPPC for each Vessel.


 


(l)            Know Your Customer Information.  The Lenders shall have received such
documentation and other evidence requested by any Lender in order for such
Lender to carry out and be satisfied with the results of all necessary “know
your customer” or other checks it is required to carry out in connection with the
transactions contemplated by this Agreement, the Note and the Security
Documents.


 


(m)          Vessel Appraisals.  The Facility Agent shall have received valuations
of the Fair Market Value of each Vessel.


 


(n)           Loan to Value Ratio.  As of the Closing Date, the ratio of the
Facility to the value of the Vessels, based on the fleet valuations delivered
pursuant to Section 3.1(m), shall be no more than .65 to 1.00.


 


3.2   Further
Conditions Precedent.  On each
Drawdown Date, the obligation of the Lenders to make any Advance available to
the Borrower or issue any Letter of Credit on behalf of the Borrower shall be
expressly conditional upon:


 


(a)           Drawdown Notice; Letter of Credit
Request.  The Facility Agent having
received a Drawdown Notice in accordance with the terms of Section 2.5 or
a Letter of Credit Request in accordance with the terms of Section 2.11,
as applicable.


 


(b)           Representations and Warranties.  The representations stated in Section 8
being true and correct as if made on that date except for such representations
and warranties that relate to a specific earlier date.


 


(c)           No Default.  No Default or Event of Default having
occurred and be continuing or resulting from the making of an Advance.


 


(d)           No Material Adverse Change.  There being no Material Adverse Change since October
29, 2007.


 


(e)           NYSE Listing; IPO Proceeds.  The Parent being listed on the New York Stock
Exchange and having received gross proceeds from its IPO in an amount equal to
or greater than $100,000,000.


 


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


 


3.4   Satisfaction
after Drawdown.  Without prejudice to
any of the other terms and conditions of this Agreement, in the event all of
the Lenders elect, in their sole discretion, to


 


28

















 


make an Advance prior to the satisfaction of all or
any of the conditions referred to in Sections 3.1 and 3.2, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within seven (7) days after the Drawdown Date (or
such longer period as the Majority Lenders, in their sole discretion, may
agree).


 


4.                                       REPAYMENT
AND PREPAYMENT


 


4.1   Mandatory
Repayment.  (a)  All amounts outstanding on the Payment Date
shall be repaid in full on the Payment Date.


 


(b)           If less than all of the Lenders agree
to extend their Commitment and the Commitments of the Non-Extending Lenders are
not assumed by another Lender or assignee, any amounts outstanding in excess of
the Revised Facility Amount shall be repaid on the Initial Payment Date.


 


(c)           The Facility Amount or Revised
Facility Amount, as applicable, will be reduced (including, if necessary, by
the repayment of outstanding Advances) upon any of the Vessels (other than the Vessels
to be replaced by Hull 8015 and Hull 8016, which are currently anticipated to
be SEAFARER and FREEDOM but in any event which shall be acceptable to the
Lenders in their sole discretion) being sold, lost or declared an actual or
constructive total loss in an amount equal to the then total Facility Amount or
Revised Facility Amount, multiplied by a fraction, the numerator of which is
the most recent Fair Market Value of such Vessel in the most recent appraisal
delivered to the Facility Agent and the denominator of which is the aggregate
of the Fair Market Value in the most recent appraisal delivered to the Facility
Agent of all Vessels.  In the event of
any such sale or total loss and in lieu of prepaying the Facility or a part
thereof, the Borrower may substitute a Vessel with a vessel acceptable to the
Lenders in their sole discretion pursuant to Section 9.3.


 


(d)           If at any time the aggregate amount
outstanding under the Facility exceeds the Facility Amount or Revised Facility
Amount, as applicable, an immediate repayment will be required equal to such
excess.


 


4.2   Voluntary
Prepayment.       The Borrower may, at its option, upon three (3) Banking Days
written notice, prepay any outstanding Advance or any portion of the Facility
Balance, without penalty, provided that if such prepayment is made on a day
other than the last day of the Interest Period of such Advance the Borrower
shall compensate the Lenders and Participants or any thereof for any loss, cost
or expense incurred by them as a result of a prepayment made on any day other
than the last day of an Interest Period. 
Each prepayment shall be in a minimum amount of Five Million Dollars
($5,000,000) plus any One Million Dollar ($1,000,000) multiple thereof or the
full amount of the then outstanding Advances.  Subject to the limits and upon the conditions
herein provided (including the reductions of the Commitments provided in
Section 4.3), the Borrower may from time to time prepay the Advances and
thereafter re-borrow such Advances or a portion thereof.


 


4.3   Optional
Permanent Reduction of Facility.  The
Borrower shall have the right, at any time and from time to time, to, without
penalty, permanently reduce the Facility, provided that the Facility Agent
receives five (5) business days prior written notice of such reduction


 


29

















 


and the Lenders are reimbursed for any breakage costs as
provided in Section 12.6 with respect to any Advances, or portions thereof,
that are prepaid on any day other than the last day of the applicable Interest
Period(s) in the event that such prepayment is necessary to reduce the Facility
Balance so that the aggregate amount of the Advances outstanding do not exceed
the amount available under the Facility after giving effect to any such
permanent reduction in the Facility. 
Each such permanent reduction shall be in an integral multiple of One
Million Dollars ($1,000,000) with a minimum amount of Five Million Dollars
($5,000,000).  Amounts permanently
reduced cannot be reinstated and are not available for re-borrowing.


 


4.4   Borrower’s
Obligations Absolute.  The Borrower’s
obligations to pay each Creditor hereunder and under the Note shall be
absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms hereof and thereof, under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrowers or any of them may have or have had against the Creditors.


 


5.                                       INTEREST
AND RATE


 


5.1   Payment
of Interest; Interest Rate.  (a) The Borrower
hereby agrees to pay to the Lenders as primary obligor interest on the unpaid
principal amount of each Advance for the period commencing on the Drawdown Date
of such Advance or if such Advance is a deemed Advance pursuant to Section 2.13
the date of the relevant drawing under the Letter of Credit until but not
including the stated maturity thereof (whether by acceleration or otherwise) or
the date of prepayment thereof at the Applicable Rate which shall be the rate
per annum which is equal to the aggregate of (i) the LIBOR Rate for the
relevant Interest Period plus (ii) the Margin plus (iii) Mandatory Costs.  The Applicable Rate with respect to the Advance
shall be determined by the Facility Agent at or about 11:00 A.M. New York time two
(2) Banking Days prior to the first day of the relevant Interest Period.  The Facility Agent shall promptly notify the
Borrower and the Lenders in writing of the Applicable Rate and the duration of
each Interest Period as and when determined. 
Each such determination, absent demonstrative error, shall be conclusive
and binding upon the Borrower.


 


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


 


(c)           Except as provided in the next
sentence, accrued interest shall be payable on the last day of each Interest
Period, provided, however, that if the Borrower shall select an Interest Period
which is longer than three months, interest shall be payable quarterly in
arrears. 
Interest payable at the Default Rate shall be payable from time
to time on demand of the Facility Agent.  No Interest Period shall extend beyond the
Payment Date.


 


30

















 


5.2   Calculation
of Interest.  All interest shall
accrue from day-to-day and be calculated on the actual number of days elapsed
and on the basis of a three hundred sixty (360) day year.


 


5.3   Maximum
Interest.  Anything in this Agreement
or the Note to the contrary notwithstanding, the interest rate on any Advance
shall in no event be in excess of the maximum rate permitted by Applicable Law.


 


5.4   Interest
Elections. (a) On the last day of each Interest Period, with respect to any
Advance, the Borrower may elect to continue such Advance for one or more new
Interest Periods as provided in this Section 5.


 


(b)           To make an election pursuant to this
Section 5, the Borrower shall notify the Facility Agent of such election in
writing by hand delivery or facsimile no later than 11:00 A.M. New York time at
least three (3) Banking Days prior to the expiration of the then current Interest
Period relating to such Advance (each an “Interest Election Request”). Each
Interest Election Request shall be irrevocable and in a form approved by the
Facility Agent and signed by the Borrower.


 


(c)           Each written Interest Election
Request shall specify the following information:


 


(i)            the Advance to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Advance;


 


(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Banking Day;
and


 


(iii)          the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of Interest Period. If the Borrower does not
request an Interest Period, it shall be deemed to have selected an Interest
Period of one month’s duration.


 


(d)           Promptly following receipt of an
Interest Election Request, the Facility Agent shall advise each Lender of the
details thereof and of such Lender’s portion of each resulting Advance.


 


(e)           If the Borrower fails to deliver a
timely Interest Election Request on or prior to the date that is three (3)
Banking Days prior to the end of the Interest Period applicable thereto, then,
such Advance shall be repaid on the last day of such Interest Period as
provided herein.


 


6.                                       PAYMENTS


 


6.1   Place of
Payments; No Set Off.  All payments
to be made hereunder by the Borrower shall be made in Dollars on the due dates
of such payments to the account of the Facility Agent at JPMorgan Chase Bank,
New York, BIC Code CHASUS33 (ABA No. 021 000 021), for the Account of ING Bank,
London Branch, BIC Code INGBGB2L,


 


31

















 


Account No. 001 1 938 123 (Ref: OSG attn Loans Agency)
for distribution to the Lenders or to such other account of the Facility Agent
as the Facility Agent may direct, without set-off or counterclaim and free
from, clear of and without deduction for, any Taxes; provided, however,
that if the Borrower shall at any time be compelled by law to withhold or
deduct any Taxes from any amounts payable to the Facility Agent for the account
of the Lenders or the other Creditors hereunder, then, the Borrower shall pay
such additional amounts as may be necessary in order that the net amounts
received after withholding or deduction shall equal the amounts which would
have been received if such withholding or deduction were not required and, in
the event any withholding or deduction is made, whether for Taxes or otherwise,
the Borrower shall promptly send to the Facility Agent any documentary evidence
they have with respect to such withholding or deduction.  No Lender shall change its lending office if
such change would result in the Borrower being compelled by law to withhold or
deduct any Taxes from any amounts payable to the Facility Agent for the account
of the Lenders or the other Creditors hereunder.


 


6.2   Federal
Income Tax Credits.  (a) If any
Lender obtains the benefit of a credit against its liability for federal income
taxes imposed by the United States of America, or any income taxes imposed by
another jurisdiction, for all or part of the Taxes as to which the Borrower has
paid additional amounts as aforesaid then such Lender shall reimburse the
Borrower for the amount of the credit so obtained; (b) each of the Lenders
that is not a United States Person (as such term is defined in Section
7701(a)(30) of the Code) shall, on or prior to the making of the Initial
Advance (and in the case of an assignee, on or prior to the effective date of
the relevant assignment) and from time to time thereafter when required by
applicable provisions of the Code, provide the Borrower with two duly completed
copies of Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is entitled to benefits under an income tax treaty to which the
United States of America is a party that exempts withholding tax on payments
under this Agreement or the other Transaction Documents or certifying that the
income receivable by it pursuant to this Agreement or the other Transaction
Documents is effectively connected with the conduct of a trade or business in
the United States of America; (c) for any period with respect to which a
Lender that is not a United States Person has failed to provide the Borrower
with the appropriate forms described in clause (b) above (other than if such
failure is due to a change in law occurring after the date on which such person
was originally required to provide such forms, or if such forms are otherwise
not required under clause (b) above), such Lender shall not be entitled to
payment of additional amounts under Section 6.1 with respect to Taxes imposed
by the United States of America; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower at such Lender’s expense shall take such steps
as such Lender shall reasonably request to assist such Lender to recover such
Taxes.


 


7.                                       GUARANTEE


 


7.1   The
Guarantee.  The Guarantors hereby
jointly and severally guarantee to each of the Creditors and their respective
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and interest on the
Advances made by the Lenders to the Borrower, the Letters of Credit issued by
the


 


32

















 


Issuing Lender on behalf of the Borrower and all other
amounts from time to time owing to the Creditors by the Borrower under this
Agreement, under the Note, under any of the Security Documents and under any
Interest Rate Agreement, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the “Guaranteed
Obligations”).  The Guarantors hereby
further jointly and severally agree that if the Borrower shall fail to pay in
full when due (whether at stated maturity, by acceleration or otherwise) any of
the Guaranteed Obligations, the Guarantors will promptly pay the same, on first
demand, and that in the case of any extension of time of payment or renewal of
any of the Guaranteed Obligations, the same will be promptly paid in full when
due (whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal.


 


7.2   Obligations
Unconditional.  The obligations of
the Guarantors under Section 7.1 are joint and several, absolute, unconditional
and irrevocable, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligation of the Borrower under this Agreement, the
Note or any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of, or security for,
any of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 7.2 that the obligations of the
Guarantors hereunder shall be joint and several, absolute, unconditional and
irrevocable, under any and all circumstances. 
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of the Guarantors hereunder, which shall remain absolute,
unconditional and irrevocable as described above:


 


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


 


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


 


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


 


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


 


The Guarantors
hereby expressly waive diligence, presentment, demand of payment, protest and
any notice not provided for herein, and any requirement that the Facility Agent
or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement, the


 


33

















 


Note or any
other agreement or instrument referred to herein or therein, or against any
other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.


 


7.3   Reinstatement.  The obligations of the Guarantors under this
Section 7 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether or not as a result of any proceedings, and
the Guarantors jointly and severally agree that they will indemnify each
Creditor on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by such Creditor in connection with such rescission
or restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.


 


7.4   Subrogation.  Each Guarantor hereby irrevocably waives, but
only until all amounts payable hereunder by the Guarantors to the Creditors (or
any of the them) have been paid in full, any and all rights to which any of
them may be entitled, by operation of law or otherwise, upon making any payment
hereunder to be subrogated to the rights of the payee against the Borrower with
respect to such payment or otherwise to be reimbursed, indemnified or
exonerated by the Borrower in respect thereof.


 


7.5   Subordination.
 The Guarantors jointly and severally
agree that, so long as the Borrower remains under any actual or contingent
liability under this Agreement, the Note, the Security Documents and any
Interest Rate Agreement, any rights which any Guarantor may have at any time by
reason of the performance by such Guarantor of the Guaranteed Obligations to
take the benefit (in whole or in part) of any security taken pursuant to this
Agreement, any of the Security Documents or any Interest Rate Agreement shall
be subject and subordinate to the rights of the Creditors hereunder and shall
be exercised by such Guarantor in such manner and upon such terms as the
Creditors may require and further agree to hold any monies at any time received
by such Guarantor as a result of the exercise of any such rights or otherwise
for and on behalf of the Creditors for application in or towards payment of any
sums at any time owed by the Borrower under this Agreement, the Security
Documents or any Interest Rate Agreement.


 


7.6   Remedies.  The Guarantors jointly and severally agree
that, as between the Guarantors and the Lenders, the obligations of the
Borrower under this Agreement and the Note may be declared to be forthwith due
and payable as provided in Section 10 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 10)
for purposes of Section 7.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event
of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and
payable by the Borrower) shall forthwith become due and payable by the
Guarantors for purposes of Section 7.1.


 


7.7   Instrument
for the Payment of Money.  Each of
the Guarantors hereby acknowledges that the guarantee in this Section 7
constitutes an instrument for the payment of money, and


 


34

















 


consents and agrees that any Creditor, at such
Creditor’s sole option, in the event of a dispute by such Guarantor in the
payment of any moneys due hereunder, shall have the right to bring
motion-action under New York CPLR Section 3213.


 


7.8   Continuing
Guarantee.  The guarantee in this
Section 7 is a continuing guarantee, and shall apply to all Guaranteed
Obligations whenever arising.


 


8.                                       REPRESENTATIONS
AND WARRANTIES


 


In order to
induce the Creditors to enter into this Agreement and to make the Facility
available, each of the Security Parties hereby represents and warrants, to the
Creditors (which representations and warranties shall survive the execution and
delivery of this Agreement and the other Transaction Documents and each
drawdown of the Facility) that:


 


(a)           Due Organization and Power.  Each of the Security Parties is a limited
partnership or limited liability company duly formed and is validly existing in
good standing under the laws of its jurisdiction of formation or, if
redomiciled, under the laws of such new domicile and is duly qualified to do
business as a foreign Person in each jurisdiction wherein the nature of the
business transacted thereby makes such qualification necessary, except where
failure to so qualify would not result in a Material Adverse Change, has full
power and authority and, to the best of its knowledge after due investigation,
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now being conducted and to own its
properties and has full power and authority to enter into and perform its
obligations under the Transaction Documents to which it is a party, and has
complied with all statutory, regulatory and other requirements relative to such
business, property and instruments to which it is a party, or to which its
property is subject, failures that, either singly or in the aggregate, could
not reasonably be expected to result in a Material Adverse Change;


 


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


 


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


 


(d)           No Violation.  The execution and delivery of, and the
performance of the provisions of, this Agreement, the Note and those of the
Security Documents and any Interest Rate Agreement to which it is to be a party
by each Security Party do not contravene any


 


35

















 


Applicable Law or
regulation existing at the date hereof or any contractual restriction binding
on such Security Party or the certificate of limited partnership, certificate
of formation or limited partnership agreement (or equivalent instruments)
thereof;


 


(e)           Filings; Stamp Taxes.  Other
than the recording of the Mortgages in the National Vessel Documentation Center
and the filing of Uniform Commercial Code Financing Statements in the State of
Delaware in respect of the Assignments, and the payment and filing or recording
fees consequent thereto, it is not necessary for the legality, validity,
enforceability or admissibility into evidence of this Agreement, the Notes or
the Security Documents that any of them or any document relating thereto be
registered, filed recorded or enrolled with any court or authority in any
relevant jurisdiction or that any stamp, registration or similar Taxes be paid
on or in relation to this Agreement, the Note or any of the Security Documents;


 


(f)            Approvals; Consents.  All consents, licenses, approvals and
authorizations required, whether by statute or otherwise, in connection with
the entry into and performance by the Security Parties, and the validity and
enforceability against the Security Parties, of this Agreement, the Note, the
Security Documents and, if applicable, the Interest Rate Agreement(s) have been
obtained and are in full force and effect;


 


(g)           Litigation.  No action, suit or proceeding is pending or
threatened against any Security Party or any subsidiary thereof before any
court, board of arbitration or administrative agency which would be reasonably
likely to result in any Material Adverse Change;


 


(h)           No Default.  No Security Party or any subsidiary thereof
is in default under any material agreement by which it is bound which default
might lead to a Material Adverse Change, or is in default of any Material
Financial Obligation;


 


(i)            ERISA.  The execution and delivery of this Agreement
and the consummation of the transactions hereunder will not involve any
prohibited transaction within the meaning of ERISA or Section 4975 of the
Code and no condition exists or event or transaction has occurred in connection
with any Plan maintained or contributed to by any member of the ERISA Group or
any ERISA Affiliate resulting from the failure of any thereof to comply with
ERISA which is reasonably likely to result in any member of the ERISA Group or
any ERISA Affiliate incurring any liability, fine or penalty which individually
or in the aggregate could result in a Material Adverse Change. No member of the
ERISA Group nor any ERISA Affiliate, individually or collectively, has
incurred, or reasonably expects to incur, Withdrawal Liabilities or liabilities
upon the happening of a Termination Event. 
With respect to any Multiemployer Plan, Multiple Employer Plan or Plan,
no member of the ERISA Group nor any ERISA Affiliate is aware of or has been
notified that any “variance” from the “minimum funding standard” has been
requested (each such term as defined in Part 3, Subtitle B, of
Title 1 of ERISA).  No member of the
ERISA Group nor any ERISA Affiliate has received any notice that any
Multiemployer Plan is in reorganization, within the meaning of Title IV of
ERISA, which reorganization could result in a Material Adverse Change;


 


(j)            Vessels.  Upon the Initial Advance and, after the
delivery of Hull 8015 or Hull 8016, as applicable, upon each Advance
thereafter, each Vessel:


 


36

















 


(i)            will be in the sole and absolute
ownership of the relevant Vessel-Owning Guarantor and duly registered in such Vessel-Owning
Guarantor’s name under United States flag unencumbered, save and except for the
Mortgage with respect thereto and as permitted thereby;


 


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


 


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


 


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


 


(v)           will comply with all relevant laws,
regulations and requirements (including environmental laws, regulations and
requirements), statutory or otherwise, as are applicable to (A) vessels
documented under United States flag and (B) vessels engaged in a trade similar
to that performed or to be performed by the Vessel, except where the failure to
so comply would not have a Material Adverse Change on the operation of such
Vessel in its existing or intended trade or the financial condition of any
Security Party.


 


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


 


(l)            Tax Returns and Payments.  The Borrower and the Subsidiaries have filed
all tax returns required to be filed by them and have paid all taxes payable by
them which have become due, other than those not yet delinquent and except for
those taxes being contested in good faith and by appropriate proceedings or
other acts and for which adequate reserves as determined in accordance with
GAAP shall have been set aside on its books;


 


(m)          Chief Executive Office.  The chief executive office and chief place of
business of the Borrower and each of the Guarantors and the office in which the
records relating to the earnings and other receivables for the Vessels are kept
is, and will continue to be, located at c/o OSG America L.P., Two Harbour
Place, 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602;


 


37

















 


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


 


(o)           Foreign Trade Control Regulations.  None of the transactions contemplated herein
will violate any of the provisions of the Foreign Assets Control Regulations of
the United States of America (Title 31, Code of Federal Regulations,
Chapter V, Part 500, as amended), any of the provisions of the Cuban
Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the
provisions of the Iranian Transaction Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 560, as
amended) or any of the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of Merchandise
(Title 31, Code of Federal Regulations, Chapter V, Part 505, as
amended);


 


(p)           Investment Company Act.  Neither the Parent nor any of the Subsidiaries is an “investment company” or
an “affiliated person” of, or a “promoter” or “principal underwriter” for or a
company “controlled” by an “investment company” as such terms are defined in
the Investment Company Act of 1940, as amended; neither the making of an Advance
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated hereby, will violate
any provision of such act or any rule, regulation or order of the Securities
and Exchange Commission thereunder;


 


(q)           Equity Ownership.  The Borrower is a wholly-owned subsidiary of the
Parent and each of the Vessel-Owning
Guarantors is a wholly-owned subsidiary of the Borrower.  Other than as previously disclosed to the Facility
Agent, including the information disclosed in the immediately preceding
sentence, on each Drawdown Date, the Borrower does not, and will not on any
Drawdown Date, own any shares of capital stock, limited liability company
interest, partnership interest or any other direct or indirect equity interest
in any corporation, limited liability company, partnership or other entity;


 


(r)            Environmental Matters and Claims.  (A) Each of the Security Parties and
each Subsidiary, when required, will be in compliance with all applicable
United States federal and state, local, foreign and international laws,
regulations, conventions and agreements relating to pollution, pollution
prevention or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, navigable waters, waters
of the contiguous zone, ocean waters and international waters), including,
without limitation, laws, regulations, conventions and agreements relating to
(1) emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous materials, oil,
hazardous substances, petroleum and petroleum products and by-products (“Materials
of Environmental Concern”), or (2) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (“Environmental Laws”) (except as to
all of the above, where the failure to do so would not be reasonably likely to
result in a Material Adverse Change); (B) each of the Security Parties and
each Subsidiary will, when required, have all permits, licenses, approvals,
rulings, variances, exemptions, clearances, consents or other authorizations
required under applicable Environmental Laws (“Environmental Approvals”)
and will, when required, be in compliance with all Environmental Approvals
required to operate their respective businesses as then being


 


38

















 


conducted (except where
the failure to comply with, obtain or renew such permits, licenses, rulings,
variances, exemptions, clearances, consents or other authorizations would not
be reasonably likely to result in a Material Adverse Change); (C) none of
the Security Parties nor any Subsidiary has received any notice of any claim,
action, cause of action, investigation or demand by any Person, entity,
enterprise or government, or any political subdivision, intergovernmental body
or agency, department or instrumentality thereof, alleging potential liability
which would be reasonably likely to result in a Material Adverse Change or a
requirement to incur investigatory costs, cleanup costs, response and/or
remedial costs (whether incurred by a governmental entity or otherwise),
natural resources damages, property damages, personal injuries, attorneys’ fees
and expenses, or fines or penalties which would be reasonably likely to result
in a Material Adverse Change, in each case arising out of, based on or
resulting from (1) the presence, or release, or threat of release, of any
Materials of Environmental Concern at any location, whether or not owned by
such person, or (2) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law or Environmental Approval (“Environmental
Claim”) (other than Environmental Claims that have been fully and finally
adjudicated or otherwise determined and all fines, penalties and other costs
(including permitted deductibles), if any, payable by any of the Security
Parties or any of the Subsidiaries in respect thereof have been paid in full or
which are fully covered by insurance); (D) to the best of the Borrowers’
knowledge, after due investigation, there are no circumstances that would be
reasonably likely to prevent or interfere with such full compliance in the
future; and (E) there is no Environmental Claim pending or, to the best of
the Borrower’s knowledge, threatened against the Parent or any Subsidiary and
to the best of the Borrower’s knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal of any Materials of
Environmental Concern, that could reasonably be expected to form the basis of
any Environmental Claim against such persons the adverse disposition of which
could reasonably be expected to result in a Material Adverse Change;


 


(s)           Compliance with ISM Code, the ISPS
Code, the MTSA and Annex VI.  Each of
the Vessels and OSG Ship Management complies with the requirements of the ISM
Code, the ISPS Code, the MTSA and Annex VI, including (but not limited to) the
maintenance and renewal of valid certificates pursuant thereto;


 


(t)            Threatened Withdrawal of DOC, SMC,
ISSC or IAPPC.  There is no
threatened or actual withdrawal of OSG Ship Management’s DOC or SMC or of the
ISSC or IAPPC in respect of the Vessels or other certification of documentation
related to the ISM Code, Annex VI or otherwise required for the operation of
the Vessels;


 


(u)           Liens.  There are no liens of any kind on any
property owned by the Borrower or Guarantors other than those liens created
pursuant to this Agreement or the Security Documents or other than Permitted
Liens;


 


(v)           Indebtedness.  The Borrower does not have any Indebtedness
except to the Lenders or as listed in Schedule VI hereto;


 


(w)          No Material Adverse Change.  Since October 29, 2007 with respect to any of
the Security Parties, there has been no Material Adverse Change;


 


39
















 


(x)            No Proceedings to Dissolve. There
are no proceedings or actions pending or contemplated by the Borrower or, to
the best of the Borrower’s knowledge, contemplated by any third party, to
dissolve or terminate the Borrower;


 


(y)           Compliance with Laws. The
Borrower is in compliance with all Applicable Laws, except where any failure to
comply with any such Applicable Laws would not, alone or in the aggregate,
result in a Material Adverse Change; and


 


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


 


9.                                       COVENANTS


 


9.1         Affirmative Covenants. Each of
the Security Parties jointly and severally hereby covenants and undertakes with
each of the Lenders that, from the date hereof and so long as the Commitments
are in effect or any principal, interest or other moneys are owing in respect
of the Facility or otherwise owing under this Agreement, the Note or any
Security Document:


 


(A)          Each of the Security Parties will:


 


(a)           Performance of Agreements. Duly
perform and observe the terms of this Agreement and the other Transaction
Documents to which it is a party;


 


(b)           Notice of Default. Inform the Facility
Agent (which shall promptly, and in any event within three (3) Banking Days,
notify the Lenders) of the occurrence of (i) any Default or Event of
Default, (ii) any litigation or governmental proceeding pending or threatened
against any Security Party which in any manner draws into question the validity
or enforceability of this Agreement, the Note or any Security Document or which
could reasonably be expected to result in a Material Adverse Change and
(iii) any other event or condition of which it becomes aware which is
reasonably likely to result in a Material Adverse Change, in each case,
promptly, and in any event within three (3) Banking Days after becoming aware
of the occurrence thereof;


 


(c)           Consents. Without prejudice to
Section 8 and this Section 9.1, obtain every consent applicable to it
and do all other acts and things which may from time to time be necessary for
the continued due performance of all its obligations under this Agreement and
under any other Transaction Document;


 


(d)           Preservation of Existence, Etc. Except
as otherwise permitted hereto, preserve and maintain, and shall cause each of
the Subsidiaries to preserve and maintain, its existence, rights (charter and
statutory) and franchises; provided that, neither the Parent nor any Subsidiary shall be required to preserve any right
or franchise, and no Subsidiary (other than the Vessel-Owning Guarantors and
the Borrower) shall be required to maintain its existence if the Board of
Directors of the Parent shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Parent or
such Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to the Parent, the Parent and the
Subsidiaries on a consolidated basis or the Lenders, and provided further that any
of the


 


40

















 


Vessel-Owning Guarantors
may be dissolved provided that all of the assets of such Vessel-Owning Guarantor,
shall be distributed to the Parent;


 


(e)           Books and Records. Keep proper
books and record in accordance with GAAP of all transactions relating to the
business activities of the Security Parties made until all obligations under
this Agreement have been satisfied in full;


 


(f)            Inspection. Allow any
representative or representatives designated by any Lender, at the risk and
expense of such Lender and during normal business hours, subject to applicable
laws and regulations, upon reasonable prior notice to visit and inspect any
properties of the Security Parties or the Subsidiaries, and, on request, to
examine the Security Parties’ or the Subsidiaries’ books of account, records,
reports and other papers (and to make copies thereof and to take extracts
therefrom) and to discuss their affairs, finances and accounts with the
Security Parties’ and the Subsidiaries’ officers and executive employees all at
such reasonable times and as often as such Lender reasonably requests but in no
event more than twice for all the Lenders during any calendar year except
during the continuance of an Event of Default in which event there shall be no
limit;


 


(g)           Payment of Obligations. Pay
and discharge, or cause to be paid and discharged, or will cause each
Subsidiary to pay and discharge, at or before maturity, all their respective
obligations and liabilities, including, without limitation, all taxes,
assessments and governmental charges or levies imposed upon them, the
Subsidiaries or their respective income or property prior to the date upon
which penalties attach thereto which, if not paid, could reasonably be expected
to result, either singularly or in the aggregate, in a Material Adverse Change;
provided, however, that the Security Parties shall not be
required to pay and discharge, or cause to be paid and discharged, any such
obligation, liability, tax, assessment, charge or levy so long as the legality
thereof shall be contested in good faith and by appropriate proceedings and
they or the relevant Subsidiary or Subsidiaries shall maintain in accordance
with GAAP appropriate reserves with respect thereto.


 


(h)           Compliance with Agreements,
Statutes, etc. Do or cause to be done all things necessary to comply with
all material contracts or agreements to which any of the Security Parties is a
party, and all laws and the rules and regulations thereunder, applicable to the
Security Parties or any of the Subsidiaries or their conduct of their business
including, without limitation, those laws, rules and regulations relating to
employee benefit plans and environmental matters except where the failure to do
so would not be reasonably likely to result in a Material Adverse Change;


 


(i)            Environmental Matters. Promptly
upon the occurrence of any of the following conditions, provide to the Facility
Agent (which shall promptly furnish a copy thereof to each Lender) a
certificate of an executive officer of Borrower, specifying in detail the
nature of such condition and its proposed response or the response of its
Environmental Affiliates (as hereinafter defined): (i) its receipt or the
receipt by any of the Subsidiaries or any of their Environmental Affiliates of
any communication whatsoever that alleges that such Person is not in compliance
with any applicable Environmental Law or Environmental Approval, if such
noncompliance could reasonably be expected to result in a Material Adverse
Change, (ii) knowledge by it, any of the Subsidiaries or any of their
Environmental Affiliates that there


 


41

















 


exists any Environmental
Claim pending or threatened against any such Person, which could reasonably be
expected to result in a Material Adverse Change, or (iii) any release,
emission, discharge or disposal of any material that could form the basis of
any Environmental Claim against it, any of the Subsidiaries or any of their
Environmental Affiliates if such Environmental Claim could reasonably be
expected to result in a Material Adverse Change. Upon the written request by
the Facility Agent, the Borrowers will submit to the Lenders at reasonable
intervals, a report providing an update of the status of any issue or claim
identified in any notice or certificate required pursuant to this subsection. For
the purposes of this subsection, “Environmental Affiliate” with respect
to a Security Party shall mean any Person or entity the liability of which for
Environmental Claims such Security Party may have assumed by contract or
operation of law;


 


(j)            Maintenance of Assets. Except
as provided herein, maintain and keep, and procure that each of the
Subsidiaries shall maintain and keep, all properties used or useful in the
conduct of their respective business in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary equipment
and will make, or cause to be made, all necessary repairs, renewals and
replacements thereof so that the business carried on in connection therewith
and every material portion thereof may be properly conducted at all times
except where the failure to do so would not be reasonably likely to result in a
Material Adverse Change;


 


(k)           Book Value. At all times use
valuation procedures to determine Book Value which are consistent with GAAP
consistently applied;


 


(l)            Pari Passu. Ensure that their
respective obligations under this Agreement, the Notes, and the Security
Documents shall at all times rank at least pari passu with all its other
present and future unsecured and unsubordinated indebtedness with the exception
of any obligations which are mandatorily preferred by any applicable laws to
companies generally and not by contract;


 


(m)          Brokerage Commissions, etc. Indemnify
and hold each of the Creditors harmless from any claim for any brokerage
commission, fee, or compensation from any broker or third party resulting from
the transactions contemplated hereby; provided, however that the
Borrower has been informed by the relevant Creditor of any such agreement with
any broker or third party prior to the date of this Agreement; and


 


(n)           IPO Proceeds. Permanently reduce
the Facility and the total Commitments to (i) $150,000,000 if the gross
proceeds received from the IPO are less than $125,000,000 but at least
$100,000,000 or (ii) nil if the gross proceeds received from the IPO are less
than $100,000,000.


 


(B)           The Parent will:


 


(a)           Minimum Consolidated Tangible Net
Worth. Maintain a Consolidated Tangible Net Worth on the last day of each
fiscal quarter at an amount not less than $200,000,000;


 


42

















 


(b)           Maximum Leverage. Maintain a
ratio of Net Debt to Total Capitalization on the last day of each fiscal
quarter of less than 1.0 to 2.0 (in respect of the Parent and the Subsidiaries
on a consolidated basis);


 


(c)           Net Debt to EBITDA. Maintain a
ratio of Net Debt to EBITDA for the four fiscal quarters most recently ended
for which financial information is available of less than 4.0 to 1.0 (in
respect of the Parent and the Subsidiaries on a consolidated basis);


 


(d)           EBITDA to Net Interest Expense.
Maintain a ratio of EBITDA to Net Interest Expense on the last day of each
fiscal quarter of more than 4.5 to 1.0, measured not less than quarterly, in
each instance based on the four most recent fiscal quarters for which financial
information is available (in respect of the Parent and the Subsidiaries on a
consolidated basis);


 


(e)           Exchange Listing. Remain listed on the New York Stock Exchange;


 


(f)            Ownership of the Borrower and
each of the Vessel-Owning Guarantors. Own the Borrower and the
Vessel-Owning Guarantors directly or indirectly;


 


(g)           Agent for Service of Process. Cause
each of the Borrower and the Vessel-Owning Guarantors to maintain at all times
OSG Ship Management, or another agent acceptable to the Majority Lenders, as
its agent for service of process in the State of New York and shall cause any
other such agent to execute and deliver to the Parent and the Facility Agent a
letter in form and substance reasonably satisfactory to the Facility Agent,
accepting such agency, prior to or concurrently with such other agent’s
acceptance of its appointment as agent for service of process for the Borrower
or such Vessel-Owning Guarantor, as the case may be; and


 


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


 


(i)            as soon as available and in any
event within ninety (90) days after the end of each fiscal year of the Parent, a consolidated balance sheet of the
Parent and the Subsidiaries as of
the end of such fiscal year and the related consolidated statements of income
and retained earnings and cash flows for such fiscal year, setting forth in
each case in comparative form the figures as of the end of and for the previous
fiscal year, complying in all material respects with all applicable rules and
regulations promulgated by the Securities and Exchange Commission, in each case
accompanied by an unqualified opinion of Ernst & Young LLP or other
independent public accountants of nationally recognized standing;


 


(ii)           as soon as available and in any event
within sixty (60) days after the end of each of the first three fiscal quarters
of each fiscal year of the Parent,
an unaudited consolidated balance sheet of the Parent and the Subsidiaries as of the end of such fiscal quarter
and the related unaudited consolidated statements of income and retained
earnings and cash flows for such fiscal quarter and for the portion of the Parent’s fiscal year ended at the end of
such fiscal quarter, setting forth in each case in comparative form the figures
as of the end of and for the


 


43

















 


corresponding fiscal quarter and the corresponding
portion of the Parent’s previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation and compliance in all material respects with all
applicable rules and regulations of the Securities and Exchange Commission with
respect to interim financial statements and consistency by the chief financial
officer or the chief accounting officer of the Parent;


 


(iii)          simultaneously with the delivery of
each set of financial statements referred to in clauses (i) and (ii) above, a
Compliance Certificate of the Parent
(A) setting forth in reasonable detail the calculations required to establish
whether the covenants set forth in Sections 9.1(B) (a), (b), (c) and (d) are
complied with as of the last day of the fiscal period covered by such financial
statements, and (B) stating whether any Default or Event of Default exists on
the date of such Certificate and, if any Default or Event of Default then
exists, setting forth the details thereof and the action which the Security
Parties are taking or propose to take with respect thereto;


 


(iv)          promptly upon the mailing thereof to
the limited partners of the Parent, electronic copies of all financial
statements, reports and proxy statements and other communications provided to
the Parent’s limited partners; and


 


(v)           from time to time such additional
financial information of the Parent
and the Subsidiaries as the Facility Agent, at the request of any Lender, may
reasonably request.


 


(C)           The Borrower and each of the Vessel-Owning
Guarantors will:


 


(a)           ISM Code, ISPS Code, MTSA and Annex
VI Matters.


 


(i)            Procure that OSG Ship Management will
comply with and ensure that their respective Vessel will comply with the
requirements of the ISM Code, the ISPS Code, MTSA and Annex VI in accordance
with the respective implementation schedules thereof, including (but not
limited to) the maintenance and renewal of valid certificates pursuant thereto
throughout the Facility Period;


 


(ii)           and will procure that OSG Ship
Management will promptly inform the Facility Agent if there is any threatened
or actual withdrawal of its DOC, SMC, ISSC or IAPPC in respect of the
applicable Vessel;


 


(iii)          and will procure that OSG Ship
Management will promptly inform the Facility Agent upon the issue to the
Borrower, the relevant Vessel-Owning Guarantor or OSG Ship Management and to
any Vessel of an SMC, ISSC or IAPPC;


 


(b)           Insurance Matters.


 


(i)            Maintain, with financially sound and
reputable insurance companies, any and all insurances required pursuant to the
terms and conditions


 


44

















 


of the Mortgage, including (a) hull and machinery
insurance, (b) war risks insurance, and (c) protection and indemnity insurance
(including the maximum coverage for oil pollution liability risks). In the
cases of the insurances referred to in sub-sections (i) (a) through (c) above,
each Security Party shall maintain or cause the respective Vessel-Owning
Guarantor to maintain such insurances in such amounts as shall be at least
equivalent to One Hundred Ten percent (110%) of the outstanding amount of the
Facility multiplied by a fraction, the numerator of which is the Fair Market
Value of the Vessel and the denominator of which is the aggregate of the Fair
Market Value of all the Vessels then mortgaged to the Security Trustee in
connection with this Agreement, and all such insurance shall be payable in
lawful money of the United States of America and upon such terms (including
provisions as to named insureds and loss payees and prior notice of
cancellation) and with such deductibles as shall from time to time be approved
by the Security Trustee;


 


(ii)           Mortgagee’s Interest Insurance
including Additional Perils-Pollution Insurance, provided, however,
that the Mortgagee’s Interest Insurance may, with the consent of the Borrower, which
consent shall not be unreasonably withheld or delayed, be arranged by the
Facility Agent at the expense of the Borrower; and


 


(iii)          such other insurance on all their
respective properties and against all such risks in at least such amounts as
are usually insured against by companies of established repute engaged in the
same or similar business from time to time;


 


(c)           Earnings. Do all acts, take
all steps and obtain any and all consents which may from time to time be
necessary or advisable for the payment of any and all Earnings (as such terms
is defined in the Earnings Assignment) with respect to each of the Vessels into
the Earnings Accounts;


 


(d)           Vessel Management. Cause the
Vessels to be managed technically and commercially by OSG Ship Management (or
an entity that is successor to substantially all of OSG Ship Management’s U.S. Flag
ship management business and is wholly owned by either OSG or the Parent);


 


(e)           Vessel Appraisals. Cause the
Fair Market Value of the Vessels to be determined annually by any two (2)
brokers listed on Schedule IV and selected by the Borrower, such appraisals to
be addressed and delivered to the Facility Agent along with the annual
financial statements to be delivered pursuant to Section 9.1.(B)(h);.and


 


(f)            Assignment of Earnings,
Assignment of Insurances and Mortgage. On the date of delivery of Hull 8015
or Hull 8016, respectively, the respective Vessel-Owning Guarantor will duly
authorize, execute and deliver to the Security Trustee, (a) the Mortgage on the
Vessel owned thereby, which shall have been recorded in accordance with the
laws of the United States of America so as to constitute a first preferred
mortgage lien under United States law, (b) the Insurances Assignment in respect
of the Vessel owned thereby, and (c) the Earnings


 


45

















 


Assignment in respect of
the Vessel owned thereby a Mortgage, in respect of the Vessel owned thereby, together
with:


 


(i)            proper Uniform Commercial Code
Financing Statements;


 


(ii)           certified copies of Requests for
Information or Copies, or equivalent reports, and


 


(iii)          evidence that all other actions
necessary or, in the reasonable opinion of the Security Agent, desirable to
perfect and protect the security interests purported to be created by the
Assignment of Earnings, the Assignment of Insurances and the Mortgage have been
taken.


 


9.2         Negative Covenants. Each of the
Security Parties hereby jointly and severally covenants and undertakes with
each of the Lenders that, from the date hereof and so long as the Commitments
are in effect or any principal, interest or other moneys are owing in respect
of the Facility or otherwise owing under this Agreement, the Note or any other
Transaction Document:


 


(A)          The Security Parties will not, without
the prior written consent of the Majority Lenders:


 


(a)           Liens. Create, assume or
permit to exist, any Liens whatsoever upon any Vessel or other collateral
provided as security under this Agreement or the other Transaction Documents
except for:


 


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


 


(ii)           Security Documents and other liens in
favor of the Security Trustee;


 


(iii)          liens, charges and encumbrances
against their respective Vessel permitted to exist under the terms of the
Mortgages; and


 


(iv)          other liens, charges and encumbrances
incidental to the conduct of the business of each such party, the ownership of
any such party’s property and assets and which do not in the aggregate
materially detract from the value of each such party’s property or assets or
materially impair the use thereof in the operation of its business;


 


(v)           pledges and deposits made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;


 


(vi)          judgment liens in respect of judgments
that do not constitute an Event of Default under Section 10.1(i) hereto;


 


46

















 


(vii)         easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of such Security Party;


 


(viii)        leases, subleases, licenses and
sublicenses granted to others in the ordinary course of business;


 


(ix)           Liens in existence on the Closing
Date which are listed, and the property subject thereto described, in Schedule VI
hereto, provided that the aggregate principal amount of the Indebtedness, if
any, secured by such Liens does not increase from that amount outstanding on
the Closing Date, less any repayments of principal thereof; and


 


(x)            Any time charter entered into with
respect to a Vessel;


 


(b)           Change of Flag, Class, Management
or Ownership. Change the flag of any of the Vessels, change the class or
Classification Society of any of the Vessels other than to another
Classification Society, change the technical management of any Vessel or the
immediate or ultimate ownership of any Vessel except as permitted hereby;


 


(c)           Chartering. Enter into any
demise or bareboat charter with respect to any Vessel without the prior consent
of the Facility Agent;


 


(d)           Change in Business. Materially
change the nature of its business or commence any business materially different
from its current business;


 


(e)           Sale of Assets. Sell, or
otherwise dispose of, any Vessel (unless otherwise in accordance with this
Agreement) or any other asset (by way of spin-off, installment sale or
otherwise) which is substantial in relation to its assets taken as a whole;


 


(f)            Changes in Offices or Names. Change
the location of its chief executive office or, its chief place of business, or
the office of the Security Party in which the records relating to the earnings
or insurances of the Vessels are kept unless the Facility Agent shall have
received thirty (30) days prior written notice of such change;


 


(g)           Consolidation and Merger. Consolidate
with, or merge into, any corporation or other entity, or merge any corporation
or other entity into it, unless the relevant Security Party is the surviving
entity;


 


(h)           Loans and Advances. Make any
loans or advances to, or any investments in, any person, firm, corporation,
joint venture or other entity (including, without limitation, any loan or
advance to any officer, director, member, stockholder, employee or customer of
any company affiliated with any Security Party) except for advances and
investments in the normal course of its business;


 


(i)            Contingent Obligations, etc. No
Vessel-Owning Guarantor shall assume, guarantee or (other than in the ordinary
course of its business) endorse or otherwise become


 


47

















 


liable, in connection
with any obligation of any person, firm, company or other entity except for
guaranties in favor of the Lenders or the Facility Agent on behalf of the
Lenders;


 


(j)            Use of Corporate Funds. Pay
out any funds to any company or person except in the ordinary course of
business in connection with the management of its business;


 


(k)           Indebtedness. No Vessel-Owning
Guarantor shall create, assume, incur or become or be or remain liable,
directly or indirectly, or make any repayment in respect of any indebtedness
except for Permitted Debt or make any repayment in respect of any Debt except
for (a) Debt owing to any Creditor and (b) Debt secured by a Permitted Lien if
the asset secured by such Permitted Lien is disposed of as otherwise permitted
herein;


 


(l)            Use of Proceeds. Will not use
the proceeds of the Advances in violation of the Foreign Assets Control
Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500 as amended) or for any hostile acquisition;
and


 


(B)           The Parent will not, without the
prior written consent of the Majority Lenders:


 


(a)           Mergers, Consolidations and Sales
of Assets. (A) Permit any Security Party to, consolidate with or be a party
to a merger with any other Person or (B) sell, lease (other than
chartering in the ordinary course of business, which shall not include bareboat
chartering for periods in excess of ten (10) years) or otherwise dispose of all
or substantially all of the assets of the Parent and the Subsidiaries, taken as
a whole; provided, however, that the Parent or any other Security
Party may consolidate or merge with any other Person if (A) at the time of such
transaction and after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing, and (B) the surviving entity in
such consolidation or merger shall be the Parent, or, if another entity, the
surviving entity would have a net worth greater or equal to the net worth of the
Parent prior to the merger and, in any case the survivor shall have assumed all
liabilities and obligations of the parties thereto.


 


(b)           No Money Laundering. Will not,
and will not permit any Subsidiary to, contravene any law, official requirement
or other regulatory measure or procedure implemented to combat “money
laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the
Council of European Communities) and comparable United States Federal and state
laws.


 


(c)           Indebtedness. Create, assume,
incur or become or be or remain liable, directly or indirectly, or make any
repayment in respect of, any indebtedness to shareholders or Affiliates except
Permitted Debt.


 


(d)           Distributions. Pay or declare
any dividend on any class of stock if at the time any such proposed payment is
to be made, or after giving effect to any such proposed payment, an Event of
Default exists or would result from the making of such payment or a breach of a
Financial Covenant contained in Section 9.1(B) exists at the time or would result
from the making of such payment.


 


9.3         Substitution of Vessels. In the
event that a Vessel (other than the Vessels to be replaced by Hull 8015 and
Hull 8016) is sold, lost or declared an actual or constructive total loss, the
Borrower may substitute a Vessel with a similar vessel to such Vessel within
180


 


48

















 


days subject to the
consent of the Lenders and so long as no Event of Default or potential Event of
Default has occurred and is continuing (or would result from such disposition).
Such substitute vessel shall meet all of the following characteristics, and the
owner of such vessel meets all of the following conditions, as the case may be:


 


(a)           a vessel of a comparable age and
tonnage as the Vessel sold or released to the Lenders or a vessel of another
size and tonnage acceptable to the Lenders;


 


(b)           complies with requirements of Section
3.1(i);


 


(c)           has, at the time of substitution, a
Fair Market Value greater than or equal to the Fair Market Value of the Vessel
for which it is substituted or a Fair Market Value acceptable to the Lenders;
and


 


(d)           the owner of the substitute Vessel
has met the conditions, updated mutatis  mutandis, of Sections
3.1(a), (b), (e), (i), (j) and (k) and Sections 3.2 (c) and (d).


 


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


 


9.5         Inspection of Vessels. The
Lenders shall be entitled to inspect each of the Vessels at any time upon
reasonable prior notice provided such inspection may not unduly interfere with
the operation of the Vessels no more than twice during any calendar year except
during the continuance of an Event of Default in which event there shall be no
limit. One such inspection per year shall be at the cost of the Borrower.


 


10.                                 EVENTS
OF DEFAULT


 


10.1       Events of Default. In the event
that any of the following events shall occur and be continuing:


 


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


 


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


 


(c)           Representations, etc. Any
representation, warranty or other statement made by the Security Parties in
this Agreement or in any other instrument, document or other agreement
delivered in connection herewith proves to have been untrue or misleading in
any material respect as at the date as of which it was made, unless
circumstances giving rise to such misrepresentation are capable of remedy and
are remedied within 15 days after the earlier of the Facility Agent giving
notice to the Borrower requiring such remedy and the Borrower becoming aware of
such representation; or


 


49

















 


(d)           Impossibility, Illegality. It
becomes impossible or unlawful for the Security Parties to fulfill any of the
covenants and obligations contained herein or in any Transaction Document, or
for any of the Lenders to exercise any of the rights vested in any of them
hereunder or under the other Transaction Documents and such impossibility or
illegality, in the reasonable opinion of such Lender, will have a Material
Adverse Change on any of its rights hereunder or under the other Transaction
Documents or on any of its rights to enforce any thereof; or


 


(e)           Certain Covenants. The
Borrower defaults in the performance or observance of any covenant contained in
Section 9.1(A)(b), 9.1(B)(a) through (d), 9.1(C)(b), 9.2(B)(a), and 9.3; or


 


(f)            Covenants. One or more of the
Security Parties default in the performance of any term, covenant or agreement
contained in this Agreement or in the other Transaction Documents, or in any
other instrument, document or other agreement delivered in connection herewith
or therewith, in each case other than an Event of Default referred to elsewhere
in this Section 10.1, and such default continues unremedied for a period
of fifteen (15) days after written notice thereof has been given to the
Security Party by the Facility Agent at the request of any Lender unless such
Security Party is diligently pursuing a remedy of such Default provided such
Default is, in the determination of the Facility Agent, capable of being
remedied within a reasonable period of time (and in any event within thirty
(30) days) without adversely affecting the Lender’s rights hereunder, under the
Note or under the Security Documents or any thereof and such Default is in fact
so remedied; or


 


(g)           Indebtedness and Other Obligations.
Any Security Party defaults under (i) any Material Financial Obligation or (ii)
any other material contract or agreement to which it is a party or by which it
is bound and, in the case of this (ii), such default could reasonably be
expected to result in a Material Adverse Change; or


 


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


 


(i)            Judgments.
Any judgment or order is made the effect whereof would be to render invalid
this Agreement or any other Transaction Document or any material provision
thereof or any Security Party asserts that any such agreement or provision
thereof is invalid; or judgments or orders for the payment of money in excess
of $20,000,000 in the aggregate for any Guarantor or the Subsidiaries (or its
equivalent in any other currency) shall be rendered against any Guarantor and/or any of the Subsidiaries and such judgments
or orders shall continue unsatisfied and unstayed for a period of thirty (30)
consecutive days and action shall legally be


 


50

















 


taken
by the judgment creditor to attach or levy upon assets of the Parent or any of
the Subsidiaries to enforce such judgment; or


 


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


 


(k)           Cessation of Business. Any
Security Party ceases to do business other than as permitted herein; or


 


(l)            Change of Ownership or Control.
A change of ownership or control which results in any of the following not
being true:


 


(i)            OSG owns at least 50.1% of
membership interests (directly or indirectly) in the Parent;


 


(ii)           OSG owns more than 50.1% of
membership interests in OSG America LLC, which is the general partner of the Parent;


 


(iii)          OSG America LLC is the general partner
of and has a 2% general partnership interest in the Parent;


 


(iv)          The Parent wholly-owns the Borrower;


 


(v)           Borrower wholly-owns (directly or
indirectly) the Vessel-Owning Guarantors; or


 


(m)          Change of Commercial and Technical
Manager. OSG Ship Management (or any entity that is successor to
substantially all of OSG Ship Management’s U.S. Flag ship management business
and is wholly owned by either OSG or the Parent) ceasing to be both the
commercial and technical manager of any Vessel either directly or indirectly
owned by the Borrower; or


 


(n)           ERISA Debt.
Any member of the ERISA Group or any ERISA Affiliate shall (i) fail to pay when
due an amount or amounts aggregating in excess of $5,000,000 which it or they
shall have become liable to pay under Title IV of ERISA or (ii) any
member of the ERISA Group or any ERISA Affiliate, individually or collectively,
shall incur, or shall reasonably expect to incur, any Withdrawal Liability or
liability upon the happening of a Termination Event and the aggregate of all
such Withdrawal Liabilities and such other liabilities shall be in excess of
$10,000,000;


 


then, the Lenders’ obligation to make the Facility available shall
cease and the Facility Agent on behalf of the Lenders may, with the Majority
Lenders’ consent and shall, upon the Majority Lenders’ instruction, by notice
to the Borrower, (i) declare the entire Facility Balance, accrued interest and
any other sums payable by the Borrower hereunder and under the Note, the other
Transaction Documents and any Interest Rate Agreement due and payable whereupon
the same shall forthwith be due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived;
provided that upon the happening of an event specified


 


51

















 


in subclauses (h) or (j) of this Section 10.1, the Facility
Balance, accrued interest and any other sums payable by the Borrower hereunder
and under the Note, the other Transaction Documents and any Interest Rate
Agreement shall be immediately due and payable without declaration,
presentment, demand, protest or other notice to the Borrower all of which are
expressly waived. In such event, the Creditors may proceed to protect and
enforce their rights by action at law, suit in equity or in admiralty or other
appropriate proceeding, whether for specific performance of any covenant
contained in this Agreement, the Note, any other Transaction Document or any
Interest Rate Agreement or in aid of the exercise of any power granted herein
or therein, or the Lenders or the Facility Agent may proceed to enforce the
payment of the Note when due or to enforce any other legal or equitable right
of the Lenders, or proceed to take any action authorized or permitted by
Applicable Law for the collection of all sums due, or so declared due,
including, without limitation, the right to appropriate and hold or apply
(directly, by way of set-off or otherwise) to the payment of the obligations of
the Borrower to any of the Creditors hereunder and/or under the Note and the
other Transaction Documents (whether or not then due) all moneys and other amounts
of the Borrower then or thereafter in possession of any Creditor, the balance
of any deposit account (demand or time, matured or unmatured) of the Borrower
then or thereafter with any Creditor and every other claim of the Borrower then
or thereafter against any of the Creditors, (ii) terminate any Letter of
Credit which may be terminated in accordance with its terms and
(iii) direct the Borrower to pay (and the Borrower hereby agrees upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in subsection (h) or (j) of this Section 10.1, it will pay) to the Facility Agent
at the office set forth in Section 7.1 such additional amounts, to be held as
security in respect of Letters of Credit then outstanding (if any), equal to
the aggregate of the then Letter of Credit Outstandings, such amounts to be
repaid to the Borrower to the extent not utilized to cover Letter of Credit
drawings.


 


10.2       Indemnification. The Borrower
agrees to, and shall, indemnify and hold harmless each of the Creditors against
any loss or reasonable costs or expenses (including legal fees and expenses)
which any of the Creditors sustains or incurs as a consequence of any default
in payment of the principal amount of the Facility Balance or interest accrued
thereon or any other amount payable hereunder, under the Note or under the
other Transaction Documents, including, but not limited to, all actual losses
incurred in liquidating or re-employing fixed deposits made by third parties or
funds acquired to effect or maintain the Advances or any part thereof. The
Borrower also agrees to reimburse and indemnify the Issuing Lender for and
against any and all losses, costs or expenses of whatever nature which may be
incurred by the Issuing Lender in performing its respective duties in any way
relating to or arising out of its issuance of Letters of Credit; provided that
the Borrower shall not be liable for the portion of such losses, costs or
expenses resulting from the Issuing Lender’s gross negligence or willful
misconduct. A Creditor’s certification of such costs and expenses shall, absent
any manifest error, be conclusive and binding on the Borrower.


 


10.3       Application of Moneys. All moneys
received by any of the Creditors under or pursuant to this Agreement, the Note
or the other Transaction Documents after the happening of any Event of Default
shall be applied by the Facility Agent in the following manner:


 


(i)            firstly, in or towards the payment
or reimbursement of any expenses or liabilities incurred by any of the Creditors
in connection with the


 


52

















 


ascertainment, protection or enforcement of its rights
and remedies hereunder and under the Note and the other Transaction Documents;


 


(ii)           secondly, in or towards payment of
any interest owing in respect of the Advances or Letters of Credit;


 


(iii)          thirdly, in or towards repayment of
the Advances;


 


(iv)          fourthly, as security in respect of
Letters of Credit then outstanding, in the aggregate amount of the then Letter
of Credit Outstandings,


 


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


 


(vi)          sixthly, in or towards payments of any
amounts then owed under any Interest Rate Agreement, and


 


(vii)         seventhly, after all Letters of Credit
have expired or are terminated and returned to the Issuing Lender, the surplus
(if any), as well as any moneys held as security for Letters of Credit to the
extent not utilized to cover Letters of Credit the surplus (if any), shall be
paid to the Borrower or to whomsoever else may be entitled thereto.


 


11.                                 ASSIGNMENTS;
PARTICIPATIONS;


 


11.1       Assignments. This Agreement shall
be binding upon, and inure to the benefit of, the Borrower and each of the
Creditors and their respective successors and permitted assigns, except that
the Borrower may not assign any of their rights or obligations hereunder
without the prior written consent of the Lenders. Any Lender may assign its
rights and obligations under this Agreement to any one or more financial
institutions approved by the Facility Agent and the Borrower, which approval
shall not be unreasonably withheld; provided, however, that no
such consent shall be required if the assignee is, immediately prior to such
assignment, another Lender or an Affiliate of the assigning Lender (the
expenses of any Lender in connection with any such assignment shall be for its
own account); provided, further that no Borrower shall be
required to pay any amount under Sections 6.1 or 11 that is greater than the
amount which it would have been required to pay had no such assignment been
made; provided, further that any assignment shall be made
pursuant to an Assignment and Assumption Agreement substantially in the form of
Exhibit A hereto; and provided, finally, that the minimum
amount which may be assigned shall be $10,000,000 unless otherwise agreed by
the Borrower and the Facility Agent. The Borrowers will take all reasonable
actions requested by the Lenders to effect any such permitted assignment,
including, without limitation, the execution of a written consent to such
Assignment and Assumption Agreement.


 


11.2       Participations. Any Lender may at
any time sell to one or more commercial banks or other financial institutions
(each of such commercial banks and other financial institutions


 


53

















 


being herein called a “Participant”)
participating interests in the Advances, its Commitment or other interests of
such Lender hereunder; provided, however, that


 


(a)           no participation contemplated in this
Section 11.2 shall relieve such Lender from its Commitment or its other
obligations hereunder;


 


(b)           such Lender shall remain solely
responsible for the performance of its Commitment and such other obligations;


 


(c)           no Participant, unless such
Participant is an Affiliate of such Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder, except that such
Lender may agree with any Participant that such Lender will not, without such
Participant’s consent, approve any amendment or waiver of any provision of this
Agreement or the Note or consent to any departure by the Borrower therefrom, if
any such amendment, waiver or consent would require the affirmative consent of
such Lender pursuant to Section 18.6 hereof; and


 


(d)           the Borrower shall not be required to
pay any amount under Sections 6.1 or 11 that is greater than the amount which
it would have been required to pay had no participating interest been sold.


 


11.3       Security Interest. Notwithstanding
any other provision set forth in this Agreement, any Lender may at any time grant
a security interest in all or any portion of its rights under this Agreement
and the other Transaction Documents.


 


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


 


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


 


12.1       Illegality. In the event that by
reason of any change in any applicable law, regulation or regulatory
requirement or in the interpretation or application thereof by any authority
after the Closing Date, a Lender or Participant has a reasonable basis to
conclude that it has become unlawful for such Lender or Participant to maintain
or give effect to its obligations as contemplated by this Agreement, such
Lender or Participant shall inform the Borrower and the Facility Agent to that
effect, whereafter the liability of such Lender or Participant to make its
Commitment available shall forthwith cease and the Borrower shall be required
to repay to such Lender or Participant that portion of the Facility Balance
advanced by such Lender or Participant immediately and to provide the Facility
Agent with sufficient amounts of Cash or Cash Equivalents to fund any possible
drawings under Letters of Credit then in existence, such amounts to be repaid
to the Borrower to the extent not utilized to cover Letter


 


54

















 


of Credit drawings. In
any such event, but without prejudice to the aforesaid obligations of the
Borrower to prepay the relevant portion of the Facility Balance or part thereof
and fund any possible drawings under Letters of Credit then in existence, the
Borrower and such Lender or Participant shall negotiate in good faith with a
view to agreeing on terms for making the Commitment available from another
jurisdiction or otherwise restructuring the Commitment on a basis which is not
unlawful.


 


12.2       Increased Cost. If after the
Closing Date any change in applicable law, regulation or regulatory requirement
or in the interpretation or application thereof by any Authority shall:


 


(a)           subject any Lender or Participant to
any Taxes; or


 


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


 


(c)           impose, modify or deem applicable any
reserve or capital adequacy requirements or require the making of any special
deposits against or in respect of any assets or liabilities of, deposits with
or for the account of, or loans by, any Lender or Participant; or


 


(d)           impose on any Lender or Participant
any other condition affecting the Facility or any part thereof;


 


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


 


(i)            such Lender or Participant shall
notify the Borrower and the Facility Agent in writing of the happening of such
event;


 


(ii)           the Borrowers agree forthwith upon
receipt of notice from such Lender or Participant as aforesaid to pay to such
Lender or Participant such amount as such Lender or Participant certifies to be
necessary to compensate such Lender or Participant for such additional cost or
such reduction.


 


Any such notice
referred to in subsections (i) and (ii) of this Section 12.2 may be made
by a Lender or Participant which notice shall set forth in reasonable detail
the amount or amount necessary to compensate such Lender or Participant at any
time before or within one (1) year after any repayment of the outstanding Facility
Amount; provided, however, that before making any such demand,
such Lender agrees to use its best efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different lending office
if the making of such designation would avoid the need for, or reduce the
amount of, such increased cost or


 


55

















 


such reduction and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lenders.


 


12.3       Nonavailability of Funds. If the Facility
Agent shall determine that, by reason of circumstances affecting the London
Interbank Market generally, adequate and reasonable means do not or will not
exist for ascertaining the Applicable Rate for any Advance for any Interest
Period, the Facility Agent shall give notice of such determination to the
Borrower and the Lenders. The Borrower and the Facility Agent, acting in
accordance with the instruction of the Lenders, shall then negotiate in good
faith in order to agree upon a mutually satisfactory interest rate and/or
Interest Period to be substituted for those which would otherwise have applied
under this Agreement. If the Borrower and the Facility Agent are unable to agree
upon such a substituted interest rate and/or Interest Period within
thirty (30) days of the giving of such determination notice, the Facility Agent
shall set an interest rate and Interest Period to take effect from the
expiration of the Interest Period in effect at the date of determination, which
rate shall be equal to the Margin plus the cost to the Lenders and Participants
(as certified by each Lender and Participant) of funding such Advance. In the
event the state of affairs referred to in this Section 12.3 shall extend
beyond the end of any Interest Period, the foregoing procedure shall continue
to apply until circumstances are such that the Applicable Rate may be
determined pursuant to Section 5.1.


 


12.4       Determination of Losses. A
certificate or determination notice of the Facility Agent or any affected
Lender or Participant, as the case may be, as to any of the matters referred to
in this Section 12 shall, absent demonstrative error, be conclusive and
binding on the Borrower.


 


12.5       Compensation for Losses. Where any
portion of the Facility Balance is to be prepaid by the Borrower pursuant to
Section 12.1 the Borrower agrees simultaneously with such prepayment to
pay to the affected Lender or Participant all accrued interest to the date of
actual payment and all other sums payable by the Borrower to such Lender or
Participant pursuant to this Agreement together with such amounts as may be
certified by such Lender or Participant to be necessary to compensate such
Lender or Participant for any actual loss, premium or penalties incurred or to
be incurred by it on account of funds borrowed to make, fund or maintain its
portion of the outstanding Facility Amount for the remainder (if any) of the
then current Interest Period or Periods, but otherwise without penalty or
premium.


 


12.6       Compensation for Breakage Costs. The
Borrower shall pay to the Lenders, Participants or any thereof, upon the
request of any thereof such amount or amounts as shall be sufficient (in the
reasonable opinion of the relevant Lenders and/or Participants) to compensate
them for any loss, cost or expense incurred by them as a result of:


 


(a)           any payment or prepayment (including
any such prepayment made pursuant to Sections 4.1, 4.2 and 12.1) of an Advance
on a date other than the last day of the relevant Interest Period; or


 


(b)           any failure by the Borrower to borrow
(including without limitation any such failure resulting from a condition
precedent set forth in Section 3) or prepay the Facility Balance held by any
Lenders and/or Participants on the date for such borrowing or prepayment


 


56

















 


specified in the relevant
request for such Advance or notice of prepayment delivered under Sections 2.2
or 4.1, respectively;


 


such
compensation to include, without limitation, an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or not borrowed for the period from the date
of such payment, prepayment or failure to borrow to the last day of the then
current Interest Period for such Advance or, in the case of a failure to
borrow, the Interest Period for such Advance which would have commenced on the
date of such failure to borrow, in each case at the applicable rate of interest
for such Advance provided for herein over (ii) the amount of interest
which otherwise would have accrued on such principal amount at a rate per annum
equal to the interest component (as reasonably determined by the relevant
Lenders and/or Participants) of the amount (as reasonably determined by such
Lenders and/or Participants) the Lenders and/or Participants would have bid in
the Eurocurrency market for Dollar deposits of amounts comparable to such
principal amount and maturities comparable to such Interest Period. Any
certification of a relevant Lender or Participant shall, absent demonstrative error,
be conclusive and binding on the Borrower as to the extent of any such losses.


 


12.7       Mitigation Obligations; Replacement of
Lenders. (a) If any Lender requests compensation under Sections 12.1 or
12.2, or if the Borrower is required to pay any additional amount to any Lender
or any Authority for the account of any Lender pursuant to Section 6.1, then
such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Advances hereunder or to assign its rights
and obligations hereunder to another of its offices, branches or affiliates,
if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 12.1, 12.2 or 6.1, as
the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.


 


(b)           If (i) any Lender requests
compensation under Sections 12.1 or 12.2, (ii) the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 6.1 or (iii) if any Lender defaults
in its obligation to fund Loans hereunder, then, in each such case, the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Facility Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 11.1), all its interests, rights and obligations under the Transaction  Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (A) the Borrower shall have received the prior
written consent of the Facility Agent, which consent shall not be unreasonably
withheld, (B) such Lender shall have received payment of an amount equal to the
outstanding principal of its Advances, accrued interest thereon and all other
amounts payable to it hereunder (including amounts payable pursuant to Sections
6.1, 12.1 or 12.2), from the assignee (to the extent of such outstanding
principal and accrued interest) or the Borrower (in the case of all other
amounts) and (C) in the case of any such assignment resulting from a claim for
compensation under Section 12.1 or 12.2 or payments required to be made
pursuant to Section 6.1, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be


 


57

















 


required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.


 


12.8       Currency Indemnity. (a) If for the
purpose of obtaining or enforcing a judgment in any court in any country it
becomes necessary to convert into any other currency (the “Judgment Currency”)
an amount due in Dollars under this Agreement or the other Transaction
Documents, then the conversion shall be made, in the discretion of the Facility
Agent, at the rate of exchange prevailing either on the date of default or on
the day before the day on which the judgment is given or the order for
enforcement is made, as the case may be (the “Conversion Date”);
provided that the Facility Agent shall not be entitled to recover under this
clause any amount in the judgment currency which exceeds at the Conversion Date
the amount in Dollars due under this Agreement and/or the other Transaction
Documents.


 


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


 


(c)           Any amount due from the Borrower
under Section 12.7(b) shall be due as a separate debt and shall not be
affected by judgment being obtained for any other sums due under or in respect
of this Agreement and/or the other Transaction Documents.


 


(d)           The term “rate of exchange” in this
Section 12.7 means the rate at which the Facility Agent in accordance with
its normal practices is able on the relevant date to purchase Dollars with the
judgment currency and includes any premium and costs of exchange payable in
connection with such purchase.


 


13.                                 FEES,
EXPENSES AND INDEMNIFICATION 


 


(a)           Fees. The Borrower shall pay
to the Facility Agent (for the account of the Lenders) a commitment fee (the “Commitment
Fee”) equal to twenty-five hundredths of one percent (.25%) on the daily undrawn
balance of the Facility for the period commencing on the Closing Date and
ending on the Final Availability Date. Such commitment fee shall accrue from
day to day and be calculated on the basis of actual days elapsed over a 365 day
year and such commitment fee shall be payable quarterly in arrears. The
Borrower shall also pay to the Facility Agent each of the fees set forth in the
Fee Letters.


 


(b)           In addition, the Borrower shall pay
to the Facility Agent, for distribution to the Letter of Credit Participants, a
fee in Dollars in respect of each Letter of Credit (the “Letter of Credit
Fee”) computed at a rate per annum equal to (i) the Margin in effect from
time to time plus (ii) Mandatory Costs on the daily Stated Amount of such
Letter of Credit as reduced by any


 


58

















 


drawings thereunder. The
Borrower further agrees to pay to the Issuing Lender, commencing at such time,
a fee in Dollars in respect of each Letter of Credit (the “Fronting Fee”)
computed at a rate per annum equal to one-eighth of one percent (1/8%) (but in
no event less than $500 per annum for each Letter of Credit) on the daily
Stated Amount of such Letter of Credit as reduced by any drawings thereunder. Accrued
Letter of Credit Fees and Fronting Fees shall be calculated on the basis of
actual days elapsed over a 360 day year and shall be due and payable quarterly
in arrears on the first day of November, February, May and August of each year
the Facility remains outstanding and on the Payment Date. The Borrower also
agrees to pay to the Issuing Lender, upon the issuance of any Letter of Credit,
an issuance fee equal to the greater of (i) $2,500 or (ii) one-eighth of one
percent of the amount of each issued Letter of Credit.


 


13.2       Expenses. The Borrower agrees,
whether or not the transactions hereby contemplated are consummated, on demand
to pay, or reimburse the Facility Agent for the payment of the reasonable, documented
expenses of the Facility Agent and (after the occurrence and during the
continuance of an Event of Default) the Lenders incident to said transactions
(and in connection with any supplements, amendments, waivers or consents
relating thereto or incurred in connection with the enforcement or defense of
any of the Facility Agent’s and the Lenders’ rights or remedies with respect
thereto or in the preservation of the Facility Agent’s and Lenders’ priorities
under documentation executed and delivered in connection therewith) including,
without limitation, all reasonable costs and expenses of preparation,
negotiation, execution and administration of this Agreement and the documents
referred to herein, fees for the registration of mortgages and any other filing
fees for the filing of any other Transaction Document, the reasonable fees and
disbursements of the Facility Agent’s counsel in connection therewith, as well
as reasonable traveling expenses of the Facility Agent, the reasonable fees and
expenses of any independent appraisers, surveyors, engineers and other
consultants retained by the Facility Agent in connection with this transaction
including one (but not more than one) annual valuation of the Vessel, all
reasonable costs and expenses, if any, in connection with the enforcement of
this Agreement and the other Transaction Documents and stamp and other similar
taxes, if any, incident to the execution and delivery of the documents
(including, without limitation, the other Transaction Documents) herein contemplated
and to hold the Creditors free and harmless in connection with any liability
arising from the nonpayment of any such stamp or other similar taxes. Such
taxes and, if any, interest and penalties related thereto as may become payable
after the date hereof shall be paid immediately by the Borrower to the Facility
Agent or the Lenders, as the case may be, when liability therefor is no longer
contested by such party or parties or reimbursed immediately by the Borrowers
to such party or parties after payment thereof (if the Facility Agent or the
Lenders, in their sole discretion, choose to make such payment).


 


13.3       Indemnification. Neither any
Creditor nor any of its directors, officers, agents or employees shall be
liable to the Borrower for any action taken or not taken by it in connection
herewith in the absence of its own gross negligence or willful misconduct. The
Borrower hereby agrees to indemnify the Creditors, their respective affiliates
and the respective directors, officers, agents and employees of the foregoing
(each an “Indemnitee”) and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be


 


59

















 


designated a party
thereto) brought or threatened relating to or arising out of this Agreement,
any actual or proposed use of proceeds of any Advance hereunder, or any related
transaction or claim; provided that (i) no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee’s own gross negligence or
willful misconduct as determined by a court of competent jurisdiction and (ii)
to the extent permitted by law, the Indemnitee shall provide the Borrower with
prompt notice of any such investigative, administrative or judicial proceeding
after the Indemnitee becomes aware of such proceeding; provided, however,
that the Indemnitee’s failure to provide such notice in a timely manner shall
not relieve the Borrower of its obligations hereunder.


 


13.4       Time of Payment. All amounts due under this Section 13 (unless
otherwise provided in this Agreement) shall be payable no later than twenty
(20) Banking Days after written demand therefor.


 


14.                                 APPLICABLE
LAW, JURISDICTION AND WAIVER


 


14.1       Applicable Law. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.


 


14.2       Jurisdiction. The Borrower and
each of the Guarantors hereby irrevocably submits, to the jurisdiction of the
courts of the State of New York located in New York County and of the United
States District Court for the Southern District of New York in any action or
proceeding brought against it by any Creditor under this Agreement or any
instrument delivered hereunder and hereby agree that service of summons or
other legal process thereon may be made by serving a copy of the summons or
other legal process in any such action or proceeding on any Security Party by
mailing or delivering the same by hand at the address indicated for notices in
Section 16 of such summons or other legal process in any such action or
proceeding shall be deemed personal service and accepted by the Security
Parties as such, and shall be legal and binding upon the Security Parties for
all purposes of any such action or proceeding. Final judgment (a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness of the Borrower to any of the Creditors) against the
Security Parties in any such legal action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment. In the event
that any of the Security Parties shall not be conveniently available for such
service, each Security Party hereby irrevocably appoints the Person who then is
the Secretary of State of the State of New York as its attorney-in-fact and
agent. The Borrower will advise the Facility Agent promptly of any change of
address for the purpose of service of process. Notwithstanding anything herein
to the contrary, a Creditor may bring any legal action or proceeding in any other
appropriate jurisdiction.


 


14.3       WAIVER OF JURY TRIAL. IT IS
MUTUALLY AGREED BY AND AMONG EACH OF THE SECURITY PARTIES AND EACH OF THE
CREDITORS THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.


 


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15.                                 THE
FACILITY AGENT AND THE SECURITY TRUSTEE


 


15.1       Appointment and Authorization. (a)
Each Lender irrevocably appoints and authorizes the Facility Agent and the
Security Trustee severally each to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction
Documents as are delegated to such Facility Agent or Security Trustee by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto. Each of the Facility Agent and the Security Trustee hereby
accepts such appointment.


 


(b)           Each of the Creditors irrevocably
appoints the Security Trustee as trustee on its behalf with regard to
(i) the security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Creditors or any of
them or for the benefit thereof under or pursuant to this Agreement or any of
the other Transaction Documents (including, without limitation, the benefit of
all covenants, undertakings, representations, warranties and obligations given,
made or undertaken to any Creditor in this Agreement or any of the other
Transaction Documents), (ii) all moneys, property and other assets paid or
transferred to or vested in any Creditor or any agent of any Creditor or
received or recovered by any Creditor or any agent of any Creditor pursuant to,
or in connection with, this Agreement or the other Transaction Documents
whether from any Security Party or any other person and (iii) all money,
investments, property and other assets at any time representing or deriving
from any of the foregoing, including all interest, income and other sums at any
time received or receivable by any Creditor or any agent of any Creditor in
respect of the same (or any part thereof). The Security Trustee hereby accepts
such appointment.


 


15.2       Agents and Affiliates. With
respect to that portion of the Facility made by it, the Facility Agent and the
Security Trustee shall have the same rights and powers under this Agreement as
any other Lender and may exercise or refrain from exercising the same as though
they were not a Facility Agent or Security Trustee and the terms “Lender” and “Lenders”
shall include each Agent in its capacity as a Lender. Each Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with, the Borrowers and the other Security Parties thereof as
if it were not an Agent hereunder.


 


15.3       Action by Agents. The obligations
of the Facility Agent and the Security Trustee hereunder are only those
expressly set forth herein. Without limiting the generality of the foregoing,
no Agent shall be required to take any action with respect to any Event of
Default, except, in the case of the Facility Agent, as expressly provided in
Section 10. The Agents shall be entitled to use their discretion with respect
to exercising or refraining from exercising any rights which may be vested in
it by, and with respect to taking or refraining from taking any action or
actions which it may be able to take under or in respect of, this Agreement and
the other Transaction Documents, unless the Agent shall have been instructed by
the Majority Lenders (or, to the extent provided herein, all of the Lenders) to
exercise such rights or to take or refrain from taking such action; provided,
however, that neither Agent shall not be required to take any action
which exposes it to personal liability or which is contrary to this Agreement
or Applicable Law.


 


15.4       Consultation with Experts. The
Agents may consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it


 


61

















 


and shall not be liable
to any Lender for any action taken or omitted to be taken by it in good faith
in accordance with the advice of such counsel, accountants or experts.


 


15.5       Liability of the Agents. Neither
the Facility Agent, nor the Security Trustee, nor any of their directors,
officers, agents or employees shall be liable to any Lender for any action
taken or not taken by it in connection herewith (a) with the consent or at
the request of the Majority Lenders or (b) in the absence of its own gross
negligence or willful misconduct. Neither the Facility Agent, nor the Security
Trustee, nor any of their directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with this
Agreement or any Advance hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the satisfaction
of any condition specified in Section 3, except receipt of items required to be
delivered to the Facility Agent or Security Trustee; or (iv) the validity,
effectiveness or genuineness of this Agreement, the other Transaction Documents
or any other instrument or writing furnished in connection herewith. The Agents
shall be entitled to assume that this Agreement, the other Transaction
Documents or any other instrument or writing furnished in connection herewith
are valid, effective and genuine, have been signed or sent by the proper
parties and are what they purport to be. Neither the Facility Agent nor the
Security Trustee shall incur any liability by acting in reliance upon any
notice, consent, certificate, statement or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.


 


15.6       Indemnification. Each Lender
shall, ratably in accordance with its Commitment, indemnify each Agent, their
affiliates and their respective directors, officers, agents and employees (to
the extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, judgment,
suit, loss, damage, obligation, penalty, disbursement or liability of any kind
whatsoever (except such as result from such Indemnitee’s gross negligence or
willful misconduct) that such Indemnitees may suffer or incur in connection
with or in any way relating to or arising out of this Agreement or the other
Transaction Documents or that such Indemnitees may suffer or incur in
connection with any action taken or omitted by such Indemnitees hereunder or
thereunder. Without limiting the generality of the foregoing, each Lender
agrees to reimburse the Facility Agent and/or the Security Trustee, as
applicable, promptly upon demand for the ratable share of any out-of-pocket
expenses (including reasonable counsel fees and disbursements) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or waiver of any provision of, or legal advice in
respect of rights or responsibilities under, this Agreement or the other
Transaction Documents, to the extent that the Agent is not reimbursed for such
expenses by the Borrower and to the extent the same does not result from the
gross negligence or willful misconduct of the Agent. Under no circumstances
shall either Agent be obligated to expend its own funds for the protection of
the interests of the Lenders, but the Agents shall be entitled to be
indemnified to its satisfaction hereunder by the Lenders prior to taking any
action or expending any funds hereunder.


 


15.7       Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the Facility Agent,
Security Trustee or any other Lender, and based on such


 


62

















 


documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Facility Agent, the Security
Trustee or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking any action under this Agreement.


 


15.8       Successor Agents. The Facility Agent
and the Security Trustee may resign at any time by giving written notice
thereof to the Lenders and the Borrowers. Upon any such resignation, the
Lenders shall appoint a successor Facility Agent or Security Trustee, as
applicable, subject to the consent of the Borrower, such consent not to be
unreasonably withheld. The Borrower hereby consents to the appointment of any
successor Facility Agent or Security Trustee, as applicable, that is a Creditor
or a first class bank. If no successor Facility Agent or Security Trustee shall
have been so appointed by the Lenders, and shall have accepted such
appointment, within thirty (30) days after the retiring Facility Agent or
Security Trustee gives notice of resignation, then the retiring Facility Agent or
Security Trustee may, on behalf of the Lenders, appoint a successor Facility Agent
or Security Trustee, as applicable, which shall be a bank or trust company of
recognized standing having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as Facility Agent or
Security Trustee hereunder by a successor respective Agent, such successor Facility
Agent or Security Trustee shall thereupon succeed to and become vested with all
the rights and duties of the respective retiring Agent and the respective retiring
Agent shall be discharged from its duties and obligations hereunder. After an
Agent’s resignation hereunder, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was Facility
Agent or Security Trustee, as applicable.


 


15.9       Distribution of Payments. Whenever
any payment is received by the Facility Agent from the Borrowers for the
account of the Lenders, or any of them, whether of principal or interest on the
Note or otherwise, it will thereafter cause like funds relating to such payment
to be promptly distributed ratably to the Lenders according to their respective
Commitments, in each case to be applied according to the terms of this
Agreement. Notwithstanding any other provision of this Agreement, the Facility Agent
(a) may, before making an amount available to a Lender, deduct and
withhold from that amount any sum which is then due and payable to the Facility
Agent from that Lender under this Agreement or any sum which the Facility Agent
is then entitled under this Agreement to require that Lender to pay on demand,
and (b) shall not be obliged to make available to the Borrower or any
Lender any sum which the Facility Agent is expecting to receive for remittance
or distribution to the Borrower or that Lender until the Facility Agent has
satisfied itself that it has received that sum.


 


15.10     Holder of Interest in Note. The Facility
Agent and the Security Trustee may treat each Lender as the holder of all of
the interest of such Lender in the Note unless and until the Facility Agent has
received a copy of an Assignment and Assumption Agreement evidencing the
transfer of all or any part of such Lender’s interest in the Facility.


 


15.11     Assumption re Event of Default. Except
as otherwise provided in Section 15.13, the Facility Agent and the
Security Trustee shall be entitled to assume that no Default or Event


 


63

















 


of Default, has occurred
and is continuing, unless the Facility Agent has been notified by the Borrower
of such fact or has been notified by a Lender that such Lender considers that a
Default or Event of Default (specifying in detail the nature thereof) has
occurred and is continuing. In the event that the Facility Agent shall have
been notified by any party in the manner set forth in the preceding sentence of
any Default or Event of Default, the Facility Agent shall notify the Security
Trustee and the Lenders and shall take such action and assert such rights under
this Agreement and under the other Transaction Documents as the Majority
Lenders (or, to the extent provided herein, all of the Lenders) shall request
in writing.


 


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


 


15.13     Limitations of Liability of Creditors.
None of the Creditors shall be under any liability or responsibility
whatsoever:


 


(a)           to the Borrower or any other person
or entity as a consequence of any failure or delay in performance by, or any
breach by, any other Creditor or any other person of any of its or their
respective obligations under this Agreement or under the other Transaction
Documents;


 


(b)           to any other Creditor as a
consequence of any failure or delay in performance by, or any breach by, the Borrower
of any of its respective obligations under this Agreement or under the other
Transaction Documents; or


 


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


 


16.                                 NOTICES
AND DEMANDS


 


All notices,
requests, demands and other communications to any party hereunder shall be in
writing (including prepaid overnight courier, facsimile transmission or similar
writing) and shall be given to the Borrower and the Facility Agent at their
respective addresses or facsimile numbers set forth below and to any Lender at
the address or facsimile number set forth on Schedule II or at such other
address or facsimile number as such party may hereafter specify for the purpose
by notice to each other party hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile or e-mail, when
such facsimile or e-mail is transmitted to the facsimile number or e-mail
address, as the case may be, specified in this Section and (telephonic, in the
case of a facsimile) confirmation of receipt thereof is obtained or
(ii) if given by mail, prepaid overnight courier or any other means, when
received at the address specified in this Section or when delivery at such
address is refused.


 


If to any Security Party, addressed to it:


 


64

















 


c/o OSG America L.P.


Two Harbour Place


302 Knights Run Avenue, Suite 1200


Tampa, Florida 33602


 


with a copy to


 


OSG Ship Management, Inc.


666 Third Avenue


New York, New York 10017


Attention: Henry Flinter


Telephone: 
(212) 578-1877


Facsimile: 
(212) 578-1670


E-mail: 
hflinter@osg.com


 


If to the Facility Agent:


 


ING Bank N.V.

London Branch

60 London Wall, London


EC2M 5TQ, United Kingdom


Attention: 
Craig Baker


Telephone: 44 20 7767 5617


Facsimile: 
44 20 7767 7324


E-mail: 
craig.baker@uk.ing.com


 


17.                                 LIMITATION
OF LIABILITY/SURVIVAL OF LIABILITY/CONTINUING INDEMNITIES


 


Notwithstanding
anything to the contrary contained in this Agreement, in the event that any
court or other judicial body of competent jurisdiction determines that legal
principles of fraudulent conveyances, fraudulent transfers or similar concepts
are applicable in evaluating the enforceability against any Security Party or
its respective assets of this Agreement and that under such principles, this
Agreement would not be enforceable against such Security Party or its assets
unless the following provisions of this Section 17 had effect, then, the
maximum liability of each Security Party hereunder (the “Maximum Liability
Amount”) shall be limited so that in no event shall such amount exceed the
lesser of (i) the aggregate outstanding principal amount of the Facility and
(ii) an amount equal to the aggregate, without double counting, of (a)
ninety-five percent (95%) of such 
Security Party’s Adjusted Net Worth (as hereinafter defined) on the date
hereof, or on the date enforcement of this Agreement is sought (the “Determination
Date”), whichever is greater and (b) the amount of any Valuable Transfer (as
hereinafter defined) to such Security Party; provided that such Security Party’s
liability under this Agreement shall be further limited to the extent, if any,
required so that the obligations of such Security Party under this Agreement
shall not be subject to being set aside or annulled under any applicable law
relating to fraudulent transfers or fraudulent conveyances. As used herein “Adjusted
Net Worth” of the respective Security Party shall mean, as of any date of
determination thereof, an amount equal to the lesser of (a) an amount equal to
the excess of (i)


 


65

















 


the amount of the present fair saleable value of the assets of such
Security Party over (ii) the amount that will be required to pay such Security
Party’s probable liability on its then existing debts, including contingent
liabilities (exclusive of its contingent liabilities hereunder), as they become
absolute and matured, and (b) an amount equal to (i) the excess of the sum of
such Security Party’s property at a fair valuation over (ii) the amount of all
liabilities of such Security Party, contingent or otherwise (exclusive of its
contingent liabilities hereunder), as such terms are construed in accordance
with applicable laws governing determinations of the insolvency of debtors. In
determining the Adjusted Net Worth of a Security Party for purposes of
calculating the Maximum Liability Amount for such Security Party, the
liabilities of such Security Party to be used in such determination pursuant to
each clause (ii) of the preceding sentence shall in any event exclude (a) the
liability of such Security Party under this Agreement and (b) the liabilities
of such Security Party subordinated in right of payment to this Agreement. As
used herein “Valuable Transfer” shall mean, in respect of such Security Party,
(a) all loans, advances or capital contributions made to such Security Party
with proceeds of the Facility, (b) all debt securities or other obligations of
such Security Party acquired from such Security Party or retired by such
Security Party with proceeds of the Facility, (c) the fair market value of all
property acquired with proceeds of the Facility and transferred, absolutely and
not as collateral, to such Security Party, (d) all equity securities of such
Security Party acquired from such Security Party with proceeds of the Facility,
and (e) the value of any other economic benefits in accordance with applicable
laws governing determinations of the insolvency of debtors, in each such case
accruing to such Security Party as a result of the Facility and this Agreement.


 


18.                                 MISCELLANEOUS


 


18.1       Time of Essence. Time is of the
essence under this Agreement, but no failure or delay on the part of any
Creditor to exercise any power or right under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise by any Creditor of any
power or right hereunder preclude any other or further exercise thereof or the
exercise of any other power or right. The remedies provided herein are
cumulative and are not exclusive of any remedies provided by law.


 


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


 


18.3       References. References herein to
Articles, Sections (or subdivisions of Sections), Schedules, Annexes or
Exhibits are to be construed as references to articles, sections (or
subdivisions of sections) of, and schedules, annexes or exhibits to, this
Agreement or the other Transaction Documents, as applicable, unless the context
otherwise requires.


 


18.4       Further Assurances. Each of the
Security Parties hereby agrees that if this Agreement or the other Transaction
Documents shall at any time be deemed by the Lenders for any reason
insufficient in whole or in part to carry out the true intent and spirit hereof
or thereof, it will execute or cause to be executed such other and further
assurances and documents as in


 


66

















 


the opinion of the
Lenders may be required in order more effectively to accomplish the purposes of
this Agreement and/or the other Transaction Documents.


 


18.5       Prior Agreements, Merger. Any and
all prior understandings and agreements heretofore entered into between
the Borrower on the one part and the Creditors on the other part, whether
written or oral, are superseded by and merged into this Agreement and the other
Transaction Documents as to the subject matter hereof or thereof, which alone
fully and completely express the agreements between the Borrower and the
Creditors as to such subject matter.


 


18.6       Entire Agreement, Amendments. This
Agreement, the Note and the other Transaction Documents constitute the entire
agreement of the parties hereto as to the subject matter hereof or
thereof, including all parties added hereto pursuant to an Assignment and
Assumption Agreement. Any provision of this Agreement, the Note or the other
Transaction Documents may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Majority Lenders
(and, if the rights or duties of the Facility Agent are affected thereby, by
the Facility Agent); provided that no amendment or waiver shall, unless
signed by all the Lenders, (a) increase or decrease the Commitment of any
Lender or subject any Lender to any additional obligation, (b) reduce the
principal of or rate of interest on any Advance or any fees hereunder or any
Letter of Credit reimbursement or any fees or other amounts hereunder,
(c) postpone the date fixed for any payment of principal of or interest on
any Advance or any fees hereunder or for any termination of any Commitment,
(d) amend Section 10, (e) waive any condition precedent to the
making of an Advance (other than the condition precedent set forth in Section
3.2(a)), (f) release any collateral, (g) consent to the assignment or transfer
by the Borrower of any of their rights and obligations under this Agreement or
the other Transaction Documents or (h) amend or modify the definition of “Majority
Lenders” or this Section 18.6.


 


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


 


18.8       Survival. The obligations of the
Borrower under Sections 6, 10.2, 12 and 13 shall survive the termination of
this Agreement and the payment in full of all obligations hereunder.


 


18.9       Confidentiality. The Creditors
shall hold all non-public information (either in the form of non-public
documentation relating to the Facility or which otherwise has been identified
as non-public information by the Borrower) obtained pursuant to the
requirements of this Agreement confidential for so long as such information
remains non-public in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event shall have the right to make disclosure
(1) to any of their respective examiners, Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement, (2) as
reasonably required by any bona  fide transferee or Participant,
to a potential bona  fide transferee or Participant, (3) as
required or requested by any Authority or pursuant to legal process,
(4) as required by Applicable Law or (5) in connection with any
litigation to which both a Creditor and the Borrower are parties; provided,
however, that


 


67

















 


(a)           unless specifically prohibited by
Applicable Law or court order, such Facility Agent or Lender shall notify the
Borrower of any request by any Authority (other than any such request in
connection with an examination of the financial condition of such Facility Agent
or Lender by such Authority) for disclosure of any such non-public information
as soon as possible after any such request;


 


(b)           any such bona fide transferee or
Participant by their acceptance of such assignment or participation shall be
deemed to have agreed (i) to be bound by this Section 18.9 and (ii) to require
any other Person to whom such transferee or Participant discloses such
non-public information to be similarly bound by this Section 18.9;


 


(c)           the Creditors shall require any
potential bona fide transferee or Participant to whom the Creditors may
disclose such non-public information to be bound by a confidentiality agreement
containing provisions substantially identical to this Section 18.9 (except
that such Person shall be obligated to return any materials furnished by the
Borrower if it does not become a transferee or Participant) or incorporating the
same by reference;


 


(d)           except as may be required by an order
of a court of competent jurisdiction and to the extent set forth therein (but
in such case, the Creditors may retain any materials furnished by the Borrower
in accordance with their customary credit or document retention policies), the
Creditors shall not be obligated or required to return any materials furnished
by the Borrower; and


 


(e)           the Creditors shall not be bound by
the terms of this Section 18.9 with respect to any information which has become
or becomes publicly known or available through means other than a breach of
this Agreement.


 


18.10     Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute one and the same
instrument.


 


18.11     WAIVER OF IMMUNITY. TO THE EXTENT
THAT ANY SECURITY PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT,
JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR
FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY,
SUCH SECURITY PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.


 


68

















 


[Signature pages to follow]


 


69

















 


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


 


	
   

  	
  OSG AMERICA OPERATING COMPANY LLC,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OSG AMERICA L.P.,

  
	
   

  	
  as joint and several Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                        ,

  
	
   

  	
  as joint and several Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                        ,

  
	
   

  	
  as joint and several Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                        ,

  
	
   

  	
  as joint and several Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
											



 

















 


	
   

  	
  ING BANK N.V., London Branch

  
	
   

  	
  as Facility Agent, Security Trustee, MLA,

  Bookrunner, Issuing Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DNB NOR BANK ASA,

  
	
   

  	
  as MLA, Bookrunner and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: