Exhibit 10.4


 


Part I


 


SHIP
MANAGEMENT AGREEMENT


 


	
  1.

  	
  Date of Agreement

  
	
   

  	
   

  
	
   

  	
  November       ,
  2007

  
	
   

  	
   

  
	
  2.

  	
  Owners (name, place of
  registered office and law of registry) (Cl. 1)

  
	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  OSG
  America L.P. and the Owners of the Managed Vessels (as indicated below)

  
	
   

  	
   

  
	
   

  	
  Place of registered office

  
	
   

  	
  c/o OSG
  America LLC, Two Harbour Place, 302 Knights Run Avenue, Tampa FL 33602

  
	
   

  	
   

  
	
   

  	
  Law of registry

  
	
   

  	
  United
  States

  
	
   

  	
   

  
	
  3.

  	
  Managers (name, place of
  registered office and law of registry) (Cl. 1)

  
	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
  OSG Ship Management, Inc.

  
	
   

  	
   

  
	
   

  	
  Place of registered office

  
	
   

  	
  Two
  Harbour Place, 302 Knights Run Avenue, Tampa FL  33602

  
	
   

  	
   

  
	
   

  	
  Law of registry

  
	
   

  	
  United
  States

  
	
   

  	
   

  
	
  4.

  	
  Day and year of
  commencement of Agreement (Cl. 2)

  
	
   

  	
   

  
	
   

  	
  See
  Clause 20

  
	
   

  	
   

  
	
  5.

  	
  Crew management (state “yes”
  or “no” as agreed) (Cl. 3.1)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  6.

  	
  Technical Management
  (state “yes” or “no” as agreed) (Cl. 3.2)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  7.

  	
  Commercial Management
  (state “yes” or “no” as agreed) (Cl. 3.3)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  8.

  	
  Insurance Arrangements
  (state “yes” or “no” as agreed) (Cl. 3.4)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  9.

  	
  Accounting Services (state
  “yes” or “no” as agreed) (Cl. 3.5)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  10.

  	
  Sale or purchase of the
  Vessel (state “yes” or “no” as agreed) (Cl. 3.6)

  
	
   

  	
   

  
	
   

  	
  No

  
	
   

  	
   

  
	
  11.

  	
  Provisions (state “yes” or
  “no” as agreed) (Cl. 3.7)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  12.

  	
  Bunkering (state “yes” or “no”
  as agreed) (Cl. 3.8)

  
	
   

  	
   

  
	
   

  	
  Yes

  
	
   

  	
   

  
	
  13.

  	
  Chartering Services Period
  (only to be filled in if “yes” stated in Box 7) (Cl. 3.3(i))

  



 

















 


	
   

  	
  The
  duration of this Agreement until terminated pursuant to Clauses 17 and 20.

  
	
   

  	
   

  
	
  14.

  	
  Owners’ Insurance (state
  alternative (i), (ii) or (iii) of Cl. 6.3)

  
	
   

  	
   

  
	
   

  	
  See Cl.
  6.3(ii)

  
	
   

  	
   

  
	
  15.

  	
  Annual Management Fee (state annual amount (Cl. 8.1)

  
	
   

  	
   

  
	
   

  	
  See
  Clause 30

  
	
   

  	
   

  
	
  16.

  	
  Severance Costs (state
  maximum amount) (Cl. 8.4(ii))

  
	
   

  	
   

  
	
   

  	
  See Cl.
  8.3

  
	
   

  	
   

  
	
  17.

  	
  Day and year of
  termination of Agreement (Cl. 17)

  
	
   

  	
   

  
	
   

  	
  See
  Clauses 17 and 20

  
	
   

  	
   

  
	
  18.

  	
  Law and Arbitration (state
  alternative 19.1, 19.2 or 19.3; if 19.3 place of
  abritration must be stated) (Cl. 19)

  
	
   

  	
   

  
	
   

  	
  See
  Clause 18

  
	
   

  	
   

  
	
  19.

  	
  Notices (state postal and
  cable address, telex and telefax number for serving notice and communication to
  the Owners (Cl. 20)

  
	
   

  	
   

  
	
   

  	
  OSG
  America L.P.

  
	
   

  	
  c/o OSG America LLC

  
	
   

  	
  Two
  Harbour Place

  
	
   

  	
  302
  Knights Run Avenue

  
	
   

  	
  Tampa FL
  33602

  
	
   

  	
   

  
	
  20.

  	
  Notices (state postal and
  cable address, telex and telefax number for serving notice and communication to
  the Managers) (Cl. 20)

  
	
   

  	
   

  
	
   

  	
  OSG Ship
  Management, Inc.

  
	
   

  	
  Two
  Harbour Place

  
	
   

  	
  302
  Knights Run Avenue

  
	
   

  	
  Tampa FL
  33602

  



 


 


	
  Signature(s) (Owners)

  	
   

  	
  Signature(s) (Managers)

  



 


 

















 


ANNEX “A”
(DETAILS OF VESSEL OR VESSELS) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT – CODE NAME: “SHIPMAN 98”


 


 


Date of Agreement

November             ,
2007


 


Name of Vessels (s):


 


Particulars of Vessels(s):


 

















 


ANNEX “B”
(DETAILS OF CREW) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT – CODE NAME: “SHIPMAN 98”


 


 


Date of Agreement

November             ,
2007


 


Details of Crew:


 


	
  Numbers

  	
  Rank

  	
  Nationality

  



 

















 


ANNEX “C”
(BUDGET) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT – CODE NAME: “SHIPMAN 98”


 


 


Date of Agreement

November             ,
2007


 


Managers’ Budget for the
first year with effect from the Commencement Date of this Agreement:


 

















 


ANNEX “D”
(ASSOCIATED VESSELS) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT – CODE NAME: “SHIPMAN 98”


 


 


NOTE:  PARTIES SHOULD BE AWARE THAT BY COMPLETING
THIS ANNEX “D” THEY WILL BE SUBJECT TO THE PROVISIONS OF SUB-CLAUSE 18.1(i) OF
THIS AGREEMENT.


 


Date of Agreement

November             ,
2007


 


Details of Associated
Vessels:


 

















 


PART II


Ship Management Agreement


 


1.                Definitions


 


In
this Agreement save where the context otherwise requires, the following words
and expressions shall have the meanings hereby assigned to them.


 


“Operating Costs” means all costs incurred in providing provisions and crew (including
crew support costs, as defined below), commercial and technical management for
the Vessels, as more fully described in Clause 3, and the cost of insuring
Vessels, as more fully described in Clauses 3 and 6.


 


“Owners” means the parties identified in Box 2.


 


“Managers” means the party identified in Box 3.


 


“Vessel” or “Vessels” means each
of the vessels, singularly or collectively, as the case may be, identified in Exhibit A
hereto, which may, from time to time, be amended (see Clauses 17.3 and 24).


 


 “Crew” means the Master, officers and ratings of
the Vessels.


 


“Crew Support Costs” means all expenses of a general nature which
are not particularly referable to any individual vessel for the time being
managed by the Managers and which are incurred by the Managers for the purpose
of providing an efficient and economic management service and, without
prejudice to the generality of the foregoing, shall include the cost of crew
standby pay, training schemes for officers and ratings, cadet training schemes,
sick pay, study pay, recruitment and interviews.


 


“Severance Costs” means the costs which the employers are legally obliged to pay to or
in respect of the Crew as a result of the early termination of any employment
contract for service on the Vessel.


 


 ”Crew Insurances” means insurances against crew risks which
shall include but not be limited to death, sickness, repatriation, injury,
shipwreck unemployment indemnity and loss of personal effects.


 


“Management Services” means the services specified in subclauses
3.1 to 3.8 as indicated affirmatively in Boxes 5 to 12.


 


“ISM Code” means the International Management Code for the Safe Operation of
Ships and for Pollution Prevention as adopted by the International Maritime
Organization (IMO) by resolution A.741(18) or any subsequent amendment thereto.


 


“STCW 95” means the International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any
subsequent amendment thereto.


 


2.                Appointment of Managers


 


With
effect from the day and year provided in Clause 20 and continuing unless and
until terminated as provided herein, the Owners hereby appoint the Managers and
the Managers hereby agree to act as the Managers of the Vessels.


 


3.                Basis of Agreement


 


Subject
to the terms and conditions herein provided, during the period of this
Agreement, the Managers shall carry out Management Services (as defined in
Clause 3) in respect of the Vessels as agents for and on behalf of the
Owners.  The Managers shall have authority to take such actions as they
may from time to time in their absolute discretion consider to be necessary to
enable them to perform this Agreement in accordance with sound ship management
practice.


 


3.1     Crew Management


 


(only applicable if agreed according to Box 5)


 


The
Managers shall provide suitably qualified Crew for the Vessels in accordance
with the STCW 95 requirements, provision of which includes but is not limited
to the following functions:


 


(i)                                                           selecting and engaging each Vessel’s Crew,
including payroll arrangements, pension administration, severance costs and
Crew insurances other than those mentioned in Clause 6;


 

















 


(ii)                                                        ensuring that the applicable requirements of
the law of the flag of the Vessel are satisfied in respect of manning levels,
rank, qualification and certification of the Crew and employment regulations
including Crew’s tax, social insurance, discipline and other requirements;


 


(iii)                                                     ensuring that all members of the Crew have
passed a medical examination with a qualified doctor certifying that they are
fit for the duties for which they are engaged and are in possession of valid
medical certificates issued in accordance with appropriate flag State
requirements.  In the absence of applicable flag State requirements the
medical certificate shall be dated not more than three months prior to the
respective Crew members leaving their country of domicile and maintained for
the duration of their service on board the Vessel;


 


(iv)                                                    ensuring that the Crew shall have a command
of the English language of a sufficient standard to enable them to perform
their duties safely;


 


(v)                                                       arranging transportation and, when necessary,
meals and lodging of the Crew, including repatriation;


 


(vi)                                                    training of the Crew and supervising their
efficiency;


 


(vii)                                                 conducting union negotiations and maintaining
complete records of all labor agreements entered into between the Owners and
the Crew;


 


(viii)                                              operating the Managers’ drug and alcohol
policy unless otherwise agreed; and


 


(ix)                                                      maintaining all administrative, training and
financial records relating to the Crew, as required by law, labor agreements
and prudent management practices.


 


3.2     Technical Management


 


(only applicable if agreed according to Box 6)


 


The
Managers shall provide technical management which includes, but is not limited
to, the following functions:


 


(i)                                                           provision of competent personnel to supervise
the maintenance and general efficiency of the Vessels;


 


(ii)                                                        arrangement and supervision of dry dockings,
repairs, alterations and the upkeep of the Vessels in conformity with prudent
management practices and standards.  The
Managers shall be entitled to incur the necessary expenditure to ensure that
the Vessels will comply with the law of the flag of each Vessel and of the
places where she trades, and all requirements and recommendations of the
classification society;


 


(iii)                                                     arrangement of the supply of necessary
stores, spares, fresh water, lubricating oil and greases.  The level and
time of the supply of such items shall be based on that which a prudent owner
of a vessel of the age and characteristics of the Vessel (including but not
limited to its operating history, planned maintenance and known wear and tear)
would arrange so as to minimize off-hire time and to undertake such maintenance
as may safely be carried out at sea by the crew;


 


(iv)                                                    appointment of surveyors and technical
consultants and service engineers as the Managers may consider from time to
time to be necessary;


 


(v)                                                       development, implementation and maintenance
of a Safety Management System (SMS) in accordance with the ISM Code (see
subclause 4.2  and 5.3);


 


(vi)                                                    ensuring that the Vessels receive at least
two visits per year from one of the Managers’ technical superintendents;


 


(vii)                                                 arrangement of oil company vettings so as to
comply with the Owner’s obligations under any charters of the Vessels; and


 


(viii)                                             provide oil pollution incident and marine
casualty response planning and management services, as detailed in Clause 29.


 

















 


3.3                   Commercial Management


 


(only applicable if agreed according to Box 7)


 


The
Managers shall provide the commercial operation of the Vessels, which includes,
but is not limited to, the following functions:


 


(i)                                                             providing chartering services which include,
but are not limited to, seeking and negotiating employment for the Vessel and
the conclusion (including the execution thereof) of charter parties or other contracts
relating to the employment of the Vessel. 
If such a contract exceeds the period stated in Box 13, consent
thereto in writing shall first be obtained from the Owners.


 


(ii)                                                          arranging of the proper payment to Owners or
their nominees of all hire and/or freight revenues or other moneys of
whatsoever nature to which Owners may be entitled arising out of the employment
of or otherwise in connection with the Vessels.


 


(iii)                                                       providing voyage estimates and accounts and calculating of hire,
freights, demurrage and/or despatch moneys due from or due to the charterers of
the Vessels;


 


(iv)                                                      invoicing hire, freight, demurrage and other accounts or debts due from
the Vessels’ charterers, arranging for payment of accounts due Vessels’
charterers and otherwise settling all accounts as between the Owners and the
Vessels’ charterers;


 


(v)                                                         issuing of voyage instructions;


 


(vi)                                                      arranging for the appointment of Vessel agents in each load and
discharge port to arrange for necessary Vessel services, including, without
limitation, arrangements for port entrance and clearance, pilots, consular
approvals, tugs, canal transits, the payment of port-related disbursements and
generally looking after and protecting the Owners’ interests in such port;


 


(vii)                                                   appointing stevedores; preparing, issuing or causing to be issued, to
shippers, cargo receipts and/or bills of lading; and


 


(viii)                                                arranging surveys associated with the commercial operation of the
Vessels.


 


3.4     Insurance Arrangements


 


(only applicable if agreed according to Box 8)


 


The
Managers shall arrange insurances in accordance with Clause 6, subject to
the following:


 


Throughout
the term of this Agreement, the Managers shall secure coverage for the Owners’
Insurances (as defined in Clause 6.1) for the Vessels at the Owners’ expense
through the Managers’ insurance program on coverage amounts (except for hull
and machinery insurance in which is subject to Clause 6.6 of this Agreement),
terms and conditions that the Managers shall determine.  The Managers
shall obtain insurance coverage for the Vessels through the Managers’ insurance
program that is in accordance with the best practice of prudent managers of
vessels of a similar type to the Vessels, with first class insurance companies,
underwriters or associations.


 


The
Managers shall arrange for the Owners’ Insurances to be in place as of the
effective date of this Agreement and shall maintain the insurance cover
existing immediately prior to such effective date at least until the discharge
of the cargo from its then current voyage.


 


3.5    Accounting Services


 


(only applicable if agreed according to Box 9)


 


The
Managers shall:


 


 (i)                                                          establish an accounting system which conforms
with prudent vessel management practices and standards and provide regular
accounting services, supply regular reports and records.


 


(ii)                                                          maintain the records of all costs and
expenditures incurred as well as data necessary or proper for the settlement of
accounts between the parties.


 

















 


3.6     Sale or Purchase of the
Vessel


 


(only applicable if agreed according
to  Box 10)


 


N/A.


 


3.7     Provisions


 


(only applicable if agreed according to Box 11)


 


The
Managers shall arrange for the supply of provisions.


 


3.8     Bunkering


 


 (only applicable if agreed according to  Box 12)


 


The
Managers shall arrange for the provision of bunker fuel of the quality required
for the Vessel’s trade and which is consistent with prudent vessel management
practices.


 


4.                Managers’ Obligations


 


4.1     The Managers undertake to use their best
endeavours to provide the agreed Management Services as agents for and on
behalf of the Owners in accordance with sound ship management practice
customary in the trade and at least equivalent to the standards followed with
respect to other vessels for which the Managers provide management services, if
any, and to protect and promote the interests of the Owners in all matters
relating to the provision of services hereunder.  Provided, however, that
the Managers in the performance of their management responsibilities under this
Agreement shall be entitled to have regard to their overall responsibility in
relation to all vessels as may from time to time be entrusted to their
management and in particular, but without prejudice to the generality of the
foregoing, the Managers shall be entitled to allocate available supplies,
manpower and services in such manner as in the prevailing circumstances the
Managers in their absolute discretion consider to be fair and reasonable.


 


4.2     Where the Managers are providing Technical
Management in accordance with sub-clause 3.2, they shall procure
that the requirements of the law of the flag of the Vessel are satisfied and
they shall in particular be deemed to be the “Company” as defined by the ISM
Code, assuming the responsibility for the operation of the Vessels and taking
over the duties and responsibilities imposed by the ISM Code when applicable.


 


4.3     The Managers shall maintain records of
technical matters relating to the Vessels including maintenance, repairs and
equipment replacement (“Technical Vessel Matters”).   Three months
after commencement of the Management Services, and quarterly thereafter, the
Managers shall issue a report to the Owners providing a summary of the
Technical Vessel Matters carried out in the previous quarter.


 


5.                Owners’ Obligations


 


5.1     The Owners shall pay all sums due to the
Managers punctually in accordance with the terms of this Agreement.


 


6.                Insurance Policies


 


For
so long as the Managers continue to place the Owners’ Insurances (as defined
below) on behalf of the Owners in accordance with Clause 3.4 of this Agreement,
the Managers shall procure that:


 


6.1     at the Owners’ expense, each of the Vessels
is insured for not less than her sound market value or entered for her full
gross tonnage, as the case may be for:


 


(i)                                                           usual hull and machinery marine risks
(including crew negligence) and excess liabilities;


 


(ii)                                                        protection and indemnity risks (including
pollution risks and Crew Insurances); and


 


(iii)                                                     war risks (including protection and indemnity
and crew risks) in accordance with the best practice of prudent owners of
vessels of a similar type to the Vessel, with first class insurance companies,
underwriters or associations (collectively, as described in Clause 6.1(i), (ii) and
(iii), the “Owners’ Insurances”);


 


6.2     all premiums and calls on the Owners’
Insurances are paid by their due date at Owners’ expense.   The Owners shall be responsible and liable
for, and shall promptly pay the deductible of any insurance claim relating to
or arising out of the operation or 


 

















 


management
of the Vessels.  The Owners shall be
responsible and liable for the allocated cost of any broker’s fee paid by the
Managers as determined by the Managers on a fair and equitable basis.


 


6.3     the Owners’ Insurances name the Managers and,
subject to underwriters’ agreement, any third party designated by the Managers
as a joint assured, with full cover, with the Owners obtaining cover in respect
of each of the Owners’ Insurances specified in sub-clause 6.1:


 


(i)                                                           If reasonably obtainable, on terms such that
neither the Managers nor any such third party shall be under any liability in
respect of premiums or calls arising in connection with the Owners’ Insurances;
or


 


Indicate alternative (i), (ii) or (iii) in Box 14.  If Box 14 is left blank then (i) applies.


 


6.4     written evidence is provided, to the
reasonable satisfaction of the Owners, of the Managers’ compliance with their
obligations under Clause 6 
within a reasonable time of the commencement of the Agreement, and of
each renewal date and, if specifically requested, of each payment date of the
Owners’ Insurances.


 


6.5     loss of hire insurance is maintained in
accordance with Clause 27.


 


6.6     the Managers shall obtain a certificate of
financial responsibility in accordance with the terms of any charter, and any
costs relating to such certificate shall be for the Owners’ account.


 


7.                Income Collected and
Expenses Paid on Behalf of Owners


 


7.1     All moneys collected by the Managers under
the terms of this Agreement (other than moneys payable by the Owners to the
Managers) and any interest thereon shall be held to the credit of the Owners in
a separate bank account.


 


7.2     All expenses incurred by the Managers under
the terms of this Agreement on behalf of the Owners (including expenses as
provided in Clause 8 ) may be debited against the Owners in the
account referred to under sub-clause 7.1  but shall in any event remain payable by the
Owners to the Managers on demand.


 


8.                Termination Payments


 


8.1     In the event of the appointment of the
Managers being terminated by the Owners or the Managers in accordance with the
provisions of Clauses 17 and 20 other than by reason of default by the
Managers, or if the Vessels are lost, sold or otherwise disposed of, all other
expenses which became due and payable to the Managers through the date of
termination, including all severance costs, shall be immediately due and
payable.


 


9.                Budgets and Management of
Funds


 


9.1     The Managers shall prepare annually a Budget
estimating the annual Operating Costs for the following twelve months.  Such budget shall include the estimated cost
of anticipated drydockings schedule to be performed on the Vessels during
the particular year covered by the Budget. 
The budget for the first year hereof is set out in Annex “C”
hereto.  Subsequent annual budgets shall
be prepared by the Managers not less than three months before the anniversary
date of the commencement of this Agreement (see Clause 2 and Box 4).


 


9.2     Following its preparation of the budget, the
Managers shall prepare their estimate of the working capital requirement of the
Vessels and the Managers shall each month up-date this estimate.  Based thereon, the Managers shall each month
request the Owners in writing for the funds required to operate the Vessels for
the ensuing month and payment of any occasional or extraordinary item of
expenditure, as described in Clauses 25, 26 and 28, additional insurance
premiums, bunkers or provisions or any other unbudgeted Operating Cost
reasonably or necessarily incurred by the Managers in the operation of the
Vessels.  Such funds shall be received by
the Managers within ten running days after the receipt by the Owners of the
Managers’ written request and shall be held to the credit of the Managers in a
separate bank account.  As provided in
Clause 7.2, the Managers may debit all expenses incurred by the Managers under
this Agreement against this account.


 


9.3     The Managers shall produce a comparison
between budgeted and actual income and expenditure of the Vessels monthly or at
such other intervals as determined by the Managers.


 


9.4     The Managers shall, at no extra cost to the
Owners, provide their own office accommodations, office staff, facilities and
stationery.


 


9.5     All discounts and commissions obtained by the
Managers in the course of the management of the Vessels shall be credited to
the Owners.


 

















 


9.6     Notwithstanding anything contained herein to
the contrary, the Managers shall in no circumstances be required to use or
commit their own funds to finance the provision of the Management Services.


 


10.         Managers Right to Sub-Contract


 


The
Managers shall have the right to sub-contract any of their obligations
hereunder and may (i) freely assign any obligations hereunder to any
affiliate of the Managers at any time and (ii) utilize the services of
third parties to fulfill the Managers’ obligations hereunder.  In the
event of such a sub-contract the Managers shall remain fully liable for the due
performance of their obligations under this Agreement.


 


11.          Responsibilities


 


11.1   Force
Majeure -
Neither the Owners nor the Managers shall be under any liability for any
failure to perform any of their obligations hereunder by reason of any cause
whatsoever of any nature or kind beyond their reasonable control.


 


11.2   Liability
to Owners
- (i) Without prejudice to sub-clause 11.1, the Managers shall be
under no liability whatsoever to the Owners for any loss, damage, delay or
expense of whatsoever nature, whether direct or indirect, (including but not
limited to loss of profit arising out of or in connection with detention of or
delay to the Vessels) and howsoever arising in the course of performance of the
Management Services UNLESS same is
proved to have resulted solely from the gross negligence or wilful default of
the Managers or their employees, or agents or sub-contractors employed by them
in connection with the Vessels, in which case (save where loss, damage,
delay or expense has resulted from the Managers’ personal act or omission
committed with the intent to cause same or recklessly and with knowledge that
such loss, damage, delay or expense would probably result)  the Managers’
liability for each incident or series of incidents giving rise to a claim or
claims shall never exceed $50,000.


 


(ii)  Notwithstanding
anything that may appear to the contrary in this Agreement, the Managers shall
not be liable for any of the actions of the Crew, even if such actions are
negligent, grossly negligent or wilful, except only to the extent that they are
shown to have resulted from a failure by the Managers to discharge their
obligations under sub-clause 3.1, in which case their liability
shall be limited in accordance with the terms of this Clause 11.   The Managers shall not, under any
circumstances be liable for any losses, costs, claims, liabilities and expenses
which the Owners may sustain as a consequence of such pre-existing or latent
defects in the Vessels, their systems, equipment and machinery.


 


11.3   Indemnity - Except to the extent and solely for the
amount therein set out that the Managers would be liable under sub-clause 11.2
, the Owners hereby undertake to keep the Managers and their employees, agents
and sub-contractors indemnified and to hold them harmless against all actions,
proceedings, claims, demands or liabilities whatsoever or howsoever arising
which may be brought against them or incurred or suffered by them arising out
of or in connection with the performance of the Agreement, including, without
limitation, all actions, proceedings, claims, demands or liabilities brought
under or relating to the U.S. Oil Pollution Act. CERCLA and any other
environmental or pollution liability or compensation laws, regulations or
conventions of any jurisdiction, and against and in respect of all costs,
losses, damages and expenses (including legal costs and expenses on a full
indemnit y basis) which the Managers may suffer or incur (either directly or
indirectly) in the course of the performance of this Agreement.


 


11.4   The Owners further undertake to indemnify the
Managers, their employees, agents and sub-contractors against all taxes, imposts,
fines and duties levied by any government as a result of the Vessels’
operations, regardless of whether such taxes, imposts, fines and duties are
levied on the Vessels, the Owners or the Managers.  Such indemnity shall not apply to taxes
imposed on amounts paid to the Managers as consideration for the Management
Services it shall provide under the terms of this Agreement.


 


11.5    The
provisions and undertakings of this Clause 11 shall remain in force
notwithstanding the termination of this Agreement pursuant to Clauses 17 and
20.


 


11.6   ”Himalaya” - It is hereby expressly agreed that no
employee or agent of the Managers (including every sub-contractor from time to
time employed by the Managers) shall in any circumstances whatsoever be under
any liability whatsoever to the Owners for any loss, damage or delay of
whatsoever kind arising or resulting directly or indirectly from any act,
neglect or default on his part while acting in the course of or in connection
with his employment and, without prejudice to the generality of the foregoing
provisions in this Clause 11, every exemption, limitation,
condition and liberty herein contained and every right, exemption from
liability, defence and immunity of whatsoever nature applicable to the Managers
or to which the Managers are entitled hereunder shall also be available and
shall extend to protect every such employee or agent of the Managers acting as
aforesaid and for the purpose of all the foregoing provisions of this Clause 11
the Managers are or shall be deemed to be acting as agent or trustee on behalf of
and for the benefit of all persons who are or might be their servants or agents
from time to time (including sub-contractors as aforesaid) and all such persons
shall to this extent be or be deemed to be parties to this Agreement.


 

















 


12.          Documentation


 


Where
the Managers are providing Technical Management in accordance with
sub-clause 3.2 and/or Crew Management in accordance with
sub-clause 3.1, they shall maintain all documentation and records
related to the Safety Management System (SMS) and/or the Crew which the Owners
need in order to demonstrate compliance with the ISM Code and STCW 95 or
to defend a claim against a third party.  The Owners shall make available,
upon the Managers’ request, all information, documentation and records required
under any flag state law, regulation or international convention and to inform
the Managers of any changes to those of the Owner’s details that are required
in the Vessels’ continuous synopsis record for the purposes of the ISPS Code.


 


13.         General Administration


 


13.1   The Managers shall handle and settle all
first-party and third-party claims arising out of the operation of the Vessels
as provided hereunder including the settlement of any claims relating to general
average or total constructive loss.


 


13.2   The Managers shall bring or defend and
negotiate settlement of actions, suits or proceedings in connection with
matters entrusted to the Managers according to this Agreement.


 


13.3   The Managers shall appoint average adjusters
and arrange for assistance in preparing average accounts, taking security for
cargo’s and freights proportion of average. 
The Managers shall also have power to obtain legal or technical or other
outside expert advice in relation to the handling and settlement of claims and
disputes or all other matters affecting the interests of the Owners in respect
of the Vessels and shall arrange for the provision of any necessary guarantee
bond or other security.


 


13.4   Any
costs reasonably incurred by the Managers in carrying out their obligations
according to Clause 13 shall be reimbursed by the Owners.


 


13.5   The Managers are authorized to receive sums
payable by third parties to the Owners, including, but not limited to the
proceeds of insurance, the settlement of claims and under any legal proceedings
or arbitrations or any settlement of claims.  Where the event(s) which
form the subject of such claims have caused the Managers expense under this
Agreement, the Managers are entitled to retain all or part of such settlements
equal to the amount expended by the Managers.


 


14.         Auditing


 


The
Managers shall at all times maintain and keep true and correct accounts and
shall make the same available for inspection and auditing by the Owners at such
times as may be mutually agreed.  On the
termination, for whatever reasons, of this Agreement, the Managers shall
release to the Owners, if so requested, the originals where possible, or
otherwise certified copies, of all such accounts and all documents specifically
relating to the Vessels and their operation.


 


15.         Compliance with Laws and
Regulations


 


The
Managers will not do or permit to be done anything which might cause any breach
or infringement of the laws and regulations of the Vessels’ flag, or of the places
where they trade.


 


16.         Duration of the Agreement


 


This
Agreement shall come into effect in accordance with Clause 2 and terminate
in accordance with Clauses 17 and 20.


 


17.          Termination


 


17.1   Owners’
default


 


(i)                                                           The Managers shall be entitled to terminate
the Agreement with immediate effect by notice in writing if any moneys payable
by the Owners under this Agreement shall not have been received in the Managers’
nominated account within ten running days of receipt by the Owners of the
Managers’ written request or if the Vessel is repossessed by the Mortgagees.


 


(ii)                                                        If the Owners: proceed with the employment of
or continue to employ the Vessel in the carriage of contraband, blockade
running, or in an unlawful trade, or on a voyage which in the reasonable
opinion of the Managers is unduly hazardous or improper, the Managers may give
notice of the default to the Owners, requiring them to remedy it as soon as
practically possible.  In the event that the Owners fail to remedy it
within a reasonable time to the satisfaction of the Managers, the Managers
shall be entitled to terminate the Agreement with immediate effect by notice in
writing.


 

















 


17.2     Managers’ Default


 


If
the Managers fail to meet their obligations under Clauses 3 and 4
of this Agreement for any reason within the control of the Managers, the Owners
may give notice to the Managers of the default, requiring them to remedy it as
soon as practically possible.  In the event that the Managers fail to
remedy it within a reasonable time to the satisfaction of the Owners, the
Owners shall be entitled to terminate the Agreement with immediate effect by
notice in writing.


 


17.3     Extraordinary Termination


 


This
Agreement shall be deemed to be terminated with respect to any particular
Vessel that is sold or which becomes a total loss or is declared as a
constructive or compromised or arranged total loss or is requisitioned.  Any such Vessel shall be deemed striken from Exhibit A,
as of the date and time of its sale or loss.


 


17.4     For the purpose of sub-clause 8.3
hereof


 


(i)                                                           the date upon which the Vessel is to be
treated as having been sold or otherwise disposed of shall be the date on which
the Owners cease to be registered as Owners of the Vessel;


 


(ii)                                                        the Vessel shall not be deemed to be lost
unless either she has become an actual total loss or agreement has been reached
with her underwriters in respect of her constructive, comprised or arranged
total loss or if such agreement with her underwriters is not reached it is
adjudged by a competent tribunal that a constructive loss of the Vessel has
occurred.


 


17.5     This Agreement shall terminate forthwith in
the event of an order being made or resolution passed for the winding up,
dissolution, liquidation or bankruptcy of either party (otherwise than for the
purpose of reconstruction or amalgamation) or if a receiver is appointed, or if
it suspends payment, ceases to carry on business or makes any special
arrangement or composition with its creditors.


 


17.6     The termination of this Agreement shall be
without prejudice to all rights accrued due between the parties prior to the
date of termination.


 


18.         Law and Arbitration


 


18.1     This Agreement shall be governed and
construed in accordance with Title 9 of the United States Code, the General Maritime
Law of the United States, and to the extent such laws are not applicable, the
laws of the State of New York, without reference to its conflicts of laws
principles. Any dispute arising out of or in connection with this Agreement
shall be referred to arbitration in New York in accordance with the rules of
the Society of Maritime Arbitrators, Inc., New York (SMA).  Any award
of the arbitrator(s) shall be final and binding and not subject to appeal.


 


19.         Notices


 


19.1     Any notice to be given by either party to the
other party shall be in writing and may be sent by fax, telex, registered or
recorded mail or by personal service.


 


19.2     The address of the Parties for service of
such communication shall be as stated in Boxes 19 and 20,
respectively.


 

















 


ADDITIONAL CLAUSES TO


SHIP MANAGEMENT AGREEMENT


 


TABLE OF
CONTENTS


 


	
  20.

  	
  DURATION AND TERMINATION

  	
  1

  
	
  21.

  	
  COMMUNICATIONS

  	
  1

  
	
  22.

  	
  ASSIGNMENT CLAUSE

  	
  1

  
	
  23.

  	
  THIRD PARTY RIGHTS

  	
  1

  
	
  24.

  	
  AMENDMENT OF LIST OF
  MANAGED VESSELS

  	
  1

  
	
  25.

  	
  CHANGES AND/OR IMPROVEMENT
  NECESSARY FOR THE OPERATION OF THE VESSEL OR IMPOSED BY LEGISLATION, CLASS OR
  VETTING APPROVALS

  	
  1

  
	
  26.

  	
  REIMBURSEMENT OF
  UNANTICIPATED REPAIR COSTS

  	
  2

  
	
  27.

  	
  LOSS OF HIRE INSURANCE

  	
  2

  
	
  28.

  	
  ISPS CODE

  	
  2

  
	
  29.

  	
  CASUALTY PLANNING AND
  MANAGEMENT

  	
  2

  
	
  30.

  	
  MANAGEMENT FEE

  	
  3

  
	
  31.

  	
  MISCELLANEOUS

  	
  3

  



 

















 


20.         DURATION AND TERMINATION


 


The term of this Agreement
shall begin upon execution of the Protocol of Acceptance of Delivery and
Commencement of Ship Management Services (Exhibit B hereto) and shall
continue in force for a period of 5 years from the date of execution of said
Protocol, unless terminated earlier in accordance with Clause 17 of this
Agreement; provided, however, that (i) the Managers shall have the right
to terminate this Agreement upon 90 days’ prior written notice to the Owners
following the second anniversary of the date of this Agreement and (ii) the
Owners shall have the right to terminate this Agreement upon 90 days’ prior
written notice to the Managers at any time.


 


21.         COMMUNICATIONS


 


All communications under
this Agreement shall be in the English language.


 


22.         ASSIGNMENT CLAUSE


 


The Owners may, upon giving
notice to the Managers, assign all of their rights under this Agreement to any
mortgagee of the Vessel provided that such assignment shall not otherwise
prejudice any of the rights of the Managers under this Agreement.  The Managers shall acknowledge any assignment
that complies with this Clause in such form as the mortgagee may reasonably
request.


 


23.         THIRD PARTY RIGHTS


 


Except as stated in this
Clause, the parties to this Agreement do not intend that any of the terms will
be enforceable by any person not a party to it. 
This Clause shall not apply to companies in the same corporate groups as
either the Owners or the Managers or to crew or to employees, subcontractors
and agents of the Managers to whom Clause 11.6 “Himalaya” would apply but for
this Clause.


 


24.         AMENDMENT OF LIST OF MANAGED
VESSELS


 


The Vessels for which the
Managers shall provide Management Services, as defined in Clause 1, shall be
identified in Exhibit A.  It is
understood that as the composition of the Owners’ fleet changes, it shall, from
time to time, be necessary to add vessels to, or delete vessels from, Exhibit A.  Either party to this Agreement may initiate
such amendments to Exhibit A by serving written notice thereof on the
other party.  Such amendments shall
become effective as of the date of the other party’s written acceptance of the
proposed amendment.  As provided in
Clause 17.3, any vessel sold or otherwise lost shall be deemed stricken from Exhibit A,
as of the date and time of its sale or loss.


 


25.          CHANGES AND/OR IMPROVEMENT
NECESSARY FOR THE OPERATION OF THE VESSEL OR IMPOSED BY LEGISLATION, CLASS OR
VETTING APPROVALS


 


In the event that any
improvement, structural change or the installation or modification of equipment
is imposed by (a) compulsory legislation or regulations, (b) class rules or
(c) an oil company whose vetting approval is required pursuant to any
charter under which the Vessels are operating, the Managers shall, at the
expense of the Owners effect such improvement, structural change or equipment
installation or modification.  The Owners
shall reimburse the Managers for all costs arising under this Clause as
provided in Clause 9.


 

















 


Any change, improvement or
installation made pursuant to this Clause 25 (other than any change or
improvement to, or installation of, equipment that belongs to the Managers or a
third party) shall be the property of Owners.


 


26.         REIMBURSEMENT OF
UNANTICIPATED REPAIR COSTS


 


In the event any
extraordinary, emergency or otherwise unanticipated repairs to the Vessel are
required to be made which are not included in the budgeting process described
in Clause 9 and which are not fully covered by hull and machinery insurance or
warranty, the cost attributable to such repairs, in excess of such insurance
coverage and deductibles, which may occur at a subsequent regularly scheduled
drydocking or otherwise (in excess of any applicable insurance or warranty
payments) shall be for the account of the Owners and shall be reimbursed to the
Managers as provided in Clauses 7 and 9.


 


27.         LOSS OF HIRE INSURANCE


 


The Managers shall procure,
at the Owners’ expense, loss of hire insurance on behalf of Owners on terms and
conditions subject to the availability of such coverage on commercially
reasonable terms.  The Managers shall not
be responsible for any deductible payments with respect to such loss of hire
insurance.  The Managers shall arrange
for loss of hire insurance, with deductible periods, daily indemnity amounts
and maximum coverages that are in conformity with prudent vessel management
practices, to be in place as of the effective date of this Agreement.


 


28.         ISPS CODE


 


The Managers shall perform
the duties of the “Company” as required by the ISPS Code.  The Managers shall also perform the Owners’
obligations and benefit from the Owners’ rights under the BIMCO ISPS Code Time
Charter Party Clause in any charterparty under which the Vessels may be
operating during the term of this Agreement. 
The Managers shall be entitled to retain any sums received or recovered
from Charterers or from any other party in relation to ISPS Code actions and
duties.  If the Managers incur
expenditures as a result of complying with the ISPS Code or making prudent
security precautions that are not recoverable from charterers pursuant to the
BIMCO ISPS Code Time Charter Party Clause, the Owners shall indemnify the
Managers for such expenditures, pursuant to Clause 9, as invoiced to the Owners
with full supporting documentation.


 


29.         CASUALTY PLANNING AND
MANAGEMENT


 


A.                                   The Managers shall provide for the
preparation and submission to relevant authorities, and ensure timely approval
by said authorities, of the following oil pollution incident response plans:


 


(1)               A Shipboard Oil Pollution Emergency Plan (“SOPEP”),
pursuant to Regulation 26 of Annex I of the International Convention for the
Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978,
as amended (“MARPOL 73/78”); and


 


(2)               A Vessel Response Plan (“VRP”), pursuant to
the U.S. Oil Pollution Act of 1990 (“OPA”) and implementing regulations
published at 33 C.F.R. Part 155.


 


B.                                     The Managers shall provide training for the
Vessels’ Crews to instruct cognizant individuals of their duties and
responsibilities under the VRP, as required by OPA and 33


 


2

















 


C.F.R. § 155.1055, and
shall conduct periodic exercises of the VRP, as required by OPA and 33 C.F.R. § 155.1060.


 


C.                                     The Managers shall maintain all records and other
documentation, relating to oil pollution incident emergency response planning,
as may be required by MARPOL 73/78 and OPA, and its implementing regulations
(33 C.F.R. Part 155, Subpart D).


 


D.                                    In the event of an oil pollution incident
involving one of the Vessels, the Managers shall ensure that timely notice of the
incident is given, on its own behalf and on behalf of the Owners, to relevant
authorities, as may be required by MARPOL 73/78 and OPA.  The Managers shall also ensure timely
activation and efficient management of the Vessel’s VRP and/or SOPEP upon the
occurrence of any such oil pollution incident.


 


E.                                      The Managers are expressly authorized to act
as agents for the Owners to enter into arrangements, by contract or otherwise,
with third-party contractors, consultants and other providers, to ensure the
availability of the services called for in the VRP, SOPEP or which might from
time to time be necessary to comply with the provisions of OPA, MARPOL 73/78 or
any other Federal, State or International environmental requirement.


 


30.         MANAGEMENT FEE


 


In addition to its
obligations, under Clauses 9 and 26, to reimburse the Managers for all the
anticipated and unanticipated costs of managing the Vessels under this
Agreement, the Owners shall also pay a management fee to the Managers for the
Management Services.  The Management Fee,
payable monthly in advance based upon the actual number of days in the
applicable month, shall be equal to four percent of the total monthly payroll
cost of all the crew who serve on board the Vessels.  The Management Fee shall be included in the
annual estimated budgeting process described in Clause 9 and shall be paid to
the Managers as provided in Clause 7.2.


 


31.         MISCELLANEOUS


 


A.              The Owners and the Managers severally agree to
perform or cause to be performed such action, and to execute, deliver or
furnish or to cause to be executed, delivered or furnished, all such further
assurances, certificates, opinions and other documents necessary or proper to
carry out this Agreement.


 


B.                No change in, or modification of, this
Agreement shall be effective unless reduced to writing and signed by the Owners
and the Managers.


 


C.                The invalidity of any provision of this
Agreement shall not affect the remainder hereof, which shall in such event be
construed as if such invalid provision had not been inserted.


 


D.               This Agreement consists of Parts I and II of
the Bimco Standard Ship Management Agreement (“Shipman 98”) Form, these
Additional Clauses, and the Exhibits hereto. 
All parts of this Agreement shall be read together as a single agreement
and in a manner that promotes consistency between all parts of this
Agreement.  No single part of this
Agreement shall be given greater weight than any other part of this Agreement
in determining the intended agreement of the parties hereto.


 


3

















 


E.                 This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.  Original signatures hereto may be delivered
by facsimile which shall be deemed originals.


 


F.                 The failure of either party to enforce any
term of this Agreement shall not act as a waiver.  Any waiver must be specifically stated as
such in writing.


 


4

















 


EXHIBIT A


 


LIST OF MANAGED VESSELS


 

















 


EXHIBIT B


 


PROTOCOL OF DELIVERY AND

COMMENCEMENT OF SHIP MANAGEMENT SERVICES


 


OSG America L.P. (“Owners”)
and OSG Ship Management, Inc. (“Managers”), each having its business
address at Two Harbour Place, 302 Knights Run Avenue, Tampa, FL  33602, each for itself does hereby certify
that:


 


At        :         hours, Eastern                          Time, on                                    , 20       , the Owners accepted delivery of the
U.S.-flag tank vessels identified in Exhibit A to the Ship Management
Agreement between the Owners and Managers, dated [date] (the “Ship Management
Agreement”).


 


Commencing at the time and
date of its acceptance of delivery of said Vessels, as documented herein, the
Owners appoint the Managers as the managers of the Vessels pursuant to the
terms and provisions of the Ship Management Agreement.


 


IN WITNESS WHEREOF, the
Owners and the Managers have executed this Protocol of Delivery and
Commencement of Ship Management Services as of
                                      ,
2007.


 


 


	
  OWNERS:

  	
  MANAGERS:

  	 

	 
	
   

  	
   

  
	 
	
  OSG America L.P.

  	
  OSG Ship Management, Inc.

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	
  Title: