ex10_1.htm


    
      
        

      

    


    Exhibit
      10.1

    


    


    DATED
      JULY 30, 2007

     

     

    


    LOAN
      AGREEMENT

    for
      a

    US$35,000,000
      Loan

    to

    GRASMERE
      MARITIME LIMITED,

    ULLSWATER
      MARITIME LIMITED

    and

    WINDERMERE
      MARITIME LIMITED

     

    provided
      by

    THE
      BANKS AND FINANCIAL INSTITUTIONS SET OUT IN SCHEDULE 1

     

    Arranger

    KfW

     

    Swap
      Bank

    KfW

     

    Agent

    KfW

     

    Security
      Trustee

    KfW


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Contents

     

    
      	
              Clause

            	 	
              Page

            
	
              1

            	
              Purpose
                and definitions

            	
              1

            
	
              2

            	
              The
                Commitment and the Advances

            	
              13

            
	
              3

            	
              Interest
                and Interest Periods

            	
              14

            
	
              4

            	
              Repayment
                and prepayment

            	
              16

            
	
              5

            	
              Fees,
                commitment commission and expenses

            	
              20

            
	
              6

            	
              Payments
                and taxes; accounts and calculations

            	
              20

            
	
              7

            	
              Representations
                and warranties

            	
              22

            
	
              8

            	
              Undertakings

            	
              26

            
	
              9

            	
              Conditions

            	
              31

            
	
              10

            	
              Events
                of Default

            	
              32

            
	
              11

            	
              Indemnities

            	
              35

            
	
              12

            	
              Unlawfulness
                and increased costs

            	
              36

            
	
              13

            	
              Security,
                set off and pro-rata payments

            	
              38

            
	
              14

            	
              Accounts

            	
              40

            
	
              15

            	
              Assignment,
                substitution and lending office

            	
              40

            
	
              16

            	
              Agent
                and Security Trustee

            	
              42

            
	
              17

            	
              Notices
                and other matters

            	
              43

            
	
              18

            	
              Governing
                law and jurisdiction

            	
              45

            


    

    


    
      	
              Schedule
                1 The Banks and their Commitments

            	
              47

            
	
              Schedule
                2 Form of Drawdown Notice

            	
              48

            
	
              Schedule
                3 Documents and evidence required as conditions precedent to making
                available the Commitment

            	
              49

            
	
              Schedule
                4 Form of Substitution Certificate

            	
              55

            
	
              Schedule
                5 Form of Master Swap Agreement

            	
              59

            
	
              Schedule
                6 Form of Corporate Guarantee

            	
              60

            
	
              Schedule
                7 Form of Mortgage

            	
              61

            
	
              Schedule
                8 Form of Deed of Covenant

            	
              62

            
	
              Schedule
                9 Form of Manager’s Undertaking

            	
              63

            
	
              Schedule
                10 Form of Charter Assignment

            	
              64

            
	
              Schedule
                11 Form of Swap Assignment

            	
              65

            
	
              Schedule
                12 Form of Account Pledge

            	
              66

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              THIS
                AGREEMENT is dated

            	 	
              2007
                and made BETWEEN:

            


    

    


     

    
      	
              (1)

            	
              GRASMERE
                MARITIME LIMITED, ULLSWATER MARITIME LIMITED and
                WINDERMERE MARITIME LIMITED as joint and several
                Borrowers;

            


    

     

    
      	
              (2)

            	
              the
                banks and financial institutions whose names and addresses are set
                out in
                Schedule 1 (the
“Banks”);

            


    

     

    
      	
              (3)

            	
              KfW,
                a public law institution established under the laws of Germany whose
                office is at Palmengartenstrasse 5-9, D60325, Frankfurt am Main,
                Federal
                Republic of Germany, as arranger;

            


    

     

    
      	
              (4)

            	
              KfW,
                a public law institution established under the laws of Germany whose
                office is at Palmengartenstrasse 5-9, D60325, Frankfurt am Main,
                Federal
                Republic of Germany, as swap bank;

            


    

     

    
      	
              (5)

            	
              KfW,
                a public law institution established under the laws of Germany whose
                office is at Palmengartenstrasse 5-9, D60325, Frankfurt am Main,
                Federal
                Republic of Germany, as agent; and

            


    

     

    
      	
              (6)

            	
              KfW,
                a public law institution established under the laws of Germany, whose
                office is at Palmengartenstrasse 5-9, D60325, Frankfurt am Main,
                Federal
                Republic of Germany, as security
                trustee.

            


    

     

    IT
      IS AGREED as follows:

     

    
      	
              1

            	
              Purpose
                and definitions

            


    

     

    
      	
              1.1

            	
              Purpose

            


    

     

    This
      Agreement sets out the terms and conditions upon and subject to which the Banks
      agree, according to their several obligations, to make available to the
      Borrowers, jointly and severally, in three (3) Advances, a loan of up to thirty
      five million Dollars ($35,000,000) for the purpose of financing part of the
      cost
      of the purchase of the Ships.

     

    
      	
              1.2

            	
              Definitions

            


    

     

    In
      this
      Agreement, unless the context otherwise requires:

     

    “Account
      Bank” means Fortis Bank (Nederland) N.V., whose office
      is at Coolsingel 93, P.O. Box 749, 3000 AS Rotterdam (or of such other address
      as may last have been notified to the other parties to this Agreement) or such
      other bank as may be designated by the Agent as the Account Bank for the
      purposes of this Agreement and includes its successors in title;

     

    “Account
      Pledge” means the pledge executed (or as the context may require) to be
      executed by the Corporate Guarantor in favour of the Security Trustee (as
      security trustee on behalf of the Creditors) in respect of the Earnings Account
      in substantially the form set out in Schedule 12 or otherwise in a form and
      substance acceptable to the Agent in its sole discretion;

     

    “Advance”
      means each borrowing of a proportion of the Commitment by the Borrowers or
      (as
      the context may require) the principal amount of such borrowing and
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to GRASMERE, the Grasmere
                Advance;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to ULLSWATER, the Ullswater Advance;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to WINDERMERE, the Windermere
                Advance,

            


    

     

    and
      “Advances” means all of them;


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    “Agency
      Agreement” means the agency agreement executed or (as the context may
      require) to be executed between the Agent and the Creditors in the agreed
      form;

     

    “Agent”
      means KfW, whose office is at Palmengartenstrasse 5-9, D60325,
      Frankfurt am Main, Federal Republic of Germany (or of such other address as
      may
      last have been notified to the other parties to this Agreement pursuant to
      clause 17.1.3) or such other person as may be appointed as agent to the
      Creditors pursuant to the Agency Agreement (and includes its successors in
      title);

     

    “Arranger”
      means KfW, whose office is at Palmengartenstrasse 5-9, D60325,
      Frankfurt am Main, Federal Republic of Germany (or such other address as may
      last have been notified to the other parties of this Agreement pursuant to
      clause 17.1.3) and includes its successors in title;

     

    “Assignee”
      has the meaning ascribed thereto in clause 15.3;

     

    “Banking
      Day” means a day on which dealings in deposits in Dollars are carried
      on in the London Interbank Eurocurrency Market and (other than Saturday or
      Sunday) on which banks are open for business in London, Frankfurt am Main,
      Rotterdam and New York City (or any other relevant place of payment under clause
      6);

     

    “Banks”
      means the banks and financial institutions listed in Schedule 1 and includes
      their respective successors in title and Assignees and Substitutes and
“Bank” means any of them;

     

    “Borrowed
      Money” means Indebtedness in respect of (a) money borrowed or raised
      and debit balances at banks, (b) any bond, note, loan stock, debenture or
      similar debt instrument, (c) acceptance or documentary credit facilities,
      (d) receivables sold or discounted (otherwise than on a non-recourse
      basis), (e) deferred payments for assets or services acquired, (f) finance
      leases and hire purchase contracts, (g) swaps, forward exchange contracts,
      futures and other derivatives, (h) any other transaction (including, without
      limitation, forward sale or purchase agreements) having the commercial effect
      of
      a borrowing or raising of money or of any of (b) to (g) above and (i) guarantees
      in respect of Indebtedness of any person falling within any of (a) to (h)
      above;

     

    “Borrower”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere
                Borrower;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Borrower;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere
                Borrower,

            


    

     

    and
      “Borrowers” means all of them;

     

    “Borrowers'
      Security Documents” means, at any relevant time, such of the Security
      Documents as shall have been executed by any of the Borrowers at such
      time;

     

    “Borrowers’
      Group” means the Borrowers and their Related Companies;

     

    “Charter”
      means in respect of a Ship any time or consecutive voyage charter with a
      duration in excess of twelve (12) months entered into by a Borrower with a
      charterer acceptable to the Agent;

     

    “Charter
      Assignment” means in respect of a Ship a specific assignment of the
      Charters (as defined in the Corporate Guarantee) and any Charter in respect
      of a
      Ship executed or (as the context may require) to be executed by a Borrower
      in
      favour of the Agent (as security agent and trustee on behalf of the Creditors)
      in substantially the form set out in Schedule 10;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    “Classification”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the classification denomination allocated
                to
                this Ship by the Classification Society (with the approval of the
                Agent)
                at the time of its acquisition by the relevant
                Borrower;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the classification denomination allocated
                to
                this Ship by the Classification Society (with the approval of the
                Agent)
                at the time of its acquisition by the relevant Borrower;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the classification denomination allocated
                to
                this Ship by the Classification Society (with the approval of the
                Agent)
                at the time of its acquisition by the relevant
                Borrower,

            


    

     

    with
      the
      Classification Society or such other classification as the Agent shall, at
      the
      request of a Borrower, have agreed in writing shall be treated as the
      Classification in relation to such Borrower’s Ship for the purposes of the
      relevant Ship Security Documents

     

    “Classification
      Society” means Nippon Kaiji Kyokai or such other classification society
      which is a member of the International Association of Classification Societies
      which the Agent shall, at the request of a Borrower, have agreed in writing
      shall be treated as the Classification Society in relation to such Borrower's
      Ship for the purposes of the relevant Ship Security Documents;

     

    “Commitment”
      means the amounts which the Banks have agreed to lend or make available to
      the
      Borrowers under clause 2.1 as reduced by any relevant term of this
      Agreement;

     

    “Compulsory
      Acquisition” means requisition for title or other compulsory
      acquisition, requisition, appropriation, expropriation, deprivation, forfeiture
      or confiscation for any reason of a Ship by any Government Entity or other
      competent authority, whether de jure or de facto, but shall exclude requisition
      for use or hire not involving requisition of title;

     

    “Contract”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere
                Contract;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Contract;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere
                Contract,

            


    

     

    and
      “Contracts” means all of them;

     

    “Contract
      Price” means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere Contract
                Price;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Contract Price;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere Contract
                Price;

            


    

     

    “Contribution”
      means, in relation to each Bank, the principal amount of the Loan owing to
      such
      Bank at any relevant time;

     

    “Corporate
      Guarantee” means the corporate guarantee executed or (as the context
      may require) to be executed by the Corporate Guarantor in favour of the Security
      Trustee (as security agent and trustee on behalf of the Creditors) in the form
      set out in Schedule 6;

     

    “Corporate
      Guarantor” means MC Shipping Inc. of 80 Broad Street, Monrovia, Liberia
      and includes its successors in title;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    “Creditors”
      means, together, the Arranger, the Agent, the Swap Bank, the Security Trustee
      and the Banks and “Creditor” means any of them;

     

    “Credit
      Support Document” has the meaning given to that expression in Section
      14 of the Master Swap Agreement and as set out in Part 4, paragraph (g) of
      the
      Schedule to the Master Swap Agreement;

     

    “Credit
      Support Provider” means any person defined as such in the Master Swap
      Agreement pursuant to Section 14 of the Master Swap Agreement;

     

    “Deed
      of Covenant” means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere Deed of
                Covenant;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Deed of Covenant;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere Deed of
                Covenant,

            


    

     

    and
      “Deeds of Covenants” means all of them;”

     

    “Default”
      means any Event of Default or any event or circumstance with which the giving
      of
      notice or lapse of time or satisfaction of any other condition (or any
      combination thereof) would constitute an Event of Default;

     

    “Delivery
      Date” means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the date on which the GRASMERE is delivered
                to
                the Grasmere Borrower in accordance with the Grasmere
                Contract;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the date on which the ULLSWATER is delivered
                to
                the Ullswater Borrower in accordance with the Ullswater Contract;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the date on which the WINDERMERE is delivered
                to the Windermere Borrower in accordance with the Windermere
                Contract;

            


    

     

    “DOC”
      means a document of compliance issued to an Operator in accordance with rule
      13
      of the ISM Code;

     

    “Dollars”
      and “$” mean the lawful currency of the United States of
      America and in respect of all payments to be made under any of the Security
      Documents mean funds which are for same day settlement in the New York Clearing
      House Interbank Payments System (or such other US dollar funds as may at the
      relevant time be customary for the settlement of international banking
      transactions denominated in US dollars);

     

    “Drawdown
      Date” means any date, being a Banking Day falling during the Drawdown
      Period, on which an Advance is, or is to be, made;

     

    “Drawdown
      Notice” means, in relation to each Advance, a notice in substantially
      the form of Schedule 2 in respect of such Advance;

     

    “Drawdown
      Period” means the period commencing on the date of this Agreement and
      ending on the Termination Date or the period ending on such earlier date (if
      any) on which (a) the aggregate amount of the Advances is equal to the
      Commitment or (b)  the Commitment is reduced to zero pursuant to clauses
      4.4, 10.1, or 12;

     

    “Earnings”
      means, in relation to each Ship, all moneys whatsoever from time to time due
      or
      payable to the relevant Borrower during the Security Period arising out of
      the
      use or operation of such Ship including (but without limiting the generality
      of
      the foregoing) all freight, hire and passage moneys, income arising out of
      pooling arrangements, compensation payable to the relevant Borrower in the
      event
      of requisition of such Ship for hire, remuneration for salvage or towage
      services, demurrage and detention moneys and damages for breach (or payments
      for
      variation or termination) of any charterparty or other contract for the
      employment of such Ship and any sums recoverable under any loss of earnings
      insurance;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    “Earnings
      Account” means an interest bearing Dollar account of the Corporate
      Guarantor opened or (as the context may require) to be opened with the Account
      Bank with account number 0255119062 with Account Reference MC Shipping-B and
      includes any sub-accounts thereof and any other account designated in writing
      by
      the Agent to be an Earnings Account for the purposes of this
      Agreement;

     

    “Encumbrance”
      means any mortgage, charge (whether fixed or floating), pledge, lien,
      hypothecation, assignment, trust arrangement or security interest or other
      encumbrance of any kind securing any obligation of any person or any type of
      preferential arrangement (including,  without limitation, title
      transfer and/or retention arrangements having a similar effect);

     

    “Environmental
      Claim” means:

     

    
      	
               

            	
              (a)

            	
              any
                and all enforcement, clean-up, removal or other governmental or regulatory
                action or order or claim instituted or made pursuant to any Environmental
                Law or resulting from a Spill; or

            


    

     

    
      	
               

            	
              (b)

            	
              any
                claim made by any other person relating to a
                Spill;

            


    

     

    “Environmental
      Incident” means any Spill:

     

    
      	
               

            	
              (a)

            	
              from
                any Fleet Vessel; or

            


    

     

    
      	
               

            	
              (b)

            	
              from
                any other vessel in circumstances
                where:

            


    

     

    
      	
               

            	
              (i)

            	
              any
                Fleet Vessel or its owner, operator or manager may be liable for
                Environmental Claims arising from the Spill (other than Environmental
                Claims arising and fully satisfied before the date of this Agreement);
                and/or

            


    

     

    
      	
               

            	
              (ii)

            	
              any
                Fleet Vessel may be arrested or attached in connection with any such
                Environmental Claims;

            


    

     

    “Environmental
      Laws” means all laws, regulations and conventions concerning pollution
      or protection of human health or the environment;

     

    “Event
      of Default” means any of the events or circumstances described in
      clause 10.1;

     

    “Flag
      State” means the Commonwealth of the Bahamas or such other state or
      territory designated in writing by the Agent, at the request of a Borrower,
      as
      being the “Flag State” of such Borrower’s Ship for the purposes
      of the relevant Ship Security Documents;

     

    “Fleet
      Vessel” means each of the Ships and any other
      vessel owned, operated, managed or crewed by any member of the Borrowers’
Group;

     

    “Government
      Entity” means and includes (whether having a distinct legal personality
      or not) any national or local government authority, board, commission,
      department, division, organ, instrumentality, court or agency and any
      association, organisation or institution of which any of the foregoing is a
      member or to whose jurisdiction any of the foregoing is subject or in whose
      activities any of the foregoing is a participant;

     

    “GRASMERE”
      means the 1997-built, 7,200 cbm LPG carrier “GRASMERE” with IMO number 9148609
      owned on the date of this Agreement by the Grasmere Seller and registered on
      the
      Singapore flag and to be registered on its Delivery Date through the Registry
      under the laws and flag of the Flag State;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    “Grasmere
      Advance” means an Advance of up to twelve million five hundred thousand
      Dollars ($12,500,000) made or (as the context may require) to be made available
      to the Borrowers for the purpose of financing part of the purchase price of
      GRASMERE pursuant to the Grasmere Contract;

     

    “Grasmere
      Borrower” means Grasmere Maritime Limited of 80 Broad Street, Monrovia,
      Liberia and includes its successors in title;

     

    “Grasmere
      Contract” means the memorandum of agreement dated 12 June 2007 (as
      amended by addendum No. 1 dated 18 June 2007) and made between the Grasmere
      Borrower and the Grasmere Seller relating to the sale by the Grasmere Seller
      and
      the purchase by the Grasmere Borrower of the GRASMERE;

     

    “Grasmere
      Contract Price” means the purchase price under the Grasmere Contract,
      being fourteen million four hundred thousand Dollars ($14,400,000) or such
      lesser sum in Dollars as may be payable by the Grasmere Borrower to the Grasmere
      Seller pursuant to the Grasmere Contract;

     

    “Grasmere
      Deed of Covenant” means the deed of covenant collateral to the Grasmere
      Mortgage executed or (as the context may require) to be executed by the Grasmere
      Borrower in favour of the Security Trustee (as security agent and trustee on
      behalf of the Creditors) in substantially the form set out in Schedule
      8;

     

    “Grasmere
      Management Agreement” means the agreement made or (as the context may
      require) to be made between the Grasmere Borrower and the Manager in a form
      previously approved by the Agent providing (inter alia) for the Manager to
      manage the GRASMERE;

     

    “Grasmere
      Manager’s Undertaking” means the manager’s undertaking in respect of
      the GRASMERE executed or (as the context may require) to be executed by the
      Manager in favour of the Security Trustee (as security agent and trustee on
      behalf of the Creditors) in substantially the form set out in Schedule
      9;

     

    “Grasmere
      Mortgage” means the first priority Bahamas mortgage of the GRASMERE
      executed or (as the context may require) to be executed by the Grasmere Borrower
      in favour of the Security Trustee (as security agent and trustee on behalf
      of
      the Creditors) in substantially the form set out in Schedule 7;

     

    “Grasmere
      Seller” means Snow Shipping Pte Ltd. Of 460 Alexandra Road, #30-04 PSA
      Building, Singapore 119963, Singapore, and includes its successors in
      title;

     

    “Indebtedness”
      means any obligation for the payment or repayment of money, whether as principal
      or as surety and whether present or future, actual or contingent;

     

    “Interest
      Payment Date” means the last day of an Interest Period;

     

    “Interest
      Period” means, in relation to any Advance or, as the case may be, the
      Loan, each period for the calculation of interest in respect of such Advance
      or
      the Loan ascertained in accordance with clauses 3.2 and 3.3;

     

    “ISM
      Code” means the International Management Code for the Safe Operation of
      Ships and for Pollution Prevention constituted pursuant to Resolution A. 741
      (18) of the International Maritime Organisation and incorporated into the Safety
      of Life at Sea Convention and includes any amendments or extensions thereto
      and
      any regulation issued pursuant thereto;

     

    “ISPS
      Code” means the International Ship and Port Facility Security Code
      constituted pursuant to resolution A.924(22) of the International Maritime
      Organization and incorporated into Safety of Life at Sea
      Convention;

     

    “ISSC”
      means in respect of a Ship an International Ship Security Certificate issued
      in
      respect of such Ship pursuant to the ISPS Code;

     


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    “LIBOR”
means,
      in
      relation to a particular period:

     

    
      	
               

            	
              (a)

            	
              the
                rate per annum that appears on Reuters at or about 11.00 a.m. (London
                time) two Banking Days before the commencement of that period for
                deposits
                in Dollars in an amount comparable with the relevant sum for a period
                equivalent to such period for delivery on the first Banking Day of
                such
                period; or

            


    

     

    
      	
               

            	
              (b)

            	
              if
                no display rate is quoted on the Reuters Screen for Dollars, the
                arithmetic mean (rounded upwards to the nearest one sixteenth of
                one per
                cent (1/16%)) of the rates per annum offered to the Banks by leading
                banks
                in the London Interbank Market at or about 11.00 a.m. London time
                two
                Banking Days before the commencement of that period for the offering
                of
                deposits in Dollars of an amount comparable with the relevant sum
                at the
                commencement of such period for a period comparable with such period
                fixed
                for its duration;

            


    

     

    and,
      for
      the purposes of this definition, "Reuters" means the display designated as
      Page
“LIBOR 01” on the Reuters Service (or other such page as may replace Page
      01 on that service or such other service as may be nominated by the British
      Bankers' Association as the information vendor for the purpose of displaying
      British Bankers' Association Interest Settlement Rates for deposits in Dollars)
      provided that if the Borrowers shall at any time enter into any Transaction(s)
      under the Master Swap Agreement, LIBOR shall (during the period when any such
      Transaction(s) are effective and for an amount equal to the notional amount
      of
      such Transaction(s)) be the rate for deposits in Dollars for a period equivalent
      to such period at or about 11 a.m. on the second Banking Day before the first
      day of such period as displayed on Reuters page ISDA (or such other page as
      may
      replace such page ISDA) on such system for the purposes of displaying
      International Swap Dealers Association Interbank rates from London for deposits
      in Dollars) provided that if on such date no such rate is so displayed, LIBOR
      for such period shall be determined in accordance with the first paragraph
      of
      this definition excluding this proviso;

     

    “Loan”
      means the aggregate principal amount owing to the Banks under this Agreement
      at
      any relevant time;

     

    “Majority
      Banks” means that Bank or those Banks whose Contribution or the
      aggregate of whose Contributions (as the case may be) is at any time equal
      to or
      greater than sixty-six and two thirds per cent. (66 2⁄3%) of the
      Loan;

     

    “Management
      Agreement” means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere Management
                Agreement;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Management Agreement;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere Management
                Agreement,

            


    

     

    and
      “Management Agreements” means all of them;

     

    “Manager”
      means Hanseatic Shipping Co. Ltd. of P.O. Box 50127, 3601 Limassol, Cyprus
      and
      includes its successors in title and “Manager” means any of
      them;

     

    “Manager's
      Undertaking” means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere Manager’s
                Undertaking;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Manager’s Undertaking;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere Manager’s
                Undertaking,

            


    

     

    and
      “Managers’ Undertakings” means all of them;


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    “Margin”
      means zero point seven five per cent (0.75%) per annum;

     

    “Master
      Swap Agreement” means the agreement made or (as the context may
      require) to be made between the Borrowers and the Swap Bank comprising an ISDA
      Master Agreement and Schedule thereto in substantially the form set out in
      Schedule 5 or in such other form and substance acceptable to the Agent in its
      sole discretion and any Confirmations (as defined therein) supplemental thereto
      with respect to this Agreement;

     

    “month”
      means a period beginning in one calendar month and ending in the next calendar
      month on the day numerically corresponding to the day of the calendar month
      on
      which it started, provided that (a) if the period started on the last
      Banking Day in a calendar month or if there is no such numerically corresponding
      day, it shall end on the last Banking Day in such next calendar month and
      (b) if such numerically corresponding day is not a Banking Day, the period
      shall end on the next following Banking Day in the same calendar month but
      if
      there is no such Banking Day it shall end on the preceding Banking Day and
      “months” and “monthly” shall be construed
      accordingly;

     

    “Mortgage”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere
                Mortgage;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Mortgage;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere
                Mortgage,

            


    

     

    and
      “Mortgages” means all of them;

     

    “Operator”
      means any person who is from time to time during the Security Period concerned
      in the operation of a Ship and falls within the definition of
“Company” set out in rule 1.1.2 of the ISM Code;

     

    “Permitted
      Encumbrance” means any Encumbrance in favour of the Creditors or any of
      them  created pursuant to the Security Documents and Permitted
      Liens;

     

    “Permitted
      Liens” means any lien on a Ship for master’s, officer’s or crew’s wages
      outstanding in the ordinary course of trading, any lien for salvage, and any
      ship repairer’s or outfitter’s possessory lien;

     

    “Pollutant”
      means and includes oil and its products, any other polluting, toxic or hazardous
      substance whose release into the environment is regulated or penalised by
      Environmental Laws;

     

    “Registry”
      means, in relation to a Ship, the offices of the Bahamas Maritime Authority
      or
      such other registrar, commissioner or representative of the Flag State who
      is
      duly authorised and empowered to register such Ship, the relevant Borrower's
      title to such Ship and the relevant Mortgage under the laws and flag of the
      Flag
      State;

     

    “Related
      Company” of a person means any Subsidiary of such person, any company
      or other entity of which such person is a Subsidiary and any Subsidiary of
      any
      such company or entity;

     

    “Relevant
      Jurisdiction” means any jurisdiction in which or where any Security
      Party is incorporated, resident, domiciled, has a permanent establishment,
      carries on, or has a place of business or is otherwise effectively
      connected;

     

    “Repayment
      Dates” means, in respect of each Advance, the date falling six months
      after the Drawdown Date relative to the first Advance and each of the dates
      falling at three monthly intervals thereafter up to and including the date
      falling one hundred and twenty (120) months after the Drawdown Date for such
      first Advance;


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    “Security
      Documents” means this Agreement, the Account Pledge, the Mortgages, the
      Deeds of Covenants, any Charter Assignment, the Managers’ Undertakings, the
      Corporate Guarantee, the Master Swap Agreement, the Swap Assignment and any
      other documents as may have been or shall from time to time after the date
      of
      this Agreement be executed to guarantee and/or secure all or any part of the
      Loan, interest thereon and other moneys from time to time owing by the Borrowers
      pursuant to this Agreement (whether or not any such document also secures moneys
      from time to time owing pursuant to any other document or
      agreement);

     

    “Security
      Party” means the Borrowers, the Corporate Guarantor, the Manager or any
      other person who may at any time be a party to any of the Security Documents
      (other than the Creditors);

     

    “Security
      Period” means the period commencing on the date of this Agreement and
      terminating upon discharge of the security created by the Security Documents
      by
      payment of all moneys payable thereunder;

     

    “Security
      Requirement” means the amount in Dollars (as certified by the Agent
      whose certificate shall, in the absence of manifest error, be conclusive and
      binding on the Borrowers and the Banks) which is, for the period from the
      Drawdown Date relative to the first Advance until the date thirty-six months
      (36) after such Drawdown Date, one hundred and ten per cent. (110%) and at
      all
      other times, one hundred and twenty per cent (120%) of the Loan;

     

    “Security
      Trustee” means KfW whose office is at Palmengartenstrasse 5-9, D60325,
      Frankfurt am Main, Federal Republic of Germany or such other person who may
      be
      appointed security agent and trustee for the Creditors pursuant to the Agency
      Agreement and includes its successors in title and assigns;

     

    “Security
      Value” means the amount in Dollars (as certified by the Agent whose
      certificate shall, in the absence of manifest error, be conclusive and binding
      on the Borrowers and the Creditors) which is, at any relevant time, the
      aggregate of (a) the market value of the Ships as most recently determined
      in
      accordance with clause 8.2.2, (b) any cash collateral deposited with the
      Agent or the Security Trustee or the Account Bank pursuant to clause 8.2.1
      (subject to cash collateral being pledged to the Security Trustee in a manner
      acceptable to the Security Trustee) and (c) the market value of any other
      additional security for the time being actually provided to any of the Creditors
      pursuant to clause 8.2;

     

    “Seller”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere
                Seller;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Seller;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere
                Seller;

            


    

     

    “Ship”:

     

    
      	
               

            	
              (a)

            	
              in
                relation to the Grasmere Borrower and the Grasmere Advance, means
                the
                GRASMERE;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the Ullswater Borrower and the Ullswater Advance, means
                the
                ULLSWATER; or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the Windermere Borrower and the Windermere Advance, means
                the
                WINDERMERE,

            


    

     

    and
      “Ships” means all of them;

     

    “Ship
      Security Documents” means:


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    
      	
            	
              (a)

            	
              in
                relation to the GRASMERE, the Grasmere Mortgage, the Grasmere Deed
                of
                Covenant, any Charter Assignment relative to the GRASMERE and the
                Grasmere
                Manager’s Undertaking;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the Ullswater Mortgage, the Ullswater
                Deed of
                Covenant, any Charter Assignment relative to the ULLSWATER and the
                Ullswater Manager’s Undertaking; or

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the Windermere Mortgage, the Windermere
                Deed
                of Covenant, any Charter Assignment relative to the WINDERMERE and
                the
                Windermere Manager’s Undertaking;

            


    

     

    “SMC”
      means a safety management certificate issued in respect of a Ship in accordance
      with rule 13 of the ISM Code;

     

    “Spill”
      means any actual or threatened emission, spill, release or discharge of a
      Pollutant into the environment;

     

    “Subsidiary”
      of a person means any company or entity directly or indirectly controlled by
      such person, and for this purpose “control” means either the
      ownership of more than fifty per cent (50%) of the voting share capital (or
      equivalent rights of ownership) of such company or entity or the power to direct
      its policies and management, whether by contract or otherwise;

     

    “Substitute”
      has the meaning ascribed thereto in clause 15.4;

     

    “Substitute
      Certificate” means a certificate in substantially the form set out in
      Schedule 4 (or in such other form as the Agent and the Banks shall approve
      or require);

     

    “Swap
      Assignment” means the security assignment executed or (as the context
      may require) to be executed by the Borrowers in favour of the Security Trustee
      (as security agent and trustee on behalf of the Creditors) in the form set
      out
      in Schedule 11;

     

    “Swap
      Bank” means KfW, whose office is at
      Palmengartenstrasse 5-9, D60325, Frankfurt am Main, Federal Republic of Germany
      and includes its successors and assigns;

     

    “Taxes”
      includes all present and future taxes, levies, imposts, duties, fees or charges
      of whatever nature together with interest thereon and penalties in respect
      thereof and “Taxation” shall be construed
      accordingly;

     

    “Termination
      Date” means 30 September 2007 or such later date as the Agent may agree
      in writing;

     

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

     

    
      	
               

            	
              (a)

            	
              the
                actual, constructive, compromised or arranged total loss of such
                Ship;
                or

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Compulsory Acquisition of such Ship;
                or

            


    

     

    
      	
               

            	
              (c)

            	
              the
                hijacking, theft, condemnation, capture, seizure, arrest, detention
                or
                confiscation of such Ship (other than where the same amounts to the
                Compulsory Acquisition of such Ship) by any Government Entity, or
                by
                persons acting or purporting to act on behalf of any Government Entity,
                unless such Ship be released and restored to the relevant Borrower
                from
                such hijacking, theft, condemnation, capture, seizure, arrest, detention
                or confiscation within thirty (30) days after the occurrence
                thereof;

            


    

     

    “Transaction”
      has the meaning ascribed to it in the Master Swap Agreement;

     

    “ULLSWATER”
      means the 1996-built, 7,200 cbm LPG carrier “ULLSWATER” owned on the date of
      this Agreement by the Ullswater Seller and registered under the Singapore flag
      and to be registered on its Delivery Date in the ownership of the Ullswater
      Borrower through the Registry under the laws and flag of the Flag
      State;


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    “Ullswater
      Advance” means an Advance of up to eleven million, nine hundred
      thousand Dollars ($11,900,000) made or (as the context may require) to be made
      available to the Borrowers for the purpose of financing part of the purchase
      price of the ULLSWATER by the Ullswater Borrower pursuant to the Ullswater
      Contract;

     

    “Ullswater
      Borrower” means Ullswater Maritime Limited of 80 Broad Street,
      Monrovia, Liberia and includes its successors in title;

     

    “Ullswater
      Contract” means the memorandum of agreement dated 12 June 2007 (as
      amended by an addendum No. 1 dated 18 June 2007) and made between the Ullswater
      Seller and the Ullswater Borrower relating to the sale by the Ullswater Seller,
      and the purchase by the Ullswater Borrower, of the ULLSWATER;

     

    “Ullswater
      Contract Price” means the purchase price under the Ullswater Contract,
      being thirteen million nine hundred thousand Dollars ($13,900,000) or such
      other
      lesser sum in Dollars as may be payable by the Ullswater Borrower to the
      Ullswater Seller pursuant to the Ullswater Contract;

     

    “Ullswater
      Deed of Covenant” means the deed of covenant collateral to the
      Ullswater Mortgage executed or (as the context may require) to be executed
      by
      the Ullswater Borrower in favour of the Security Trustee (as security agent
      and
      trustee on behalf of the Creditors) in substantially the form set out in
      Schedule 8;

     

    “Ullswater
      Management Agreement” means the agreement made or (as the context may
      require) to be made between the Ullswater Borrower and the Manager in a form
      previously approved in writing by the Agent providing (inter alia) for the
      Manager to manage the ULLSWATER;

     

    “Ullswater
      Manager’s Undertaking” means the manager’s undertaking in respect of
      the ULLSWATER executed or (as the context may require) to be executed by the
      Manager in favour of the Security Trustee (as security agent and trustee on
      behalf of the Creditors) in substantially the form set out in Schedule
      9;

     

    “Ullswater
      Mortgage” means the first priority Bahamas mortgage of the ULLSWATER
      executed or (as the context may require) to be executed by the Ullswater
      Borrower in favour of the Security Trustee (as security agent and trustee on
      behalf of the Creditors) in substantially the form set out in Schedule
      7;

     

    “Ullswater
      Seller” means Ullswater Shipping Pte. Ltd. of Singapore, and includes
      its successors in title;

     

    “Underlying
      Documents” means together, the Contracts, any Charters and the
      Management Agreements;

     

    “WINDERMERE”
      means the 1995-built, 6,550 cbm LPG carrier “WINDERMERE” owned on the date of
      this Agreement by the Windermere Seller and registered under the Singapore
      flag
      and to be registered on its Delivery Date in the ownership of the Windermere
      Borrower through the Registry under the laws and flag of the Flag
      State;

     

    “Windermere
      Advance” means an Advance of up to ten million six hundred thousand
      Dollars ($10,600,000) made or (as the context may require) to be made available
      to the Borrowers for the purpose of financing part of the purchase price of
      the
      WINDERMERE by the Windermere Borrower pursuant to the Windermere
      Contract;

     

    “Windermere
      Borrower” means Windermere Maritime Limited of 80 Broad Street,
      Monrovia, Liberia and includes its successors in title;


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    “Windermere
      Contract” means the memorandum of agreement dated 12 June 2007 (as
      amended by an addendum No. 1 dated 18 June 2007) and made between the Windermere
      Seller and the Windermere Borrower relating to the sale by the Windermere
      Seller, and the purchase by the Windermere Borrower, of the
      WINDERMERE;

     

    “Windermere
      Contract Price” means the purchase price under the Windermere Contract,
      being twelve million, four hundred thousand Dollars ($12,400,000) or such other
      lesser sum in Dollars as may be payable by the Windermere Borrower to the
      Windermere Seller pursuant to the Windermere Contract;

     

    “Windermere
      Deed of Covenant” means the deed of covenant collateral to the
      Windermere Mortgage executed or ( as the context may require) to be executed
      by
      the Windermere Borrower in favour of the Security Trustee (as security agent
      and
      trustee on behalf of the Creditors) in substantially the form set out in
      Schedule 8;

     

    “Windermere
      Management Agreement” means the agreement made or (as the context may
      require) to be made between the Windermere Borrower and the Manager in a form
      previously approved in writing by the Agent providing (inter alia) for the
      Manager to manage the WINDERMERE;

     

    “Windermere
      Manager’s Undertaking” means the manager’s undertaking in respect of
      the WINDERMERE executed or (as the context may require) to be executed by the
      Manager in favour of the Agent (as security agent and trustee on behalf of
      the
      Creditors) in substantially the form set out in Schedule 9;

     

    “Windermere
      Mortgage” means the first priority Bahamas mortgage of the WINDERMERE
      executed or (as the context may require) to be executed by the Windermere
      Borrower in favour of the Security Trustee (as security agent and trustee on
      behalf of the Creditors) in substantially the form set out in Schedule 7;
      and

     

    “Windermere
      Seller” means Windermere Shipping Pte. Ltd. of Singapore, and includes
      its successors in title.

     

    
      	
              1.3

            	
              Headings

            


    

     

    Clause headings
      and the table of contents are inserted for convenience of reference only and
      shall be ignored in the interpretation of this Agreement.

     

    
      	
              1.4

            	
              Construction
                of certain terms

            


    

     

    In
      this
      Agreement, unless the context otherwise requires:

     

    
      	
              1.4.1

            	
              references
                to clauses and Schedules are to be construed as references to
                clauses of, and Schedules to, this Agreement and references to
                this Agreement include its
                Schedules;

            


    

     

    
      	
              1.4.2

            	
              references
                to (or to any specified provision of) this Agreement or any other
                document
                shall be construed as references to this Agreement, that provision
                or that
                document as in force for the time being and as amended in accordance
                with
                terms thereof, or, as the case may be, with the agreement of the
                relevant
                parties;

            


    

     

    
      	
              1.4.3

            	
              references
                to a “regulation” include any present or future
                regulation, rule, directive, requirement, request or guideline (whether
                or
                not having the force of law) of any agency, authority, central bank
                or
                government department or any self-regulatory or other national or
                supra-national authority;

            


    

     

    
      	
              1.4.4

            	
              words
                importing the plural shall include the singular and vice
                versa;

            


    

     

    
      	
              1.4.5

            	
              references
                to a time of day are to London
                time;

            


    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    
      	
              1.4.6

            	
              references
                to a person shall be construed as references to an individual, firm,
                company, corporation, unincorporated body of persons or any Government
                Entity;

            


    

     

    
      	
              1.4.7

            	
              references
                to a “guarantee” include references to an indemnity or
                other assurance against financial loss including, without limitation,
                an
                obligation to purchase assets or services as a consequence of a default
                by
                any other person to pay any Indebtedness and “guaranteed”
                shall be construed accordingly; and

            


    

     

    
      	
              1.4.8

            	
              references
                to any enactment shall be deemed to include references to such enactment
                as re-enacted, amended or extended.

            


    

     

    
      	
              1.5

            	
              Agreed
                forms

            


    

     

    In
      this
      Agreement, any document expressed to be “in the agreed form”
means a document in a form agreed by (and for the purposes
      of identification
      signed by or on behalf of) the Borrowers and the Banks or (in the case of any
      of
      the other Security Documents) a document in the form actually executed by both
      the relevant Security Party or relevant Security Parties and the Security
      Trustee, the Agent and/or the Banks and/or the Swap Bank.

     

    
      	
              1.6

            	
              Third
                party rights

            


    

     

    No
      term
      of this Agreement is enforceable under the Contracts (Rights of Third Parties)
      Act 1999 by a person who is not a party to this Agreement.

     

    
      	
              1.7

            	
              Effectiveness
                of Majority Banks decision

            


    

     

    Where
      this Agreement provides for any matter to be determined by reference to the
      opinion of the Majority Banks or to be subject to the consent or request of
      the
      Majority Banks or for any action to be taken on the instructions of the Majority
      Banks, such opinion, consent, request or instructions shall (as between the
      Banks and the Agent) only be regarded as having been validly given or issued
      by
      the Majority Banks if all the Banks and the Agent shall have received prior
      notice of the matter on which such opinion, consent, request or instructions
      are
      required to be obtained and a majority of the Banks and the Agent shall have
      given or issued such opinion, consent, request or instructions.

     

    
      	
              2

            	
              The
                Commitment and the
                Advances

            


    

     

    
      	
              2.1

            	
              Agreement
                to lend

            


    

     

    The
      Banks, relying upon each of the representations and warranties in clause 7,
      agree to lend to the Borrowers, jointly and severally, upon and subject to
      clause 2.5 and other terms of this Agreement in three (3) Advances upon and
      subject to the terms of this Agreement the principal sum of up to thirty five
      million Dollars ($35,000,000).  The obligation of each Bank under this
      Agreement shall be to contribute that proportion of each Advance which, as
      at
      the Drawdown Date of such Advance, its Commitment bears to the aggregate
      Commitment of all of the Banks.

     

    
      	
              2.2

            	
              Obligations
                of Banks several

            


    

     

    The
      obligations of the Banks under this Agreement are several; the failure of any
      Bank to perform such obligations shall not relieve any other Bank, the Security
      Trustee the Agent or the Borrowers or any of them of any of their respective
      obligations or liabilities under this Agreement nor shall the Agent or the
      Security Trustee be responsible for the obligations of any Bank (except for
      its
      own obligations, if any, as a Bank) nor shall any Bank be responsible for the
      obligations of any other Bank under this Agreement.

     

    
      	
              2.3

            	
              Interests
                of Banks several

            


    

     

    Notwithstanding
      any other term of this Agreement the interests of the Agent, the Security
      Trustee and the Banks are several and the amount due to the Agent, the Security
      Trustee (for its own account) and to each Bank is a separate and independent
      debt.  The Agent, the Security Trustee and the Banks shall have the
      right to protect and enforce its rights arising out of this Agreement and it
      shall not be necessary for the Agent or the Security Trustee or any Bank (as
      the
      case may be) to be joined as an additional party in any proceedings for this
      purpose.

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    
      	
              2.4

            	
              Drawdown

            


    

     

    Subject
      to the terms and conditions of this Agreement, each Advance shall be made to
      the
      Borrowers on the relevant Drawdown Date following receipt by the Agent from
      the
      Borrowers of an original Drawdown Notice not later than 10:00 a.m. on the third
      Banking Day before the date, which shall be a Banking Day falling within the
      Drawdown Period, on which the Borrowers propose such Advance is
      made.  A Drawdown Notice shall be effective on actual receipt by the
      Agent and, once given, shall, subject as provided in clause 3.6.1, be
      irrevocable.

     

    
      	
              2.5

            	
              Timing
                and limitation of Advances

            


    

     

    
      	
              2.5.1

            	
              Subject
                to the other provisions of this clause 2.5, the amount of each Advance
                shall be for such amount as is specified in the Drawdown Notice for
                that
                Advance.

            


    

     

    
      	
              2.5.2

            	
              Each
                Advance shall be made in accordance with clause 6.2 and the amount of
                each Advance shall be as follows:

            


    

     

    
      	
               

            	
              (a)

            	
              the
                amount of the Grasmere Advance shall be up to twelve million five
                hundred
                thousand Dollars ($12,500,000);

            


    

     

    
      	
               

            	
              (b)

            	
              the
                amount of the Ullswater Advance shall be up to eleven million, nine
                hundred thousand Dollars ($11,900,000);
                and

            


    

     

    
      	
               

            	
              (c)

            	
              the
                amount of the Windermere Advance shall be up to ten million, six
                hundred
                thousand Dollars ($10,600,000).

            


    

     

    
      	
              2.6

            	
              Availability

            


    

     

    Upon
      receipt of a Drawdown Notice in respect of an Advance complying with the terms
      of this Agreement, the Agent shall promptly notify each Bank and, subject to
      the
      provisions of clause 9, each Bank shall make available to the Agent its
      portion of the relevant Advance for payment by the Agent in accordance with
      clause 6.2.  The Borrowers acknowledge that payment of the
      Grasmere Advance to the Grasmere Seller or the Ullswater Advance to the
      Ullswater Seller or the Windermere Advance to the Windermere Seller in
      accordance with clause 6.2 shall satisfy the obligation of the Banks to lend
      that Advance to the Borrowers under this Agreement.

     

    
      	
              2.7

            	
              Termination
                of Commitment

            


    

     

    Any
      part
      of the Commitment which remains undrawn and uncancelled by the Termination
      Date
      shall no longer be available to the Borrowers pursuant to this Agreement and
      the
      Banks shall have no further obligations to the Borrowers in respect of that
      undrawn part of the relevant Advance.

     

    
      	
              2.8

            	
              Application
                of proceeds

            


    

     

    Without
      prejudice to the Borrowers’ obligations under clause 8.1.3, the Banks shall
      have, no further responsibility for the application of the proceeds of the
      Loan
      or any part thereof by the Borrowers.

     

    
      	
              3

            	
              Interest
                and Interest Periods

            


    

     

    
      	
              3.1

            	
              Normal
                interest rate

            


    

     

    Subject
      to the Master Swap Agreement, the Borrowers shall pay interest on each Advance
      in respect of each Interest Period relating thereto on each Interest Payment
      Date (or, in the case of Interest Periods of more than three (3) months, by
      instalments, the first instalment three (3) months from the commencement of
      the
      Interest Period and the subsequent instalments at intervals of three (3) months
      or, if shorter, the period from the date of the preceding instalment until
      the
      Interest Payment Date relative to such Interest Period) at the rate per annum
      determined by the Agent to be the aggregate of (a) the Margin, and
      (b) LIBOR for such Interest Period.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    
      	
              3.2

            	
              Selection
                of Interest Periods

            


    

     

    Subject
      to the Master Swap Agreement, the Borrowers may by notice received by the Agent
      not later than 10:00 a.m. on the second Banking Day before the beginning of
      each
      Interest Period specify whether such Interest Period shall have a duration
      of
      three, six or twelve months, or such other period as the Borrowers and the
      Agent
      may agree provided always that if on any date upon which an Interest
      Period falls to be selected by the Borrowers pursuant to this clause 3.2 a
      Transaction or Transactions (which is/are effective or which shall become
      effective during the relevant Interest Period) shall have been entered into
      between the Bank and the Borrowers pursuant to the Master Swap Agreement LIBOR
      shall during the period of any such Transaction(s) and for an amount equal
      to
      the notional amount of such Transaction(s) be determined by reference to the
      rate for deposits in Dollars displayed on Reuters page ISDA in accordance with
      the proviso to the definition of LIBOR and, for the avoidance of doubt, LIBOR
      for that Advance or, as the case may be, part of the Loan which exceeds the
      notional amount of the Transaction(s) shall be determined by reference to the
      rate for deposits in Dollars referred to in the definition of LIBOR but
      excluding the proviso to such definition.

     

    
      	
              3.3

            	
              Determination
                of Interest Periods

            


    

     

    Every
      Interest Period shall be of the duration specified by the Borrowers pursuant
      to
      clause 3.2 but so that:

     

    
      	
              3.3.1

            	
              the
                initial Interest Period in respect of each Advance shall commence
                on the
                Drawdown Date of such Advance and each subsequent Interest Period
                for such
                Advance shall commence on the last day of the previous Interest Period
                for
                such Advance;

            


    

     

    
      	
              3.3.2

            	
              the
                initial Interest Period in respect of each Advance after the first
                Advance
                shall end on the same day as the then current Interest Period for
                the
                Loan;

            


    

     

    
      	
              3.3.3

            	
              if
                any Interest Period for an Advance would otherwise overrun a Repayment
                Date for such Advance, then, in the case of the last Repayment Date
                for
                such Advance, such Interest Period shall end on such Repayment Date,
                and
                in the case of any other Repayment Date or Repayment Dates, the relevant
                Advance shall be divided into parts so that there is one part in
                the
                amount of the repayment instalment due on each Repayment Date for
                such
                Advance falling during that Interest Period and having an Interest
                Period
                ending on the relevant Repayment Date and another part in the amount
                of
                the balance of the relevant Advance having an Interest Period ascertained
                in accordance with clause 3.2 and the other provisions of this
                clause 3.3;

            


    

     

    
      	
              3.3.4

            	
              if
                the Borrowers fail to specify the duration of an Interest Period
                in
                accordance with the provisions of clause 3.2 and this clause 3.3
                such Interest Period shall have a duration of three (3) months or
                such
                other period as shall comply with this clause 3.3;
                and

            


    

     

    
      	
              3.3.5

            	
              for
                the avoidance of doubt, during the currency of any Transaction, Interest
                Periods in respect of each Advance or, as the case may be, the Loan
                shall
                coincide with the payment dates set out in such Transaction and the
                rate
                of interest shall coincide with the fixed rate of interest determined
                in
                accordance with such Transaction.

            


    

     

    
      	
              3.4

            	
              Default
                interest

            


    

     

    If
      the
      Borrowers fail to pay any sum (including, without limitation, any sum payable
      pursuant to this clause 3.4) on its due date for payment under any of the
      Security Documents, the Borrowers shall pay interest on such sum on demand
      from
      the due date up to the date of actual payment (as well after as before judgment)
      at a rate determined by the Agent pursuant to this
      clause 3.4.  The period beginning on such due date and ending on
      such date of payment shall be divided into successive periods of not more than
      three (3) months as selected by the Agent each of which (other than the first,
      which shall commence on such due date) shall commence on the last day of the
      preceding such period.  The rate of interest applicable to each such
      period shall be the aggregate (as determined by the Agent) of (a) two per cent
      (2%) per annum, (b) the Margin, and (c) LIBOR for such period.  Such
      interest shall be due and payable on the last day of each such period as
      determined by the Agent and each such day shall, for the purposes of this
      Agreement, be treated as an Interest Payment Date, provided that if such unpaid
      sum is an amount of principal which became due and payable by reason of a
      declaration by the Agent under clause 10.2.2 or a prepayment pursuant to
      clauses 4.2, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment
      Date relating thereto, the first such period selected by the Agent shall be
      of a
      duration equal to the period between the due date of such principal sum and
      such
      Interest Payment Date and interest shall be payable on such principal sum during
      such period at a rate of two per cent (2%) above the rate applicable thereto
      immediately before it shall have become so due and payable.  If, for
      the reasons specified in clause 3.6.1, the Agent is unable to determine a
      rate in accordance with the foregoing provisions of this clause 3.4, each
      Bank shall promptly notify the Agent of the cost of funds to such Bank and
      interest on any sum not paid on its due date for payment shall be calculated
      at
      a rate determined by the Agent to be two per cent (2%) per annum above the
      aggregate of the Margin and the cost of funds to such Bank.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    
      	
              3.5

            	
              Notification
                of Interest Periods and interest
                rate

            


    

     

    The
      Agent
      shall notify the Borrowers and the Banks promptly of the duration of each
      Interest Period and of each rate of interest (or, as the case may be default
      interest) determined by it under this clause 3.

     

    
      	
              3.6

            	
              Market
                disruption;
                non-availability

            


    

     

    
      	
              3.6.1

            	
              If
                and whenever, at any time prior to the commencement of any Interest
                Period
                the Agent shall have determined (which determination shall, in the
                absence
                of manifest error, be conclusive):

            


    

     

    
      	
               

            	
              (a)

            	
              that
                adequate and fair means do not exist for ascertaining LIBOR during
                such
                Interest Period; or

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Agent shall have received notification from any of the Banks, that
                deposits in Dollars are not available to such Banks in the London
                Interbank Market in the ordinary course of business in sufficient
                amounts
                to fund the Loan or their Contributions for such Interest
                Period,

            


    

     

    the
      Agent
      shall forthwith give notice (a “Determination Notice”) thereof
      to the Borrowers and to each of the Banks.  A Determination Notice
      shall contain particulars of the relevant circumstances giving rise to its
      issue.  After the giving of any Determination Notice the undrawn
      amount of the Commitment shall not be borrowed until notice to the contrary
      is
      given to the Borrowers by the Agent.

     

    
      	
              3.6.2

            	
              During
                the period of ten days after any Determination Notice has been given
                by
                the Agent under clause 3.6.1, each Bank shall certify an alternative
                basis
                (the “Substitute Basis”) for maintaining its
                Contribution.  The Substitute Basis may include alternative
                interest periods, alternative currencies or alternative rates of
                interest
                but shall include a margin above the cost of funds, including Additional
                Cost, if any, to such Bank equivalent to the Margin.  The
                Substitute Basis so certified shall be binding upon the Borrowers,
                and
                shall take effect in accordance with its terms from the date specified
                in
                the Determination Notice until such time as the Agent notifies the
                Borrowers that none of the circumstances specified in clause 3.6.1
                continues to exist whereupon the normal interest rate fixing provisions
                of
                this Agreement shall apply.

            


    

     

    
      	
              4

            	
              Repayment
                and prepayment

            


    

     

    
      	
              4.1

            	
              Repayment

            


    

     

    
      	
              4.1.1

            	
              Grasmere
                Advance

            


    

     

    Subject
      to the provisions of this Agreement the Borrowers shall repay the Grasmere
      Advance by thirty-nine (39) instalments, one such instalment to be repaid on
      each of the Repayment Dates for such Advance and the amount of each instalment
      (other than the thirty-ninth and final instalment) shall be two hundred and
      twelve thousand, eight hundred and two Dollars ($212,802) and the amount of
      the
      final instalment shall be four million four hundred and thirteen thousand,
      five
      hundred and twenty-four Dollars ($4,413,524) (constituting a repayment
      instalment of two hundred and twelve thousand, eight hundred and two Dollars
      ($212,802) and a balloon payment of four million two hundred thousand seven
      hundred and twenty-two Dollars ($4,200,722)).  If the Grasmere Advance
      is not drawn in full, the amount of each repayment instalment shall be reduced
      proportionately.  No amount repaid may be reborrowed.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    
      	
              4.1.2

            	
              Ullswater
                Advance

            


    

     

    Subject
      to the provisions of this Agreement the Borrowers shall repay the Ullswater
      Advance by thirty-nine (39) instalments, one such instalment to be repaid on
      each of the Repayment Dates for such Advance and the amount of each instalment
      (other than the thirty-ninth and final instalment) shall be two hundred and
      two
      thousand five hundred and eighty-eight Dollars ($202,588) and the amount of
      the
      final instalment shall be four million two hundred and one thousand six hundred
      and fifty six  Dollars ($4,201,656) (constituting a repayment
      instalment of two hundred and two thousand five hundred and eighty-eight Dollars
      ($202,588) and a balloon payment of three million nine hundred and ninety-nine
      thousand and sixty-eight Dollars ($3,999,068)).  If the Ullswater
      Advance is not drawn in full, the amount of each repayment instalment shall
      be
      reduced proportionately.  No amount repaid may be
      reborrowed.

     

    
      	
              4.1.3

            	
              Windermere
                Advance

            


    

     

    Subject
      to the provisions of this Agreement the Borrowers shall repay the Windermere
      Advance by thirty-nine (39) instalments, one such instalment to be repaid on
      each of the Repayment Dates for such Advance and the amount of each instalment
      (other than the thirty-ninth and final instalment) shall be one hundred and
      eighty thousand four hundred and fifty-six Dollars ($180,456) and the amount
      of
      the final instalment shall be three million seven hundred and forty two thousand
      six hundred and seventy-two Dollars ($3,742,672) (constituting a repayment
      instalment of one hundred and eighty thousand four hundred and fifty-six Dollars
      ($180,456) and a balloon payment of three million five hundred and sixty two
      thousand two hundred and sixteen Dollars ($3,562,216)).  If the
      Windermere Advance is not drawn in full, the amount of each repayment instalment
      shall be reduced proportionately.  No amount repaid may be
      reborrowed.

     

    
      	
              4.2

            	
              Voluntary
                prepayment

            


    

     

    The
      Borrowers may prepay the Loan in whole or part (being one million Dollars
      ($1,000,000) or any larger sum which is an integral multiple of one million
      Dollars ($1,000,000) on any Interest Payment Date relating to the part of the
      Loan to be repaid without premium or penalty

     

    
      	
              4.3

            	
              Master
                Swap Agreement, repayments and
                prepayments

            


    

     

    
      	
              4.3.1

            	
              Notwithstanding
                any provision of the Master Swap Agreement to the contrary, in the
                case of
                a prepayment of all or part of the Loan (including, without limit,
                upon a
                Total Loss in accordance with clause 4.4) then subject to clause
                4.3.2 the Swap Bank shall be entitled but not obliged (and, where
                relevant, may do so without the consent of the Borrowers, where it
                would
                otherwise be required or necessary under the Master Swap Agreement)
                to
                amend, re-book, supplement, cancel, close out, net out, terminate,
                liquidate, transfer or assign all or any part of the rights, benefits
                and
                obligations created by any Transaction and/or the Master Swap Agreement
                and/or to obtain or re-establish any hedge or related trading position
                to
                the extent any outstanding exposure is no longer wholly matched with
                or
                linked to all or part of the Loan in such manner and with such person
                as
                the Swap Bank may reasonably believe appropriate and both the Swap
                Bank’s
                and the Borrowers’ continuing obligations under any Transaction and/or the
                Master Swap Agreement shall, unless agreed otherwise by the Swap
                Bank, be
                calculated so far as the Swap Bank considers it practicable by reference
                to the amended repayment schedule for the Loan taking into account
                the fact that less than the full amount of the Loan remains
                outstanding.

            


    

     

    
      	
              4.3.2

            	
              If
                less than the full amount of the Loan remains outstanding, following
                a
                prepayment under this Agreement and the Swap Bank in its absolute
                discretion agrees, following a written request of the Borrowers,
                that the
                Borrowers may be permitted to maintain all or part of a Transaction
                in an
                amount not wholly matched with or linked to all or part of the Loan,
                the
                Borrowers shall within ten days of being notified by or on behalf
                of the
                Swap Bank of such requirement, provide the Agent (as security agent
                and
                trustee) with, or procure the provision to the Agent of, such additional
                security as shall in the reasonable opinion of the Swap Bank be adequate
                to secure the performance of such Transaction, which additional security
                shall take such form, be constituted by such documentation and be
                entered
                into between such parties, as the Swap Bank in its absolute discretion
                may
                approve or require, and each document comprising such additional
                security
                shall constitute a Credit Support
                Document.

            


    

     


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    
      	
              4.3.3

            	
              The
                Borrowers shall on the first written demand of the Swap Bank indemnify
                the
                Swap Bank and the Agent in respect of all losses, costs and expenses
                (including, but not limited to, legal costs and expenses) properly
                incurred or sustained by the Swap Bank and/or the Agent as a consequence
                of or in relation to the effecting of any matter or transactions
                referred
                to in this clause 4.3. The Swap Bank shall account to the Borrowers
                for any benefit resulting as a consequence of, or in relation to
                the
                effecting of any matter or transaction referred to in this
                clause 4.3.

            


    

     

    
      	
              4.3.4

            	
              Notwithstanding
                any provisions of the Master Swap Agreement to the contrary, if for
                any
                reason a Transaction has been entered into but the Loan is not drawn
                down
                under this Agreement then, subject to clause 4.3.5, the Swap Bank
                shall be
                entitled but not obliged (and, where relevant, may do so without
                the
                consent of the Borrowers where it would otherwise be required whether
                under the Master Swap Agreement or otherwise) to amend, re-book,
                supplement, cancel, close out, net out, terminate, liquidate, transfer
                or
                assign all or any part of the rights, benefits and obligations created
                by
                such Transaction(s) and/or the Master Swap Agreement and/or to obtain
                or
                re-establish any hedge or related trading position in any manner
                and with
                any person the Swap Bank in its absolute discretion may
                determine.

            


    

     

    
      	
              4.3.5

            	
              If
                a Transaction has been entered into but the Loan is not drawn down
                under
                this Agreement and the Swap Bank in its absolute discretion agrees,
                following a written request of the Borrowers, that the Borrowers
                may be
                permitted to maintain all or part of a Transaction, the Borrower
                shall
                within ten days of being notified by or on behalf of the Swap Bank
                of such
                requirement, provide the Agent (as security agent and trustee) with,
                or
                procure the provision to the Agent of, such additional security as
                shall
                in the opinion of the Swap Bank be adequate to secure the performance
                of
                such Transaction, which additional security shall take such form,
                be
                constituted by such documentation and be entered into between such
                parties, as the Swap Bank in its absolute discretion may approve
                or
                require, and each document comprising such additional security shall
                constitute a Credit Support Document for the purposes of the Master
                Swap
                Agreement and/or otherwise.

            


    

     

    
      	
              4.3.6

            	
              Without
                prejudice to or limitation of the obligations of the Borrowers under
                clause 4.3.3, in the event that the Swap Bank exercises any of its
                rights under clauses 4.3.1, 4.3.2, 4.3.4, or 4.3.5 and such exercise
                results in all or part of a Transaction being terminated such Transaction
                or the part thereof terminated (which shall for the purposes hereof
                be
                treated as a separate Transaction) in each case shall be treated
                under the
                Master Swap Agreement in the same manner as if it were a Terminated
                Transaction (as defined in Section 14 of the Master Swap Agreement)
                pursuant to an Event of Default (as so defined in that Section 14) by
                the Borrowers and, accordingly, the Swap Bank shall be permitted
                to
                recover from the Borrowers a payment for early termination calculated
                in
                accordance with the provisions of Section 6(e)(i) of the Master Swap
                Agreement in respect of such
                Transaction.

            


    

     

    
      	
              4.4

            	
              Prepayment
                on Total Loss and
                sale

            


    

     

    
      	
              4.4.1

            	
              On
                any of the Ships becoming a Total Loss or being involved in an incident
                which in the opinion of the Banks may result in any of the Ships
                being
                subsequently determined to be a Total Loss, or on any Ship being
                sold
                prior to drawdown of the Advance for such Ship, the obligation of
                the
                Banks to make that Advance shall immediately cease and the Commitment
                in
                respect of that Advance shall be reduced to
                zero.

            


    

     

    
      	
              4.4.2

            	
              On
                the date ninety (90) days after that on which such Ship became a
                Total
                Loss or, if earlier, on the date upon which the insurance proceeds
                in
                respect of such Total Loss are or Requisition Compensation is received
                by
                the relevant Borrower (or the Security Trustee and/or the other Creditors
                pursuant to the Ship Security Documents), or in the case of a sale
                of a
                Ship immediately on the completion of the sale of such Ship, the
                Borrowers
                shall prepay the Advance attributable to such Ship and such further
                amount
                (if any) as shall be necessary to ensure that the provisions of clause
                8.2
                remain fully satisfied and shall apply the remaining insurance proceeds
                or
                Requisition Compensation or sale proceeds in payment to the Earnings
                Account. 

            


    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    
      	
              4.4.3

            	
              For
                the purpose of this Agreement, a Total Loss shall be deemed to have
                occurred:

            


    

     

    
      	
               

            	
              (a)

            	
              in
                the case of an actual total loss, on the actual date and at the time
                such
                Ship was lost or, if such date is not known, on the date on which
                such
                Ship was last reported;

            


    

     

    
      	
            	
              (b)

            	
              in
                the case of a constructive total loss, upon the date and at the time
                notice of abandonment of the Ship is given to the insurers of such
                Ship
                for the time being (provided a claim for Total Loss is admitted by
                such
                insurers) or, if such insurers do not forthwith accept such a claim,
                at
                the date and at the time at which either a total loss is subsequently
                admitted by the insurers or a total loss is subsequently adjudged
                by a
                competent court of law or arbitration tribunal to have
                occurred;

            


    

     

    
      	
               

            	
              (c)

            	
              in
                the case of a compromised or arranged total loss, on the date upon
                which a
                binding agreement as to such compromised or arranged total loss has
                been
                entered into by the insurers of such
                Ship;

            


    

     

    
      	
               

            	
              (d)

            	
              in
                the case of Compulsory Acquisition, on the date upon which the relevant
                requisition of title or other compulsory acquisition occurs;
                and

            


    

     

    
      	
               

            	
              (e)

            	
              in
                the case of hijacking, theft, condemnation, capture, seizure, arrest,
                detention or confiscation of a Ship (other than where the same amounts
                to
                Compulsory Acquisition of such Ship) by any Government Entity, or
                by
                persons purporting to act on behalf of any Government Entity, which
                deprives the relevant Borrower of the use of such Ship for more than
                thirty (30) days, upon the expiry of the period of thirty (30) days
                after
                the date upon which the relevant hijacking, theft, condemnation,
                capture,
                seizure, arrest, detention or confiscation
                occurred.

            


    

     

    
      	
              4.5

            	
              Amounts
                payable on prepayment

            


    

     

    Any
      prepayment of all or part of the Loan under this Agreement shall be made
      together with (a) accrued interest on the amount to be prepaid to the date
      of
      such prepayment, (b) any additional amount payable under clauses 6.7 or 12.2
      and
      (c) all other sums payable by the Borrowers to Agent and/or the other Creditors
      under this Agreement or any of the other Security Documents including, without
      limitation, any accrued commitment commission payable under clause 5.1 and
      any
      amounts payable under clause 11.

     

    
      	
              4.6

            	
              Notice
                of prepayment; reduction of repayment
                instalments

            


    

     

    
      	
              4.6.1

            	
              No
                prepayment may be effected under clause 4.2 unless the Borrowers
                shall
                have given the Banks at least fourteen (14) days’ notice of their
                intention to make such prepayment.  Every notice of prepayment
                shall be effective only on actual receipt by the Banks, shall be
                irrevocable, shall specify the amount to be prepaid and shall oblige
                the
                Borrowers to make such prepayment on the date specified. No amount
                prepaid
                may be reborrowed. Any amount prepaid pursuant to clauses 4.2 and
                8.2.1(a)
                shall be applied pro rata as between the relevant Advances and amounts
                repaid under clause 4.4 shall be applied first in prepayment of the
                Advance in respect of the Ship that shall have been sold or become
                a Total
                Loss and second on a pro rata basis as between the remaining Advances
                all
                such prepayments shall be applied in reducing the repayment instalments
                in
                inverse order of their due dates for
                payment.

            


    

     

    
      	
              4.6.2

            	
              The
                Borrowers may not prepay the Loan or any part thereof save as expressly
                provided in this Agreement.

            


    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    
      	
              5

            	
              Fees,
                commitment commission and
                expenses

            


    

     

    
      	
              5.1

            	
              Fees

            


    

     

    The
      Borrowers shall pay to the Agent:

     

    
      	
              5.1.1

            	
              for
                the benefit of the Agent, a management fee payable on the earlier
                of (i)
                the date of this Agreement or (ii) 1 August 2007 in the amount of
                one
                hundred and five thousand Dollars ($105,000);
                and

            


    

     

    
      	
              5.1.2

            	
              if
                the Loan is not drawndown in full by 31 August 2007, a commitment
                fee, for
                the benefit of the Agent (for distribution to the Banks) payable
                on the
                Termination Date or, if earlier, on the Drawdown Date for the final
                Advance computed from 31 August 2007 at the rate of zero point three
                percent (0.30%) per annum on the daily undrawn amount of the Commitment.
                

            


    

     

    The
      fee
      referred to in clause 5.1.1 and the commitment fee referred to in clause 5.1.2
      shall be non-refundable and shall be payable by the Borrowers to the Agent,
      whether or not any part of the Commitment is ever advanced.

     

    
      	
              5.2

            	
              Expenses

            


    

     

    The
      Borrowers shall pay to the Agent on a full indemnity basis on demand all
      reasonable expenses (including legal, printing and out-of-pocket expenses)
      incurred by the Creditors or any of them:

     

    
      	
              5.2.1

            	
              in
                connection with the negotiation, preparation, execution and, where
                relevant, registration of the Security Documents and of any amendment
                or
                extension of or the granting of any waiver or consent under, any
                of the
                Security Documents and the syndication of the Loan;
                and

            


    

     

    
      	
              5.2.2

            	
              in
                contemplation of, or otherwise in connection with, the enforcement
                of, or
                preservation of any rights under, any of the Security Documents,
                or
                otherwise in respect of the moneys owing under any of the Security
                Documents,

            


    

     

    together
      with interest at the rate referred to in clause 3.4 from the date on which
      such
      expenses were incurred to the date of payment (as well after as before
      judgment).

     

    
      	
              5.3

            	
              Value
                added tax

            


    

     

    All
      fees
      and expenses payable pursuant to this clause 5 shall be paid together with
      value added tax or any similar tax (if any) properly chargeable
      thereon.

     

    
      	
              5.4

            	
              Stamp
                and other duties

            


    

     

    The
      Borrowers shall pay all stamp, documentary, registration or other like duties
      or
      taxes (including any duties or taxes payable by the Agent, the Security Trustee
      and/or the Banks) imposed on or in connection with any of the Underlying
      Documents, the Security Documents or the Loan and shall indemnify the Creditors
      or any of them against any liability arising by reason of any delay or omission
      by the Borrowers to pay such duties or taxes.

     

    
      	
              6

            	
              Payments
                and taxes; accounts and
                calculations

            


    

     

    
      	
              6.1

            	
              No
                set-off or counterclaim

            


    

     

    The
      Borrowers acknowledge that in performing their obligations under this Agreement,
      the Banks will be incurring liabilities to third parties in relation to the
      funding of amounts to the Borrowers, such liabilities matching the liabilities
      of the Borrowers to the Banks and that it is reasonable for the Banks to be
      entitled to receive payments from the Borrowers gross on the due date in order
      that each of the Banks is put in a position to perform its matching obligations
      to the relevant third parties.  Accordingly, all payments to be made
      by the Borrowers under any of the Security Documents shall be made in full,
      without any set-off or counterclaim whatsoever and, subject as provided in
      clause 6.6, free and clear of any deductions or withholdings, in Dollars on
      the due date to such account at such bank in such place as the Agent may from
      time to time specify for this purpose.  Save as otherwise provided in
      this Agreement or any relevant Security Documents such payments shall be for
      the
      account of all Banks and the Agent shall distribute such payments in like funds
      as are received by the Agent to the Banks rateably in accordance with their
      respective Commitment (prior to the first drawdown) or Contribution (following
      the first drawdown).

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    
      	
              6.2

            	
              Payment
                by the
                Banks

            


    

     

    All
      sums
      to be advanced by the Banks to the Borrowers under this Agreement shall be
      remitted in Dollars on the Drawdown Date for the relevant Advance to the account
      of the Agent at such bank as the Agent may have notified to the Banks and shall
      be paid by the Agent on such date in like funds as are received by the Agent
      to
      the account specified in the Drawdown Notice for such Advance.

     

    
      	
              6.3

            	
              Agent
                may assume receipt

            


    

     

    Where
      any
      sum is to be paid under any of the Security Documents to the Agent for the
      account of another person, the Agent may assume that the payment will be made
      when due and the Agent may (but shall not be obliged to) make such sum available
      to the person so entitled.  If it proves to be the case that such
      payment was not made to the Agent, then the person to whom such sum was so
      made
      available shall on request refund such sum to the Agent together with interest
      thereon sufficient to compensate the Agent for the cost of making available
      such
      sum up to the date of such repayment and the person by whom such sum was payable
      shall indemnify the Agent for any and all loss or expense which the Agent may
      sustain or incur as a consequence of such sum not having been paid on its due
      date.  If such a sum is so paid to the Agent by the Borrowers, the
      Borrowers may assume that the Agent has paid such sum to the other person for
      whose account it was paid to the Agent.

     

    
      	
              6.4

            	
              Non-Banking
                Days

            


    

     

    When
      any
      payment under any of the Security Documents would otherwise be due on a day
      which is not a Banking Day, the due date for payment shall be extended to the
      next following Banking Day unless such Banking Day falls in the next calendar
      month in which case payment shall be made on the immediately preceding Banking
      Day.

     

    
      	
              6.5

            	
              Calculations

            


    

     

    All
      interest and other payments of an annual nature under any of the Security
      Documents shall accrue from day to day and be calculated on the basis of actual
      days elapsed and a three hundred and sixty (360) days year.

     

    
      	
              6.6

            	
              Certificates
                conclusive

            


    

     

    Any
      certificate or determination of the Agent as to any rate of interest or any
      other amount pursuant to and for the purposes of any of the Security Documents
      shall, in the absence of manifest error, be conclusive and binding on the
      Borrowers and on the Banks.

     

    
      	
              6.7

            	
              Grossing-up
                for Taxes

            


    

     

    If
      at any
      time the Borrowers or any of them are required to make any deduction or
      withholding in respect of Taxes from any payment due under any of the Security
      Documents for the account of any Bank or the Agent or the Security Trustee
      (or
      if the Agent is required to make any deduction or withholding from a payment
      to
      a Bank or the Security Trustee or withholding in respect of Taxes from any
      payment due under any of the Security Documents), the sum due from the Borrowers
      or any of them in respect of such payment shall be increased to the extent
      necessary to ensure that, after the making of such deduction or withholding,
      each Bank and the Agent or the Security Trustee receives on the due date for
      such payment (and retains, free from any liability in respect of such deduction
      or withholding), a net sum equal to the sum which it would have received had
      no
      such deduction or withholding been required to be made and the Borrowers shall
      indemnify each Bank and the Agent and the Security Trustee against any losses
      or
      costs incurred by it by reason of any failure of the Borrowers or any of them
      to
      make any such deduction or withholding or by reason of any increased payment
      not
      being made on the due date for such payment.  The Borrowers shall
      promptly deliver to the Agent any receipts, certificates or other proof
      evidencing the amounts (if any) paid or payable in respect of any deduction
      or
      withholding as aforesaid.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    
      	
              6.8

            	
              Claw-back
                of Tax benefit

            


    

     

    If,
      following any such deduction or withholding as is referred to in clause 6.7
      from
      any payment by the Borrowers (or any of them), the Banks, the Agent or the
      Security Trustee shall receive or be granted a credit against or remission
      for
      any Taxes payable by it, the Banks, the Agent or the Security Trustee (as the
      case may be) shall, subject to the Borrowers (or any of them) having made any
      increased payment in accordance with clause 6.6 and to the extent that the
      Banks, the Agent or the Security Trustee (as the case may be) can do so without
      prejudicing the retention of the amount of such credit or remission and without
      prejudice to the right of the Banks, the Agent or the Security Trustee to obtain
      any other relief or allowance which may be available to it, reimburse the
      Borrowers (or any of them) with such amounts as the Banks, the Agent or the
      Security Trustee shall in its absolute discretion certify to be the proportion
      of such credit or remission as will leave the Banks, the Agent or the Security
      Trustee (after such reimbursement) in no worse position that it would have
      been
      in had there been no such deduction or withholding from the payment by the
      Borrowers (or any of them) as aforesaid.  Such reimbursement shall be
      made forthwith upon the Banks, the Agent or the Security Trustee certifying
      that
      the amount of such credit or remission has been received by
      it.  Nothing contained in this Agreement shall oblige the Banks, the
      Agent or the Security Trustee to rearrange its tax affairs or to disclose any
      information regarding its tax affairs and computations. Without prejudice to
      the
      generality of the foregoing, the Borrowers (or any of them) shall not, by virtue
      of this clause 6.8, be entitled to enquire about the Bank’s, the Agent’s or the
      Security Trustee’s (as the case may be) tax affairs.

     

    
      	
              6.9

            	
              Loan
                account

            


    

     

    Each
      Bank
      shall maintain, in accordance with its usual practice, an account evidencing
      the
      amounts from time to time lent by, owing to and paid to it under the Security
      Documents.  The Agent shall maintain a control account (which in
      relation to the Mortgages shall be the “account current” referred to in the
      Mortgages) showing the Loan and other sums owing by the Borrowers under the
      Security Documents and all payments in respect thereof being made from time
      to
      time.  The control account shall, in the absence of manifest error, be
      conclusive as to the amount from time to time owing by the Borrowers under
      the
      Security Documents.

     

    
      	
              7

            	
              Representations
                and warranties

            


    

     

    
      	
              7.1

            	
              Continuing
                representations and
                warranties

            


    

     

    The
      Borrowers jointly and severally represent and warrant to each Creditor
      that:

     

    
      	
              7.1.1

            	
              Due
                incorporation

            


    

     

    each
      of
      the Borrowers and each of the other Security Parties are duly incorporated
      and
      validly existing in good standing, in the case of the Borrowers and the
      Corporate Guarantor, under the laws of the Republic of Liberia as a Liberian
      corporation, and in the case of each of the other Security Parties, under the
      laws of their respective countries of incorporation as companies with limited
      liability, and have power to carry on their respective businesses as they are
      now being conducted and to own their respective property and other
      assets;

     

    
      	
              7.1.2

            	
              Corporate
                power

            


    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    each
      of
      the Borrowers has power to execute, deliver and perform its obligations under
      the Underlying Documents and the relevant Borrowers' Security
      Documents  to which it is or is to be a party and to borrow the
      Commitment and each of the other Security Parties has power to execute and
      deliver and perform its obligations under the Security Documents to which it
      is
      or is to be a party; all necessary corporate, shareholder and other action
      has
      been taken to authorise the execution, delivery and performance of the same
      and
      no limitation on the powers of any Borrower to borrow will be exceeded as a
      result of borrowing the Loan;

     

    
      	
              7.1.3

            	
              Binding
                obligations

            


    

     

    the
      Underlying Documents and the Security Documents constitute or will, when
      executed, constitute valid and legally binding obligations of the relevant
      Security Parties enforceable in accordance with their respective
      terms;

     

    
      	
              7.1.4

            	
              No
                conflict with other
                obligations

            


    

     

    the
      execution and delivery of, the performance of their obligations under, and
      compliance with the provisions of, the Underlying Documents and the Security
      Documents by the relevant Security Parties will not (a) contravene any existing
      applicable law, statute, rule or regulation or any judgment, decree or permit
      to
      which any of the Borrowers or any other Security Party is subject, (b) conflict
      with, or result in any breach of any of the terms of, or constitute a default
      under, any agreement or other instrument to which any of the Borrowers or any
      other Security Party is a party or is subject or by which it or any of its
      property is bound, (c) contravene or conflict with any provision of the
      constitutional documents of any of the Borrowers or any other Security Party
      or
      (d) result in the creation or imposition of or oblige any of the Borrowers
      or
      any of their Related Companies or any other Security Party to create any
      Encumbrance (other than a Permitted Encumbrance) on any of the undertakings,
      assets, rights or revenues of any of the Borrowers or their Related Companies
      or
      any other Security Party;

     

    
      	
              7.1.5

            	
              No
                litigation

            


    

     

    no
      litigation, arbitration or administrative proceeding is taking place, pending
      or, to the knowledge of the officers of any of the Borrowers, threatened against
      any of the Borrowers or any other Security Party which could have a material
      adverse effect on the business, assets or financial condition of any of the
      Borrowers or any other Security Party;

     

    
      	
              7.1.6

            	
              No
                filings required

            


    

     

    save
      for
      the registration of the Mortgages in the relevant register under the laws of
      the
      Flag State through the Registry, it is not necessary to ensure the legality,
      validity, enforceability or admissibility in evidence of any of the Underlying
      Documents or any of the Security Documents that they or any other instrument
      be
      notarised, filed, recorded, registered or enrolled in any court, public office
      or elsewhere in any Relevant Jurisdiction or that any stamp, registration or
      similar tax or charge be paid in any Relevant Jurisdiction on or in relation
      to
      any of the Underlying Documents or the Security Documents and each of the
      Underlying Documents and the Security Documents is in proper form for its
      enforcement in the courts of each Relevant Jurisdiction;

     

    
      	
              7.1.7

            	
              Choice
                of law

            


    

     

    the
      choice of English law to govern the Underlying Documents and the Security
      Documents (other than the Mortgages) and the choice of Bahamas law to govern
      the
      Mortgages, and the submissions by the Security Parties to the non-exclusive
      jurisdiction of the English courts are valid and binding;

     

    
      	
              7.1.8

            	
              No
                immunity

            


    

     

    neither
      the Borrowers nor any other Security Party nor any of their respective assets
      is
      entitled to immunity on the grounds of sovereignty or otherwise from any legal
      action or proceeding (which shall include, without limitation, suit, attachment
      prior to judgment, execution or other enforcement);

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    
      	
              7.1.9

            	
              Consents
                obtained

            


    

     

    every
      consent, authorisation, licence or approval of, or registration with or
      declaration to, governmental or public bodies or authorities or courts required
      by any Security Party to authorise, or required by any Security Party in
      connection with, the execution, delivery, validity, enforceability or
      admissibility in evidence of each of the Underlying Documents and each of the
      Security Documents to which it is or is to be a party or the performance by
      each
      Security Party of its obligations under the Security Documents or the Underlying
      Documents to which it is or is to be a party has been obtained or made and
      is in
      full force and effect and there has been no default in the observance of any
      of
      the conditions or restrictions (if any) imposed in, or in connection with,
      any
      of the same;

     

    
      	
              7.1.10

            	
              Shareholdings

            


    

     

    each
      of
      the Borrowers is legally and beneficially owned by the Corporate
      Guarantor;

     

    
      	
              7.1.11

            	
              Compliance
                with ISM Code and ISPS
                Code

            


    

     

    the
      Operator and the Ships have complied at all times with the ISM Code and the
      ISPS
      Code;

     

    
      	
              7.1.12

            	
              Environmental
                matters

            


    

     

    to
      the
      best of the knowledge and belief of each of the Borrowers and its
      officers:

     

    
      	
               

            	
              (a)

            	
              all
                Environmental Laws applicable to any Fleet Vessel have been complied
                with
                and all consents, licences and approvals required under such Environmental
                Laws have been obtained and complied with;
                and

            


    

     

    
      	
               

            	
              (b)

            	
              no
                Environmental Claim has been made or threatened or is pending against
                any
                member of the Borrowers’ Group or any Fleet Vessel and not fully
                satisfied; and

            


    

     

    
      	
               

            	
              (c)

            	
              there
                has been no Environmental Incident;

            


    

     

    
      	
              7.1.13

            	
              No
                money laundering

            


    

     

    in
      relation to the borrowing by the Borrowers of the Loan, the performance and
      discharge of its obligations and liabilities under this Agreement and the
      transactions and other arrangements effected or contemplated by this Agreement,
      each of the Borrowers is acting for its own account and that the foregoing
      will
      not involve or lead to contravention of any law, official, requirement or other
      regulatory measure or procedure implemented to combat “money laundering” (as
      defined in Article 1 of the Directive (91/308/EEC) of the Council of the
      European Communities); and

     

    
      	
              7.1.14

            	
              Freedom
                from Encumbrances

            


    

     

    none
      of
      the Ships nor any of their respective Earnings, Insurances or Requisition
      Compensation (each as defined in the relevant Ship Security Documents) nor
      the
      Earnings Account nor the Underlying Documents nor any other properties or rights
      which are, or are to be the subject of any of the Security Documents nor any
      part thereof will be, on the Drawdown Date for any Advance, subject to any
      Encumbrance other than a Permitted Encumbrance.

     

    
      	
              7.2

            	
              Initial
                representations and
                warranties

            


    

     

    The
      Borrowers jointly and severally further represent and warrant to each Creditor
      that:

     

    
      	
              7.2.1

            	
              Pari
                passu

            


    

     

    the
      obligations of each Borrower under this Agreement are direct, general and
      unconditional obligations of such Borrower and rank at least pari passu with
      all
      other present and future unsecured and unsubordinated Indebtedness of such
      Borrower except for obligations which are mandatorily preferred by operation
      of
      law and not by contract;


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    
      	
              7.2.2

            	
              No
                default under other Borrowed
                Money

            


    

     

    none
      of
      the Borrowers nor any other Security Party is (nor would with the giving of
      notice or lapse of time or the satisfaction of any other condition or
      combination thereof be) in breach of or in default under any agreement relating
      to Borrowed Money to which it is a party or by which it may be
      bound;

     

    
      	
              7.2.3

            	
              Information

            


    

     

    the
      information, exhibits and reports furnished by any Security Party to the Agent
      in connection with the negotiation and preparation of the Security Documents
      are
      true and accurate in all material respects and not misleading, do not omit
      material facts and all reasonable enquiries have been made to verify the facts
      and statements contained therein; there are no other facts the omission of
      which
      would make any fact or statement therein misleading;

     

    
      	
              7.2.4

            	
              No
                withholding Taxes

            


    

     

    no
      Taxes
      are imposed by withholding or otherwise on any payment to be made by any
      Security Party under the Underlying Documents or the Security Documents to
      which
      such Security Party is or is to be a party or are imposed on or by virtue of
      the
      execution or delivery by the Security Parties of the Underlying Documents or
      the
      Security Documents or any other document or instrument to be executed or
      delivered under any of the Security Documents;

     

    
      	
              7.2.5

            	
              No
                Default

            


    

     

    no
      Default has occurred and is continuing;

     

    
      	
              7.2.6

            	
              The
                Ships

            


    

     

    each
      Ship
      will on the Drawdown Date of the Advance relevant to such Ship be:

     

    
      	
               

            	
              (a)

            	
              in
                the absolute ownership of the relevant Borrower who will on and after
                such
                Drawdown Date be the sole, legal and beneficial owner of such
                Ship;

            


    

     

    
      	
               

            	
              (b)

            	
              provisionally
                registered through the offices of the relevant Registry as a ship
                under
                the laws and flag of the relevant Flag
                State;

            


    

     

    
      	
               

            	
              (c)

            	
              operationally
                seaworthy and in every way fit for service;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              classed
                with the relevant Classification free of all requirements and
                recommendations of the Classification
                Society;

            


    

     

    
      	
              7.2.7

            	
              Ships'
                employment

            


    

     

    save
      for
      any Charters, none of the Ships is nor will on or before the Drawdown Date
      of
      the Advance relevant to such Ship be subject to any charter or contract or
      to
      any agreement to enter into any charter or contract which, if entered into
      after
      the date of the relevant Ship Security Documents would have required the consent
      of the Agent and on or before the Drawdown Date of the Advance relevant to
      such
      Ship, there will not be any agreement or arrangement whereby the Earnings may
      be
      shared with any other person;

     

    
      	
              7.2.8

            	
              No
                Material Adverse Change

            


    

     

    there
      has
      been no material adverse change in the financial position of the Borrowers
      or
      the Corporate Guarantor from that described  to the Agent in the
      negotiation of this Agreement; and

     

    
      	
              7.2.9

            	
              Copies
                true and complete

            


    

     

    the
      copies of the Underlying Documents delivered or to be delivered to the Agent
      pursuant to clause 9.1 are, or will when delivered be, true and complete
      copies of such documents; and such documents constitute valid and binding
      obligations of the parties thereto enforceable in accordance with their
      respective terms and there have been no amendments or variations thereof or
      defaults thereunder.


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    
      	
              7.3

            	
              Repetition
                of representations and
                warranties

            


    

     

    On
      and as
      of each Drawdown Date and (except in relation to the representations and
      warranties in clause 7.2) on each Interest Payment Date, the Borrowers
      shall:

     

    
      	
               

            	
              (a)

            	
              be
                deemed to repeat the representations and warranties in clauses 7.1
                and 7.2
                as if made with reference to the facts and circumstances existing
                on such
                day; and

            


    

     

    
      	
               

            	
              (b)

            	
              be
                deemed to further represent and warrant to each of the Creditors
                that the
                then latest audited financial statements delivered to the Agent by
                the
                Borrowers (if any) have been prepared in accordance with generally
                accepted international accounting principles and practices which
                have been
                consistently applied and present fairly and accurately the financial
                position of the Borrowers, as at the end of the financial period
                to which
                the same relate and the results of the operations of the Borrowers,
                for
                the financial period to which the same relate and, as at the end
                of such
                financial period, neither the Borrowers nor any of their Related
                Companies
                had any significant liabilities (contingent or otherwise) or any
                unrealised or anticipated losses which are not disclosed by, or reserved
                against or provided for in, such financial
                statements.

            


    

     

    
      	
              8

            	
              Undertakings

            


    

     

    
      	
              8.1

            	
              General

            


    

     

    The
      Borrowers jointly and severally undertake with each Creditor that, from the
      date
      of this Agreement and so long as any moneys are owing under any of the Security
      Documents and while all or any part of the Commitment remains outstanding,
      they
      will:

     

    
      	
              8.1.1

            	
              Notice
                of Default

            


    

     

    promptly
      inform the Agent of any occurrence of which any of them become aware which
      might
      adversely affect the ability of any Security Party to perform its obligations
      under any of the Security Documents or the Underlying Documents to which it
      is
      or is to be a party and, without limiting the generality of the foregoing,
      will
      inform the Agent of any Default or of any material litigation, arbitration
      or
      similar proceedings affecting the Borrowers and/or the Ships forthwith upon
      becoming aware thereof and will from time to time, if so requested by the Agent,
      confirm to the Agent in writing that, save as otherwise stated in such
      confirmation, no Default has occurred which is continuing and no material
      litigation, arbitration or similar proceedings have been commenced by or against
      the Borrowers and/or the Ships;

     

    
      	
              8.1.2

            	
              Consents
                and licences

            


    

     

    without
      prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain in
      full
      force and effect and comply in all material respects with the conditions and
      restrictions (if any) imposed in, or in connection with, every consent,
      authorisation, licence or approval of governmental or public bodies or
      authorities or courts and do, or cause to be done, all other acts and things
      which may from time to time be necessary or desirable under applicable law
      for
      the continued due performance of all the obligations of the Security Parties
      under each of the Security Documents and the Underlying Documents;

     

    
      	
              8.1.3

            	
              Use
                of proceeds

            


    

     

    use
      the
      Loan exclusively for the purposes specified in clause 1.1;

     

    
      	
              8.1.4

            	
              Pari
                passu

            


    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    ensure
      that their obligations under this Agreement and the Master Swap Agreement shall,
      at all times rank at least pari passu with all their other present and future
      unsecured and unsubordinated Indebtedness with the exception of any obligations
      which are mandatorily preferred by law and not by contract;

     

    
      	
              8.1.5

            	
              Financial
                statements

            


    

     

    prepare
      unaudited financial statements of each of the Borrowers in accordance with
      generally accepted international accounting principles and practices
      consistently applied in respect of each financial year and deliver as many
      copies of the same as the Agent may reasonably require as soon as practicable
      but not later than ninety (90) days after the end of the financial period to
      which they relate;

     

    
      	
              8.1.6

            	
              Delivery
                of reports

            


    

     

    deliver
      to the Agent and each Bank as many copies as they may require of every report,
      circular, notice or like document issued by the Borrowers or any of other
      Security Party to its shareholders or creditors generally;

     

    
      	
              8.1.7

            	
              Provision
                of further information

            


    

     

    provide
      the Agent and each Bank with:

     

    
      	
               

            	
              (a)

            	
              such
                financial and other information concerning the Borrowers and their
                respective affairs as the Agent or any Bank may from time to time
                reasonably require; and

            


    

     

    
      	
               

            	
              (b)

            	
              such
                documents and evidence as the Agent and any Bank shall from time
                to time
                require, based on applicable law and regulations from time to time
                and the
                Agent and such Bank’s own internal guidelines from time to time to
                identify the Borrowers and the other Security Parties and any other
                persons involved or affected by the transaction(s) contemplated by
                this
                Agreement;

            


    

     

    
      	
              8.1.8

            	
              Obligations
                under Security Documents

            


    

     

    and
      will
      procure that each of the other Security Parties will, duly and punctually
      perform each of the obligations expressed to be assumed by them under the
      Security Documents and the Underlying Documents to which they are a
      party;

     

    
      	
              8.1.9

            	
              Compliance
                with ISM Code

            


    

     

    and
      will
      procure that any Operator will, comply with and ensure that the Ships and any
      Operator complies with the requirements of the ISM Code, including (but not
      limited to) the maintenance and renewal of valid certificates pursuant thereto
      throughout the Security Period;

     

    
      	
              8.1.10

            	
              Withdrawal
                of DOC and SMC

            


    

     

    and
      will
      procure that any Operator will, immediately inform the Agent if there is any
      threatened or actual withdrawal of such Operator’s DOC or the SMC in respect of
      either of the Ships;

     

    
      	
              8.1.11

            	
              Issuance
                of DOC and SMC

            


    

     

    and
      will
      procure that any Operator will, promptly inform the Agent upon the issue to
      any
      of the Borrowers or any Operator of a DOC and to any of the Ships of an SMC
      or
      the receipt by any of the Borrowers or any Operator of notification that its
      application for the same has been refused;

     

    
      	
              8.1.12

            	
              Compliance
                with ISPS Code

            


    

     

    and
      will
      procure that each Ship will comply with the requirements of the ISPS Code
      including (but not limited to) the maintenance and renewal of the ISSC for
      each
      Ship pursuant to the ISPS Code and will immediately inform the Agent if there
      is
      any actual or threatened withdrawal of the ISSC for any Ship;


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    
      	
              8.1.13

            	
              Know
                your customer and money laundering
                compliance

            


    

     

    provide
      the Banks with such documents and evidence as the Banks shall from time to
      time
      require, based on applicable law and regulations from time to time and the
      Banks’ own “know your customer” internal guidelines from time to time to
      identify the Borrowers and the other Security
      Parties, including the ultimate legal and beneficial owner or owners of such
      entities, and any other persons involved or affected by the transaction(s)
      contemplated by this Agreement; and

     

    
      	
              8.1.14

            	
              Charters

            


    

     

    shall
      promptly deliver to the Agent a final draft of any Charter prior to execution
      thereof and deliver to the Agent a Charter Assignment in respect of such Charter
      and all notices and acknowledgements required thereunder concurrently with
      the
      execution of such Charter.

     

    
      	
              8.2

            	
              Security
                value maintenance

            


    

     

    
      	
              8.2.1

            	
              Security
                shortfall

            


    

     

    If
      at any
      time the Security Value shall be less than the Security Requirement, the Agent
      may give notice to the Borrowers requiring that such deficiency be remedied
      and
      then the Borrowers shall, within a period of thirty (30) days of the date of
      receipt by the Borrowers of the Agent’s said notice, either:

     

    
      	
            	
              (a)

            	
              prepay
                such sum in Dollars as will result in the Security Requirement after
                such
                prepayment (taking into account any other repayment of the Loan made
                between the date of the notice and the date of such prepayment) being
                equal to the Security Value; and/or

            


    

     

    
      	
               

            	
              (b)

            	
              provide
                cash collateral (to be held in an account which has been pledged
                in favour
                of the Agent (as security agent and trustee on behalf of the Creditors)
                of
                such sum which, when added to the Security Value, shall not be less
                than
                the Security Requirement as at such date;
                and/or

            


    

     

    
      	
               

            	
              (c)

            	
              constitute
                to the satisfaction of the Banks such further security for the Loan
                as
                shall be acceptable to the Banks having a value for security purposes
                (as
                determined by the Banks in their absolute discretion) at the date
                upon
                which such further security shall be constituted which, when added
                to the
                Security Value, shall not be less than the Security Requirement as
                at such
                date.

            


    

     

    The
      provisions of clauses 4.5 and 4.6 shall apply to prepayments under
      clause 8.2.1(a).

     

    
      	
              8.2.2

            	
              Valuations
                of the Ships

            


    

     

    Each
      of
      the Ships shall, for the purposes of this Agreement, be valued in Dollars at
      yearly intervals by an independent firm of shipbrokers suitably qualified and
      experienced in dealing with similar types of vessels to the Ships appointed
      by
      the Agent in its sole discretion.  Each such valuation shall be made
      without, unless required by the Agent, physical inspection, and on the basis
      of
      a sale for prompt delivery for cash at arm’s length on normal commercial terms
      as between a willing buyer and a willing seller without taking into account
      the
      benefit of any charterparty or other engagement concerning the relevant Ship.
      The mean of such valuations shall constitute the value of the Ships for the
      purposes of this clause 8.2.

     

    The
      value
      of any Ship determined in accordance with the provisions of this clause 8.2
      shall be binding upon the parties hereto until such time as any further such
      valuations shall be obtained.

     

    
      	
              8.2.3

            	
              Information

            


    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    The
      Borrowers jointly and severally undertake with the Agent and each of the Banks
      to supply to the Agent and to any such shipbrokers such information concerning
      either of the Ships and its condition as the Agent or any such shipbrokers
      may
      require for the purpose of making any such valuation.

     

    
      	
              8.2.4

            	
              Costs

            


    

     

    All
      costs
      in connection with the Agent obtaining any valuation of the Ships referred
      to in
      clause 8.2.2, and any valuation either of any additional security for the
      purposes of ascertaining the Security Value at any time or necessitated by
      the
      Borrowers electing to constitute additional security pursuant to
      clause 8.2.1(c), shall be borne by the Borrowers.

     

    
      	
              8.2.5

            	
              Valuation
                of additional security

            


    

     

    For
      the
      purpose of this clause 8.2, the market value of any additional security
      provided or to be provided to the Banks shall be determined by the Banks in
      their absolute discretion without any necessity for the Banks assigning any
      reason thereto, Provided always that any vessel shall be valued under this
      clause 8.2 as if it were a “Ship”.

     

    
      	
              8.2.6

            	
              Documents
                and evidence

            


    

     

    In
      connection with any additional security provided in accordance with this
      clause 8.2, the Banks shall be entitled to receive such evidence and
      documents of the kind referred to in Schedule 3 as may in the Banks’
opinion be appropriate and such favourable legal opinions as the Banks shall
      in
      their absolute discretion require.

     

    
      	
              8.2.7

            	
              Security
                Release

            


    

     

    If
      the
      Security Value shall at any time exceed the Security Requirement, and the
      Borrowers shall previously have provided further security to the Bank pursuant
      to clause 8.2.1(b) or 8.2.1(c), if such excess has prevailed for a period in
      excess of 90 days then the Agent shall, as soon as reasonably practicable after
      notice from the Borrowers to do so and subject to no Default having occurred
      and
      continuing and to the Agent being indemnified to its satisfaction against the
      cost of doing so, release any such further security specified by the Borrowers
      provided that the Agent is satisfied that, immediately following such release,
      the Security Value will equal or exceed an amount equal to one hundred and
      ten
      percent (110%) of the Security Requirement.

     

    
      	
              8.3

            	
              Negative
                undertakings

            


    

     

    The
      Borrowers jointly and severally undertake with the Agent and each of the other
      Creditors that, from the date of this Agreement and so long as any moneys are
      owing under the Security Documents and while all or any part of the Commitment
      remains outstanding, they will not, without the prior written consent of the
      Agent:

     

    
      	
              8.3.1

            	
              Negative
                pledge

            


    

     

    permit
      any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be
      created or extended over all or any part of their respective present or future
      undertakings, assets, rights or revenues to secure or prefer any of their
      present or future Indebtedness or other liability or obligation of the Borrowers
      or that of any other person;

     

    
      	
              8.3.2

            	
              No
                merger

            


    

     

    merge
      or
      consolidate with any other person;

     

    
      	
              8.3.3

            	
              Disposals

            


    

     

    sell,
      transfer, abandon, lend or otherwise dispose of or cease to exercise direct
      control over any part (being alone or, when aggregated with all other disposals
      falling to be taken into account pursuant to this clause 8.3.3, material in
      the
      opinion of the Banks in relation to the undertakings, assets, rights, and
      revenues of the Borrowers) of their present or future undertaking, assets,
      rights or revenues (otherwise than by transfers, sales or disposals for full
      consideration in the ordinary course of trading) whether by one or a series
      of
      transactions related or not except in relation to any sale of a Ship in
      accordance with the terms of this Agreement;

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    
      	
              8.3.4

            	
              Other
                business

            


    

     

    undertake
      any business other than the ownership and operation of the Ships and the
      chartering of the Ships to third parties and matters incidental
      thereto;

     

    
      	
              8.3.5

            	
              Acquisitions

            


    

     

    acquire
      any further assets other than the Ships and rights arising under contracts
      entered into by or on behalf of the Borrowers in the ordinary course of their
      businesses of owning, operating and chartering the Ships;

     

    
      	
              8.3.6

            	
              Other
                obligations

            


    

     

    incur
      any
      obligations except for obligations arising under the Underlying Documents or
      the
      Security Documents or contracts entered into in the ordinary course of their
      business of owning, operating and chartering the Ships;

     

    
      	
              8.3.7

            	
              No
                borrowing

            


    

     

    incur
      any
      Borrowed Money (including, without limitation, from their shareholders or
      otherwise) except for Borrowed Money pursuant to the Security
      Documents;

     

    
      	
              8.3.8

            	
              Repayment
                of borrowings

            


    

     

    repay
      or
      prepay the principal of, or pay interest on or any other sum in connection
      with
      any of their Borrowed Money except for Borrowed Money pursuant to the Security
      Documents;

     

    
      	
              8.3.9

            	
              Guarantees

            


    

     

    issue
      any
      guarantees or indemnities or otherwise become directly or contingently liable
      for the obligations of any person, firm, or corporation except pursuant to
      the
      Security Documents and except for guarantees or indemnities from time to time
      required in the ordinary course by any protection and indemnity or war risks
      association with which a Ship is entered, guarantees required to procure the
      release of such Ship from any arrest, detention, attachment or levy or
      guarantees or undertakings required for the salvage of such Ship);

     

    
      	
              8.3.10

            	
              Loans

            


    

     

    make
      any
      loans or grant any credit (save for normal trade credit in the ordinary course
      of business) to any person or agree to do so;

     

    
      	
              8.3.11

            	
              Sureties

            


    

     

    permit
      any of their Indebtedness to any person (other than the Creditors pursuant
      to
      the Security Documents) to be guaranteed by any person (save for guarantees
      or
      indemnities from time to time required in the ordinary course by any protection
      and indemnity or war risks association with which a Ship is entered, guarantees
      required to procure the release of such Ship from any arrest, detention,
      attachment or levy or guarantees or undertakings required for the salvage of
      a
      Ship);

     

    
      	
              8.3.12

            	
              Share
                Capital

            


    

     

    purchase
      or otherwise acquire for value any shares of their capital or distribute any
      of
      their present or future assets, undertakings, rights or revenues to any of
      their
      shareholders (except for any dividends payable to their
      shareholders);

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    
      	
              8.3.13

            	
              Subsidiaries

            


    

     

    form
      or
      acquire any Subsidiaries;

     

    
      	
              8.3.14

            	
              Constitutional
                documents

            


    

     

    agree
      to
      any change to their articles of incorporation, by-laws or other constitutional
      documents;

     

    
      	
              8.3.15

            	
              Ownership
                of shares

            


    

     

    
      	
               

            	
              (a)

            	
              permit
                any change in the legal and beneficial ownership of the shares in
                the
                Borrowers; or

            


    

     

    
      	
               

            	
              (b)

            	
              permit
                any change in the majority shareholders of the Corporate Guarantor
                from
                that disclosed to the Agent on or before the date of this Agreement
                save
                that no such consent shall be required if the Corporate Guarantor
                shall
                become a Subsidiary of Bear Stearns Merchant Manager III, L.P. and
                the
                Agent’s consent to a future transfer of shares in the Corporate Guarantor
                that would result in the Corporate Guarantor ceasing to be a Subsidiary
                of
                Bear Stearns Merchant Manager III, L.P. shall not be unreasonably
                withheld
                or delayed;

            


    

     

    
      	
              8.3.16

            	
              Assignment
                of Earnings

            


    

     

    assign
      or
      agree to assign otherwise than to the Agent (as security agent and trustee
      on
      behalf of the Creditors) the Earnings or any part thereof in respect of any
      of
      the Ships; and

     

    
      	
              8.3.17

            	
              Classification,
                Classification Society or Flag
                State

            


    

     

    change
      the Classification, the Classification Society or the Flag State of any of
      the
      Ships.

     

    
      	
              9

            	
              Conditions

            


    

     

    
      	
              9.1

            	
              Documents
                and evidence

            


    

     

    The
      obligation of each Bank to make its Commitment available shall be subject to
      the
      condition that the Agent, or its duly authorised representative, shall have
      received:

     

    
      	
              9.1.1

            	
              not
                later than two Banking Days before the day on which the Drawdown
                Notice
                for the first Advance to be drawn down is given, the documents and
                evidence specified in Part 1 of Schedule 3 in form and substance
                satisfactory to the Agent; and

            


    

     

    
      	
              9.1.2

            	
              on
                or prior to the drawdown of each Advance, the documents and evidence
                specified in Part 2 of Schedule 3 in relation to the Ship to which
                such Advance relates, in form and substance satisfactory to the
                Agent.

            


    

     

    
      	
              9.2

            	
              General
                conditions precedent

            


    

     

    The
      obligation of the Banks to make any Advance shall be subject to the further
      conditions that, at the time of the giving of the Drawdown Notice for such
      Advance, and at the time of the making of such Advance:

     

    
      	
              9.2.1

            	
              the
                representations and warranties contained in (a) clauses 7.1, 7.2
                and
                7.3 and (b) clause 4 of the Corporate Guarantee, are true and correct
                on and as of each such time as if each was made with respect to the
                facts
                and circumstances existing at such time;
                and

            


    

     

    
      	
              9.2.2

            	
              no
                Event of Default shall have occurred and be continuing unremedied
                or
                unwaived or would result from the making of the relevant
                Advance.

            


    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    
      	
              9.3

            	
              Waiver
                of conditions precedent

            


    

     

    The
      conditions specified in this clause 9 are inserted solely for the benefit
      of the Banks and may be waived by the Banks in whole or in part and with or
      without conditions.

     

    
      	
              9.4

            	
              Further
                conditions precedent

            


    

     

    Not
      later
      than five Banking Days prior to each Drawdown Date and not later than five
      Banking Days prior to each Interest Payment Date, the Banks may request and
      the
      Borrowers shall, not later than two Banking Days prior to such date, deliver
      to
      the Banks on such request further relevant certificates and/or favourable
      opinions as to any or all of the matters which are the subject of clauses7,
      8, 9
      and 10.

     

    
      	
              10

            	
              Events
                of Default

            


    

     

    
      	
              10.1

            	
              Events

            


    

     

    There
      shall be an Event of Default if:

     

    
      	
              10.1.1

            	
              Non-payment:
                any Security Party fails to pay any sum payable by it under any of
                the
                Security Documents at the time, in the currency and in the manner
                stipulated in the Security Documents (and so that, for this purpose,
                sums
                payable on demand shall be treated as having been paid at the stipulated
                time if paid within three (3) Banking Days of demand);
                or

            


    

     

    
      	
              10.1.2

            	
              Master
                Swap Agreement: (a) an Event of Default or Potential Event of
                Default (in each case as defined in the Master Swap Agreement) has
                occurred and is continuing under the Master Swap Agreement or (b)
                an Early
                Termination Date (as defined in the Master Swap Agreement) has occurred
                or
                been or become capable of being effectively designated under the
                Master
                Swap Agreement or (c) a person entitled to do so give notice of an
                Early
                Termination Event under Section 6(b)(iv) of the Master Swap Agreement
                or
                (d) the Master Swap Agreement is cancelled, terminated, suspended,
                rescinded or revoked or otherwise ceases to remain in full force
                and
                effect for any reason; or

            


    

     

    
      	
              10.1.3

            	
              Breach
                of Insurance and certain other obligations: any of the Borrowers
                or, as the context may require, the Manager fails to obtain and/or
                maintain the Insurances (as defined in, and in accordance with the
                requirements of, the Ship Security Documents) for any of the Ships
                or if
                any insurer in respect of such Insurances cancels the Insurances
                or
                disclaims liability by reason, in either case, of mis-statement in
                any
                proposal for the Insurances or for any other failure or default on
                the
                part of any of the Borrowers, the Manager or any other person or
                any of
                the Borrowers commits any breach of or omits to observe any of the
                obligations or undertakings expressed to be assumed by it under
                clauses 8.2 or 8.3 respectively;
                or

            


    

     

    
      	
              10.1.4

            	
              Breach
                of other obligations: any Security Party commits any breach of or
                omits to observe any of its obligations or undertakings expressed
                to be
                assumed by it under any of the Security Documents (other than those
                referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) or the Underlying
                Documents and, in respect of any such breach or omission which in
                the
                opinion of the Banks is capable of remedy, such action as the Banks
                may
                require shall not have been taken within fourteen (14) days of the
                Agent
                and/or the Banks notifying the relevant Security Party of such default
                and
                of such required action; or

            


    

     

    
      	
              10.1.5

            	
              Misrepresentation:
                any representation or warranty made or deemed to be made or repeated
                by or
                in respect of any Security Party in or pursuant to any of the Security
                Documents or in any notice, certificate or statement referred to
                in or
                delivered under any of the Security Documents or any of the Underlying
                Documents is or proves to have been incorrect or misleading in any
                material respect; or

            


    

     

    
      	
              10.1.6

            	
              Cross-default:
                any Indebtedness of any Borrower or the Corporate Guarantor is not
                paid
                when due or any Indebtedness of any Borrower or the Corporate Guarantor
                becomes (whether by declaration or automatically in accordance with
                the
                relevant agreement or instrument constituting the same) due and payable
                prior to the date when it would otherwise have become due (unless
                as a
                result of the exercise by the relevant Borrower or the Corporate
                Guarantor
                of a voluntary right of prepayment) or any creditor of any Borrower
                or the
                Corporate Guarantor becomes entitled to declare any such Indebtedness
                due
                and payable or any facility or commitment available to any Borrower
                or the
                Corporate Guarantor relating to Indebtedness is withdrawn, suspended
                or
                cancelled by reason of any default (however described) of the person
                concerned unless the relevant Borrower or the Corporate Guarantor
                shall
                have satisfied the Agent that such withdrawal, suspension or cancellation
                will not affect or prejudice in any way the relevant Borrower's or
                the
                Corporate Guarantor’s ability to pay its debts as they fall due and fund
                its commitments, or any guarantee given by any Borrower or the Corporate
                Guarantor in respect of Indebtedness is not honoured when due and
                called
                upon and, the amount, or aggregate amount at any one time, of all
                Indebtedness in relation to which any of the foregoing events shall
                have
                occurred and be continuing is (in the case of the Corporate Guarantor,
                but
                not the Borrowers) equal to or greater than one million five hundred
                thousand Dollars ($1,500,000) or its equivalent in the currency in
                which
                the same is denominated and
                payable; or

            


    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    


    
      	
              10.1.7

            	
              Legal
                process: any judgment or order made against any Security Party
                is
                not stayed or complied with within 21 days or a creditor attaches
                or takes
                possession of, or a distress, execution, sequestration or other process
                is
                levied or enforced upon or sued out against, any of the undertakings,
                assets, rights or revenues of any Security Party and is not discharged
                within 21 days; or

            


    

     

    
      	
              10.1.8

            	
              Insolvency:
                any Security Party becomes insolvent or stops or suspends making
                payments
                (whether of principal or interest) with respect to all or any class
                of its
                debts or announces the intention to do so;
                or

            


    

     

    
      	
              10.1.9

            	
              Reduction
                or loss of capital: a meeting is convened by any Security Party
                for the purpose of passing any resolution to purchase, reduce or
                redeem
                any of its share capital; or

            


    

     

    
      	
              10.1.10

            	
              Winding
                up: any corporate action, legal proceedings or other procedure
                or
                step is taken for the purpose of winding up any Security Party (not
                being
                an action, proceedings or a procedure which the Borrowers or the
                relevant
                Security Party can demonstrate to the satisfaction of the Agent,
                by
                providing an opinion of leading counsel to that effect, is frivolous,
                vexatious or an abuse of the process of the court or relates to a
                claim to
                which the relevant Security Party has a good defence and which is
                being
                vigorously contested by the relevant Security Party) or an order
                is made
                or resolution passed for the winding up of any Security Party or
                a notice
                is issued convening a meeting for the purpose of passing any such
                resolution; or

            


    

     

    
      	
              10.1.11

            	
              Administration:
                any petition is presented, notice given or other step is taken for
                the
                purpose of the appointment of an administrator of any Security Party
                or an
                administration order is made in relation to any Security Party;
                or

            


    

     

    
      	
              10.1.12

            	
              Appointment
                of receivers and managers: any administrative or other receiver
                is appointed of any Security Party or the whole or a substantial
                part of
                its assets and/or undertaking or any other steps are taken to enforce
                any
                Encumbrance over all or any part of the assets of any Security Party;
                or

            


    

     

    
      	
              10.1.13

            	
              Compositions:
                any corporate action, legal proceedings or other procedures or steps
                are
                taken, or negotiations are commenced by any Security Party or by
                any of
                its creditors with a view to the general readjustment or rescheduling
                of
                all or part of its indebtedness or to proposing any kind of composition,
                compromise or arrangement involving such company and any of its creditors;
                or

            


    

     

    
      	
              10.1.14

            	
              Analogous
                proceedings: there occurs, in relation to any Security Party, in
                any country or territory in which any of them carries on business
                or to
                the jurisdiction of whose courts any part of their assets is subject,
                any
                event which, in the reasonable opinion of the Banks and/or Agent,
                appears
                in that country or territory to correspond with, or have an effect
                equivalent or similar to, any of those mentioned in clauses 10.1.7
                to
                10.1.13 (inclusive) or any Security Party or any other Restricted
                Company
                otherwise becomes subject, in any such country or territory, to the
                operation of any law relating to insolvency, bankruptcy or liquidation;
                or

            


    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    


    
      	
              10.1.15

            	
              Cessation
                of business: any Security Party suspends or ceases or threatens
                to suspend or cease to carry on its business;
                or

            


    

     

    
      	
              10.1.16

            	
              Seizure:
                all or a material part of the undertaking, assets, rights or revenues
                of,
                or shares or other ownership interests in, any Security Party or
                any other
                Restricted Company are seized, nationalised, expropriated or compulsorily
                acquired by or under the authority of any government;
                or

            


    

     

    
      	
              10.1.17

            	
              Invalidity:
                any of the Security Documents or any of the Underlying Documents
                shall at
                any time and for any reason become invalid or unenforceable or otherwise
                cease to remain in full force and effect, or if the validity or
                enforceability of any of the Security Documents shall at any time
                and for
                any reason be contested by any Security Party which is a party thereto,
                or
                if any such Security Party shall deny that it has any, or any further,
                liability thereunder; or

            


    

     

    
      	
              10.1.18

            	
              Unlawfulness:
                it becomes impossible or unlawful at any time for any Security Party,
                to
                fulfil any of the covenants and obligations expressed to be assumed
                by it
                in any of the Security Documents or for the Agent or the other Creditors
                to exercise the rights or any of them vested in it or them under
                any of
                the Security Documents or otherwise;
                or

            


    

     

    
      	
              10.1.19

            	
              Repudiation:
                any Security Party repudiates any of the Security Documents or does
                or
                causes or permits to be done any act or thing evidencing an intention
                to
                repudiate any of the Security Documents;
                or

            


    

     

    
      	
              10.1.20

            	
              Encumbrances
                enforceable: any Encumbrance (other than Permitted Liens) in
                respect of any of the property (or part thereof) which is the subject
                of
                any of the Security Documents becomes enforceable;
                or

            


    

     

    
      	
              10.1.21

            	
              Material
                adverse change: there occurs, in the reasonable opinion of the
                Agent, a material adverse change in the financial position of any
                Security
                Party by reference to the financial position of such Security Party
                as
                described by any Borrower or any Security Party to the Agent in the
                negotiation of this Agreement; or

            


    

     

    
      	
              10.1.22

            	
              Arrest:
                any Ship is arrested, confiscated, seized, taken in execution, impounded,
                forfeited, detained in exercise or purported exercise of any possessory
                lien or other claim or otherwise taken from the possession of the
                relevant
                Borrower and the relevant Borrower shall fail to procure the release
                of
                such Ship within a period of twenty-one (21) days thereafter;
                or

            


    

     

    
      	
              10.1.23

            	
              Registration:
                the registration of any Ship under the laws and flag of the Flag
                State is
                cancelled or terminated without the prior written consent of the
                Agent or,
                if any Ship is only provisionally registered on the Delivery Date
                for such
                Ship, such Ship is not permanently registered under the laws and
                flag of
                the Flag State within the time limit imposed by the Flag State (subject
                always to the relevant Mortgage remaining in full force and effect);
                or

            


    

     

    
      	
              10.1.24

            	
              Unrest:
                the Flag State becomes involved in hostilities or civil war or there
                is a
                seizure of power in the Flag State by unconstitutional means if,
                in any
                such case, such event could in the opinion of the Banks and/or the
                Agent
                reasonably be expected to have a material adverse effect on the security
                constituted by any of the Security Documents;
                or

            


    

     

    
      	
              10.1.25

            	
              Environmental
                Incidents: there is an Environmental Incident which gives rise,
                or may give rise, to an Environmental Claim which could, in the opinion
                of
                the Banks and/or Agent be expected to have a material adverse effect
                (a)
                on the business, assets, operations, property or financial condition
                of
                any Security Party and/or any of the Borrowers’ Group or (b) on the
                security constituted by any of the Security Documents or the
                enforceability of that security in accordance with its terms;
                or

            


    

     

    
      	
              10.1.26

            	
              P&I:
                any Borrower, the Manager or any other person fails or omits to comply
                with any requirements of the protection and indemnity association
                or other
                insurer with which a Ship is entered for insurance or insured against
                protection and indemnity risks (including oil pollution risks) to
                the
                effect that any cover (including, without limitation, any cover in
                respect
                of liability for Environmental Claims arising in jurisdictions where
                such
                Ship operates or trades) is or may be liable to cancellation,
                qualification or exclusion at any
                time.

            


    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    


    
      	
              10.2

            	
              Acceleration

            


    

     

    The
      Agent
      may (with the prior approval of the Majority Banks), without prejudice to any
      other rights of the Banks, at any time after the occurrence of an Event of
      Default by notice to the Borrowers declare that:

     

    
      	
              10.2.1

            	
              the
                obligation of each Bank to make its Commitment available shall be
                terminated, whereupon the Commitment shall be reduced to zero forthwith;
                and/or

            


    

     

    
      	
              10.2.2

            	
              the
                Loan and all interest and commitment commission accrued and all other
                sums
                payable under the Security Documents have become due and payable,
                whereupon the same shall, immediately or in accordance with the terms
                of
                such notice, become due and
                payable.

            


    

     

    
      	
              10.3

            	
              Demand
                basis

            


    

     

    If,
      pursuant to clause 10.2.2, the Agent declares the Loan to be due and
      payable on demand, the Agent may (and if so instructed by the Majority Banks
      shall) by written notice to the Borrowers (a) call for repayment of the Loan
      on
      such date as may be specified whereupon the Loan shall become due and payable
      on
      the date so specified together with all interest and commitment commission
      accrued and all other sums payable under this Agreement or (b) withdraw such
      declaration with effect from the date specified in such notice.

     

    
      	
              11

            	
              Indemnities

            


    

     

    
      	
              11.1

            	
              Miscellaneous
                indemnities

            


    

     

    The
      Borrowers shall on demand indemnify each Bank, the Arranger, the Swap Bank,
      the
      Security Trustee and the Agent, without prejudice to any of their rights under
      any of the Security Documents, against any loss (excluding loss of Margin)
      or
      expense which such Bank, the Swap Bank, the Security Trustee, Arranger or the
      Agent shall certify as sustained or incurred by it as a consequence
      of:

     

    
      	
              11.1.1

            	
              any
                default in payment of any sum under any of the Security Documents
                when
                due;

            


    

     

    
      	
              11.1.2

            	
              the
                occurrence of any other Event of
                Default;

            


    

     

    
      	
              11.1.3

            	
              any
                prepayment of the Loan or part thereof being made under clauses 4.4,
                8.2.1
                (a) or 12.1 or any other repayment or prepayment of the Loan or part
                thereof being made otherwise than on an Interest Payment Date relating
                to
                the part of the Loan prepaid or repaid;
                or

            


    

     

    
      	
              11.1.4

            	
              any
                Advance not being made for any reason (excluding any default by the
                Agent
                or any Bank) after the Drawdown Notice for such Advance has been
                given,

            


    

     

    including,
      in any such case, but not limited to, any loss or expense sustained or incurred
      by the relevant Creditor in maintaining or funding its Contribution or, as
      the
      case may be, Commitment or any part thereof or in liquidating or re-employing
      deposits from third parties acquired to effect or maintain its Contribution
      or,
      as the case may be, Commitment or any part thereof or any other amount owing
      to
      such Creditor.

     

    In
      case
      any of such events generate a benefit, the net value thereof as determined
      by
      the Agent shall be accounted for by each Creditor concerned to the
      Borrowers.

     

    
      	
              11.2

            	
              Currency
                indemnity

            


    

     

    If
      any
      sum due from any of the Borrowers under any of the Security Documents or any
      order or judgment given or made in relation thereto has to be converted from
      the
      currency (the “first currency”) in which the same is payable
      under the relevant Security Document or under such order or judgment into
      another currency (the “second currency”) for the purpose of (a)
      making or filing a claim or proof against the Borrowers or any of them, (b)
      obtaining an order or judgment in any court or other tribunal or (c) enforcing
      any order or judgment given or made in relation to any of the Security
      Documents, the Borrowers shall indemnify and hold harmless each Creditor from
      and against any loss suffered as a result of any difference between (i) the
      rate
      of exchange used for such purpose to convert the sum in question from the first
      currency into the second currency and (ii) the rate or rates of exchange at
      which the relevant Creditor may in the ordinary course of business purchase
      the
      first currency with the second currency upon receipt of a sum paid to it in
      satisfaction, in whole or in part, of any such order, judgment, claim or
      proof.  Any amount due from the Borrowers under this clause 11.2
      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 any of the Security
      Documents and the term “rate of exchange” includes any premium
      and costs of exchange payable in connection with the purchase of the first
      currency with the second currency.


    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    


    
      	
              11.3

            	
              Environmental
                indemnity

            


    

     

    The
      Borrowers shall indemnify each Creditor on demand and hold it harmless from
      and
      against all costs, expenses, payments, charges, losses, demands, liabilities,
      actions, proceedings (whether civil or criminal), penalties, fines, damages,
      judgments, orders, sanctions or other outgoings of whatever nature which may
      be
      suffered, incurred or paid by, or made or asserted against such Creditor at
      any
      time, whether before or after the repayment in full of principal and interest
      under this Agreement, relating to, or arising directly or indirectly in any
      manner or for any cause or reason whatsoever out of an Environmental Claim
      made
      or asserted against such Creditor if such Environmental Claim would not have
      been, or been capable of being, made or asserted against such Creditor if it
      had
      not entered into any of the Security Documents and/or exercised any of its
      rights, powers and discretions thereby conferred and/or performed any of its
      obligations thereunder and/or been involved in any of the transactions
      contemplated by the Security Documents.

     

    
      	
              12

            	
              Unlawfulness
                and increased costs

            


    

     

    
      	
              12.1

            	
              Unlawfulness

            


    

     

    If
      it is
      or becomes contrary to any law or regulation for any Bank to make any Advance
      or
      to maintain its Commitment or fund its Contribution, such Bank shall promptly,
      through the Agent, give notice to the Borrowers whereupon (a) such Bank’s
      Commitment shall be reduced to zero and (b) the Borrowers shall be obliged
      to
      prepay the Contribution of such Bank either (i) forthwith or (ii) on a future
      specified date not being earlier than the latest date permitted by the relevant
      law or regulation together with interest accrued to the date of prepayment
      and
      all other sums payable by the Borrowers under this Agreement.

     

    
      	
              12.2

            	
              Increased
                costs

            


    

     

    If
      the
      result of any change in, or in the interpretation or application of, or the
      introduction of, any law or any regulation, request or requirement (whether
      or
      not having the force of law, but, if not having the force of law, with which
      the
      Agent and/or any Bank or, as the case may be, its holding company habitually
      complies), including (without limitation) those relating to Taxation, capital
      adequacy, liquidity, reserve assets, cash ratio deposits and special deposits,
      is to:

     

    
      	
              12.2.1

            	
              subject
                any Bank to Taxes or change the basis of Taxation of any Bank with
                respect
                to any payment under any of the Security Documents (other than Taxes
                or
                Taxation on the overall net income, profits or gains of such Bank
                imposed
                in the jurisdiction in which its principal or lending office under
                this
                Agreement is located); and/or

            


    

     

    
      	
              12.2.2

            	
              increase
                the cost to, or impose an additional cost on, any Bank or its holding
                company in making or keeping such Bank’s Commitment available or
                maintaining or funding all or part of such Bank’s Contribution;
                and/or

            


    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    


    
      	
              12.2.3

            	
              reduce
                the amount payable or the effective return to any Bank under any
                of the
                Security Documents; and/or

            


    

     

    
      	
              12.2.4

            	
              reduce
                any Bank's or its holding company's rate of return on its overall
                capital
                by reason of a change in the manner in which it is required to allocate
                capital resources to such Bank's obligations under any of the Security
                Documents; and/or

            


    

     

    
      	
              12.2.5

            	
              require
                any Bank or its holding company to make a payment or forgo a return
                on or
                calculated by reference to any amount received or receivable by such
                Bank
                under any of the Security Documents;
                and/or

            


    

     

    
      	
              12.2.6

            	
              require
                any Bank or its holding company to incur or sustain a loss (including
                a
                loss of future potential profits) by reason of being obliged to deduct
                all
                or part of its Commitment or the Loan from its capital for regulatory
                purposes,

            


    

     

    then
      and
      in each such case (subject to clause 12.3):

     

    
      	
               

            	
              (a)

            	
              such
                Bank shall notify the Borrowers in writing of such event promptly
                upon its
                becoming aware of the same; and

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Agent shall negotiate with the Borrowers in good faith with a view
                to
                restructuring the transaction constituted by the Security Documents
                in a
                way which will (in the reasonable opinion of the Agent) satisfactorily
                avoid either the unlawfulness or increased costs concerned (each
                as the
                case may be) without either decreasing the amounts or net returns
                due to
                the Security Trustee, the Agent, the Swap Bank and the Banks under
                the
                Security Documents or which would, but for such unlawfulness or such
                increased costs (each as the case may be), have been so due, or otherwise
                adversely affecting the rights, interests and security of the Banks
                under
                the transaction as presently constituted and will not (in the reasonable
                opinion of the Agent) increase the cost to the Borrowers of or otherwise
                adversely affect the rights, and interests of the Borrowers under
                the
                transactions (and unless the Agent nominates a longer period (which
                it
                shall be at liberty to do)), such negotiations shall continue for
                a period
                of thirty (30) days after the Borrowers have been given notice under
                clause 12.2 (a) above or for such lesser period as is permitted under
                applicable law having regard to either the unlawfulness or the increased
                costs concerned (such period called the “Negotiation
                Period”);

            


    

     

    
      	
               

            	
              (c)

            	
              if
                at the end of the Negotiation Period the Agent and the Borrowers
                have not
                reached agreement on a restructuring of the transaction on the basis
                described in clause 12.2(b) above then the Borrowers shall on demand,
                made
                at any time after expiry of the Negotiation Period whether or not
                the
                relevant Bank’s Contribution has been repaid, pay to such Bank the amount
                which such Bank specifies (in a certificate (which shall be conclusive
                in
                the absence of manifest error) setting forth the basis of the computation
                of such amount but not including any matters which such Bank regards
                as
                confidential in relation to its funding arrangements) is required
                to
                compensate such Bank for such alternative funding, increased cost,
                reduction, payment or forgone
                return.

            


    

     

    For
      the
      purposes of this clause 12.2 “holding company” means the
      company or entity (if any) within the consolidated supervision of which a Bank
      is included.

     

    
      	
              12.3

            	
              Exception

            


    

     

    Nothing
      in clause 12.2 shall entitle any Bank to receive any amount in respect of
      compensation for any such liability to Taxes, increased or additional cost,
      reduction, payment, foregone return or loss to the extent that the same is
      the
      subject of an additional payment under clause 6.6.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    


    
      	
              13

            	
              Security,
                set-off and pro-rata
                payments

            


    

     

    
      	
              13.1

            	
              Application
                of moneys

            


    

     

    All
      moneys received by the Agent and/or any of the other Creditors under or pursuant
      to any of the Security Documents and expressed to be applicable in accordance
      with the provisions of this clause 13.1 shall be applied in the following
      manner:

     

    
      	
              13.1.1

            	
              first
                in or toward payment of all unpaid fees, commissions and expenses
                which
                may be owing to the Agent and/or the Security Trustee under any of
                the
                Security Documents (on a pro rata basis as between the Agent and
                the
                Security Trustee if applicable);

            


    

     

    
      	
              13.1.2

            	
              secondly
                in or towards payment of any arrears of interest owing in respect
                of the
                Loan or any part thereof;

            


    

     

    
      	
              13.1.3

            	
              thirdly
                in or towards repayment of the Loan (whether the same is due and
                payable
                or not);

            


    

     

    
      	
              13.1.4

            	
              fourthly
                in or towards payment to the Swap Bank of any sums owing to the Swap
                Bank
                under the Master Swap Agreement;

            


    

     

    
      	
              13.1.5

            	
              fifthly
                in or towards payment to any Creditor (other than the Swap Bank)
                of any
                other sums owing to it under any of the Security Documents;
                and

            


    

     

    
      	
              13.1.6

            	
              sixthly
                the surplus (if any) shall be paid to the Borrowers or to whomsoever
                else
                may be entitled to receive such surplus or in such other manner as
                the
                Banks shall determine.

            


    

     

    
      	
              13.2

            	
              Set-off

            


    

     

    
      	
              13.2.1

            	
              The
                Borrowers authorise each Bank (without prejudice to any of such Bank’s
                rights at law, in equity or otherwise), at any time after the occurrence
                of Default which is continuing and without notice to the
                Borrowers:

            


    

     

    
      	
               

            	
              (a)

            	
              to
                apply any credit balance to which the Borrowers or any of them is
                then
                entitled standing upon any account of such Borrower with any branch
                of
                such Bank in or towards satisfaction of any sum due and payable from
                such
                Borrower to such Bank under any of the Security
                Documents;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                the name of any Borrower and/or such Bank to do all such acts and
                to
                execute all such documents as may be necessary or expedient to effect
                such
                application; and

            


    

     

    
      	
               

            	
              (c)

            	
              to
                combine and/or consolidate all or any accounts in the name of the
                Borrowers with such Bank.

            


    

     

    For
      such
      purposes, each such Bank is authorised to purchase with the moneys standing
      to
      the credit of such account such other currencies as may be necessary to effect
      such application.  No Bank shall be obliged to exercise any right
      given to it by this clause 13.2.  Each Bank shall notify the Agent and
      the Borrowers forthwith upon the exercise or purported exercise of any right
      of
      set-off giving full details in relation thereto and the Agent shall inform
      the
      other Banks.

     

    
      	
              13.2.2

            	
              Without
                prejudice to their rights hereunder and/or under the Master Swap
                Agreement, the Swap Bank may at the same time as, or at any time
                after,
                any Event of Default has occurred or the Borrowers default under
                the
                Master Swap Agreement, set-off any amount due now or in the future
                from
                the Borrowers to the Swap Bank under this Agreement against any amount
                due
                from the Swap Bank to the Borrowers under the Master Swap Agreement
                and
                apply the first amount in discharging the second amount.  The
                effect of any set-off under this clause (b) shall be effective to
                extinguish or, as the case may require, reduce the liabilities of
                the Swap
                Bank under the Master Swap
                Agreement.

            


    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    


    
      	
              13.3

            	
              Pro-rata
                payments

            


    

     

    If
      at any
      time the proportion which any Bank (the “Recovering Bank”) has
      received or recovered (other than from an Assignee, a Transferee Bank or a
      sub-participant in such Bank’s Contribution or any other payment of an amount
      due to the Recovering Bank for its sole account pursuant to clauses 3.6, 4.2,
      5.1, 6.1, 11.1, 11.2, 12.1 or 12.2) in respect of its share of any payment
      to be
      made for the account of the Recovering Bank and one or more other Banks under
      any of the Security Documents is greater (the amount of the excess being
      referred to in this clause 13.3 as the “excess amount”)
      than the proportion of the share of such payment received or recovered by the
      Bank receiving or recovering the smallest or no proportion of its share,
      then:

     

    
      	
              13.3.1

            	
              within
                two Banking Days of such receipt or recovery, the Recovering Bank
                shall
                pay to the Agent an amount equal (or equivalent) to the excess
                amount;

            


    

     

    
      	
              13.3.2

            	
              the
                Agent shall treat such payment as if it were part of the payment
                to be
                made by the Borrowers and shall distribute the same in accordance
                with
                clause 13.1; and

            


    

     

    
      	
              13.3.3

            	
              as
                between the Borrowers and the Recovering Bank the excess amount shall
                be
                treated as not having been paid but the obligations of the Borrowers
                to
                the other Banks shall, to the extent of the amount so paid to them,
                be
                treated as discharged.

            


    

     

    Each
      Bank
      shall forthwith notify the Agent of any such receipt or recovery by such Bank
      other than by payment through the Agent.  If any excess amount
      subsequently has to be wholly or partly refunded by the Recovering Bank which
      paid an amount equal thereto to the Agent under sub-clause 13.3.1 above each
      Bank to which any part of such amount was distributed shall on request from
      the
      Recovering Bank repay to the Recovering Bank such Bank’s pro-rata share of the
      amount which has to be refunded by the Recovering Bank.  Each Bank
      shall on request supply to the Agent such information as the Agent may from
      time
      to time request for the purpose of this clause 13.3.  Notwithstanding
      the foregoing provisions of this clause 13.3 no Recovering Bank shall be obliged
      to share any excess amount which it receives or recovers pursuant to legal
      proceedings taken by it to recover any sums owing to it under this Agreement
      with any other party which has a legal right to, but does not, either join
      in
      such proceedings or commence and diligently pursue separate proceedings to
      enforce its rights in the same or another court (unless the proceedings
      instituted by the Recovering Bank are instituted by it without prior notice
      having been given to such party through the Agent).

     

    
      	
              13.4

            	
              No
                release

            


    

     

    For
      the
      avoidance of doubt it is hereby declared that failure by any Recovering Bank
      to
      comply with the provisions of clause 13.3 shall not release any other
      Recovering Bank from any of its obligations or liabilities under
      clause 13.3.

     

    
      	
              13.5

            	
              No
                charge

            


    

     

    The
      provisions of this clause 13 shall not, and shall not be construed so as to,
      constitute a charge by a Bank over all or any part of a sum received or
      recovered by it in the circumstances mentioned in clause 13.3.

     

    
      	
              13.6

            	
              Further
                assurance

            


    

     

    The
      Borrowers jointly and severally undertake with each Creditor that the Security
      Documents shall both at the date of execution and delivery thereof and so long
      as any moneys are owing under any of the Security Documents be valid and binding
      obligations of the respective parties thereto and rights of each Bank
      enforceable in accordance with their respective terms and that they will, at
      their expense, execute, sign, perfect and do, and will procure the execution,
      signing, perfecting and doing by each of the other Security Parties of, any
      and
      every such further assurance, document, act or thing as in the reasonable
      opinion of the Agent may be necessary or desirable for perfecting the security
      contemplated or constituted by the Security Documents.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    


    
      	
              13.7

            	
              Conflicts

            


    

     

    In
      the
      event of any conflict between this Agreement and any of the other Borrowers'
      Security Documents, the provisions of this Agreement shall prevail.

     

    
      	
              14

            	
              Accounts

            


    

     

    
      	
              14.1

            	
              General

            


    

     

    The
      Borrowers jointly and severally undertake with each of the Banks and the Agent
      that they will:

     

    
      	
              14.1.1

            	
              on
                or before the first Drawdown Date procure that the Earnings Account
                is
                opened; and

            


    

     

    
      	
              14.1.2

            	
              procure
                that all moneys payable to the Borrowers in respect of the Earnings
                shall
                unless and until the Agent directs to the contrary pursuant to clause
                2.1.1 of the Deeds of Covenant be paid to the Earnings
                Account.

            


    

     

    Provided
      however that if any of the moneys paid to the Earnings Account are payable
      in a
      currency other than Dollars, the Borrowers shall instruct the Account Bank
      to
      convert such moneys into Dollars at the Account Bank’s spot rate of exchange at
      the relevant time for the purchase of Dollars with such currency and the term
      “spot rate of exchange” shall include any premium and costs of exchange payable
      in connection with the purchase of Dollars with such currency.

     

    
      	
              14.2

            	
              Earnings
                Account: withdrawals

            


    

     

    Unless
      the Banks otherwise agree in writing, neither the Borrowers nor the Corporate
      Guarantor shall be entitled to withdraw any moneys from the Earnings Account
      at
      any time after an Event of Default shall have occurred which is continuing
      unremedied and unwaived.  The Borrowers shall have unrestricted access
      to the Earnings Account until the occurrence of an Event of Default which is
      continuing unremedied and unwaived.

     

    
      	
              14.3

            	
              Application
                of accounts

            


    

     

    At
      any
      time after the occurrence of an Event of Default, the Banks may, without notice
      to the Borrowers, instruct the Account Bank to apply all moneys then standing
      to
      the credit of the Earnings Account (together with interest from time to time
      accruing or accrued thereon) in payment to the Agent and the Agent shall apply
      the same in or towards satisfaction of any sums due to the Agent and/or the
      Banks under the Security Documents in the manner specified in
      clause 13.1.

     

    
      	
              14.4

            	
              Pledging
                of Account

            


    

     

    The
      Earnings Account and all amounts from time to time standing to the credit
      thereof shall be subject to the security constituted by and the rights conferred
      by the Account Pledge.

     

    
      	
              15

            	
              Assignment,
                substitution
                and lending office

            


    

     

    
      	
              15.1

            	
              Benefit
                and burden

            


    

     

    This
      Agreement shall be binding upon, and enure for the benefit of, the Banks, the
      Security Trustee, the Arranger, the Agent, the Swap Bank and the Borrowers
      and
      their respective successors.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    


    
      	
              15.2

            	
              No
                assignment by Borrowers

            


    

     

    The
      Borrowers may not assign or transfer any of their rights or obligations under
      this Agreement or any of the other Security Documents without the prior written
      consent of the Agent.

     

    
      	
              15.3

            	
              Assignment
                by Banks

            


    

     

    Each
      Bank
      may assign all or any part of its rights in respect of its Contribution under
      this Agreement or under any of the other Security Documents to any of its
      Related Companies (an “Assignee”) without the prior consent of
      the Borrowers.

     

    
      	
              15.4

            	
              Substitution

            


    

     

    Each
      Bank
      may transfer, by way of novation, all or any part of its rights, benefits and/or
      obligations under this Agreement to any of its Related Companies (a
“Substitute without the prior written consent of the Borrowers
      or to any other Bank or financial institution with the prior written consent
      of
      the Borrowers (such consent not to be unreasonably withheld or
      delayed).  Any such novation shall be effected upon five Banking Days’
prior notice by delivery to the Agent of a duly completed Substitution
      Certificate duly executed by such Bank, the Substitute and the Agent (for
      itself, the Borrowers and the other Creditors).  On the effective date
      specified in a Substitution Certificate so executed and delivered, to the extent
      that they are expressed in such Substitution Certificate to be the subject
      of
      the novation effected pursuant to this clause 15.4:

     

    
      	
              15.4.1

            	
              the
                existing parties to this Agreement and the Bank party to the relevant
                Substitution Certificate shall be released from their respective
                obligations towards one another under this Agreement (“discharged
                obligations”) and their respective rights against one another
                under this Agreement (“discharged rights”) shall be
                cancelled;

            


    

     

    
      	
              15.4.2

            	
              the
                Substitute party to the relevant Substitution Certificate and the
                existing
                parties to this Agreement (other than the Bank party to such Substitution
                Certificate) shall assume obligations towards each other which differ
                from
                the discharged obligations only insofar as they are owed to or assumed
                by
                such Substitute instead of to or by such
                Bank;

            


    

     

    
      	
              15.4.3

            	
              the
                Substitute party to the relevant Substitution Certificate and the
                existing
                parties to this Agreement (other than the Bank party to such Substitution
                Certificate) shall acquire rights against each other which differ
                from the
                discharged rights only insofar as they are exercisable by or against
                such
                Substitute instead of by or against such Bank;
                and

            


    

     

    
      	
              15.4.4

            	
              in
                the event any Bank transfers by way of novation all or any part of
                its
                rights, benefits and/or obligations under this Agreement to another
                person, this Agreement and the Security Documents shall remain in
                full
                force and effect,

            


    

     

    and,
      on
      the date upon which such novation takes effect, the Substitute shall pay to
      the
      Agent for its own account a fee in the sum of one thousand Dollars ($1,000)
      to
      be paid by the Substitute and the Bank between them.  The Agent shall
      promptly notify the other parties hereto of the receipt by it of any
      Substitution Certificate and shall promptly deliver a copy of such Substitution
      Certificate to the Borrowers.

     

    
      	
              15.5

            	
              Reliance
                on Substitution
                Certificate

            


    

     

    The
      Agent, the other Creditors and the Borrowers shall be fully entitled to rely
      on
      any Substitution Certificate delivered to the Agent in accordance with the
      foregoing provisions of this clause 15 which is complete and regular on its
      face
      as regards its contents and purportedly signed on behalf of the relevant Bank
      and the Substitute and neither the Agent, nor the other Creditors nor the
      Borrowers shall have any liability or responsibility to any party as a
      consequence of placing reliance on and acting in accordance with any such
      Substitution Certificate if it proves to be the case that the same was not
      authentic or duly authorised.

     

    
      	
              15.6

            	
              Signing
                of Substitution
                Certificate

            


    

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    The
      Borrowers and each of the other Creditors irrevocably authorise the Agent to
      countersign each Substitution Certificate on its behalf without any further
      consent of, or consultation with, the Borrowers or such Creditors (as the case
      may be).

     

    
      	
              15.7

            	
              Construction
                of certain references

            


    

     

    If
      any
      Bank assigns all or any part of its rights or novates all or any part of its
      rights, benefits and obligations as provided in clause 15.3 or 15.4 all relevant
      references in this Agreement to such Bank shall thereafter be construed as
      a
      reference to such Bank and/or its Assignee or Substitute (as the case may be)
      to
      the extent of their respective interests.

     

    
      	
              15.8

            	
              Documenting
                assignments and novations

            


    

     

    If
      any
      Bank assigns all or any part of its rights or novates all or any part of its
      rights, benefits and/or obligations as provided in clauses 15.3 or 15.4 the
      Borrowers jointly and severally undertake, immediately on being requested to
      do
      so by the Agent and at the cost of the Bank that has so assigned or novated
      all
      or any part of its rights and/or obligations, to enter into, and procure that
      the other Security Parties shall enter into, such documents as may be necessary
      or desirable to transfer to the Assignee or Substitute all or the relevant
      part
      of such Bank’s interest in the Security Documents and all relevant references in
      this Agreement to such Bank shall thereafter be construed as a reference to
      the
      Bank and/or its Assignee or Substitute (as the case may be) to the extent of
      their respective interests.

     

    
      	
              15.9

            	
              Lending
                office

            


    

     

    Each
      Bank
      shall lend through its office at the address specified in Schedule 1 or, as
      the
      case may be, in any relevant Substitution Certificate or through any other
      office of such Bank selected from time to time by it through which such Bank
      wishes to lend for the purposes of this Agreement.

     

    
      	
              15.10

            	
              No
                additional costs

            


    

     

    If
      at the
      time of, or immediately after, any assignment by a Bank of all or any part
      of
      its rights or benefits under this Agreement or any transfer by a Bank of any
      part of the rights, benefits and/or obligations under this Agreement, the
      Borrowers would be obliged to pay to the Assignee or Substitute under clause
      6.7
      or 12.2 any sum in excess of the sum (if any) which it would have been obliged
      to pay to such Bank under the relevant clause in the absence of such assignment
      or transfer, the Borrowers shall not be obliged to pay that excess.

     

    
      	
              15.11

            	
              Disclosure
                of information

            


    

     

    Any
      Bank
      or the Agent may disclose to a prospective assignee or substitute or transferee
      or to any other person who may propose entering into contractual relations
      with
      such Bank or the Agent in relation to this Agreement such information about
      the
      Borrowers as such Bank or the Agent shall consider appropriate, subject to
      compliance with all applicable banking confidentiality
      requirements.

     

    
      	
              16

            	
              Agent
                and Security Trustee

            


    

     

    The
      terms
      and basis on which the Agent has been appointed by the other Creditors as
      facility agent and the Security Trustee has been appointed as security agent
      and
      trustee respectively are set out in the Agency Agreement including, among other
      things, the manner in which any decision to exercise any right, powers,
      discretion or authority or to carry out any duty are to be made between the
      other Creditors and the Agent or, as the case may be, the Security
      Trustee.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    


    
      	
              17

            	
              Notices
                and other matters

            


    

     

    
      	
              17.1

            	
              Notices

            


    

     

    Every
      notice, request, demand or other communication under this Agreement or (unless
      otherwise provided therein) under any of the other Security Documents
      shall:

     

    
      	
              17.1.1

            	
              be
                in writing delivered personally or by first-class prepaid letter
                (airmail
                if available) or facsimile transmission or other means of
                telecommunication in permanent written
                form;

            


    

     

    
      	
              17.1.2

            	
              be
                deemed to have been received, subject as otherwise provided in the
                relevant Security Document, in the case of a letter, when delivered
                personally or three Banking Days after it has been put in to the
                post and,
                in the case of a facsimile transmission or other means of
                telecommunication in permanent written form, at the time of despatch
                (provided that if the date of despatch is not a business day in the
                country of the addressee or if the time of despatch is after the
                close of
                business in the country of the addressee it shall be deemed to have
                been
                received at the opening of business on the next such business day);
                and

            


    

     

    
      	
              17.1.3

            	
              be
                sent:

            


    

     

    
      	
               

            	
              (a)

            	
              if
                to the Borrowers or any of them at:

            


    

     

    
      	
               

            	
              c/o
                MC Shipping Inc.

            


    

    
      	
               

            	
              Gildo
                Pastor Center

            


    

    
      	
               

            	
              7
                rue de Gabian

            


    

    
      	
               

            	
              MC
                98000 Monaco

            


      	 	 


    

    
      	
               

            	
              Fax
                no:

            	
              +377
                9797 4999

            


    

    
      	
               

            	
              Attn:

            	
              Finance
                Department

            


    

    


    
      	
               

            	
              (b)

            	
              if
                to the Agent and/or the Swap Bank and/or the and/or the Security
                Trustee,  Arranger and/or the Swap Bank
                at:

            


    

     

    
      	
               

            	
              KfW

            


    

    
      	
               

            	
              Palmengartenstrasse
                5-9

            


    

    
      	
               

            	
              D60325

            


    

    
      	
               

            	
              Frankfurt
                am Main

            


    

    
      	
               

            	
              Federal
                Republic of Germany

            


      	 	 


    

    
      	
               

            	
              Fax
                No:

            	
              +49
                69 7431 2944

            


    

    
      	
               

            	
              Attn:

            	
              Credit
                Operations

            


    

    
      	
            	
               

            	
              Shipping
                X4b1

            


    

    


    
      	
               

            	
              (c)

            	
              if
                to a Bank, to its address or fax number specified in Schedule 1 or
                in any
                relevant Substitution Certificate,

            


    

     

    or
      to
      such other address and/or numbers as is notified by one party to the other
      parties under this Agreement.

     

    
      	
              17.2

            	
              No
                implied waivers, remedies
                cumulative

            


    

     

    No
      failure or delay on the part of the Agent, the Banks, the Swap Bank, the
      Security Trustee, or any of them to exercise any power, right or remedy under
      any of the Security Documents shall operate as a waiver thereof, nor shall
      any
      single or partial exercise by the Agent, the Banks, the Swap Bank, the Security
      Trustee, or any of them of any power, right or remedy preclude any other or
      further exercise thereof or the exercise of any other power, right or
      remedy.  The remedies provided in the Security Documents are
      cumulative and are not exclusive of any remedies provided by law.

     

    
      	
              17.3

            	
              English
                language

            


    

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    All
      certificates, instruments and other documents to be delivered under or supplied
      in connection with any of the Security Documents shall be in the English
      language or shall be accompanied by a certified English translation upon which
      the Creditors or any of them shall be entitled to rely.

     

    
      	
              17.4

            	
              Counterparts

            


    

     

    This
      Agreement may be entered into in any number of counterparts and by the parties
      to it on separate counterparts, each of which when executed and delivered shall
      be an original, but all the counterparts together shall constitute one and
      the
      same instrument.

     

    
      	
              17.5

            	
              Borrowers'
                obligations

            


    

     

    
      	
              17.5.1

            	
              Joint
                and several

            


    

     

    Notwithstanding
      anything to the contrary contained in any of the Security Documents, the
      agreements, obligations and liabilities of the Borrowers herein contained are
      joint and several and shall be construed accordingly.  Each of the
      Borrowers agrees and consents to be bound by the Security Documents to which
      it
      is, or is to be, a party notwithstanding that the other Borrowers which were
      intended to sign or to be bound may not do so or be effectually bound and
      notwithstanding that any of the Security Documents may be invalid or
      unenforceable against the other Borrowers (or any of them), whether or not
      the
      deficiency is known to any of the Creditors.

     

    
      	
              17.5.2

            	
              Borrowers
                as principal debtors

            


    

     

    Each
      Borrower acknowledges and confirms that it is a principal and original debtor
      in
      respect of all amounts which may become payable by the Borrowers in accordance
      with the terms of this Agreement or any of the other Security Documents and
      agrees that the Creditors may also continue to treat it as such, whether or
      not
      any Creditor is or becomes aware that such Borrower is or has become a surety
      for the other Borrowers (or any of them).

     

    
      	
              17.5.3

            	
              Indemnity

            


    

     

    The
      Borrowers hereby agree jointly and severally to keep the Creditors fully
      indemnified on demand against all damages, losses, costs and expenses arising
      from any failure of any Borrower to perform or discharge any purported
      obligation or liability of the other Borrowers (or any of them) which would
      have
      been the subject of this Agreement or any other Security Document had it been
      valid and enforceable and which is not or ceases to be valid and enforceable
      against the other Borrowers (or any of them) on any ground whatsoever, whether
      or not known to a Creditor including, without limitation, any irregular exercise
      or absence of any corporate power or lack of authority of, or breach of duty
      by,
      any person purporting to act on behalf of the other Borrowers (or any of them)
      (or any legal or other limitation, whether under the Limitation Acts or
      otherwise or any disability or death, bankruptcy, unsoundness of mind,
      insolvency, liquidation, dissolution, winding up, administration, receivership,
      amalgamation, reconstruction or any other incapacity of any person whatsoever
      (including, in the case of a partnership, a termination or change in the
      composition of the partnership) or any change of name or style or constitution
      of any Security Party)).

     

    
      	
              17.5.4

            	
              Liability
                unconditional

            


    

     

    None
      of
      the obligations or liabilities of the Borrowers under this Agreement or any
      other Security Document shall be discharged or reduced by reason
      of:

     

    
      	
               

            	
              (a)

            	
              the
                death, bankruptcy, unsoundness of mind, insolvency, liquidation,
                dissolution, winding-up, administration, receivership, amalgamation,
                reconstruction or other incapacity of any person whatsoever (including,
                in
                the case of a partnership, a termination or change in the composition
                of
                the partnership) or any change of name or style or constitution of
                any
                Borrower or any other person
                liable;

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Agent (acting on the instructions of the Majority Banks) granting
                any
                time, indulgence or concession to, or compounding with, discharging,
                releasing or varying the liability of, any Borrower or any other
                person
                liable or renewing, determining, varying or increasing any accommodation,
                facility or transaction or otherwise dealing with the same in any
                manner
                whatsoever or concurring in, accepting, varying any compromise,
                arrangement or settlement or omitting to claim or enforce payment
                from any
                Borrower or any other person liable;
                or

            


    

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (c)

            	
              anything
                done or omitted which but for this provision might operate to exonerate
                the Borrowers or any of them.

            


    

     

    
      	
              17.5.5

            	
              Recourse
                to other security

            


    

     

    The
      Creditors shall not be obliged to make any claim or demand or to resort to
      any
      Security Document or other means of payment now or hereafter held by or
      available to it for enforcing this Agreement or any of the Security Documents
      against any Borrower or any other person liable and no action taken or omitted
      by any Creditor in connection with any such Security Document or other means
      of
      payment will discharge, reduce, prejudice or affect the liability of the
      Borrowers under this Agreement and the Security Documents to which any of them
      are, or are to be, a party.

     

    
      	
              17.5.6

            	
              Waiver
                of Borrowers' rights

            


    

     

    Each
      Borrower agrees with each Creditor that, from the date of this Agreement and
      so
      long as any moneys are owing under any of the Security Documents and while
      all
      or any part of the Commitment remains outstanding, it will not, without the
      prior written consent of the Agent (acting on the instructions of the Majority
      Banks):

     

    
      	
               

            	
              (a)

            	
              exercise
                any right of subrogation, reimbursement and indemnity against the
                other
                Borrowers (or any of them) or any other person liable under the Security
                Documents;

            


    

     

    
      	
               

            	
              (b)

            	
              demand
                or accept repayment in whole or in part of any Indebtedness now or
                hereafter due to such Borrower from the other Borrowers (or any of
                them)
                or from any other person liable or demand or accept any guarantee,
                indemnity or other assurance against financial loss or any document
                or
                instrument created or evidencing an Encumbrance in respect of the
                same or
                dispose of the same;

            


    

     

    
      	
               

            	
              (c)

            	
              take
                any steps to enforce any right against the other Borrowers (or any
                of
                them) or any other person liable in respect of any such moneys;
                or

            


    

     

    
      	
               

            	
              (d)

            	
              claim
                any set-off or counterclaim against the other Borrowers (or any of
                them)
                or any other person liable or claiming or proving in competition
                with any
                Creditor in the liquidation of the other Borrowers (or any of them)
                or any
                other person liable or have the benefit of, or share in, any payment
                from
                or composition with, the other Borrowers (or any of them) or any
                other
                person liable or any other Security Document now or hereafter held
                by any
                Creditor for any moneys owing under this Agreement or for the obligations
                or liabilities of any other person liable but so that, if so directed
                by
                the Agent, it will prove for the whole or any part of its claim in
                the
                liquidation of the other Borrowers (or any of them) or other person
                liable
                on terms that the benefit of such proof and all money received by
                it in
                respect thereof shall be held on trust for the Banks and applied
                in or
                towards discharge of any moneys owing under this Agreement in such
                manner
                as the Agent (acting on the instructions of the Majority Banks) shall
                deem
                appropriate.

            


    

     

    
      	
              18

            	
              Governing
                law and jurisdiction

            


    

     

    
      	
              18.1

            	
              Law

            


    

     

    This
      Agreement is governed by, and shall be construed in accordance with, English
      law.

     

    
      	
              18.2

            	
              Submission
                to jurisdiction

            


    

     


    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    The
      Borrowers, jointly and severally, agree, for the benefit of the Security
      Trustee, the Banks and the Agent, that any legal action or proceedings arising
      out of or in connection with this Agreement against the Borrowers or any of
      them
      or any of their assets may be brought in the English courts.  Each of
      the Borrowers irrevocably and unconditionally submits to the jurisdiction of
      such courts and irrevocably designates, appoints and empowers H. Clarkson &
Co Ltd. at present of St Magnus House, 3 Lower Thames Street, London EC3R 6HE,
      England to receive for it and on its behalf, service of process issued out
      of
      the English courts in any such legal action or proceedings.  The
      submission to such jurisdiction shall not (and shall not be construed so as
      to)
      limit the right of the Security Trustee, the Banks and the Agent to take
      proceedings against the Borrowers or any of them in the courts of any other
      competent jurisdiction nor shall the taking of proceedings in any one or more
      jurisdictions preclude the taking of proceedings in any other jurisdiction,
      whether concurrently or not.

     

    The
      parties further agree that only the courts of England and not those of any
      other
      State shall have jurisdiction to determine any claim which the Borrowers or
      any
      of them may have against the Security Trustee, the Banks, the Swap Bank and
      the
      Agent arising out of or in connection with this Agreement.

     

    IN WITNESS
      whereof the parties to this Agreement have caused this Agreement to be duly
      executed on the date first above written.


    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    


    Schedule 1

     

    The
      Banks and their Commitments

     

    


    
      	
              Name

            	
              Address
                and fax

            	
              Commitment

              ($)

            
	
              KfW

               

            	
              Palmengartenstrasse
                5-9

              D60325

              Frankfurt
                am Main

              Federal
                Republic of Germany

               

              Fax:  +49
                69 7431 2944

               

            	
              35,000,000

            
	
              TOTAL

            	 	
              35,000,000

            


    

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    


    Schedule 2

    Form
      of Drawdown Notice

     (referred
      to in clause 2.4)

     

    
      	
              To:

            	
              KfW

            


    

    
      	
               

            	
              Palmengartenstrasse
                5-9

            


    

    
      	
               

            	
              D60325

            


    

    
      	
               

            	
              Frankfurt
                am Main

            


    

    
      	
               

            	
              Federal
                Republic of Germany

            


    

    


    [Date]

    


    U.S.$35,000,000
      Loan

    Loan
      Agreement dated [·] 2007 (the
“Loan
      Agreement”)

     

    We
      refer
      to the above Loan Agreement and hereby give you notice that we wish to draw
      down
      the [Grasmere] [Ullswater] [Windermere] Advance, namely $[·] on [·]
      2007 and select [a
      first Interest Period in respect thereof of [·] months]
      [the first
      Interest Period in respect thereof to expire on [·]]. The funds
      should
      be credited to [name and number of account] with
      [details of bank in New York [·]]:

     

    We
      confirm that:

     

    
      	
              (a)

            	
              no
                event or circumstance has occurred and is continuing which constitutes
                a
                Default;

            


    

     

    
      	
              (b)

            	
              the
                representations and warranties contained in (i) clauses 7.1, 7.2
                and
                7.3(b) of the Loan Agreement and (ii) the other Security Documents,
                are
                true and correct at the date hereof as if made with respect to the
                facts
                and circumstances existing at such
                date;

            


    

     

    
      	
              (c)

            	
              the
                borrowing to be effected by the drawdown of the [Grasmere] [Ullswater]
                [Windermere] Advance will be within our corporate powers, has been
                validly
                authorised by appropriate corporate action and will not cause any
                limit on
                our borrowings (whether imposed by statute, regulation, agreement
                or
                otherwise) to be exceeded; and

            


    

     

    
      	
              (d)

            	
              there
                has been no material adverse change in our financial position from
                that
                described by us to the Agent in the negotiation of the Loan
                Agreement.

            


    

     

    Words
      and
      expressions defined in the Loan Agreement shall have the same meanings where
      used herein.

     

    


    
      	  
              	 	 
	
              For
                and on behalf of

            	 
	
              GRASMERE
                MARITIME LIMITED

            	 
	 	 
	  
              	 	 
	
              For
                and on behalf of

            	 
	
              ULLSWATER
                MARITIME LIMITED

            	 
	 	 
	  
              	 	 
	
              For
                and on behalf of

            	 
	
              WINDERMERE
                MARITIME LIMITED

            	 


    

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    


    Schedule 3

     

    Documents
      and evidence required as conditions precedent to making available the
      Commitment

     

     (referred
      to in clause 9.1)

     

    Part
      1

     

    
      	
              (a)

            	
              Constitutional
                documents

            


    

     

    Copies,
      certified by an officer of each Security Party as true, complete and up to
      date
      copies of all documents which contain or establish or relate to the constitution
      of that Security Party;

     

    
      	
              (b)

            	
              Corporate
                authorisations

            


    

     

    copies
      of
      resolutions of the directors or, as the case may be, the shareholders of each
      Security Party approving such of the Underlying Documents and the Security
      Documents to which such Security Party is, or is to be, party and authorising
      the signature, delivery and performance of such Security Party's obligations
      thereunder, certified (in a certificate dated no earlier than five Banking
      Days
      prior to the date of this Agreement) by an officer of such Security Party
      as:

     

    
      	
               

            	
              (a)

            	
              being
                true and correct;

            


    

     

    
      	
               

            	
              (b)

            	
              being
                duly passed at meetings of the directors and shareholders duly convened
                and held;

            


    

     

    
      	
               

            	
              (c)

            	
              not
                having been amended, modified or revoked;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              being
                in full force and effect,

            


    

     

    together
      with originals or certified copies of any powers of attorney issued by any
      Security Party pursuant to such resolutions;

     

    
      	
              (c)

            	
              Specimen
                signatures

            


    

     

    copies
      of
      the signatures of the persons who have been authorised on behalf of each
      Security Party to sign such of the Underlying Documents and the Security
      Documents to which such Security Party is, or is to be, party and to give
      notices and communications, including notices of drawing, under or in connection
      with the Security Documents, certified (in a certificate dated no earlier than
      five Banking Days prior to the date of this Agreement) by an officer of such
      Security Party as being the true signatures of such persons;

     

    
      	
              (d)

            	
              Certificate
                of incumbency

            


    

     

    a
      list of
      directors and officers of each Security Party specifying the names and positions
      of such persons, certified (in a certificate dated no earlier than five Banking
      Days prior to the date of this Agreement) by an officer of such Security Party
      to be true, complete and up to date;

     

    
      	
              (e)

            	
              Borrowers’
                consents and approvals

            


    

     

    a
      certificate (dated no earlier than the date of this Agreement) from an officer
      of each of the Borrowers that no consents, authorisations, licences or approvals
      are necessary for that Borrower to authorise or are required by that Borrower
      in
      connection with the borrowing by that Borrower of the Loan pursuant to this
      Agreement or the execution, delivery and performance of that Borrowers’ Security
      Documents;


    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    


    
      	
              (f)

            	
              Other
                consents and approvals

            


    

     

    a
      certificate (dated no earlier than five Banking Days prior to the date of this
      Agreement) from an officer of each Security Party (other than the Borrowers)
      that no consents, authorisations, licences or approvals are necessary for such
      Security Party to guarantee and/or grant security for the borrowing by the
      Borrowers of the Commitment pursuant to this Agreement and execute, deliver
      and
      perform the Security Documents insofar as such Security Party is a party
      thereto;

     

    
      	
              (g)

            	
              Certified
                Underlying Documents

            


    

     

    a
      copy,
      certified (in a certificate dated no earlier than the date of this Agreement)
      as
      a true and complete copy by an officer of the relevant Borrower of each
      Underlying Document (including, but not limited to, the Charters in respect
      of
      any Ship and any novation agreement or addendum in connection with any Charter),
      each in a form and substance acceptable to the Agent together with evidence
      satisfactory to the Agent that each such document is in full force and effect
      and that there have been no breaches of the terms thereof or any default
      thereunder;

     

    
      	
              (h)

            	
              Security
                Documents

            


    

     

    the
      Master Swap Agreement, the Swap Assignment, the Account Pledge and the Corporate
      Guarantee, each duly executed;

     

    
      	
              (i)

            	
              Borrowers'
                process agent

            


    

     

    a
      letter
      from each Borrower's agent for receipt of service of proceedings referred to
      in
      clause 18.2 accepting its appointment under the said clause and under
      each of the other Security Documents in which it is or is to be appointed as
      such Borrower's agent;

     

    
      	
              (j)

            	
              Security
                Parties’ process agent

            


    

     

    a
      letter
      from each Security Party’s agent for receipt of service of proceedings accepting
      its appointment under each of the Security Documents in which it is or is to
      be
      appointed as such Security Party’s agent;

     

    
      	
              (k)

            	
              “Know
                your customer”, due diligence
                etc.

            


    

     

    evidence
      that all information required in relation to any Security Party and/or the
      directors and the ultimate beneficial owners thereof in order for each Bank
      to
      complete its due diligence formalities and “know your customer” requirements in
      accordance with applicable laws, regulations or internal guidelines of such
      Bank
      in connection with this Agreement and the other Security Documents has been
      provided and is satisfactory in all respects to each relevant Bank;

     

    
      	
              (l)

            	
              No
                litigation or other event

            


    

     

    evidence
      in form and substance satisfactory to the Agent that there is no event or
      existing or threatened litigation, arbitration or similar proceedings by any
      person with respect to the transactions contemplated by the Security Documents
      or which the Agent shall in its sole discretion determine is reasonably likely
      to have a materially adverse effect on the business, property, assets,
      liabilities, financial condition or otherwise or prospects of the Borrowers
      or
      the Borrowers’ Group;

     

    
      	
              (m)

            	
              Additional
                documents and evidence

            


    

     

    to
      the
      extent required by any change in applicable law and regulation or any changes
      in
      the Agent’s or any Bank’s own internal guidelines since the date on which the
      applicable documents and evidence were delivered to the Agent and Banks pursuant
      to clause 8.1.7, such further documents and evidence as the Agent and/or any
      Bank shall require to identify the Borrowers and the other Security Parties
      and
      any other persons involved or affected by the transaction(s) contemplated by
      this Agreement;  and


    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    


    
      	
              (n)

            	
              Accounts

            


    

     

    evidence
      that the Earnings Account has been opened, together with duly completed mandate
      forms in respect thereof.


    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    


    Part
      2

     

    Documents
      and evidence required as conditions precedent to each Advance being
      made

     

    
      	
              (a)

            	
              Drawdown
                Notice

            


    

     

    The
      relevant Drawdown Notice duly executed;

     

    
      	
              (b)

            	
              Conditions
                precedent

            


    

     

    evidence
      that the conditions precedent set out in Part 1 of Schedule 3 (remain or, as
      appropriate, will be) fully satisfied;

     

    
      	
              (c)

            	
              Ship
                conditions

            


    

     

    evidence
      that the Ship relevant to the Advance which is to be made:

     

    
      	
               

            	
              (i)

            	
              Registration
                and Encumbrances

            


    

     

    is
      permanently or provisionally registered in the name of the relevant Borrower
      under the laws and flag of the Flag State through the Registry and that such
      Ship and its Earnings, Insurances and Requisition Compensation (as defined
      in
      the relevant Ship Security Documents) are free of Encumbrances;

     

    
      	
               

            	
              (ii)

            	
              Classification

            


    

     

    maintains
      the relevant Classification free of all requirements and recommendations of
      the
      Classification Society;

     

    
      	
               

            	
              (iii)

            	
              Insurance

            


    

     

    is
      insured in accordance with the provisions of the relevant Ship Security
      Documents and all requirements of such Ship Security Documents in respect of
      such insurance have been complied with (including without limitation
      confirmation from the protection and indemnity association or other insurer
      with
      which such Ship is, or is to be, entered for insurance or insured against
      protection and indemnity risks (including oil pollution risks) that any
      necessary declarations required by the association or insurer for the removal
      of
      any oil pollution exclusion have been made and that any such exclusion does
      not
      apply to such Ship); and

     

    
      	
              (d)

            	
              Title
                and deletion

            


    

     

    evidence
      that the transfer of title to such Ship from the relevant Seller to the relevant
      Borrower has been duly recorded with the Registry free from Encumbrances and
      that the prior registration of such Ship in the name of the relevant Seller
      has
      been or, within a period of thirty (30) days following the Delivery Date of
      such
      Ship, will be cancelled and that no Encumbrances are registered against such
      Ship on such prior register;

     

    
      	
              (e)

            	
              Security
                Documents

            


    

     

    the
      Ship
      Security Documents for such Ship duly executed;

     

    
      	
              (f)

            	
              Mortgage
                registration

            


    

     

    evidence
      that the Mortgage over such Ship has been permanently or provisionally
      registered against such Ship under the laws and flag of the Flag State through
      the Registry;

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    


    
      	
              (g)

            	
              Notices
                of assignment

            


    

     

    copies
      of
      duly executed notices of assignment required by the terms of the Ship Security
      Documents and in the forms prescribed by the relevant Ship Security
      Documents;

     

    
      	
              (h)

            	
              Liberian
                opinion

            


    

     

    an
      opinion of Seward and Kissel, special legal advisers on matters of Liberian
      law
      to the Agent;

     

    
      	
              (i)

            	
              Dutch
                Opinion

            


    

     

    an
      opinion of Norton Rose, special legal advisers on matters of Dutch law to the
      Agent;

     

    
      	
              (j)

            	
              Bahamas
                opinion

            


    

     

    an
      opinion of Lennox Paton, special legal advisers on matters of Bahamas law to
      the
      Agent;

     

    
      	
              (k)

            	
              English
                opinion

            


    

     

    an
      opinion of Norton Rose special legal advisers on matters of English law to
      the
      Agent;

     

    
      	
              (l)

            	
              Further
                opinions

            


    

     

    any
      such
      further opinion as may be required by the Agent;

     

    
      	
              (m)

            	
              Security
                Parties’ process agent

            


    

     

    a
      letter
      from each Security Party’s agent for receipt of service of proceedings accepting
      its appointment under each of the Security Documents in which it is or is to
      be
      appointed as such Security Party’s agent;

     

    
      	
              (n)

            	
              Insurance
                opinion

            


    

     

    an
      opinion (at the expense of the Borrowers) from Junge & Co to the Agent, on
      the insurances effected or to be effected in respect of such Ship upon and
      following the relevant Drawdown Date;

     

    
      	
              (o)

            	
              Insurance
                undertakings

            


    

     

    confirmations
      from the relevant P&I Club, War Risks Club, brokers/insurers confirming that
      Letters of Undertaking will be issued in respect of the relevant Ship in a
      form
      and substance acceptable to the Agent in its sole discretion;

     

    
      	
              (p)

            	
              SMC/DOC/ISSC

            


    

     

    a
      copy,
      certified as a true and complete copy by an officer of the relevant Borrower
      of
      the DOC issued to the Operator and the SMC and the ISSC for such
      Ship;

     

    
      	
              (q)

            	
              Certificates
                of financial
                responsibility

            


    

     

    a
      copy of
      a certificate of financial responsibility in relation to the relevant Ship
      complying with the requirements of the United States Oil Pollution Act 1990
      or
      the United States Comprehensive Environmental Response Compensation Liability
      Act 1980 together with evidence of approval thereof by the relevant regulatory
      authorities or a letter from the relevant Borrower confirming that it is not
      intended that the Ship trade to the USA, and if it does, the relevant Borrower
      will ensure compliance with the above regulations;

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    


    
      	
              (r)

            	
              Valuations

            


    

     

    a
      valuation (dated not more than sixty (60) days prior to the Drawdown Date of
      the
      Advance which is to be made) of the Ship relevant to such Advance by an
      independent firm of shipbrokers appointed by the Agent and made in the manner
      specified in clause 8.2.2 demonstrating the market value of such
      Ship;

     

    
      	
              (s)

            	
              Survey
                report

            


    

     

    a
      survey
      report at the expense of the Borrowers  by surveyors appointed by the
      Agent and dated not earlier than thirty (30) days prior to the Drawdown Date
      of
      the Advance which is to be made, evidencing that the Ship relevant to such
      Advance is seaworthy in every respect;

     

    
      	
              (t)

            	
              Certificate
                of financial
                responsibility

            


    

     

    a
      copy of
      a certificate of financial responsibility in relation to the relevant Ship
      complying with the requirements of the United States Oil Pollution Act 1990
      or
      the United States Comprehensive Environmental Response Compensation Liability
      Act 1980 together with evidence of approval thereof by the relevant regulatory
      authorities or a letter from the relevant Borrower confirming that it is not
      intended that the Ship trade to the USA, and if it does, the relevant Borrower
      will ensure compliance with the above regulations;

     

    
      	
              (u)

            	
              Further
                matters/opinions

            


    

     

    any
      such
      other matter or further opinion as may be required by the Agent;

     

    
      	
              (v)

            	
              Equity
                contributions

            


    

     

    evidence
      that the relevant Borrower has deposited into the Earnings Account its equity
      contribution in order to meet the relevant Contract Price in a manner acceptable
      to the Agent in its sole discretion and in an amount which when aggregated
      with
      the relevant Advance is at least equal to the relevant Contract Price (and
      payments on account of unbroached bunkers and lubricating oils);

     

    
      	
              (w)

            	
              Material
                adverse change

            


    

     

    evidence
      satisfactory to the Agent (acting reasonably) that no material adverse change
      shall have occurred in the business or financial condition of the Borrowers
      or
      the Corporate Guarantor from that described to the Agent and/or the Banks in
      the
      negotiations of this Agreement which could materially and adversely affect
      the
      abilities of the Borrowers or the Corporate Guarantee to comply with their
      obligations under the Security Document to which they are a party;
      and

     

    
      	
              (x)

            	
              Fees

            


    

     

    evidence
      that any fees due pursuant to clause 5.1.1 and any commitment commission due
      pursuant to clause 5.1.3 have been paid in full.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    


    Schedule 4

     

    Form
      of Substitution Certificate

     

    [Note:
      Banks are advised not to employ Substitution Certificates or otherwise to
      assign, novate or transfer interests in the Agreement without first ensuring
      that the transaction complies with all applicable laws and regulation in all
      applicable jurisdictions.]

     

    
      	
              To:

            	
              KfW
                on its own behalf, as agent for the Banks party to the Agreement
                defined
                below and on behalf of [·]
                and [·].

            


    

     

     

    
      	
              Attention:

            	 	
              [Date]

            


    

    Substitution
      Certificate

     

    This
      Substitution Certificate relates to a $35,000,000 Loan
      Facility Agreement (the
“Agreement”) dated [·]
      2007 made between GRASMERE MARITIME LIMITED,
      ULLSWATER MARITIME LIMITED and WINDERMERE MARITIME LIMITED as borrowers, the
      banks whose respective names and addresses are set out in Schedule 1 thereto
      as
      Banks, KfW as Swap Bank, Arranger, Security Trustee and Agent.

     

    
      	
              1

            	
              [name
                of Existing Bank] (the “Existing Bank”) (a)
                confirms the accuracy of the summary of its participation in the
                Agreement
                set out in the schedule below; and (b) requests [name of
                Substitute Bank] (the “Substitute”) to accept by
                way of novation the portion of such participation specified in the
                schedule hereto by counter-signing and delivering this Substitution
                Certificate to the Agent at its address for the service of notices
                specified in the Agreement.

            


    

     

    
      	
              2

            	
              The
                Substitute hereby requests the Agent (on behalf of itself, the Borrowers
                and the Banks and all other parties to the Agency Agreement to accept
                this
                Substitution Certificate as being delivered to the Agent pursuant
                to and
                for the purposes of clause 15.4 of the Agreement, so as to take
                effect in accordance with the respective terms thereof on [date of
                transfer] (the “Effective Date”) or on such
                later date as may be determined in accordance with the respective
                terms
                thereof.

            


    

     

    
      	
              3

            	
              The
                Agent (on behalf of itself, the Borrowers, the Banks and all other
                parties
                to the Agency Agreement) confirms the novation effected by this
                Substitution Certificate pursuant to and for the purposes of
                clause 15.4 of the Agreement so as to take effect in accordance with
                the respective terms thereof.

            


    

     

    
      	
              4

            	
              The
                Substitute confirms:

            


    

     

    
      	
               

            	
              (a)

            	
              that
                it has received a copy of the Agreement and each of the other Security
                Documents and all other documentation and information required by
                it in
                connection with the transactions contemplated by this Substitution
                Certificate;

            


    

     

    
      	
               

            	
              (b)

            	
              that
                it has made and will continue to make its own assessment of the validity,
                enforceability and sufficiency of the Agreement, the other Security
                Documents and this Substitution Certificate and has not relied and
                will
                not rely on the Existing Bank or the Agent or any statements made
                by
                either of them in that respect;

            


    

     

    
      	
               

            	
              (c)

            	
              that
                it has made and will continue to make its own credit assessment of
                the
                Borrowers and has not relied and will not rely on the Existing Bank
                or the
                Agent or any statements made by either of them in that respect;
                and

            


    

     

    
      	
               

            	
              (d)

            	
              that,
                accordingly, neither the Existing Bank nor the Agent shall have any
                liability or responsibility to the Substitute in respect of any of
                the
                foregoing matters.

            


    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    


    
      	
              5

            	
              Execution
                of this Substitution Certificate by the Substitute constitutes its
                representation to the Existing Bank and all other parties to the
                Agreement
                that it has power to become party to the Agreement as a Bank on the
                terms
                herein and therein set out and has taken all necessary steps to authorise
                execution and delivery of this Substitution
                Certificate.

            


    

     

    
      	
              6

            	
              The
                Existing Bank makes no representation or warranty and assumes no
                responsibility with respect to the legality, validity, effectiveness,
                adequacy or enforceability of the Agreement or any of the other Security
                Documents or any document relating thereto and assumes no responsibility
                for the financial condition of the Borrowers or any other party to
                the
                Agreement or any of the other Security Documents or for the performance
                and observance by the Borrowers or any other such party of any of
                its
                obligations under the Agreement or any of the other Security Documents
                or
                any document relating thereto and any and all such conditions and
                warranties, whether express or implied by law or otherwise, are hereby
                excluded.

            


    

     

    
      	
              7

            	
              The
                Substitute hereby undertakes to the Existing Bank, the Borrowers
                and the
                Agent and each of the other parties to the Agreement that it will
                perform
                in accordance with their terms all those obligations which by the
                respective terms of the Agreement will be assumed by it after acceptance
                of this Substitution Certificate by the
                Agent.

            


    

     

    
      	
              8

            	
              All
                terms and expressions used but not defined in this Substitution
                Certificate shall bear the meaning given to them in the
                Agreement.

            


    

     

    
      	
              9

            	
              This
                Substitution Certificate and the rights and obligations of the parties
                hereunder shall be governed by and construed in accordance with English
                law.

            


    

     

    Note: This
      Substitution Certificate is not a security, bond, note, debenture, investment
      or
      similar instrument.

     

    AS
      WITNESS the hands of the authorised signatories of the parties hereto
      on the date appearing below.

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    


    The
      Schedule

     

    
      	
              Commitment:
                $

            	
              Portion
                Transferred: $

            
	
              Contribution:
                $

            	
              Portion
                Transferred: $

            
	
              Next
                Interest Payment Date:

            


    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    


    Administrative
      Details of Substitute

     

    Lending
      Office:

    Account
      for payments:

    Telephone:

    Telex:

    Attention:

    
      	
              [Existing
                Bank] 

            	 	
              [Substitute] 

            	 
	
              By:

            	  
              	 	
              By:

            	  
              	 
	
              Date:

            	 	 	
              Date:

            	 	 


    

    


    The
      Agent

    By:

    


    
      	  
              	 
	
              on
                its own behalf

            	 


    

    and
      on
      behalf of the Borrowers and the Banks and all other parties to the Agency
      Agreement

    Date:


    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    Schedule 5

     

    Form
      of Master Swap Agreement



    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    Schedule 6

     

    Form
      of Corporate Guarantee


    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    


    Schedule 7

     

    Form
      of Mortgage


    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    


    Schedule 8

     

    Form
      of Deed of Covenant


    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    


    Schedule 9

     

    Form
      of Manager’s Undertaking


    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

    


    Schedule 10

     

    Form
      of Charter Assignment


    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    


    Schedule 11

     

    Form
      of Swap Assignment


    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    


    Schedule 12

     

    Form
      of Account Pledge


    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    


    BORROWERS

     

    
      	
              SIGNED
                by

            	
              )

            	 	 	 
	
              for
                and on behalf of

            	
              )

            	 	
               
                

            	 
	
              GRASMERE
                MARITIME LIMITED

            	
              )

            	 	
              Attorney-in-Fact

            	 
	
              pursuant
                to a power of attorney

            	
              )

            	 	 	 
	
              dated                                            2007

            	
              )

            	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	 	 
	
              for
                and on behalf of

            	
              )

            	 	
               
                

            	 
	
              ULLSWATER
                MARITIME LIMITED

            	
              )

            	 	
              Attorney-in-Fact

            	 
	
              pursuant
                to a power of attorney

            	
              )

            	 	 	 
	
              dated                                            2007

            	
              )

            	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	 	 
	
              for
                and on behalf of

            	
              )

            	 	
               
                

            	 
	
              WINDERMERE
                MARITIME LIMITED

            	
              )

            	 	
              Attorney-in-Fact

            	 
	
              pursuant
                to a power of attorney

            	
              )

            	 	 	 
	
              dated                                            2007

            	
              )

            	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              CREDITORS

            	 	 	 	 
	 	 	 	 	 
	
              BANKS

            	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	
               
                

            	 
	
              for
                and on behalf of

            	
              )

            	 	
              Authorised
                Signatory

            	 
	
              KfW

            	
              )

            	 	 	 
	
              as
                authorised signatories

            	
              )

            	 	
               
                

            	 
	 	
              )

            	 	
              Authorised
                Signatory

            	 
	 	 	 	 	 
	 	 	 	 	 
	
              ARRANGER

            	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	
               
                

            	 
	
              for
                and on behalf of

            	
              )

            	 	
              Authorised
                Signatory

            	 
	
              KfW

            	
              )

            	 	 	 
	
              as
                authorised signatories

            	
              )

            	 	
               
                

            	 
	 	 	 	
              Authorised
                Signatory

            	 


    

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

    


    
      	
              AGENT

            	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	
               
                

            	 
	
              for
                and on behalf of

            	
              )

            	 	
              Authorised
                Signatory

            	 
	
              KfW

            	
              )

            	 	 	 
	
              as
                authorised signatories

            	
              )

            	 	
               
                

            	 
	 	
              )

            	 	
              Authorised
                Signatory

            	 
	 	 	 	 	 
	 	 	 	 	 
	
              SECURITY
                TRUSTEE

            	 	 	 	 
	
              SIGNED
                by

            	
              )

            	 	
               
                

            	 
	
              for
                and on behalf of

            	
              )

            	 	
              Authorised
                Signatory

            	 
	
              KfW

            	
              )

            	 	 	 
	
              as
                authorised signatories

            	
              )

            	 	
               
                

            	 
	 	
              )

            	 	
              Authorised
                Signatory

            	 


    

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Dated      July
                30, 2007

            	 
	 	 	 
	 	 	 
	 	
              MC
                SHIPPING INC.

            	
              (1)

            
	 	
              and

            	 
	 	
              KfW

            	
              (2)

            
	 	
              (as
                Security Trustee)

            	 
	 	 	 
	 	  
              	 
	 	 	 
	 	
              CORPORATE
                GUARANTEE

            	 
	 	
                                                                                  
                

            	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Contents

    


    
      	
              Clause 

            	
              Page

            
	 	 	 
	
              1

            	
              Interpretation

            	
              1

            
	 	 	 
	
              2

            	
              Guarantee

            	
              3

            
	 	 	 
	
              3

            	
              Payments
                and Taxes

            	
              6

            
	 	 	 
	
              4

            	
              Representations
                and warranties

            	
              6

            
	 	 	 
	
              5

            	
              Undertakings

            	
              9

            
	 	 	 
	
              6

            	
              Set-off

            	
              12

            
	 	 	 
	
              7

            	
              Benefit
                of this Guarantee

            	
              12

            
	 	 	 
	
              8

            	
              Notices
                and other matters

            	
              12

            
	 	 	 
	
              9

            	
              Law
                and jurisdiction

            	
              14

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              THIS
                GUARANTEE is dated

            	 	
              2007
                and made BETWEEN:

            


    

     

    
      	
              (1)

            	
              MC
                SHIPPING INC. as guarantor (the “Guarantor”);
                and

            


    

     

    
      	
              (2)

            	
              KfW
                (the “Security Trustee”) as agent, security
                agent and trustee, for the benefit of itself and each of the other
                Creditors (as defined below).

            


    

     

    WHEREAS:

     

    
      	
              (A)

            	
              by
                a facility agreement dated
                                                                   2007
                (the “Facility Agreement”) and made between (1) Grasmere
                Maritime Limited, Ullswater Maritime Limited and Windemere Maritime
                Limited as joint and several borrowers
                (the “Borrowers”), (2) the banks and financial
                institutions whose names and addresses are set out in Schedule 1
                to the
                Facility Agreement (the “Banks”), (3) KfW as arranger
                (the “Arranger”), (4) KfW as swap bank (the “Swap
                Bank”), (5) KfW as agent (the “Agent”), and
                (6) KfW (the “Security Trustee”) and together with the
                Agent, Banks, the Arranger and the Swap Bank, the
                “Creditors” and each a “Creditor”) as
                agent, security agent and trustee on behalf of the Creditors, the
                Banks
                have agreed, upon and subject to the terms and conditions of the
                Facility
                Agreement, to make available to the Borrowers as joint and several
                borrowers, a loan facility of up to thirty five million ($35,000,000)
                (the
                “Loan”);

            


    

     

    
      	
              (B)

            	
              by
                a master swap agreement
                dated                                       2007
                and the Schedule thereto made between (1) the Borrowers and (2) the
                Swap
                Bank comprising an ISDA Master Agreement in the form or substantially
                in
                the form set out as Schedule 5 to the Facility Agreement together
                with any
                Confirmations (as defined therein) supplemental thereto (the
                “Master Swap Agreement”), the Swap Bank agreed the terms
                and conditions upon which it would enter into an interest rate
                swap  transaction(s) with the Borrowers in respect of the Loan
                (whether in whole or in part as the case may be from time to time);
                and

            


    

     

    
      	
              (C)

            	
              the
                execution and delivery of this Guarantee is one of the conditions
                precedent to the Banks making their Commitments available under the
                Facility Agreement.

            


    

     

    IT
      IS AGREED as follows:

     

    Interpretation

    Defined
      expressions

    In
      this
      Guarantee, unless the context otherwise requires or unless otherwise defined
      in
      this Guarantee, words and expressions defined in the Facility Agreement and
      used
      in this Guarantee shall have the same meaning where used in this
      Guarantee.

     

    Definitions

    In
      this
      Guarantee, unless the context otherwise requires:

     

    “Charters”
      means:

     

    
      	
               

            	
              (a)

            	
              in
                respect of the GRASMERE, the time charter dated 13 June 2007 and
                made
                between the Grasmere Borrower and Vitol
                S.A.;

            


    

     

    
      	
               

            	
              (b)

            	
              in
                relation to the ULLSWATER, the time charter dated 24 March 1995 and
                made
                between the Ullswater Seller and Vitol S.A. supplemented and amended
                by
                addendum 1 dated 26 August 1996, addendum 2 dated 19 February 1997,
                addendum 3 dated 30 July 1998, addendum 4 dated 21 September 1998,
                addendum 5 dated 24 April 2002, addendum 6 dated 30 January 2006,
                addendum
                7 dated 23 January 2007, addendum 8 dated 20 March 2007, each made
                between
                the Ullswater Seller and Vitol S.A. and the triparty agreement dated
                13
                June 2007 made between the Windermere Seller, the Grasmere Seller,
                the
                Ullswater Seller, the Corporate Guarantor and Vitol S.A.;
                and

            


    

     

    
      	
               

            	
              (c)

            	
              in
                relation to the WINDERMERE, the time charter dated 13 June 2007 and
                made
                between the Windermere Borrower and Vitol
                S.A,

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    and
      “Charter” means any of them;

     

    “Collateral
      Instruments” means notes, bills of exchange, certificates of deposit
      and other negotiable and non-negotiable instruments, guarantees, indemnities
      and
      other assurances against financial loss and any other documents or instruments
      which contain or evidence an obligation (with or without security) to pay,
      discharge or be responsible directly or indirectly for, any indebtedness or
      liabilities of the Borrowers or any other person liable and includes any
      documents or instruments creating or evidencing a mortgage, charge (whether
      fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement
      or security interest of any kind;

     

    “Guaranteed
      Liabilities” means all moneys, obligations and liabilities expressed to
      be guaranteed by the Guarantor in clause 2.1;

     

    “Incapacity”
      means, in relation to a person, the death, bankruptcy, unsoundness of mind,
      insolvency, liquidation, dissolution, winding-up, administration, receivership,
      amalgamation, reconstruction or other incapacity of that person whatsoever
      (and,
      in the case of a partnership, includes the termination or change in the
      composition of the partnership); and

     

    “Relevant
      Jurisdiction” means any jurisdiction in which or where the Guarantor is
      incorporated, resident, domiciled, has a permanent establishment, carries on,
      or
      has a place of business or is otherwise effectively connected.

     

    Headings

    Clause headings
      and the table of contents are inserted for convenience of reference only and
      shall be ignored in the interpretation of this Guarantee.

     

    Constructions
      of certain terms

    In
      this
      Guarantee, unless the context otherwise requires:

     

    references
      to clauses are to be construed as references to the clauses of this
      Guarantee;

     

    references
      to (or to any specified provision of) this Guarantee or any other document
      shall
      be construed as references to this Guarantee, that provision or that document
      as
      in force for the time being and as amended from time to time in accordance
      with
      the terms thereof, or, as the case may be, with the agreement of the relevant
      parties;

     

    words
      importing the plural shall include the singular and vice versa;

     

    references
      to a time of day are to London time;

     

    references
      to a person shall be construed as including references to an individual, firm,
      company, corporation, unincorporated body of persons or any Government
      Entity;

     

    references
      to a “guarantee” include references to an indemnity or other
      assurance against financial loss including, without limitation, an obligation
      to
      purchase assets or services as a consequence of a default by any other person
      to
      pay any Indebtedness and “guaranteed” shall be construed
      accordingly; and

     

    references
      to any enactment, amended or extended shall be deemed to include reference
      to
      such enactment as re-enacted, amended or extended.

     

    Contracts
      (Rights of Third Parties) Act 1999

    No
      term
      of this Guarantee is enforceable under the Contracts (Rights of Third Parties)
      Act 1999 by a person who is not a party to this Guarantee.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    Guarantee

    Covenant
      to pay

    In
      consideration of the Banks making or continuing loans, advances or guarantees
      to, or otherwise giving credit or granting banking facilities or accommodation
      or granting time to, the Borrowers pursuant to the Facility Agreement and for
      the Swap Bank entering into the Master Swap Agreement, the Guarantor hereby
      guarantees to pay to the Security Trustee, for the account of the Creditors
      or
      any of them, on first demand by the Security Trustee all moneys and discharge
      all obligations and liabilities now or hereafter due, owing or incurred by
      the
      Borrowers to the Creditors or any of them under or pursuant to the Facility
      Agreement, the Master Swap Agreement and the other Security Documents when
      the
      same become due for payment or discharge whether by acceleration or otherwise,
      and whether such moneys, obligations or liabilities are express or implied,
      present, future or contingent, joint or several, incurred as principal or
      surety, originally owing to the Creditors or any of them or purchased or
      otherwise acquired by them or it, denominated in Dollars or in any other
      currency, or incurred on any banking account or in any other manner
      whatsoever.  Provided however, that the Guarantor will not be obliged
      or required to pay out any moneys under this Guarantee until the earlier of:
      (a)
      the date on which the Charters (or any of them) are terminated (whether by
      effluxion of time or otherwise), suspended, novated, extended beyond their
      original term in any way (including by way of any optional extension granted
      pursuant to the terms of a Charter), or rescinded or (b) 29 February
      2008.

     

    Such
      liabilities shall, without limitation, include interest (as well after as before
      judgment) to date of payment at such rates and upon such terms as may from
      time
      to time be agreed, commission, fees and other charges and all legal and other
      costs, charges and expenses on a full and unqualified indemnity basis which
      may
      be incurred by the Creditors in relation to any such moneys, obligations or
      liabilities or generally in respect of the Borrowers, the Guarantor or any
      Collateral Instrument.

     

    Guarantor
      as principal debtor; indemnity

    As
      a
      separate and independent stipulation, the Guarantor agrees that if any purported
      obligation or liability of the Borrowers (or any of them) which would have
      been
      the subject of this Guarantee had it been valid and enforceable is not or ceases
      to be valid or enforceable against the Borrowers (or any of them) on any ground
      whatsoever whether or not known to the Creditors or any of them (including,
      without limitation, any irregular exercise or absence of any corporate power
      or
      lack of authority of, or breach of duty by, any person purporting to act on
      behalf of the Borrowers (or any of them) or any legal or other limitation,
      whether under the Limitation Acts or otherwise or any disability or Incapacity
      or any change in the constitution of the Borrowers (or any of them)) the
      Guarantor shall nevertheless be liable to the Creditors in respect of that
      purported obligation or liability as if the same were fully valid and
      enforceable and the Guarantor was the principal debtor in respect
      thereof.  The Guarantor hereby agrees to keep the Creditors fully
      indemnified on demand against all damages, losses, costs and expenses arising
      from any failure of the Borrowers (or any of them) to perform or discharge
      any
      such purported obligation or liability.

     

    Statements
      of account conclusive

    Any
      statement of account, signed as correct by an officer of the Security Trustee,
      showing the amount of the Guaranteed Liabilities shall, in the absence of
      manifest error, be binding and conclusive on and against the
      Guarantor.

     

    No
      security taken by Guarantor

    The
      Guarantor warrants that it has not taken or received, and undertake that until
      all the Guaranteed Liabilities of the Borrowers have been paid or discharged
      in
      full, it will not take or receive, the benefit of any security from the
      Borrowers (or any of them) or any other person in respect of its obligations
      under this Guarantee.

     

    Interest

    The
      Guarantor agrees to pay interest on each amount demanded of it under this
      Guarantee from the date of such demand until payment (as well after as before
      judgment) at the rate specified in clause 3.4 of the Facility Agreement
      which shall apply to this Guarantee mutatis mutandis.  Such interest
      shall be compounded at the end of each period determined for this purpose by
      the
      Security Trustee in the event of it not being paid when demanded but without
      prejudice to the Creditors’ right to require payment of such
      interest.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    Continuing
      security and other matters

    This
      Guarantee shall:

     

    secure
      the ultimate balance from time to time owing to the Creditors or any of them
      by
      the Borrowers (or any of them) and shall be a continuing security,
      notwithstanding any settlement of account or other matter
      whatsoever;

     

    be
      in
      addition to any present or future Collateral Instrument, right or remedy held
      by
      or available to the Creditors or any of them; and

     

    not
      be in
      any way prejudiced or affected by the existence of any such Collateral
      Instrument, rights or remedies or by the same becoming wholly or in part void,
      voidable or unenforceable on any ground whatsoever or by the Security Trustee
      or
      any of the other Creditors dealing with, exchanging, varying or failing to
      perfect or enforce any of the same or giving time for payment or indulgence
      or
      compounding with any other person liable.

     

    Liability
      unconditional

    The
      liability of the Guarantor shall not be affected nor shall this Guarantee be
      discharged or reduced by reason of:

     

    the
      Incapacity or any change in the name, style or constitution of the Borrowers
      (or
      any of them) or any other person liable;

     

    the
      Security Trustee or any of the other Creditors granting any time, indulgence
      or
      concession to, or compounding with, discharging, releasing or varying the
      liability of, the Borrowers (or any of them) or any other person liable or
      renewing, determining, varying or increasing any accommodation, facility or
      transaction or otherwise dealing with the same in any manner whatsoever or
      concurring in, accepting or varying any compromise, arrangement or settlement
      or
      omitting to claim or enforce payment from the Borrowers (or any of them) or
      any
      other person liable; or

     

    any
      act
      or omission which would not have discharged or affected the liability of any
      Guarantor had it been a principal debtor instead of a Guarantor or by anything
      done or omitted which but for this provision might operate to exonerate the
      Guarantor.

     

    Collateral
      Instruments

    None
      of
      the Creditors shall be obliged to make any claim or demand on the Borrowers
      (or
      any of them) or to resort to any Collateral Instrument or other means of payment
      now or hereafter held by or available to them or it before enforcing this
      Guarantee and no action taken or omitted by the Creditors in connection with
      any
      such Collateral Instrument or other means of payment shall discharge, reduce,
      prejudice or affect the liability of the Guarantor under this Guarantee nor
      shall the Creditors be obliged to apply any money or other property received
      or
      recovered in consequence of any enforcement or realisation of any such
      Collateral Instrument or other means of payment in reduction of the Guaranteed
      Liabilities.

     

    Waiver
      of Guarantor’s rights

    Until
      all
      the Guaranteed Liabilities have been paid, discharged or satisfied in full
      (and
      notwithstanding payment of a dividend in any liquidation or under any compromise
      or arrangement) the Guarantor agrees that, without the prior written consent
      of
      the Security Trustee, it will not:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    exercise
      its rights of subrogation, reimbursement and indemnity against the Borrowers
      (or
      any of them) or any other person liable;

     

    demand
      or
      accept repayment in whole or in part of any indebtedness now or hereafter due
      to
      the Guarantor from the Borrowers (or any of them) or from any other person
      liable or demand or accept any Collateral Instrument in respect of the same
      or
      dispose of the same;

     

    take
      any
      step to enforce any right against the Borrowers (or any of them)  or
      any other person liable in respect of any Guaranteed Liabilities;
      or

     

    claim
      any
      set-off or counterclaim against the Borrowers (or any of them) or any other
      person liable or claim or prove in competition with the Creditors or any of
      them
      in the liquidation of the Borrowers (or any of them) or any other person liable
      or have the benefit of, or share in, any payment from or composition with,
      the
      Borrowers (or any of them) or any other person liable or any other Collateral
      Instrument now or hereafter held by the Creditors for any Guaranteed Liabilities
      or for the obligations or liabilities of any other person liable but so that,
      if
      so directed by the Security Trustee, it will prove for the whole or any part
      of
      its claim in the liquidation of the Borrowers (or any of them) or any other
      person liable on terms that the benefit of such proof and of all money received
      by it in respect thereof shall be held on trust for the Creditors and applied
      in
      or towards discharge of the Guaranteed Liabilities in such manner as the
      Security Trustee shall deem appropriate.

     

    Suspense
      accounts

    Any
      money
      received in connection with this Guarantee (whether before or after any
      Incapacity of the Borrowers (or any of them) or the Guarantor) may be placed
      to
      the credit of a suspense account with a view to preserving the rights of the
      Creditors to prove for the whole of their respective claims against the
      Borrowers (or any of them) or any other person liable or may be applied in
      or
      towards satisfaction of such of the Guaranteed Liabilities as the Security
      Trustee may from time to time conclusively determine in its absolute
      discretion.

     

    Settlements
      conditional

    Any
      release, discharge or settlement between the Guarantor and any of the Creditors
      shall be conditional upon no security, disposition or payment to the Creditors
      by the Borrowers (or any of them) or any other person liable being void, set
      aside or ordered to be refunded pursuant to any enactment or law relating to
      bankruptcy, liquidation, administration or insolvency or for any other reason
      whatsoever and if such condition shall not be fulfilled the Creditors shall
      be
      entitled to enforce this Guarantee subsequently as if such release, discharge
      or
      settlement had not occurred and any such payment had not been made.

     

    Guarantor
      to deliver up certain property

    If,
      contrary to clauses 0 or 0, the Guarantor takes or receives the benefit of
      any
      security or receives or recovers any money or other property, such security,
      money or other property shall be held on trust for the Security Trustee and
      shall be delivered to the Security Trustee on demand.

     

    Retention
      of this Guarantee

    The
      Creditors shall be entitled to retain this Guarantee after as well as before
      the
      payment or discharge of all the Guaranteed Liabilities for such period as the
      Security Trustee may reasonably determine.

     

    Payments
      and Taxes

    No
      set-off or counterclaim

    All
      payments to be made by the Guarantor under this Guarantee shall be made in
      full,
      without any set-off or counterclaim whatsoever and, subject as provided in
      clause 0, free and clear of any deductions or withholdings, in Dollars on the
      due date to the account of the Agent referred to in clause 6.1 of the
      Facility Agreement.  Save as otherwise expressly provided by the
      Facility Agreement such payments shall be for the account of the Banks and
      the
      Swap Bank and the Security Trustee shall forthwith distribute such payments
      in
      like funds as are received by the Security Trustee to the Banks rateably in
      accordance with their Commitments or Contributions, as the case may be or to
      the
      Swap Bank.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    Grossing
      up for Taxes

    If
      at any
      time the Guarantor is required to make any deduction or withholding in respect
      of Taxes from any payment due under this Guarantee for the account of any
      Creditor (or if the Security Trustee is required to make any such deduction
      or
      withholding from a payment to a Creditor), the sum due from the Guarantor in
      respect of such payment shall be increased to the extent necessary to ensure
      that, after the making of such deduction or withholding, each Creditor receives
      on the due date for such payment (and retains, free from any liability in
      respect of such deduction or withholding) a net sum equal to the sum which
      it
      would have received had no such deduction or withholding been required to be
      made and the Guarantor shall jointly and severally indemnify each Creditor
      against any losses or costs incurred by any of them by reason of any failure
      of
      the Guarantor to make any such deduction or withholding or by reason of any
      increased payment not being made on the due date for such
      payment.  The Guarantor shall promptly deliver to the Security Trustee
      any receipts, certificates or other proof evidencing the amounts (if any) paid
      or payable in respect of any deduction or withholding as aforesaid.

     

    Claw-back
      of Tax benefit

    If,
      following any such deduction or withholding as is referred to in clause 3.2
      from
      any payment by the Borrowers (or any of them), any Creditor shall receive or
      be
      granted a credit against or remission for any Taxes payable by it, the relevant
      Creditor shall, subject to the Borrowers (or any of them) having made any
      increased payment in accordance with clause 3.2 and to the relevant Creditor
      can
      do so without prejudicing the retention of the amount of such credit or
      remission and without prejudice to the relevant Creditor to obtain any other
      relief or allowance which may be available to it, reimburse the Borrowers (or
      any of them) with such amounts as the relevant Creditor shall in its absolute
      discretion certify to be the proportion of such credit or remission as will
      leave the relevant Creditor (after such reimbursement) in no worse position
      that
      it would have been in had there been no such deduction or withholding from
      the
      payment by the Borrowers (or any of them) as aforesaid.  Such
      reimbursement shall be made forthwith upon the relevant Creditor certifying
      that
      the amount of such credit or remission has been received by
      it.  Nothing contained in this Agreement shall oblige relevant
      Creditor to rearrange its tax affairs or to disclose any information regarding
      its tax affairs and computations. Without prejudice to the generality of the
      foregoing, the Borrowers (or any of them) shall not, by virtue of this clause
      3.3, be entitled to enquire about any Creditor’s (as the case may be) tax
      affairs.

     

    Representations
      and warranties

     

    Continuing
      representations and warranties

    The
      Guarantor represents and warrants that:

     

    Due
      incorporation

    the
      Guarantor and its Subsidiaries are duly incorporated and validly existing under
      the laws of the respective countries of their incorporation as limited liability
      companies and have power to carry on their respective businesses as they are
      now
      being conducted and to own their respective property and other
      assets;

     

    Corporate
      power to Guarantee

    the
      Guarantor has power to execute, deliver and perform its obligations under this
      Guarantee; all necessary corporate, shareholder and other action has been taken
      to authorise the execution, delivery and performance of the same and no
      limitation on the powers of the Guarantor to borrow or give guarantees will
      be
      exceeded as a result of this Guarantee;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Binding
      obligations

    this
      Guarantee constitutes valid and legally binding obligations of the Guarantor
      enforceable in accordance with its terms;

     

    No
      conflict with other obligations

    the
      execution and delivery of, the performance of its obligations under, and
      compliance with the provisions of, this Guarantee by the Guarantor will not
      (a) contravene any existing applicable law, statute, rule or regulation or
      any judgment, decree or permit to which the Guarantor is subject,
      (b) conflict with, or result in any breach of any of the terms of, or
      constitute a default under, any agreement or other instrument to which the
      Guarantor is a party or is subject or by which it or any of its property is
      bound, (c) contravene or conflict with any provision of the Guarantor’s
      Articles of Incorporation/By-laws/Statutes or other constitutional
      documents or (d) result in the creation or imposition of or oblige the
      Guarantor or any of its Subsidiaries to create any Encumbrance on that
      Guarantor's or its Subsidiaries’ undertakings, assets, rights or
      revenues;

     

    No
      litigation

    no
      litigation, arbitration or administrative proceeding is taking place, pending
      or, to the knowledge of the officers of the Guarantor, threatened against the
      Guarantor or any of its Subsidiaries which could have a material adverse effect
      on the business, assets or financial condition of the Guarantor or any of its
      Subsidiaries;

     

    Financial
      statements correct and complete

    the
      audited financial statements of the Guarantor, the audited consolidated
      financial statements of the Guarantor and its Subsidiaries in respect of the
      financial year ended on 31 December 2006 and the Form 10-Q reports of the
      Guarantor as delivered to the Security Trustee have been prepared in accordance
      with generally accepted international accounting principles and practices which
      have been consistently applied and present fairly and accurately the financial
      position of the Guarantor and the consolidated financial position of the
      Guarantor and its Subsidiaries as at such date and the results of the operations
      of the Guarantor and the consolidated results of the operations of the Guarantor
      and its Subsidiaries respectively for the financial year or, in the case of
      the
      Form 10-Q reports, the financial quarter to which they relate ended on such
      date
      and, as at such date, neither the Guarantor nor any of its Subsidiaries had
      any
      significant liabilities (contingent or otherwise) or any unrealised or
      anticipated losses which are not disclosed by, or reserved against or provided
      for in, such financial statements;

     

    No
      filings required

    it
      is not
      necessary to ensure the legality, validity, enforceability or admissibility
      in
      evidence of this Guarantee that it or any other instrument be notarised, filed,
      recorded, registered or enrolled in any court, public office or elsewhere in
      any
      Relevant Jurisdiction or that any stamp, registration or similar tax or charge
      be paid in any Relevant Jurisdiction on or in relation to this Guarantee and
      this Guarantee is in proper form for its enforcement in the courts of each
      Relevant Jurisdiction;

     

    Choice
      of law

    the
      choice by the Guarantor of English law to govern this Guarantee and the
      submission by the Guarantor to the non-exclusive jurisdiction of the English
      courts is valid and binding;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    No
      immunity

    neither
      the Guarantor nor any of its assets is entitled to immunity on the grounds
      of
      sovereignty or otherwise from any legal action or proceeding (which shall
      include, without limitation, suit, attachment prior to judgment, execution
      or
      other enforcement); and

     

    Consents
      obtained

    every
      consent, authorisation, licence or approval of, or registration with or
      declaration to, governmental or public bodies or authorities or courts required
      by of the Guarantor to authorise, or required by the Guarantor in connection
      with, the execution, delivery, validity, enforceability or admissibility in
      evidence of this Guarantee or the performance by the Guarantor of its
      obligations under this Guarantee has been obtained or made and is in full force
      and effect and there has been no default in the observance of the conditions
      or
      restrictions (if any) imposed in, or in connection with, any of the
      same.

     

    Initial
      representations and warranties

    The
      Guarantor further represents and warrants that:

     

    No
      material adverse change

    there
      has
      been no material adverse change in the financial position of the Guarantor
      or
      the consolidated financial position of the Guarantor and its Subsidiaries from
      that described to the Guarantor in the negotiations of this Guarantee or set
      forth in the financial statements referred to in clause 0;

     

    Pari
      passu

    the
      obligations of the Guarantor under this Guarantee are direct, general and
      unconditional obligations of the Guarantor and rank at least pari passu with
      all
      other present and future unsecured and unsubordinated Indebtedness of the
      Guarantor with the exception of any obligations which are mandatorily preferred
      by law and not by contract;

     

    No
      default under other Indebtedness

    neither
      the Guarantor nor any of its Subsidiaries are (nor would with the giving of
      notice or lapse of time or the satisfaction of any other condition or any
      combination thereof be) in breach of or in default under any agreement relating
      to Indebtedness to which it is a party or by which it may be bound;

     

    Information

    the
      information, exhibits and reports furnished by the Guarantor to the Security
      Trustee and the other Creditors in connection with the negotiation and
      preparation of this Guarantee or the other Security Documents to which such
      Guarantor, is, or is to be, a party are true and accurate in all material
      respects and not misleading, do not omit material facts and all reasonable
      enquiries have been made to verify the facts and statements contained therein;
      there are no other facts the omission of which would make any fact or statement
      therein misleading;

     

    No
      withholding Taxes

    no
      Taxes
      are imposed by withholding or otherwise on any payment to be made by the
      Guarantor under this Guarantee or under the Security Documents to which, the
      Guarantor is, or is to be, a party or are imposed on or by virtue of the
      execution or delivery by the Guarantor of this Guarantee or under the Security
      Documents to which, the Guarantor is, or is to be, a party or any document
      or
      instrument to be executed or delivered under this Guarantee or any document
      or
      instrument to be executed or delivered thereunder; and

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    No
      Default

    no
      Default has occurred.

     

    Repetition
      of representations and warranties

    On
      and as
      of each day from the date of this Guarantee until all moneys due or owing by
      the
      Borrowers under the Facility Agreement, the Master Swap Agreement and/or the
      other Security Documents and/or by the Guarantor under this Guarantee have
      been
      paid in full the Guarantor shall be deemed to repeat the representations and
      warranties in clause 0 (and so that for this purpose the representation and
      warranty in clause 0 shall refer to the then latest audited financial statements
      delivered to the Creditors under clause 0) as if made with reference to the
      facts and circumstances existing on each such day.

     

    Undertakings

    General

    The
      Guarantor undertakes that, from the date of this Guarantee and so long as any
      moneys are owing under this Guarantee, it will:

     

    Notice
      of default

    promptly
      inform the Security Trustee of any occurrence of which it becomes aware which
      might adversely affect the ability of the Guarantor to perform its obligations
      under this Guarantee and without limiting the generality of the foregoing,
      will
      promptly inform the Security Trustee of any Default or of any material
      litigation, arbitration or similar proceedings affecting the Borrowers and/or
      the Ships forthwith upon becoming aware thereof and will from time to time,
      if
      so requested by the Security Trustee, confirm to the Security Trustee in writing
      that, save as otherwise stated in such confirmation, no Default has occurred
      and
      is continuing and no material litigation, arbitration or similar proceedings
      has
      been commenced by or against the Borrowers and/or the Ships;

     

    Consents
      and licences

    without
      prejudice to clause 0, obtain or cause to be obtained, maintain in full force
      and effect and comply in all material respects with the conditions and
      restrictions (if any) imposed in, or in connection with, every consent,
      authorisation, licence or approval of governmental or public bodies or
      authorities or courts and do, or cause to be done, all other acts and things
      which may from time to time be necessary or desirable under applicable law
      for
      the continued due performance of all its obligations under this
      Guarantee;

     

    Pari
      passu

    ensure
      that its obligations under this Guarantee shall, without prejudice to the
      provisions of clause 0, 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 law and not by
      contract;

     

    Financial
      statements

    prepare
      financial statements of the Guarantor and consolidated financial statements
      of
      the Guarantor and its Subsidiaries in accordance with generally accepted
      international principles and practices consistently applied in respect of each
      financial year and cause the same to be reported on by its auditors and prepare
      unaudited financial statements of the Guarantor and unaudited consolidated
      financial statements of the Guarantor and its Subsidiaries in respect of each
      quarter on the same basis as the annual statements (Form 10-Q reports in respect
      of the Guarantor for each quarter (in a form satisfactory to the Security
      Trustee) shall be acceptable in this respect) and deliver to the Security
      Trustee as many copies of the same as the Security Trustee may reasonably
      require as soon as practicable but not later than one hundred and eighty (180)
      days (in the case of audited financial statements) or ninety (90) days (in
      the
      case of unaudited financial statements) after the end of the financial period
      to
      which they relate;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Delivery
      of reports

    deliver
      to the Security Trustee and each Bank as many copies as they may reasonably
      require of every report, circular, notice or like document issued by the
      Guarantor to its shareholders or creditors generally; and

     

     

    Provision
      of other information

    provide
      the Security Trustee, the Swap Bank and each Bank with:

     

    
      	
               

            	
              (a)

            	
              such
                financial and other information concerning the Guarantor and its
                affairs
                as the Security Trustee, the Swap Bank  or any Bank may from
                time to time reasonably require;
                and

            


    

     

    
      	
               

            	
              (b)

            	
              such
                documents and evidence as the Security Trustee, the Swap Bank and
                any Bank
                shall from time to time require, based on applicable law and regulations
                from time to time and the Security Trustee, the Swap Bank and such
                Bank’s
                own internal guidelines from time to time to identify the Guarantor
                and
                any other persons involved or affected by the transaction(s) contemplated
                by this Guarantee.

            


    

     

    Negative
      undertakings

    The
      Guarantor undertakes that from the date of this Guarantee and so long as any
      moneys are owing under this Guarantee it will not, without the prior written
      consent of the Security Trustee (such consent not to be unreasonably withheld
      or
      delayed):

     

    Disposals

    and
      will
      procure that none of its Subsidiaries will, sell, transfer, lend or otherwise
      dispose of or cease to exercise direct control over any part (being either
      alone
      or when aggregated with all other disposals falling to be taken into account
      pursuant to this clause 0 material in the opinion of the Agent in relation
      to
      the undertakings, assets, rights and revenues of such Guarantor and its
      Subsidiaries taken as a whole) of its present or future undertakings, assets,
      rights or revenues (otherwise than by transfers, sales or disposals for full
      consideration in the ordinary course of trading) whether by one or a series
      of
      transactions related or not;

     

    Constitutional
      documents

    agree
      to
      any change to its Articles of incorporation/By-laws/statues or other
      constitutional documents; and

     

    Ownership

    
      	
               

            	
              (c)

            	
              permit
                any change in the legal and beneficial ownership of the shares in
                the
                Borrowers; or

            


    

     

    
      	
               

            	
              (d)

            	
              permit
                any change in the majority shareholders of the Guarantor from that
                disclosed to the Agent on or before the date of this Guarantee save
                that
                no such consent shall be required if the Guarantor shall become a
                Subsidiary of Bear Stearns Merchant Manager III, L.P. and the Agent’s
                consent to a future transfer of shares in the Guarantor that would
                result
                in the Guarantor ceasing to be a Subsidiary of Bear Stearns Merchant
                Manager III, L.P.  shall not be unreasonably withheld or
                delayed.

            


    

     

    Financial
      Undertakings

    The
      Guarantor further undertakes with the Security Trustee that, from the date
      of
      this Guarantee and so long as any moneys are owing under this
      Guarantee:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    the
      ratio
      of the Guarantor’s and its Subsidiaries’ consolidated EBITDA to Interest expense
      shall never fall below 2:1;

     

    the
      value
      of the Guarantor’s Net Worth shall never fall below $30,000,000;
      and

     

    the
      Guarantor shall have a minimum Cash of $5,000,000,

    For
      the
      purposes of this clause 5.3 the terms: (a) “Net Worth” means
      the aggregate of the Guarantor’s Total Assets less the Guarantor’s Total
      Liabilities as each such term is respectively determined in accordance with
      the
      audited and unaudited consolidated financial statements of the Guarantor and
      its
      Subsidiaries delivered to the Security Trustee under clause 0; (b)
“EBITDA” means the earnings of the
      Guarantor before interest, taxes, depreciation and amortization as determined
      in
      accordance with the audited and unaudited consolidated financial statements
      of
      the Guarantor and its Subsidiaries delivered to the Security Trustee under
      clause 5.1.4; (c) “Interest expense” shall be determined in
      accordance with the audited and unaudited consolidated financial statements
      of
      the Guarantor and its Subsidiaries delivered to the Security Trustee under
      clause 5.1.4; and (d) “Cash” means “cash” as determined in
      accordance with the audited and unaudited consolidated financial statements
      of
      the Guarantor and its Subsidiaries delivered to the Security Trustee under
      clause 5.1.4.

     

    For
      the
      avoidance of doubt where reference is made in this clause 5.3 to calculations
      being made in accordance with the audited and unaudited consolidated financial
      statements of the Guarantor and its Subsidiaries delivered to the Security
      Trustee under clause 5.1.4, the first such calculations shall be made on the
      basis of the audited consolidated financial statements of the Guarantor and
      its
      Subsidiaries in respect of the financial year ended 31 December 2006, and in
      the
      event that the Guarantor shall ever change the basis of calculation or the
      accounting basis of its audited or unaudited consolidated financial statements
      (whether in form or substance) the calculations set out in this clause 5.3
      shall
      be made by the Security Trustee in the manner which in the reasonable opinion
      of
      the Security Trustee resembles most closely that evidenced by the audited
      consolidated financial statements delivered to the Security Trustee in respect
      of the financial year ended on 31 December 2006.

     

    Compliance
      certificate

    The
      Guarantor undertakes that, from the date of this Guarantee and so long as moneys
      are owing under this Guarantee, it will deliver to the Security Trustee,
      together with the audited and unaudited financial statements prepared pursuant
      to clause 5.1.4 in respect of each financial quarter or financial year (as
      the
      case may be) to which such certificate relates, for distribution to the Banks,
      sufficient copies for all the Banks of a written certificate from the finance
      director (or equivalent) of the Guarantor certifying:

     

    
      	
               

            	
              (e)

            	
              the
                amount of (i) EBITDA and Interest expense determined for the proposal
                clause 5.3.1, (ii) the value of the Net Worth for the purposes of
                clause
                5.3.2 and (iii) the amount of the Cash determined for the purposes
                of
                clause 5.3.3, in each case, on the basis (inter alia) of the assets
                and
                liabilities shown in the latest audited or, as the case may be, unaudited
                financial statements of the Guarantor to be produced pursuant to
                clause
                5.1.4 at such date; and

            


    

     

    
      	
               

            	
              (f)

            	
              that
                the Guarantor is in compliance with its obligations in clause 5.3
                (or, if
                it was not in compliance, indicating the extent of the
                breach).

            


    

     

    Each
      such
      certificate to be provided hereunder shall be accompanied by adequate
      information supporting the values so placed on the various assets.

     

    Set-off

    The
      Guarantor authorises each Bank and the Swap Bank to apply any credit balance
      to
      which the Guarantor is then entitled on any account of the Guarantor with such
      Bank and the Swap Bank at any of its branches in or towards satisfaction of
      any
      sum then due and payable from the Guarantor to such Bank or the Swap Bank under
      this Guarantee.  For this purpose each Bank and the Swap Bank is
      authorised to purchase with the moneys standing to the credit of such account
      such other currencies as may be necessary to effect such
      application.  Neither the Bank nor the Swap Bank shall be obliged to
      exercise any right given to it by this clause 6.  Each Bank and
      the Swap Bank shall notify the Security Trustee and the Guarantor forthwith
      upon
      the exercise or purported exercise of any right of set-off giving full details
      in relation thereto and the Security Trustee shall inform the other
      Creditors.


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Benefit
      of this Guarantee

    Benefit
      and burden

    This
      Guarantee shall be binding upon the Guarantor and its successors in title and
      shall enure for the benefit of the Security Trustee, for the benefit of itself
      and each of the other Creditors and their respective successors in title and
      (in
      the case of the Banks) their Assignees and Substitutes.  The Guarantor
      expressly acknowledges and accepts the provisions of clause 15 of the Facility
      Agreement and agree that any person in favour of whom an assignment or a
      transfer is made in accordance with such clause shall be entitled to the benefit
      of this Guarantee.

     

    Changes
      in constitution or reorganisation of Creditors

    For
      the
      avoidance of doubt and without prejudice to the provisions of clause 0, this
      Guarantee shall remain binding on the Guarantor notwithstanding any change
      in
      the constitution of the Creditors or any of them or their or its absorption
      in,
      or amalgamation with, or the acquisition of all or part of their or its
      undertaking or assets by, any other person, or any reconstruction or
      reorganisation of any kind, to the intent that this Guarantee shall remain
      valid
      and effective in all respects in favour of any assignee, transferee or other
      successor in title of the Creditors in the same manner as if such assignee,
      transferee or other successor in title had been named in this Guarantee as
      a
      party instead of, or in addition to, the relevant Creditor, as the case may
      be.

     

    No
      assignment by Guarantor

    The
      Guarantor may not assign or transfer any of its rights or obligations under
      this
      Guarantee.

     

    Disclosure
      of information

    Any
      Creditor may disclose to a prospective assignee or transferee or to any other
      person who may propose entering into contractual relations with such Creditor
      in
      relation to the Facility Agreement such information about the Guarantor as
      such
      Creditor shall consider appropriate provided such prospective assignee,
      substitute or transferee enters into a confidentiality agreement with the
      Security Trustee and the Creditors in relation to such information.

     

    Notices
      and other matters

    Notice

    Every
      notice, request, demand or other communication under this Guarantee
      shall:

     

    be
      in
      writing delivered personally or by first-class prepaid letter (airmail if
      available) or facsimile transmission or other means of telecommunication in
      permanent written form;

     

    be
      deemed
      to have been received, subject as otherwise provided in this Guarantee, in
      the
      case of a letter, when delivered personally or three days after it has been
      put
      into the post, in the case of a facsimile transmission or other means of
      telecommunication in permanent written form, at the time of despatch (provided
      that, if the date of despatch is not a business day in the country of the
      addressee or if the time of despatch is after the close of business in the
      country of the addressee it shall be deemed to have been received at the opening
      of business on the next such business day); and

     

    be
      sent:

     

    
      	
               

            	
              (g)

            	
              to
                the Guarantor at:

            


    

     

    
      	
            	
               

            	
              Gildo
                Pastor Center

            


    

    
      	
            	
               

            	
              7
                rue du Gabion

            


    

    
      	
            	
               

            	
              MC
                98000

            


    

    
      	
            	
               

            	
              Monaco

            


      	 	 	 


    

    
      	
               

            	
              Fax:

            	
              +377
                9797 4999

            


    

    
      	
            	
               

            	
              Attention:
                Finance Department

            


    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (h)

            	
              to
                the Security Trustee at:

            


    

     

    
      	
            	
               

            	
              KfW

            


    

    
      	
            	
               

            	
              Palmengartenstrasse
                5-9, D60325

            


    

    
      	
            	
               

            	
              Frankfurt
                am Main

            


    

    
      	
            	
               

            	
              Federal
                Republic of Germany

            


    

     

    
      	
               

            	
              Fax:

            	
              +49
                69 7431 2944

            


    

    
      	
               

            	
              Attention:

            	
              Credit
                Operations

            


    

    
      	
            	
               

            	
              Shipping
                X4b1

            


    

     

    or
      to
      such other address or facsimile number as is notified by the Guarantor or the
      Security Trustee to the other parties to this Guarantee.

     

    No
      implied waivers, remedies cumulative

    No
      failure or delay on the part of the Creditors or any of them to exercise any
      power, right or remedy under this Guarantee shall operate as a waiver thereof,
      nor shall any single or partial exercise by the Security Trustee or the other
      Creditors or any of them of any power, right or remedy preclude any other or
      further exercise thereof or the exercise of any other power, right or
      remedy.  The remedies provided in this Guarantee are cumulative and
      are not exclusive of any remedies provided by law.

     

    English
      translations

    All
      certificates, instruments and other documents to be delivered under or supplied
      in connection with this Guarantee shall be in the English language or shall
      be
      accompanied by a certified English translation upon which the Creditors shall
      be
      entitled to rely.

     

    Other
      guarantors

    The
      Guarantor agrees to be bound by this Guarantee notwithstanding that any other
      person intended to execute or to be bound by any other Guarantee or assurance
      under or pursuant to the Facility Agreement may not do so or may not be
      effectually bound and notwithstanding that such other Guarantee or assurance
      may
      be determined or be or become invalid or unenforceable against any other person,
      whether or not the deficiency is known to the Creditors or any of
      them.

     

    Expenses

    The
      Guarantor agrees to reimburse the Creditors or any of them on demand for all
      legal and other costs, charges and expenses on a full and unqualified indemnity
      basis which may be incurred by the Creditors or any of them in relation to
      the
      enforcement of this Guarantee against the Guarantor.

     

    Partial
      Invalidity

    If,
      at
      any time, any provision of this Guarantee is or becomes illegal, invalid or
      unenforceable in any respect under any law of any jurisdiction, neither the
      legality, validity or enforceability of the remaining provisions nor the
      legality, validity or enforceability of such provision in any other respect
      or
      under the law of any other jurisdiction will be affected or impaired in any
      way.

     

    Counterparts

    This
      Guarantee may be entered into in any number of counterparts and by the parties
      to it on separate counterparts, each of which when executed and delivered shall
      be an original, but all the counterparts together shall constitute one and
      the
      same instrument.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Law
      and jurisdiction

     

    Law

    This
      Guarantee is governed by and shall be construed in accordance with English
      law.

     

    Submission
      to jurisdiction

    The
      Guarantor agrees for the benefit of the Creditors that any legal action or
      proceedings arising out of or in connection with this Guarantee against the
      Guarantors or any of them or any of its assets may be brought in the English
      courts, irrevocably and unconditionally submit to the jurisdiction of such
      courts and irrevocably designates, appoints and empowers H. Clarkson & Co.
      Ltd of St Magnus House, 3 Lower Thames Street, London EC3R 6HE, England to
      receive for it and on its behalf, service of process issued out of the English
      courts in any such legal action or proceedings.  The submission to
      such jurisdiction shall not (and shall not be construed so as to) limit the
      right of the Creditors to take proceedings against the Guarantor in the courts
      of any other competent jurisdiction, nor shall the taking of proceedings in
      any
      one or more jurisdictions preclude the taking of proceedings in any other
      jurisdiction, whether concurrently or not.

     

    The
      Guarantor further agrees that only the courts of England and not those of any
      other State shall have jurisdiction to determine any claim which the Guarantor
      may have against the Creditors arising out of or in connection with this
      Guarantee.

     

    IN
      WITNESS whereof the parties to this Guarantee have caused this
      Guarantee to be duly executed as a deed on the date first above
      written.

     

    


    
      	
              SIGNED,
                SEALED and DELIVERED

            	
              )

            	 	 	 
	
              as
                a DEED

            	
              )

            	 	 	 
	
              by

            	
              )

            	 	 	 
	
              for
                and on behalf of

            	
              )

            	 	 	 
	
              MC
                SHIPPING INC.

            	
              )

            	 	 	 
	
              pursuant
                to a power of attorney

            	
              )

            	 	  
              	 
	
              dated
                                               
                                 2007

            	
              )

            	 	
              Attorney-in-Fact

            	 
	
              in
                the presence of:

            	
              )

            	 	 	 
	 	 	 	 	 
	  
              	 	 	 	 
	
              Witness

            	 	 	 	 
	 	 	 	 	 
	
              Name:

            	 	 	 	 
	 	 	 	 	 
	
              Address:

            	 	 	 	 
	 	 	 	 	 
	
              Occupation:

            	 	 	 	 
	 	 	 	 	 
	
              SIGNED,
                SEALED and DELIVERED

            	
              )

            	 	 	 
	
              as
                a DEED by

            	
              )

            	 	  
              	 
	
              for
                and on behalf of

            	
              )

            	 	
              Authorised
                Signatory

            	 
	
              KfW

            	
              )

            	 	 	 
	
              as
                authorised signatories

            	
              )

            	 	  
              	 
	
              in
                the presence of:

            	
              )

            	 	
              Authorised
                Signatory

            	 
	 	 	 	 	 
	  
              	 	 	 	 
	
              Witness

            	 	 	 	 
	 	 	 	 	 
	
              Name:

            	 	 	 	 
	 	 	 	 	 
	
              Address:

            	 	 	 	 
	 	 	 	 	 
	
              Occupation:

            	 	 	 	 


    

     

     

    14