**EXHIBIT 10.2**
 
 **DATED   11th  
October 2004**
 
 
 
 **URBANA
SHIPPING LIMITED**
 **and
others**
 **(as
borrowers)**
 
 **-
and -**
 
 **FORTIS
BANK (NEDERLAND) N.V.**
 **and
others**
 **(as
lenders)**
 
 **-
and -**
 
 **FORTIS
BANK (NEDERLAND) N.V.**
 **(as
agent and security trustee)**
 
  
 
 **___________________________________**
 
 **US$45,000,000
SECURED**
 **LOAN
FACILITY AGREEMENT**
 **___________________________________**
  
 **CONTENTS**
 **Page**
 1
    Definitions
      and Interpretation
    22
    The
      Loan and its Purpose
    203
    Conditions
      Precedent and Subsequent
    224
    Representations
      and Warranties
    305
    Repayment
      and Prepayment
    336
    Interest
    367
    Fees
    388
    Security
      Documents
    399
    Agency
      and Trust
    4010
    Covenants
    5311
    Earnings
      and Cash Collateral Accounts
    6112
    Events
      Of Default
    6213
    Set-Off
      And Lien
    6814
    Assignment
      and Sub-Participation
    6915
    Payments,
      Mandatory Prepayment, Reserve Requirements and Illegality
    7116
    Communications
    7817
    General
      Indemnities
    8018
    Miscellaneous
    8319
    Law
      and Jurisdiction
    89SCHEDULE
      1
    91The
      Borrowers and the Vessels
    91
  
 SCHEDULE
      2
    94The
      Banks and the Commitments
    94SCHEDULE
      3
    95General
      Terms and Conditions
    95APPENDIX
      A
    99APPENDIX
      B
    101Form
      of Transfer Certificate
    101


**LOAN
AGREEMENT**


**Dated:**
    **11
      October 2004**


****


**BETWEEN:-**


(1)
    the
      companies listed in Schedule 1, each of which is a company incorporated
      according to the law of the country indicated against its name in Schedule
      1, with its registered office at the address indicated against its name in
      Schedule 1 (together "**the
      Borrowers**"
      and each a "**Borrower**");
      and
 
 (2)
    the
      banks listed in Schedule 2, each acting through its office at the address
      indicated against its name in Schedule 2 (together "**the
      Banks**"
      and each a "**Bank**");
      and
 
 (3)
    **FORTIS
      BANK (NEDERLAND) N.V.**,
      acting as agent and security trustee through its office at Coolsingel 93,
      3012 AE Rotterdam, The Netherlands (in that capacity "**the
      Agent**").


**WHEREAS:-**


(A)
    Each
      of the Borrowers is the registered owner of the Vessel listed against its
      name in Schedule 1.
 
 (B)
    Each
      of the Vessels is or will be registered in the ownership of her Owner
      under the flag of the country indicated against its name in Schedule
      1.






(C)
    Each
      of the Banks has agreed to advance to the Borrowers, as joint and several
      debtors and obligors, its respective Commitment of an aggregate amount not
      exceeding the lesser of (i) forty five million Dollars ($45,000,000) and
      (ii) seventy per cent. (70%) of the aggregate Market Value of the Vessels.
      The Loan will be divided into two tranches, Tranche A and Tranche B.
      Tranche A, in the maximum amount of twenty two million seven hundred and
      thirteen thousand one hundred and twenty five Dollars ($22,713,125), shall
      be used by the Borrowers to re-finance certain existing indebtedness and
      pay certain related fees and expenses. Tranche B, in the maximum amount of
      twenty two million two hundred and eighty six thousand eight hundred and
      seventy five Dollars ($22,286,875), shall be used by the Borrowers to
      finance the purchase the Notes.





1


****


**IT IS AGREED** as
follows:-




**1**
    **Definitions
      and Interpretation**
  1.1
    **Definitions**
  In
      this Agreement:-


1.1.1
    "**the
      Accounts**"
      means the Earnings Account and the Cash Collateral
  Account.




1.1.2
    "**the
      Account Security Deed**"
      means the Account Security Deed referred to in Clause
    8.1.4.




1.1.3
    "**the
      Address for Service**"
      means c/o Marine Legal Services Limited, Gate House, 1 Farringdon Street,
      London EC4M 7NS or, in relation to any of the Security Parties, such other
      address in England and Wales as that Security Party may from time to time
      designate by no fewer than ten days' written notice to the
      Agent.




1.1.4
    "**the
      Administration"**has
      the meaning given to it in paragraph 1.1.3 of the ISM
    Code.





1.1.5
    the
      "**Advance
      Date**",
      in relation to any Drawing, means the date on which that Drawing is
      advanced by the Banks to the Borrowers pursuant to Clause
    2.




1.1.6
    "**the
      Assignments**"
      means the deeds of assignment of the Insurances, Earnings, Requisition
      Compensation and Charter referred to in Clause 8.1.2 (each an
      "**Assignment**").




1.1.7
    the
      "**Attributable
      Amount**",
      in relation to any Vessel and at any time, means the amount which is
      obtained by dividing the Index Amount of that Vessel set out against the
      name of that Vessel in Schedule 1 by the sum of the Index Amounts of
      the Vessels then mortgaged to the Banks or to the Agent on their behalf as
      security for the repayment of the Indebtedness, and multiplying the result
      by the amount of the Loan outstanding at that
time.





2




1.1.8
    "**the
      Availability Termination Date**"
      means 31 December 2004 or such later date as the Banks may in their
      discretion agree (such consent not to be unreasonably
      withheld).




1.1.9
    "**Break
      Costs**"
      means all costs, losses, premiums or penalties incurred by the Agent or
      any Bank in the circumstances contemplated by Clause 17.4, or as a result
      of it receiving any prepayment of all or any part of the Loan (whether
      pursuant to Clause 5 or otherwise), or any other payment under or in
      relation to the Security Documents on a day other than the due date for
      payment of the sum in question, and includes (without limitation) any
      losses or costs incurred in liquidating or re-employing deposits from
      third parties acquired to effect or maintain the Loan, and any
      liabilities, expenses or losses incurred by the Agent or any Bank in
      terminating or reversing, or otherwise in connection with, any Transaction
      or any other interest rate and/or currency swap, transaction or
      arrangement entered into by the Agent or any Bank to hedge any exposure
      arising under this Agreement, or in terminating or reversing, or otherwise
      in connection with, any open position arising under this
      Agreement.




1.1.10
    "**Business
      Day**"
      means a day on which banks are open for the transaction of business of the
      nature contemplated by this Agreement (and not authorised by law to close)
      in New York, United States of America; Amsterdam, The Netherlands; London,
      England and any other financial centre which any Bank may consider
      appropriate for the operation of the provisions of this
      Agreement.




1.1.11
    "**Cash
      Collateral Account**"
      means an interest bearing bank account to be opened in the joint names of
      the Borrowers with the Agent and designated "MC SHIPPING" - Cash
      Collateral Account".




1.1.12
    "**Cash
      Collateral**"
      has the meaning ascribed to it in Clause
10.2.12.




1.1.13
    "**Charterers**"
      meansthe
      charterers listed in Schedule 1 as Charterers of the Vessels and each a
      "**Charterer**".




1.1.14
    "**Charters**"
      means the Existing Charters and any other charters approved in writing by
      the Agent.





3




1.1.15
    "**Commitment**"
      means, in relation to each Bank, the amount of the Loan which that Bank
      agrees to advance to the Borrowers as its several liability as indicated
      against the name of that Bank in Schedule 2 and/or, where the context
      permits, the amount of the Loan advanced by that Bank and remaining
      outstanding.




1.1.16
    a
      "**Communication**"
      means any notice, approval, demand, request or other communication from
      one party to this Agreement to any other party to this
      Agreement.




1.1.17
    "**the
      Communications Address**"
      means c/o MC Shipping Inc Aigue Marine 24, avenue de Fontvieille, PO Box
      658, MC 98013, Monaco, Cedex Fax no.: +377 9205 9416, marked for the
      attention of Ms Dominique Sergent,
      email:dominique.sergent@mcshipping.com




1.1.18
    "**the
      Company**"
      means, at any given time and in relation to any Vessel, the company
      responsible for the Vessel’s compliance with the ISM Code pursuant to
      paragraph 1.1.2 of the ISM Code.




1.1.19
    "**Container
      Vessels**"
      means m.v. "MAERSK BARCELONA", m.v. "ANKARA", m.v. "MAERSK BRISBANE" and
      m.v. "MAERSK BELAWAN" and each a "**Container
      Vessel**".




1.1.20
    "**Currency
      of Account**"
      means, in relation to any payment to be made to the Agent or a Bank under
      or pursuant to any of the Security Documents, the currency in which that
      payment is required to be made by the terms of the relevant Security
      Document.




1.1.21
    "**the
      Deeds of Covenants**"
      means the deeds of covenants referred to in Clause 8.1.1 (each a
      "**Deed
      of Covenants**").




1.1.22
    "**Default
      Rate**"
      means the rate of three per centum (3%) per annum above the cost to the
      Agent of obtaining funds in amount similar to the amount of the
      Indebtedness or any relevant part of the Indebtedness for such periods as
      the Agent shall determine.





4




1.1.23
    "**DOC**"
      means, in relation to each Company, a valid Document of Compliance issued
      for theCompanyby
      the Administration pursuant to paragraph 13.2 of the ISM
    Code.




1.1.24
    "**Dollars**"
      and "**$**"
      each means available and freely transferable and convertible funds in
      lawful currency of the United States of
America.




1.1.25
    "**Drawdown
      Notice**"
      means a notice complying with Clause 2.3.




1.1.26
    "**Drawing**"
      means a part of the Loan advanced by the Banks to the Borrowers in
      accordance with Clause 2.3.




1.1.27
    "**Earnings**",
      in relation to a Vessel, means all hires, freights, pool income and other
      sums payable to or for the account of the Owner in respect of that Vessel
      including (without limitation) all remuneration for salvage and towage
      services, demurrage and detention moneys, contributions in general
      average, compensation in respect of any requisition for hire and damages
      and other payments (whether awarded by any court or arbitral tribunal or
      by agreement or otherwise) for breach, termination or variation of any
      contract for the operation, employment or use of the
    Vessel.




1.1.28
    "**the
      Earnings Account**"
      means a bank account to be opened in the joint names of the Borrowers with
      the Agent and designated "MC SHIPPING - Earnings
  Account".




1.1.29
    "**Encumbrance**"
      means any mortgage, charge (fixed or floating), pledge, lien, assignment,
      hypothecation, preferential right, option, title retention or trust
      arrangement or any other agreement or arrangement which has the effect of
      creating security or payment priority.




1.1.30
    "**Event
      of Default**"
      means any of the events set out in
Clause 12.2.




1.1.31
    "**Existing****Charters**"
      means the charters for each Vessel made between the relevant Owner and the
      relevant Charterer listed in Schedule 1 (together with any option periods)
      and each a "**Charter**".




1.1.32
    "**the
      Existing Lenders**"
      means Fortis Bank (Nederland) N.V. and Bank of Nova
  Scotia.





5




1.1.33
    "**the
      Facility Period**"
      means the period beginning on the date of this Agreement and ending on the
      date when the whole of the Indebtedness has been repaid in full and the
      Borrowers have ceased to be under any further actual or contingent
      liability to the Banks or the Agent under or in connection with the
      Security Documents.




1.1.34
    "**the
      Fee Letter**"
      means a letter from the Agent to the Borrowers (and countersigned by the
      Guarantor) setting out certain fees, commissions and other sums payable by
      the Borrowers to the Agent in connection with the
Loan.




1.1.35
    "**the
      Guarantee**"
      means the guarantee and indemnity of the Guarantor referred to in Clause
      8.1.3.




1.1.36
    "**the
      Guarantor**"
      means MC Shipping Inc. a corporation incorporated under the laws of
      Liberia with its registered office at 80 Broad Street, Monrovia, Liberia
      and/or (where the context permits) any other person or company who shall
      at any time during the Facility Period give to the Banks or to the Agent
      on their behalf a guarantee and/or indemnity for the repayment of all or
      part of the Indebtedness.




1.1.37
    "**the
      Indebtedness**"
      means the Loan; all other sums of any nature (together with all interest
      on any of those sums) which from time to time may be payable by any of the
      Borrowers to the Agent or the Banks pursuant to the Security Documents;
      any damages payable as a result of any breach by any of the Borrowers of
      any of the Security Documents; and any damages or other sums payable as a
      result of any of the obligations of any of the Borrowers under or pursuant
      to any of the Security Documents being disclaimed by a liquidator or any
      other person, or, where the context permits, the amount thereof for the
      time being outstanding.




1.1.38
    "**the
      Index Amount**",
      in relation to any Vessel, means the number indicated against the name of
      that Vessel in Schedule 1 and, in relation to any other vessel, means such
      number as the Borrowers and the Agent may
agree.





6




1.1.39
    an
      "**Instructing
      Group**"
      means any one or more Banks whose combined Proportionate Shares exceed
      sixty six point six per centum (66.6%).




1.1.40
    "**Insurances**",
      in relation to a Vessel, means all policies and contracts of insurance
      (including all entries in protection and indemnity or war risks
      associations) which are from time to time taken out or entered into in
      respect of or in connection with that Vessel or her increased value or her
      Earnings and (where the context permits) all benefits thereof, including
      all claims of any nature and returns of
premium.




1.1.41
    "**Interest
      Payment Date**"
      means each date for the payment of interest in accordance with
      Clause 6.




1.1.42
    "**Interest
      Period**"
      means each interest period selected by the Borrowers or agreed by the
      Agent pursuant to Clause 6.




1.1.43
    "**the
      ISM Code**"
      means the International Management Code for the Safe Management of Ships
      and for Pollution Prevention, as adopted by the Assembly of the
      International Maritime Organisation on 4 November 1993 by resolution A.741
      (18) and incorporated on 19 May 1994 as chapter IX of the Safety of Life
      at Sea Convention 1974.




1.1.44
    "**ISPS
      Code**"
      means the International Ship and Port Facility Security
    Code.




1.1.45
    "**ISPS
      Company**"
      means, at any given time, the company responsible for each Vessel's
      compliance with the ISPS Code.




1.1.46
    "**ISSC**"
      means, in relation to a Vessel, a valid International Ship Security
      Certificate for that Vessel issued under the ISPS
Code.




1.1.47
    "**law**"
      means any law, statute, treaty, convention, regulation, instrument or
      other subordinate legislation or other legislative or quasi-legislative
      rule or measure, or any order or decree of any government, judicial or
      public or other body or authority, or any directive, code of practice,
      circular, guidance note or other direction issued by any competent
      authority or agency (whether or not having the force of
    law).




1.1.48
    "**LIBOR**"
      means the rate, rounded to the nearest four decimal places downwards (if
      the digit displayed in the fifth decimal place is 1,2,3 or 4) or upwards
      (if the digit displayed in the fifth decimal place is 5,6,7,8 or 9)
      displayed as the British Bankers' Association Interest Settlement Rate on
      Telerate Page 3750 or any other information service selected by the Agent
      on which that rate is displayed, for deposits in Dollars of amounts equal
      to the amount of the Loan or any relevant part of the Loan for a period
      equal in length to the relevant Interest Period, or (if the Agent is for
      any reason unable to ascertain that rate) the rate (rounded upwards to the
      nearest whole multiple of one-sixteenth of one per centum) at which
      deposits in Dollars of amounts comparable to the amount of the Loan (or
      any relevant part of the Loan) are offered to the Agent in the London
      Interbank market for a period equal in length to the relevant Interest
      Period.





7




1.1.49
    "**the
      Loan**"
      means the aggregate amount from time to time advanced by the Banks to the
      Borrowers pursuant to Clause 2 or, where the context permits, the amount
      advanced and for the time being
outstanding.




1.1.50
    "**LTV
      Ratio**"
      means the ratio of the amount of the Loan for the time being outstanding
      to the aggregate of the Market Values (as at the date of determination of
      the LTV Ratio) of those of the Vessels which remain subject to the
      Mortgages and which have not become a Total Loss plus the value of any
      additional security provided to the Banks (or the Agent on their behalf)
      pursuant to Clause 10.2.2.




1.1.51
    "**LPG
      Vessel**"
      means any of m.v. "CONISTON", m.v. "AUTEUIL", m.v. "DEAUVILLE", m.v.
      "LONGCHAMP", m.v. "MALVERN", m.v. "CHELTENHAM" and m.v. "LA
      FORGE".




1.1.52
    "**the
      Managers**"
      means V. Ships (Cyprus) Limited, or such other commercial and/or technical
      managers of the Vessels nominated by the Borrowers as the Agent may
      approve.




1.1.53
    "**the
      Management****Agreements**"
      means the management agreements between the Borrowers and the Managers
      relating to the Vessels.




1.1.54
    "**the
      Margin**"
      means one point two five per centum (1.25%) per
annum.




1.1.55
    "**Market
      Value**"
      means, in respect to a valuation of a Vessel, (i) on the Advance Date
      under Tranche A, the arithmetic average of two valuations provided by two
      independent sale and purchase brokers appointed by the Agent and (ii)
      commencing on the first December following the anniversary of the Advance
      Date of Tranche A and thereafter on a semi-annual basis throughout the
      Facility Period and at any other time, the arithmetic average of two
      valuations provided by two independent sale and purchase brokers appointed
      by the Agent. The initial valuations and any valuations following an Event
      of Default shall be at the Borrowers' expense. The two valuations each
      year during the Facility Period shall be at the Agent's expense. Any
      valuation shall be made without physical inspection and on the basis of a
      charter free sale for prompt delivery for cash at arms' length on normal
      commercial terms as between a willing seller and a willing
      buyer.





8




1.1.56
    "**the
      Maximum Loan Amount**"
      means the lesser of (a) forty five million Dollars ($45,000,000) and (b)
      seventy per centum (70%) of the Market Value of the Vessels at the first
      Advance Date.




1.1.57
    "**the
      Mortgagees' Insurances**"
      means all policies and contracts of mortgagees' interest insurance,
      mortgagees' additional perils (oil pollution) insurance and any other
      insurance from time to time taken out by the Agent on behalf of the Banks
      in relation to the Vessels.




1.1.58
    "**the
      Mortgages**"
      means the first priority and first preferred mortgages referred to in
      Clause 8.1 (each a "**Mortgage**").




1.1.59
    "**Notes**"
      means the 11.25% Senior Notes due 2008 issued by the
      Guarantor.




1.1.60
    "**Operating
      Expenses**"
      means expenses properly and reasonably incurred by the Borrowers in
      connection with the operation, employment, maintenance, repair and
      insurance of the Vessels.




1.1.61
    "**Owner**"
      means, in relation to a Vessel, the Borrower against whose name the name
      of that Vessel appears in Schedule 1.




1.1.62
    "**Potential
      Event of Default**"
      means any event which, with the giving of notice and/or the passage of
      time and/or the satisfaction of any materiality test, would constitute an
      Event of Default.





9




1.1.63
    "**Proceedings**"
      means any suit, action or proceedings begun by the Agent or any of the
      Banks arising out of or in connection with the Security
      Documents.




1.1.64
    "**Proportionate
      Share**"
      means, at any time, the proportion which that Bank’s Commitment (whether
      or not advanced) then bears to the aggregate Commitments of all the Banks
      (whether or not advanced).




1.1.65
    "**Repayment
      Date**"
      means the date for payment of any Repayment Instalment in accordance with
      Clause 5.




1.1.66
    "**Repayment
      Instalment**"
      means any instalment of the Loan to be repaid by the Borrowers pursuant to
      Clause 5.




1.1.67
    "**Requisition
      Compensation**",
      in relation to a Vessel, means all compensation or other money which may
      from time to time be payable to the Owner as a result of the Vessel being
      requisitioned for title or in any other way compulsorily acquired (other
      than by way of requisition for hire).




1.1.68
    "**the
      Security Documents**"
      means this Agreement, the Mortgages, the Deeds of Covenants, the
      Assignments, the Guarantee, the Account Security Deed or (where the
      context permits) any one or more of them, and any other agreement or
      document which may at any time be executed by any person as security for
      the payment of all or any part of the
Indebtedness.




1.1.69
    "**Security
      Parties**"
      means the Borrowers, the Guarantor and any other person or company who may
      at any time during the Facility Period be liable for, or provide security
      for, all or any part of the Indebtedness, and "**Security
      Party**"
      means any one of them.




1.1.70
    "**SMC**"
      means, in relation to each Vessel, a valid safety management certificate
      issued for that Vessel by or on behalf of the relevant Administration
      pursuant to paragraph 13.4 of the ISM Code.




1.1.71
    "**SMS**"
      means, in relation to each Vessel, a safety management system for that
      Vessel developed and implemented in accordance with the ISM Code and
      including the functional requirements, duties and obligations required by
      the ISM Code.




10





1.1.72
    "**Special
      Involuntary Prepayment**"
      means a prepayment made pursuant to Clause
5.5.




1.1.73
    "**Taxes**"
      means all taxes, levies, imposts, duties, charges, fees, deductions and
      withholdings (including any related interest, fines, surcharges and
      penalties) and any restrictions or conditions resulting in any charge,
      other than taxes on the overall net income of the Agent or of a Bank, and
      "**Tax**"
      and "**Taxation**"
      shall be interpreted accordingly.




1.1.74
    "**Total
      Loss**",
      in relation to a Vessel, means:-




(a)
    an
      actual, constructive, arranged, agreed or compromised total loss of that
      Vessel; or




(b)
    the
      requisition for title or compulsory acquisition of that Vessel by or on
      behalf of any government or other authority (other than by way of
      requisition for hire); or




(c)
    the
      capture, seizure, arrest, detention or confiscation of that Vessel, unless
      the Vessel is released and returned to the possession of the Owner within
      one month after the capture, seizure, arrest, detention or confiscation in
      question.




1.1.75
    "**Tranche
      A**"
      means a maximum amount of twenty two million seven hundred and thirteen
      thousand and one hundred and twenty five Dollars
      ($22,713,125).




1.1.76
    "**Tranche
      B**"
      means a maximum amount of twenty two million two hundred and eighty six
      thousand and eight hundred and seventy five Dollars
      ($22,286,875).




1.1.77
    "**Tranches**"
      means Tranche A and Tranche B together.




1.1.78
    "**Transfer
      Certificate**"
      means a certificate materially in the form of Appendix
  B.




1.1.79
    "**Transfer
      Date**",
      in relation to a transfer of any of a Bank's rights and/or obligations
      under or pursuant to this Agreement, means the fifth Business Day after
      the date of delivery of the relevant Transfer Certificate to the Agent, or
      such later Business Day as may be specified in the relevant Transfer
      Certificate.





11




1.1.80
    "**Transferee**"
      means any bank or financial institution to which a Bank transfers any of
      its rights and/or obligations under or pursuant to this
      Agreement.




1.1.81
    "**the
      Trust Property**"
      means:-




(a)
    the
      benefit of the covenant contained in Clause 9;
and




(b)
    all
      benefits arising under (including, without limitation, all proceeds of the
      enforcement of) each of the Security Documents (other than this
      Agreement), with the exception of any benefits arising solely for the
      benefit of the Agent.




1.1.82
    "**Underlying
      Documents**"
      means the Charters and the Management
Agreements.




1.1.83
    "**the
      Vessels"**means
      the vessels listed in Schedule 1 and everything now or in the future
      belonging to them on board and ashore (each a "**Vessel**").




1.2
    **Interpretation**
  In
      this Agreement:-




1.2.1
    words
      denoting the plural number include the singular and vice
      versa;




1.2.2
    words
      denoting persons include corporations, partnerships, associations of
      persons (whether incorporated or not) or governmental or
      quasi-governmental bodies or authorities and vice
versa;




1.2.3
    references
      to Recitals, Clauses, Schedules and Appendices are references to recitals
      and clauses of, and schedules and appendices to, this Agreement;




1.2.4
    references
      to this Agreement include the Recitals, the Schedules and the
      Appendices;





12




1.2.5
    the
      headings and contents page(s) are for the purpose of reference only, have
      no legal or other significance, and shall be ignored in the interpretation
      of this Agreement;




1.2.6
    references
      to any document (including, without limitation, to all or any of the
      Security Documents) are, unless the context otherwise requires, references
      to that document as amended, supplemented, novated or replaced from time
      to time;




1.2.7
    references
      to statutes or provisions of statutes are references to those statutes, or
      those provisions, as from time to time amended, replaced or
      re-enacted;




1.2.8
    references
      to a Bank or to the Agent include its successors, transferees and
      assignees;




1.2.9
    references
      to times of day are to London time.




1.3
    **Offer
      letter**


This
Agreement supersedes the terms and conditions contained in any correspondence
relating to the subject matter of this Agreement exchanged between the Agent or
any of the Banks and the Borrowers or their representatives prior to the date of
this Agreement. It shall be read in conjunction with the Agent's General Terms
and Conditions (a copy of which is attached at Schedule 3 and which shall form
an integral part hereof). In the case of any conflict between this Agreement and
the said General Terms and Conditions, this Agreement shall prevail.


1.4
    **Joint
      and several liability**


1.4.1
    All
      obligations, covenants, representations, warranties and undertakings in or
      pursuant to the Security Documents assumed, given, made or entered into by
      the Borrowers shall, unless otherwise expressly provided, be assumed,
      given, made or entered into by the Borrowers jointly and
      severally.




1.4.2
    Each
      of the Borrowers agrees that any rights which it may have at any time
      during the Facility Period by reason of the performance of its obligations
      under the Security Documents to be indemnified by any other Borrower
      and/or to take the benefit of any security taken by the Banks or by the
      Agent pursuant to the Security Documents shall be exercised in such manner
      and on such terms as the Agent may require. Each of the Borrowers agrees
      to hold any sums received by it as a result of its having exercised any
      such right on trust for the Agent (as agent for the Banks)
      absolutely.





13




1.4.3
    Each
      of the Borrowers agrees that it will not at any time during the Facility
      Period claim any set-off or counterclaim against any other Borrower in
      respect of any liability owed to it by that other Borrower under or in
      connection with the Security Documents, nor prove in competition with the
      Banks or the Agent in any liquidation of (or analogous proceeding in
      respect of) any other Borrower in respect of any payment made under the
      Security Documents or in respect of any sum which includes the proceeds of
      realisation of any security held by the Banks or the Agent for the
      repayment of the Indebtedness.





**2**
    **The Loan and its Purpose**




2.1
    **Agreement
      to lend**Subject
      to the terms and conditions of this Agreement, and in reliance on each of
      the representations and warranties made or to be made in or in accordance
      with each of the Security Documents, each of the Banks agrees to advance
      to the Borrowers its Commitment of an aggregate amount not exceeding the
      Maximum Loan Amount to be used by the Borrowers for the purposes referred
      to in Recital (C).




2.2
    **Drawings**Subject
      to satisfaction by the Borrowers of the conditions set out in
      Clause 3, and subject to Clause 2.3, the Loan shall be advanced to
      the Borrowers in no more than two Drawings(one
      for each of Tranche A and Tranche B). In each
      case the Agent shall transfer the amount of the Drawing to the Borrowers
      and/or, in the case of Tranche A, to the Existing Lenders and in the case
      of Tranche B to the Borrowers or their order, by such method of funds
      transfer as the Agent and the Borrowers shall
agree.




2.3
    **Advance
      of Drawings**Each
      Drawing shall be advanced in Dollars on a Business Day, provided that the
      Borrowers shall have given to the Agent not more than ten and not fewer
      than three Business Days' notice in writing materially in the form set out
      in Appendix A of the required Advance Date of the Drawing in
      question. Each Drawdown Notice once given shall be irrevocable and shall
      constitute a warranty by the Borrowers that:-





14




2.3.1
    all
      conditions precedent to the advance of the Drawing requested in that
      Drawdown Notice will have been satisfied on or before the Advance Date
      requested;




2.3.2
    no
      Event of Default or Potential Event of Default will then have occurred;




2.3.3
    no
      Event of Default or Potential Event of Default will result from the
      advance of the Drawing in question; and




2.3.4
    there
      has been no material adverse change in the business, affairs or financial
      condition of any of the Security Parties from that pertaining at the date
      of this Agreement.




The Agent
shall promptly notify each Bank of the receipt of each Drawdown Notice,
following which each Bank will make its Proportionate Share of the amount of the
requested Drawing available to the Borrowers through the Agent on the Advance
Date requested.




2.4
    **Availability
      Termination Date**No
      Bank shall be under any obligation to advance all or any part of its
      Commitment after the Availability Termination
Date.




2.5
    **Several
      obligations**The
      obligations of the Banks under this Agreement are several. The failure of
      a Bank to perform its obligations under this Agreement shall not affect
      the obligations of the Borrowers to the Agent or to the other Banks, nor
      shall the Agent or any other Bank be liable for the failure of a Bank to
      perform any of its obligations under or in connection with this
      Agreement.




2.6
    **Application
      of Loan**Without
      prejudice to the obligations of the Borrowers under this Agreement,
      neither the Banks nor the Agent shall be obliged to concern themselves
      with the application of the Loan by the
Borrowers.




2.7
    **Loan
      and control accounts**The
      Borrowers will open and maintain with the Agent such loan and control
      accounts as the Agent shall consider necessary or desirable.





15




**3**
    **Conditions Precedent and Subsequent******




3.1
    **General
      Conditions Precedent**Before the Borrowers shall be entitled to issue a Drawdown Notice pursuant
      to Clause 2.3, and before any Bank shall have any obligation to advance
      any part of its Commitment, the Borrowers shall deliver or cause to be
      delivered to or to the order of the Agent in form and substance
      satisfactory to the Agent the following documents and
      evidence:




3.1.1
    **Evidence
      of incorporation**Such
      evidence as the Agent may reasonably require that each Security Party was
      duly incorporated in its country of incorporation and remains in existence
      and, where appropriate, in good standing, with power to enter into, and
      perform its obligations under, those of the Security Documents to which it
      is, or is intended to be, a party, including (without limitation) a copy,
      certified by a director or the secretary of the Security Party in question
      as true, complete, accurate and unamended, of all documents establishing
      or limiting the constitution of each Security Party.




3.1.2
    **Corporate
      authorities**A
      copy, certified by a director or the secretary of the Security Party in
      question as true, complete, accurate and neither amended nor revoked, of a
      resolution of the directors and a resolution of the shareholders (or
      members, as the case may be) of each Security Party (together, where
      appropriate, with signed waivers of notice of any directors' or
      shareholders' (or members', as the case may be) meetings) approving, and
      authorising or ratifying the execution of, those of the Security Documents
      to which that Security Party is or is intended to be a party and all
      matters incidental thereto.




3.1.3
    **Officer's
      certificate**A
      certificate signed by a duly authorised officer of each of the Security
      Parties setting out the names of the directors, officers and
      shareholders/members of that Security
Party.




3.1.4
    **Power
      of attorney**The
      notarially attested and legalised power of attorney of each of the
      Security Parties under which any documents are to be executed or
      transactions undertaken by that Security
Party.





16




3.2
    **Conditions
      Precedent - Tranche A**Before
      any Bank shall have any obligation to advance to the Borrowers any part of
      its Commitment in respect of Tranche A, the Borrowers shall, in addition
      to the documents and evidence delivered pursuant to Clause 3.1, deliver or
      cause to be delivered to or to the order of the Agent the following
      additional documents and evidence relating thereto in form and substance
      satisfactory to the Agent:-




3.2.1
    **Confirmatory
      Certificates**A
      certificate signed by the secretary of each of the Security Parties dated
      no later than five (5) Business Days before the Advance Date of Tranche A
      confirming that none of the documents and evidence delivered to the Bank
      pursuant to Clauses 3.1.1, 3.1.2, 3.1.3 and 3.1.4 has been amended,
      modified or revoked in any way since its delivery to or to the order of
      the Agent.




3.2.2
    **Vessel
      documents**Photocopies,
      certified as true, accurate and complete by a director or the secretary of
      the Owner, of (in respect of each Vessel):-




(a)
    the
      relevant Charter;




(b)
    the
      management agreement between the Owner and the Managers relating to that
      Vessel; and




(c)
    that
      Vessel's current Safety Construction, Safety Equipment, Safety Radio and
      Load Line Certificates;




(d)
    that
      Vessel's current Certificate of Financial Responsibility issued pursuant
      to the United States Oil Pollution Act
1990;




(e)
    that
      Vessel’s current SMC;




(f)
    that
      Vessel's current ISSC; and




(g)
    the
      relevant Company’s current DOC;





in each
case together with all addenda, amendments or supplements.




3.2.3
    **Evidence
      of ownership**Certificate(s)
      of ownership and encumbrance (or equivalent) issued by the Registrar of
      Ships (or equivalent official) at the Vessel's port of registry confirming
      that each Vessel is on the Tranche A Advance Date owned by her Owner and
      free of registered Encumbrances.





17




3.2.4
    **Evidence
      of insurance**Evidence
      that each Vessel is insured in the manner required by the Security
      Documents and that letters of undertaking will be issued in the manner
      required by the Security Documents, together with the written approval of
      the Insurances by an insurance adviser appointed by the Agent, such
      written approval to be at the expense of the
Borrowers.




3.2.5
    **Confirmation
      of class**A
      Certificate of Confirmation of Class for hull and machinery confirming
      that each Vessel is classed with the highest class applicable to vessels
      of her type with Lloyd's Register of Shipping or such other classification
      society as may be acceptable to the Agent.




3.2.6
    **Instruction to classification
      society**A
      letter of instruction from the Owner of each Vessel to that Vessel's
      classification society in the form required by the
  Agent.





3.2.7
    **Survey
      reports**Reports
      by surveyors instructed by the Agent to inspect any one LPG Vessel and any
      one Container Vessel, each such Vessel to be selected in the Agent's
      absolute discretion, confirming that the condition of each such Vessel is
      in all respects acceptable to the Agent, such surveys to be at the expense
      of the Borrowers.




3.2.8
    **Valuations**Two valuations of each Vessel addressed to the Agent from a broker
      acceptable to the Agent and appointed by the Agent certifying a value for
      each Vessel, assessed in such manner as the Agent may require, acceptable
      to the Agent, such valuations to be at the expense of the
      Borrowers.




3.2.9
    **The
      Security Documents**The
      Security Documents, together with all notices and other documents required
      by any of them, duly executed and, in the case of the Mortgages,
      registered with first priority through the Registrar of Ships (or
      equivalent official) at the port of registry of the Vessel
      concerned.




3.2.10
    **Drawdown
      Notice**A
      Drawdown Notice.





18




3.2.11
    **Process
      agent**A
      letter from Marine Legal Services Limited accepting their appointment by
      each of the Security Parties as agent for service of Proceedings pursuant
      to the Security Documents.




3.2.12
    **Mandates**Such duly signed forms of mandate, and/or other evidence of the opening of
      the Accounts, as the Agent or any of the Banks may
  require.




3.2.13
    **Cash
      Collateral**The payment of five million Dollars ($5,000,000) to the Cash Collateral
      Account.




3.2.14
    **Managers'
      confirmation**The
      written confirmation of the Managers that, throughout the Facility Period
      unless otherwise agreed by the Agent, they will remain the commercial and
      technical managers of the Vessels and that they will not, without the
      prior written consent of the Agent, sub-contract or delegate the
      commercial or technical management of any Vessel to any third
      party.




3.2.15
    **The
      Fee Letter**The
      Fee Letter countersigned on behalf of the Borrowers and the Guarantor by
      way of acceptance of its terms.




3.2.16
    **Underlying
      Documents**Photocopies, certified as true, accurate and complete, of the Underlying
      Documents.




3.2.17
    **Legal
      opinions**Confirmation
      satisfactory to the Agent that opinions on the laws of England, Bahamas
      and Liberia required by the Agent will be given substantially in the form
      required by the Agent.




3.3
    **Conditions
      Precedent - Tranche B**Before any Bank shall have any obligation to advance to the Borrowers any
      part of its Commitment in respect of Tranche B, the Borrowers shall, in
      addition to the documents and evidence delivered pursuant to Clause 3.1,
      deliver or cause to be delivered to or to the order of the Agent the
      following additional documents and evidence relating thereto in form and
      substance satisfactory to the Agent:




3.3.1
    **Confirmatory
      Certificates**A
      certificate, dated no earlier than the fifth Business Daybeforethe Advance Date of Tranche B, signed by a director or duly authorised
      officer of each of the Security Parties, confirming that none of the
      documents and evidence delivered to or to the order of the Agent pursuant
      to Clauses 3.1.1, 3.1.2, 3.1.3 and 3.1.4, have been modified, amended or
      revoked since their delivery to or to the order of the
    Agent.




19




3.3.2
    **Evidence
      of Use**Evidence satisfactory to the Agent in its complete discretion that (i)
      Tranche B will be used to assist the Borrowers finance the purchase of the
      Notes and (ii) the procedure(s) used to purchase the Notes is/are
      acceptable to the Agent.




3.3.3
    **Drawdown
      Notice**A
      Drawdown Notice




3.4
    **Conditions
      Subsequent**The Borrowers undertake to deliver or to cause to be delivered to the
      Agent on, or as soon as practicable after, the first Advance Date, the
      following additional documents and evidence:-




3.4.1
    **Evidence
      of registration**Evidence
      of registration of the Mortgages, in each case with first priority, with
      the Registrar of Ships (or equivalent official) at the port of registry of
      the Vessel concerned.




3.4.2
    **Letters
      of undertaking**Letters
      of undertaking as required by the Security Documents in form and substance
      acceptable to the Agent.




3.4.3
    **Legal
      opinions**Such
      legal opinions as the Agent shall require.




3.4.4
    **Companies
      Act registrations**Evidence that the prescribed particulars of the Security Documents have
      been delivered to the Registrar of Companies of England and Wales within
      the statutory time limit.




3.5
    **No
      waiver**If
      the Banks in their sole discretion agree to advance any part of the Loan
      to the Borrowers before all of the documents and evidence required by
      Clauses 3.1, 3.2 or 3.3 have been delivered to or to the order of the
      Agent, the Borrowers undertake to deliver all outstanding documents and
      evidence to or to the order of the Agent no later than the date specified
      by the Agent, and the advance of any part of the Loan shall not be taken
      as a waiver of the Agent's right to require production of all the
      documents and evidence required by Clauses 3.1, 3.2 or
  3.3.




3.6
    **Form
      and content**All
      documents and evidence delivered to the Agent pursuant to this Clause
      shall:-





20




3.6.1
    be
      in form and substance acceptable to the Agent;




3.6.2
    be
      accompanied, if required by the Agent, by translations into the English
      language, certified in a manner acceptable to the Agent;




3.6.3
    if
      required by the Agent, be certified, notarised, legalised or attested in a
      manner acceptable to the Agent.




3.7
    **Event
      of Default**No
      Bank shall be under any obligation to advance any part of its Commitment
      nor to act on any Drawdown Notice if, at the date of the Drawdown Notice
      or at the date on which the advance of a Drawing is requested in the
      Drawdown Notice, an Event of Default or Potential Event of Default shall
      have occurred, or if an Event of Default or Potential Event of Default
      would result from the advance of the Drawing in
  question.




**4**
    **Representations
      and Warranties**




Each of
the Borrowers represents and warrants to each of the Banks and to the Agent at
the date of this Agreement and (by reference to the facts and circumstances then
pertaining) at the date of each Drawdown Notice, at each Advance Date and at
each Interest Payment Date as follows:-




4.1
    **Incorporation
      and capacity**Each
      of the Security Parties is a body corporate duly constituted and existing
      and (where applicable) in good standing under the law of its country of
      incorporation, in each case with perpetual corporate existence and
      the power to sue and be sued, to own its assets and to carry on its
      business, and all of the corporate shareholders (if any) of each Security
      Party are duly constituted and existing under the laws of their countries
      of incorporation with perpetual corporate existence and the power to sue
      and be sued, to own their assets and to carry on their business.




4.2
    **Solvency**None
      of the Security Parties is insolvent or in liquidation or administration
      or subject to any other insolvency procedure, and no receiver,
      administrative receiver, administrator, liquidator, trustee or analogous
      officer has been appointed in respect of any of the Security Parties or
      all or any part of their assets.





21




4.3
    **Binding
      obligations**The
      Security Documents when duly executed and delivered will constitute the
      legal, valid and binding obligations of the Security Parties enforceable
      in accordance with their respective terms.




4.4
    **Satisfaction
      of conditions**All
      acts, conditions and things required to be done and satisfied and to have
      happened prior to the execution and delivery of the Security Documents in
      order to constitute the Security Documents the legal, valid and binding
      obligations of the Security Parties in accordance with their respective
      terms have been done, satisfied and have happened in compliance with all
      applicable laws.




4.5
    **Registrations
      and consents**With
      the exception only of the registrations referred to in Clause 3.4, all (if
      any) consents, licences, approvals and authorisations of, or registrations
      with or declarations to, any governmental authority, bureau or agency
      which may be required in connection with the execution, delivery,
      performance, validity or enforceability of the Security Documents have
      been obtained or made and remain in full force and effect and none of the
      Borrowers is aware of any event or circumstance which could reasonably be
      expected adversely to affect the right of any of the Borrowers to hold
      and/or obtain renewal of any such consents, licences, approvals or
      authorisations.




4.6
    **Disclosure
      of material facts**None
      of the Borrowers is aware of any material facts or circumstances which
      have not been disclosed to the Agent and which might, if disclosed, have
      adversely affected the decision of a person considering whether or not to
      make loan facilities of the nature contemplated by this Agreement
      available to the Borrowers.




4.7
    **No
      material litigation**There
      is no action, suit, arbitration or administrative proceeding pending or to
      its knowledge about to be pursued before any court, tribunal or
      governmental or other authority which in the reasonable opinion of the
      Agent would, or would be likely to, have a materially adverse effect on
      the business, assets, financial condition or creditworthiness of any of
      the Security Parties.




4.8
    **No
      breach of law or contract**The
      execution, delivery and performance of the Security Documents will not
      contravene any contractual restriction or any law binding on any of the
      Security Parties or on any shareholder (whether legal or beneficial) of
      any of the Security Parties, or the constitutional documents of any of the
      Security Parties, nor result in the creation of, nor oblige any of the
      Security Parties to create, any Encumbrance over all or any of its assets,
      with the exception of the Encumbrances created by or pursuant to the
      Security Documents, and, in entering into those of the Security Documents
      to which it is, or is to be, a party, and in borrowing the Loan, each of
      the Borrowers is acting for its own
account.





22




4.9
    **No
      deductions**None of the Borrowers is required to make any deduction or withholding
      from any payment which it may be obliged to make to the Agent or any of
      the Banks under or pursuant to the Security
Documents.




4.10
    **No
      established place of business in the United Kingdom or United
      States**None of the Security Parties has, nor will any of them have during the
      Facility Period, an established place of business in the United Kingdom or
      the United States of America.




4.11
    **Use
      of Loan**The
      Loan will be used for the purposes specified in Recital
    (C).




4.12
    **Underlying
      Documents**The certified copies of the Underlying Documents delivered to the Agent
      are true and complete copies, and there are no side agreements or other
      documents thereto which have not been disclosed to the
    Agent.




**5**
    **Repayment
      and Prepayment**




5.1
    **Repayment**The
      Borrowers agree to repay the Loan to the Agent as agent for the Banks by
      twenty four (24) consecutive quarterly Repayment Instalments each in the
      sum of one million eight hundred and seventy five thousand Dollars
      ($1,875,000), the first Repayment Date being the date which is three
      calendar months after the first Advance Date and subsequent Repayment
      Dates being at consecutive intervals of three calendar months
      thereafter.




5.2
    **Reduction
      of Repayment Instalments**If
      the aggregate amount advanced to the Borrowers is less than forty five
      million Dollars ($45,000,000), the amount of each Repayment Instalment
      shall be reduced pro rata to the amount actually
  advanced.




5.3
    **Voluntary
      Prepayment**The
      Borrowers may prepay the Loan in whole or in part (without penalty save as
      provided in clause 5.6) in an amount equal to five hundred thousand
      Dollars ($500,000) or an integral multiple of that amount (or as otherwise
      may be agreed by the Agent) provided that they have first given to the
      Agent not fewer than fifteen (15) days' prior written notice expiring on a
      Business Day of their intention to do so. Any such prepayment shall be
      applied in accordance with Clause 5.7. Any notice pursuant to this Clause
      once given shall be irrevocable and shall oblige the Borrowers to make the
      prepayment referred to in the notice on the Business Day specified in the
      notice, together with all interest accrued on the amount prepaid up to and
      including that Business Day.





23




5.4
    **Involuntary
      Prepayment**The net proceeds from the refinancing, sale, scrap or Total Loss of any
      Vessel shall be applied promptly upon receipt in or towards prepayment of
      the Indebtedness then outstanding. If such net proceeds are less than the
      Attributable Amount for that Vessel, the net proceeds together with such
      additional amount as may be required to ensure that an amount equal to the
      Attributable Amount shall be prepaid. If the net proceeds exceed the
      Attributable Amount for that Vessel, any surplus shall be released to the
      Borrowers provided that no Event of Default or Potential Event of Default
      shall have occurred and be continuing. Any such prepayment shall be
      applied in accordance with Clause 5.7.




5.5
    **Special
      Involuntary Prepayment**Promptly after the sale or scrapping of all of the Container Vessels the
      Borrowers shall prepay one third (33.33%) of the Indebtedness then
      outstanding or such amount as to ensure that LTV Ratio in relation to the
      remaining Vessels will not exceed seventy percent (70%) after such
      prepayment is made. Any prepayment made pursuant to this Clause shall be
      applied pro rata to the remaining Repayment
Instalments.




5.6
    **Prepayment
      indemnity**If
      the Borrowers shall, subject always to Clause 5.3, make a prepayment on a
      Business Day other than the last day of an Interest Period in respect of
      the whole of the Loan, they shall, in addition to the amount prepaid and
      accrued interest, pay to the Agent on behalf of the Banks any amount which
      the Agent may certify is necessary to compensate the Banks for any Break
      Costs incurred by the Agent or any of the Banks as a result of the making
      of the prepayment in question.




5.7
    **Application
      of prepayments**Any
      prepayment made pursuant to Clause 5.3 or Clause 5.4 in an amount less
      than the Indebtedness shall be applied in satisfaction or reduction first
      of any costs and other amounts outstanding; secondly of all interest
      outstanding; thirdly of the Repayment Instalments in inverse order of
      maturity.





24




5.8
    **No
      reborrowing**No
      amount repaid or prepaid pursuant to this Agreement may in any
      circumstances be reborrowed.




**6**
    **Interest**




6.1
    **Interest
      Periods**The period during which the Loan shall be outstanding pursuant to this
      Agreement shall be divided into consecutive Interest Periods of one,
      three, six, nine or twelve months' duration, as selected by the Borrowers
      by written notice to the Agent not later than 11.00 a.m. on the third
      Business Day before the beginning of the Interest Period in question, or
      such other duration as may be agreed by the Banks in their discretion**PROVIDED
      THAT**the Borrowers may not elect to have more than three (3) one month Interest
      Periods in any calendar year.




6.2
    **Beginning
      and end of Interest Periods**The
      first Interest Period shall begin on the first Advance Date.
      Notwithstanding Clause 6.1, the first Interest Period in respect of each
      Drawing other than the first shall be of such a length as to end on the
      same date as the then current Interest Period applicable to the remainder
      of the Loan, and the final Interest Period shall end on the Repayment Date
      applicable to the final Repayment
Instalment.




6.3
    **Interest
      Periods to meet Repayment Dates**If
      the Borrowers shall select, or the Borrowers and the Banks shall agree, an
      Interest Period which does not expire on the next Repayment Date, there
      shall, in respect of each part of the Loan equal to a Repayment Instalment
      falling due for payment before the expiry of that Interest Period, be a
      separate Interest Period which shall expire on the relevant Repayment
      Date, and the Interest Period selected or agreed shall apply to the
      balance of the Loan only.




6.4
    **Interest
      rate**During each Interest Period interest shall accrue on the Loan at the rate
      determined by the Agent to be the aggregate of (a) the Margin and
      (b) LIBOR determined at or about 11.00 a.m. on the second Business
      Day prior to the beginning of that Interest
Period.





25




6.5
    **Failure
      to select Interest Period**If
      the Borrowers at any time fail to select or agree an Interest Period in
      accordance with Clause 6.1, the interest rate applicable after the expiry
      of the then current Interest Period shall be the rate determined by the
      Agent in accordance with Clause 6.4 for consecutive Interest Periods each
      of such duration (not exceeding three months) as the Agent may
      select.




6.6
    **Accrual
      and payment of interest**Interest
      shall accrue from day to day, shall be calculated on the basis of a 360
      day year and the actual number of days elapsed (or, in any circumstance
      where market practice differs, in accordance with the prevailing market
      practice) and shall be paid by the Borrowers to the Agent on behalf of the
      Banks on the last day of each Interest Period and additionally, during any
      Interest Period exceeding three (3) months, on the last day of each
      successive three (3) month period of that Interest
  Period.




6.7
    **Ending
      of Interest Periods**Each
      Interest Period shall, subject to Clauses 6.2 and 6.3, end on the date
      which numerically corresponds to the date on which the immediately
      preceding Interest Period ended (or, in the case of the first Interest
      Period, to the first Advance Date) in the calendar month which is the
      number of months selected or agreed after the calendar month in which the
      immediately preceding Interest Period ended (or, in the case of the first
      Interest Period, in which the first Advance Date occurred), except
      that:-




6.7.1
    if
      there is no numerically corresponding date in the calendar month in which
      the Interest Period ends, the Interest Period shall end on the last
      Business Day in that calendar month; and




6.7.2
    if
      any Interest Period would end on a day which is not a Business Day, that
      Interest Period shall end on the next succeeding Business Day (unless the
      next succeeding Business Day falls in the next calendar month, in which
      event the Interest Period in question shall end on the next preceding
      Business Day).




Any
adjustment made pursuant to Clause 6.7.1 or 6.7.2 shall be ignored for the
purpose of determining the date on which any subsequent Interest Period shall
end.


6.8
    **Default
      Rate**If
      an Event of Default shall occur, the whole of the Indebtedness shall, from
      the date of the occurrence of the Event of Default, bear interest up to
      the date of actual payment (both before and after judgment) at the Default
      Rate, compounded at such intervals as the Agent shall determine, which
      interest shall be payable from time to time by the Borrowers to the Agent
      on behalf of the Banks on demand.




26




6.9
    **Determinations
      conclusive**Each
      determination of an interest rate made by the Agent in accordance with
      Clause 6 shall (save in the case of manifest error or on any question
      of law) be final and conclusive.




**7**
    **Fees**




The
Borrowers shall pay to or to the order of the Agent the fees, commissions and
other sums referred to in the Fee Letter in the amounts and on the dates set out
in the Fee Letter.




**8**
    **Security
      Documents**




8.1
    As
      security for the repayment of the Indebtedness, the Borrowers shall
      execute and deliver to the Agent or cause to be executed and delivered to
      the Agent, on or before the first Advance Date, the following Security
      Documents in such forms and containing such terms and conditions as the
      Agent shall require:-




8.1.1
    **the
      Mortgages**a
      first priority statutory mortgage over each Vessel together in each case
      with a collateral deed of covenants;




8.1.2
    **the
      Assignments**a
      deed of assignment of the Insurances, Earnings, Requisition Compensation
      and Charter of each Vessel;




8.1.3
    **the
      Guarantee**the
      guarantee and indemnity of the Guarantor;




8.1.4
    **the
      Account Security Deed**an
      account security deed in respect of all amounts from time to time standing
      to the credit of the Accounts.




8.2
    In
      consideration of the Banks making the Loan available to the Borrowers, the
      Borrowers agree to procure, at any time during the Facility Period,
      execution in favour of the Agent (as agent and security trustee of the
      Banks) by the Guarantor of pledges over and/or charges of all the
      Guarantor's right, title and interest in and to the shares of each of the
      Borrowers, and the Borrowers agree, if and when required to do so by the
      Agent, promptly to procure the execution and delivery to the Agent of all
      documents which the Agent may require to obtain the full benefit of such
      pledges and/or charges.





27




**9**
    **Agency
      and Trust**




9.1
    **Appointment**Each
      of the Banks appoints the Agent its agent for the purpose of administering
      the Loan and the Security Documents.




9.2
    **Authority**Each
      of the Banks irrevocably authorises the Agent (subject to Clauses 9.4 and
      9.19):-




9.2.1
    to
      execute the Security Documents (other than this Agreement) on its
      behalf;




9.2.2
    to
      collect,receive,
      release or pay any money on its behalf;




9.2.3
    acting
      on the instructions from time to time of an Instructing Group to give orwithholdany waivers, consents or approvals under or pursuant to any of the
      Security Documents;




9.2.4
    acting
      on the instructions from time to time of an Instructing Group to exercise,
      orrefrainfrom exercising, any discretions under or pursuant to any of the Security
      Documents; and




9.2.5
    to
      enforce the Security Documents on its
behalf.




The Agent
shall have no duties or responsibilities as agent or as security trustee other
than those expressly conferred on it by the Security Documents and shall not be
obliged to act on any instructions from the Banks or an Instructing Group if to
do so would, in the opinion of the Agent, be contrary to any provision of the
Security Documents or to any law, or would expose the Agent to any actual or
potential liability to any third party.




9.3
    **Trust**The
      Agent agrees and declares, and each of the Banks acknowledges, that,
      subject to the terms and conditions of this Clause, the Agent holds the
      Trust Property on trust for the Banks, in accordance with their respective
      Proportionate Shares, absolutely. Each of the Banks agrees that the
      obligations, rights and benefits vested in the Agent in its capacity as
      security trustee shall be performed and exercised in accordance with this
      Clause. The Agent in its capacity as security trustee shall have the
      benefit of all of the provisions of this Agreement benefiting it in its
      capacity as agent for the Banks, and all the powers and discretions
      conferred on trustees by the Trustee Act 1925 (to the extent not
      inconsistent with this Agreement). In
addition:-





28




9.3.1
    the
      Agent (and any attorney, agent or delegate of the Agent) may indemnify
      itself or himself out of the Trust Property against all liabilities,
      costs, fees, damages, charges, losses and expenses sustained or incurred
      by it or him in relation to the taking or holding of any of the Trust
      Property or in connection with the exercise or purported exercise of the
      rights, trusts, powers and discretions vested in the Agent or any other
      such person by or pursuant to the Security Documents or in respect of
      anything else done or omitted to be done in any way relating to the
      Security Documents; and




9.3.2
    the
      Banks acknowledge that the Agent shall be under no obligation to insure
      any property nor to require any other person to insure any property and
      shall not be responsible for any loss which may be suffered by any person
      as a result of the lack or insufficiency of any insurance;
    and




9.3.3
    the
      Agent and the Banks agree that the perpetuity period applicable to the
      trusts declared by this Agreement shall be the period of eighty years from
      the date of this Agreement.




9.4
    **Limitations on authority**Except
      with the prior written consent of each of the Banks, the Agent shall not
      be entitled to :-





9.4.1
    release
      or vary any security given for the Borrowers' obligations under this
      Agreement; nor




9.4.2
    waive
      the payment of any sum of money payable by any of the Security Parties
      under the Security Documents; nor




9.4.3
    change
      the meaning of the expressions "**Instructing
      Group**"
      or "**Margin**";
      nor





29




9.4.4
    exercise,
      or refrain from exercising, any discretion, or give or withhold any
      consent, the exercise or giving of which is, by the terms of this
      Agreement, expressly reserved to the Banks;
nor




9.4.5
    extend
      the due date for the payment of any sum of money payable by any of the
      Security Parties under the Security Documents;
nor




9.4.6
    take
      or refrain from taking any step if the effect of such action or inaction
      may lead to the increase of the obligations of a Bank under any of the
      Security Documents; nor




9.4.7
    agree
      to change the currency in which any sum is payable under the Security
      Documents (other than in accordance with the terms of the Security
      Documents); nor




9.4.8
    agree
      to amend this Clause 9.4.




9.5
    **Liability**Neither
      the Agent nor any of its directors, officers, employees or agents shall be
      liable to the Banks for anything done or omitted to be done by the Agent
      under or in connection with the Security Documents unless as a result of
      the Agent's wilful misconduct.




9.6
    **Acknowledgement**Each
      of the Banks acknowledges that:-




9.6.1
    it
      has not relied on any representation made by the Agent or any of the
      Agent's directors, officers, employees or agents or by any other person
      acting or purporting to act on behalf of the Agent to induce it to enter
      into any of the Security Documents;




9.6.2
    it
      has made and will continue to make without reliance on the Agent, and
      based on such documents and other evidence as it considers appropriate,
      its own independent investigation of the financial condition and affairs
      of the Security Parties in connection with the making and continuation of
      the Loan;




9.6.3
    it
      has made its own appraisal of the creditworthiness of the Security
      Parties;




9.6.4
    the
      Agent shall not have any duty or responsibility at any time to provide it
      with any credit or other information relating to any of the Security
      Parties unless that information is received by the Agent pursuant to the
      express terms of the Security Documents.





30




Each of
the Banks agrees that it will not assert nor seek to assert against any
director, officer, employee or agent of the Agent or against any other person
acting or purporting to act on behalf of the Agent any claim which it might have
against them in respect of any of the matters referred to in this
Clause.




9.7
    **Limitations
      on responsibility**The
      Agent shall have no responsibility to any of the Security Parties or to
      the Banks on account of:-




9.7.1
    the
      failure of a Bank or of any of the Security Parties to perform any of
      their respectiveobligationsunder the Security Documents;




9.7.2
    the
      financial condition of any of the Security Parties;




9.7.3
    the
      completeness or accuracy of any statements, representations or warranties
      made in or pursuant to any of the Security Documents, or in or pursuant to
      any document delivered pursuant to or in connection with any of the
      Security Documents;




9.7.4
    the
      negotiation, execution, effectiveness, genuineness, validity,
      enforceability, admissibility in evidence or sufficiency of any of the
      Security Documents or of any document executed or delivered pursuant to or
      in connection with any of the Security
Documents.


9.8
    **The
      Agent's rights**The
      Agent may:-


9.8.1
    assume
      that all representations or warranties made or deemed repeated by any of
      the Security Parties in or pursuant to any of the Security Documents aretrueand complete, unless, in its capacity as the Agent, it has acquired actual
      knowledge to the contrary; and




9.8.2
    assume
      that no Event of Default or Potential Event of Default has occurred
      unless, in its capacity as the Agent, it has acquired actual knowledge to
      the contrary; and




9.8.3
    rely
      on anydocumentor
      Communication believed by it to be genuine;
and





31




9.8.4
    rely
      as to legalorother professional matters on opinions and statements of any legal or
      other professional advisers selected or approved by it;
  and




9.8.5
    rely
      as to any factual matters which might reasonably be expected to be within
      theknowledgeof
      any of the Security Parties on a certificate signed by or on behalf of
      that Security Party; and




9.8.6
    refrain
      fromexercisingany right, power, discretion or remedy unless and until instructed to
      exercise that right, power, discretion or remedy and as to the manner of
      its exercise by the Banks (or, where applicable, by an Instructing Group)
      and unless and until the Agent has received from the Banks any payment
      which the Agent may require on account of, or any security which the Agent
      may require for, any costs, claims, expenses (including legal and other
      professional fees) and liabilities which it considers it may incur or
      sustain in complying with those
instructions.


9.9
    **The
      Agent's duties**The
      Agent shall:-




9.9.1
    if
      requested in writing to do so by a Bank, make enquiry and advise the Banks
      as to the performance or observance of any of the provisions of the
      Security Documents by any of the Security Parties or as to the existence
      of an Event of Default; and




9.9.2
    inform
      the Banks promptly of any Event of Default of which the Agent has actual
      knowledge.




9.10
    **No
      deemed knowledge**The
      Agent shall not be deemed to have actual knowledge of the falsehood or
      incompleteness of any representation or warranty made or deemed repeated
      by any of the Security Parties or actual knowledge of the occurrence of
      any Event of Default or Potential Event of Default unless a Bank or any of
      the Security Parties shall have given written notice thereof to the Agent
      in its capacity as the Agent. Any information acquired by the Agent other
      than specifically in its capacity as the Agent shall not be deemed to be
      information acquired by the Agent in its capacity as the Agent.




9.11
    **Other
      business**The
      Agent may, without any liability to account to the Banks, generally engage
      in any kind of banking or trust business with any of the Security Parties
      or any of their respective subsidiaries or associated companies or with a
      Bank as if it were not the Agent.





32




9.12
    **Indemnity**The
      Banks shall, promptly on the Agent's request, reimburse the Agent in their
      respective Proportionate Shares, for, and keep the Agent fully indemnified
      in respect of:-




9.12.1
    all
      amounts payable by the Borrowers to the Agent pursuant to Clause 17 to the
      extent thatthoseamounts are not paid by the Borrowers;
  9.12.2
    all
      liabilities, damages, costs and claims sustained or incurred by the Agent
      inconnectionwith the Security Documents, or the performance of its duties and
      obligations, or the exercise of its rights, powers, discretions or
      remedies under or pursuant to any of the Security Documents; or in
      connection with any action taken or omitted by the Agent under or pursuant
      to any of the Security Documents, unless in any case those liabilities,
      damages, costs or claims arise solely from the Agent's wilful
      misconduct.


9.13
    **Employment
      of agents**In
      performing its duties and exercising its rights, powers, discretions and
      remedies under or pursuant to the Security Documents, the Agent shall be
      entitled to employ and pay agents to do anything which the Agent is
      empowered to do under or pursuant to the Security Documents (including the
      receipt of money and documents and the payment of money) and to act or
      refrain from taking action in reliance on the opinion of, or advice or
      information obtained from, any lawyer, banker, broker, accountant, valuer
      or any other person believed by the Agent in good faith to be competent to
      give such opinion, advice or information.




9.14
    **Distribution
      of payments**The
      Agent shall pay promptly to the order of each of the Banks that Bank's
      Proportionate Share of every sum of money received by the Agent pursuant
      to the Security Documents or the Mortgagees' Insurances (with the
      exception of any amounts payable pursuant to Clause 7 and/or the Fee
      Letter and any amounts which, by the terms of the Security Documents, are
      paid to the Agent for the account of the Agent alone or specifically for
      the account of one or more Banks) and until so paid such amount shall be
      held by the Agent on trust absolutely for that
Bank.





33




9.15
    **Reimbursement**The
      Agent shall have no liability to pay any sum to a Bank until it has itself
      received payment of that sum. If, however, the Agent does pay any sum to a
      Bank on account of any amount prospectively due to that Bank pursuant to
      Clause 9.14 before it has itself received payment of that amount, and
      the Agent does not in fact receive payment within five Business Days after
      the date on which that payment was required to be made by the terms of the
      Security Documents or the Mortgagees' Insurances, each Bank receiving any
      such payment will, on demand by the Agent, refund to the Agent an amount
      equal to the amount received by it, together with an amount sufficient to
      reimburse the Agent for any amount which the Agent may certify that it has
      been required to pay by way of interest on money borrowed to fund the
      amount in question during the period beginning on the date on which that
      amount was required to be paid by the terms of the Security Documents or
      the Mortgagees' Insurances and ending on the date on which the Agent
      receives reimbursement.




9.16
    **Redistribution
      of payments**Unless
      otherwise agreed between the Banks and the Agent, if at any time a Bank
      receives or recovers by way of set-off, the exercise of any lien or
      otherwise (other than from any assignee or transferee of or
      sub-participant in that Bank's Commitment), an amount greater than that
      Bank's Proportionate Share of any sum due from any of the Security Parties
      under the Security Documents (the amount of the excess being referred to
      in this Clause as the "**Excess
      Amount**")
      then:-




9.16.1
    that
      Bank shall promptly notify the Agent (which shall promptly notify each
      other Bank);




9.16.2
    that
      Bank shall pay to the Agent an amount equal to the Excess Amount within
      ten days of its receipt or recovery of the Excess Amount;
    and




9.16.3
    the
      Agent shall treat that payment as if it were a payment by the Security
      Party in question on account of the sum owed to the Banks as aforesaid and
      shall account to the Banks in respect of the Excess Amount in accordance
      with the provisions of this Clause.




However,
if a Bank has commenced any Proceedings to recover sums owing to it under the
Security Documents and, as a result of, or in connection with, those Proceedings
has received an Excess Amount, the Agent shall not distribute any of that Excess
Amount to any other Bank which had been notified of the Proceedings and had the
legal right to, but did not, join those Proceedings or commence and diligently
prosecute separate Proceedings to enforce its rights in the same or another
court.





34




9.17
    **Rescission
      of Excess Amount**If
      all or any part of any Excess Amount is rescinded or must otherwise be
      restored to any of the Security Parties or to any other third party, the
      Banks which have received any part of that Excess Amount by way of
      distribution from the Agent pursuant to this Clause shall repay to the
      Agent for the account of the Bank which originally received or recovered
      the Excess Amount, the amount which shall be necessary to ensure that the
      Banks share rateably in accordance with their Proportionate Shares in the
      amount of the receipt or payment retained, together with interest on that
      amount at a rate equivalent to that (if any) paid by the Bank receiving or
      recovering the Excess Amount to the person to whom that Bank is liable to
      make payment in respect of such amount, and Clause 9.16.3 shall apply only
      to the retained amount.




9.18
    **Proceedings**Each
      of the Banks and the Agent shall notify one another of the proposed
      commencement of any Proceedings under any of the Security Documents prior
      to their commencement.




9.19
    **Instructions**Where
      the Agent is authorised or directed to act or refrain from acting in
      accordance with the instructions of the Banks or of an Instructing Group
      each of the Banks shall provide the Agent with instructions within three
      Business Days of the Agent's request (which request may be made orally or
      in writing). If a Bank does not provide the Agent with instructions within
      that period, that Bank shall be bound by the decision of the Agent.
      Nothing in this Clause shall limit the right of the Agent to take, or
      refrain from taking, any action without obtaining the instructions of the
      Banks or an Instructing Group if the Agent in its discretion considers it
      necessary or appropriate to take, or refrain from taking, such action in
      order to preserve the rights of the Banks under or in connection with the
      Security Documents. In that event, the Agent will notify the Banks of the
      action taken by it as soon as reasonably practicable, and the Banks agree
      to ratify any action taken by the Agent pursuant to this
      Clause.




9.20
    **Communications**Any
      Communication under this Clause shall be given, delivered, made or served,
      in the case of the Agent (in its capacity as Agent or as one of the
      Banks), and in the case of the other Banks, at the address or fax number
      indicated in Schedule 2.





35




9.21
    **Payments**All amounts payable to a Bank under this Clause shall be paid to such
      account at such bank as that Bank may from time to time direct in writing
      to the Agent.




9.22
    **Retirement**Subject
      to a successor being appointed in accordance with this Clause, the Agent
      may retire as agent and/or security trustee at any time without assigning
      any reason by giving to the Borrowers and the Banks notice of its
      intention to do so, in which event the following shall apply:-




9.22.1
    the
      Banks may within thirty days after the date of the Agent's notice appoint
      asuccessorto
      act as agent and/or security trustee or, if they fail to do so, the Agent
      may appoint any other bank or financial institution as its
      successor;




9.22.2
    the
      resignation of the Agent shall take effect simultaneously with the
      appointment of its successor on written notice of that appointment being
      given to theBorrowers
      orthe Banks;




9.22.3
    the
      Agent shall thereupon be discharged from all further obligations as agent
      and/or security trustee but shall remain entitled to the benefit of the
      provisions of this Clause;




9.22.4
    the
      Agent'ssuccessorand each of the other parties to this Agreement shall have the same rights
      and obligations amongst themselves as they would have had if that
      successor had been a party to this
Agreement.




9.23
    **No
      fiduciary relationship**Except
      as provided in Clauses 9.3 and 9.14, the Agent shall not have any
      fiduciary relationship with or be deemed to be a trustee of or for a Bank
      and nothing contained in any of the Security Documents shall constitute a
      partnership between any two or more Banks or between the Agent and any
      Bank.




9.24
    **The
      Agent as a Bank**The
      expression "**the
      Banks**"
      when used in the Security Documents includes the Agent in its capacity as
      one of the Banks. The Agent shall be entitled to exercise its rights,
      powers, discretions and remedies under or pursuant to the Security
      Documents in its capacity as one of the Banks in the same manner as any
      other Bank and as if it were not also the
Agent.





36




9.25
    **The
      Agent as security trustee**Unless the context otherwise requires, the expression "**the
      Agent**"
      when used in the Security Documents includes the Agent acting in its
      capacities both as agent and security
trustee.




**10**
    **Covenants**




The
Borrowers covenant with the Banks and with the Agent in the following
terms.




10.1
    **Negative
      covenants**




None of
the Borrowers will without the Agent's prior written consent:-




10.1.1
    **no
      disposals or third party rights**dispose
      of or create or permit to arise or continue any Encumbrance or other third
      party right on or over all or any part of its present or future assets or
      undertaking; nor




10.1.2
    **no
      borrowings**borrow
      any money or incur any obligations under leases;
nor




10.1.3
    **no
      repayments**repay
      any loans made to it; nor




10.1.4
    **no
      substantial liabilities**except
      in the ordinary course of business, incur any liability to any third party
      which is in the opinion of the Agent of a substantial nature;
      nor




10.1.5
    **no
      other business**engage
      in any business other than the ownership, operation, chartering and
      management of the Vessel owned by it; nor




10.1.6
    **no
      loans or other financial commitments**make
      any loan nor enter into any guarantee or indemnity or otherwise
      voluntarily assume any actual or contingent liability in respect of any
      obligation of any other person; nor




10.1.7
    **no
      dividends**pay
      any dividends or make any other distributions to shareholders or issue any
      new shares during the continuance of an Event of Default or Potential
      Event of Default; nor





37




10.1.8
    **no
      sale of Vessels**sell
      or otherwise dispose of the Vessel owned by it or any shares in that
      Vessel nor agree to do so unless the relevant Attributable Amount of the
      Outstanding Indebtedness is prepaid on the date of sale or disposal;
      nor




10.1.9
    **no
      chartering after Event of Default**following the occurrence and during the continuation of an Event of
      Default let its Vessel on charter or renew or extend any charter or other
      contract of employment of its Vessel (nor agree to do so);
    nor




10.1.10
    **no
      change in management**appoint
      anyone other than the Managers as commercial or technical managers of the
      Vessels, nor terminate or materially vary the arrangements for the
      commercial or technical management of the Vessels, nor permit the Managers
      to sub-contract or delegate the commercial or technical management of any
      Vessel to any third party; nor




10.1.11
    **no
      change in ownership or control**permit
      any change in its beneficial ownership and control from that advised to
      the Agent at the date of this Agreement;
nor




10.1.12
    **no
      change in class or flag**permit any change in the classification society or flag of any of the
      Vessels.




10.1.13
    **Charter
      obligations**breach its obligations under any Charter to which it is a party, or cancel
      or purport to cancel such Charter, or amend, vary or waive performance
      under such Charter in a manner adverse to the interests of the Bank;
      nor




10.1.14
    **no
      chartering**save
      for any Charter or any extension of such a Charter on terms acceptable to
      the Agent, permit the Vessels to be let on any demise charter, or on any
      time charter, consecutive voyage charter or other contract of employment
      which (inclusive of any extension option) is capable of exceeding twelve
      (12) months, nor to employ any Vessel in any way which might impair the
      security created by the Security Documents; if the terms of any such
      proposed time charter, consecutive voyage charter or other contract of
      employment are equal to or better than the Existing Charter for the
      relevant Vessel (which test shall include the creditworthiness of the
      charterer) the Agent will give its approval;
and





38




10.1.15
    **no
      acquisition of assets**except in the ordinary course of business, acquire any asset or
      undertaking.




10.2
    **Positive
      covenants**




10.2.1
    **Registration
      and Class of Vessels**The
      Borrowers undertake to maintain the registration of the Vessels under the
      flags and with the class indicated in Schedule 1 for the duration of the
      Facility Period.




10.2.2
    **Additional
      security**If
      and so often as the aggregate of the Market Values of the Vessels
      (determined in accordance with Clause 1.1.55) plus the value of any
      additional security for the time being provided to the Banks (or to the
      Agent on their behalf) pursuant to this Clause shall be less than one
      hundred and thirty per cent. (130%) of the amount of the Indebtedness then
      outstanding, the Borrowers will, within thirty days of the request of the
      Agent to do so, at the Borrowers' option:-




(a)
    pay
      to the Agent or to its nominee a cash deposit in the amount of the
      shortfall to be secured in favour of the Banks (or of the Agent on their
      behalf) as additional security for the payment of the Indebtedness; or




(b)
    give
      to the Banks (or to the Agent on their behalf) other additional security
      in amount and form acceptable to the Banks in their discretion; or




(c)
    prepay
      the amount of the Indebtedness which will ensure that the aggregate of the
      Market Values of the Vessels (determined as aforesaid) plus the value of
      any such additional security is not less than one hundred and thirty per
      cent. (130%) of the amount of the Loan.




Clauses 5.3,
5.6 and 5.7 shall apply, *mutatis
mutandis* , to any
prepayment made pursuant to this Clause and the value of any additional security
provided pursuant to this Clause shall be determined by the Agent in its
discretion.





39




10.2.3
    **Financial
      statements**The
      Borrowers will supply to the Agent, without request, the annual
      consolidated financial statements of the Guarantor for each financial year
      of the Guarantor ending during the Facility Period, containing (amongst
      other things) the Guarantor's profit and loss account for, and balance
      sheet at the end of, each such financial year, prepared in accordance with
      generally accepted accounting principles and practices applicable in the
      USA consistently applied, and audited by a firm of chartered accountants
      (or equivalent) acceptable to the Agent, in each case within one hundred
      and eighty (180) days of the end of the financial year to which they
      relate and semi-annual management accounts within ninety (90) days of the
      end of the half year to which they relate.




10.2.4
    **Other
      information**The
      Borrowers will promptly supply to the Agent copies of all financial and
      other information from time to time given by any of the Borrowers to its
      shareholders and such information and explanations as the Agent may from
      time to time require in connection with the operation of the Vessels and
      the Borrowers' profit and liquidity, and will procure that the Agent be
      given the like information and explanations relating to all other Security
      Parties.




10.2.5
    **Evidence
      of goodstanding**The Borrowers will on the request of the Agent (which shall be made no
      more than once in each calendar year unless an Event of Default is in
      existence) provide the Agent with evidence in form and substance
      satisfactory to the Agent that the Security Parties and all corporate
      shareholders of any of the Security Parties remain in good
      standing.




10.2.6
    **Evidence
      of current COFR**Without limiting the Borrowers' obligations under Clause 10.2.4, the
      Borrowers will from time to time on the request of the Agent provide the
      Agent with such evidence as the Agent may reasonably require that each
      Vessel (if required) has a valid and current Certificate of Financial
      Responsibility pursuant to the United States Oil Pollution Act
      1990.





40




10.2.7
    **ISM
      Code compliance**The Borrowers will:-




(a)
    procure
      that each of the Vessels remains for the duration of the Facility Period
      subject to a SMS;




(b)
    maintain
      a valid and current SMC for each of the Vessels throughout the Facility
      Period;




(c)
    procure
      that each Company maintains a valid and current DOC throughout the
      Facility Period;




(d)
    immediately
      notify the Agent in writing of any actual or threatened withdrawal,
      suspension, cancellation or modification of the SMC of any Vessel or of
      the DOC of any Company;




(e)
    immediately
      notify the Agent in writing of any “*accident*”
      or “*major**non*-*conformity*”,
      as each of those terms is defined in the Guidelines on the Implementation
      of the International Safety Management Code by Administrations adopted by
      the Assembly of the International Maritime Organisation pursuant to
      Resolution A.788(19), and of the steps being taken to remedy the
      situation; and




(f)
    not
      without the prior written consent of the Agent (which will not be
      unreasonably withheld) change the identity of any
  Company.




10.2.8
    **ISPS
      Code compliance**The
      Borrowers will:-




(a)
    for
      the duration of the Facility Period comply with the ISPS Code in relation
      to each of the Vessels and procure that each of the Vessels and the ISPS
      Company comply with the ISPS Code;




(b)
    maintain
      a valid and current ISSC for each of the Vessels throughout the Facility
      Period; and




(c)
    immediately
      notify the Agent in writing of any actual or threatened withdrawal,
      suspension, cancellation or modification of any
ISSC.




41




10.2.9
    **Inspection
      of records**The
      Borrowers will permit the inspection of their financial records and
      accounts from time to time by the Agent or its nominee, such inspection to
      take place on reasonable notice and no more than once in each calendar
      year unless an Event of Default shall occur.




10.2.10
    **Pari
      passu obligations**The
      Borrowers will ensure that, throughout the Facility Period, the
      obligations of the Security Parties under or pursuant to the Security
      Documents rank at least*pari
      passu*with all other existing or future indebtedness, obligations or liabilities
      of the Security Parties, other than any mandatorily preferred by
      law.






10.2.11
    **Notification
      of Event of Default**The
      Borrowers will immediately notify the Agent in writing of the occurrence
      of any Event of Default or Potential Event of
Default.




10.2.12
    **Balance
      of Cash Collateral Account**The Borrowers will ensure that a minimum of five million Dollars
      ($5,000,000) (the "**Cash
      Collateral**")
      is standing to the credit of the Cash Collateral Account at all times
      during the Facility Period**PROVIDED
      THAT**the Cash Collateral will be released by the Agent on behalf of the Banks
      to the Borrowers upon (i) the sale or scrapping of all of the Container
      Vessels and (ii) an immediate Special Involuntary
    Prepayment.




10.2.13
    **Sale
      of Container Vessels**If
      at any time any of the Container Vessels is not employed on a Charter or
      another charter acceptable to the Banks, the Borrowers will promptly sell
      (or scrap) the relevant Container
Vessel(s).




10.2.14
    **Future
      transactions**The
      Borrowers undertake to give the Agent a right to be involved in any future
      transactions in relation to the Borrowers or the Vessels on market
      conditions.




**11**
    **Earnings
      and Cash Collateral Account****s**




11.1
    **Maintenance
      of accounts**The
      Borrowers shall maintain the Accounts with the Agent for the duration of
      the Facility Period free of Encumbrances and rights of set off other than
      as created by or pursuant to the Security
Documents.





42




11.2
    **Earnings**The
      Borrowers shall procure that there is credited to the Earnings Account all
      Earnings and any Requisition Compensation which are to be applied as
      follows:





(i)
    firstly,
      in or towards Operating Expenses;




(ii)
    secondly, in or towards payment of any costs, outstanding
      fees and commissions or other monies owed to the Banks relating to the
      Indebtedness;




(iii)
    thirdly,
      in or towards payment of all due Interest accrued but unpaid in respect of
      the Loan; and




(iv)
    fourthly,
      in or towards payment of the Repayment
Instalments.




11.3
    **Borrowers'
      obligations not affected**If
      for any reason the amount standing to the credit of the Earnings Account
      shall be insufficient to pay any Repayment Instalment or to make any
      payment of interest when due, the Borrowers' obligation to pay that
      Repayment Instalment or to make that payment of interest shall not be
      affected.




11.4
    **Release
      of surplus**Any
      amount remaining to the credit of the Earnings Account following the
      making of any payment required by Clause 11.2 shall (unless an Event of
      Default or Potential Event of Default shall have occurred and be
      continuing) be released to or to the order of the
    Borrowers.




11.5
    **Restriction
      on withdrawal**During
      the Facility Period no sum may be withdrawn from the Accounts (except in
      accordance with this Clause) without the prior written consent of the
      Agent.




11.6
    **Relocation
      of Accounts**At
      any time following the occurrence and during the continuation of an Event
      of Default, the Agent may without the consent of the Borrowers relocate
      either or both of the Accounts to any other branch of the Agent, without
      prejudice to the continued application of this Clause and the rights of
      the Banks under or pursuant to the Security
Documents.





43




**12**
    **Events Of Default**




12.1
    **The
      Agent's rights**If
      any of the events set out in Clause 12.2 occurs, the Agent may (and, if
      instructed to do so by an Instructing Group, shall) by notice to the
      Borrowers declare the Banks to be under no further obligation to the
      Borrowers under or pursuant to this Agreement and may (and, if instructed
      to do so by an Instructing Group shall) declare all or any part of the
      Indebtedness (including such unpaid interest as shall have accrued) to be
      immediately payable, in which event the Indebtedness (or the part of the
      Indebtedness referred to in the Agent's notice) shall immediately become
      due and payable without any further demand or notice of any
      kind.




12.2
    **Events
      of Default**The
      events referred to in Clause 12.1 are:-




12.2.1
    **payment
      default**if
      the Borrowers default in the payment of any part of the Indebtedness when
      due; or




12.2.2
    **other
      default**if
      any of the Security Parties fails to observe or perform any of the
      covenants, conditions, undertakings, agreements or obligations on its part
      contained in any of the Security Documents or shall in any other way be in
      breach of or do or cause to be done any act repudiating or evidencing an
      intention to repudiate any of the Security Documents; or




12.2.3
    **misrepresentation
      or breach of warranty**if
      any representation or warranty made or repeated, or any other information
      given, by any of the Security Parties to the Banks or the Agent in or
      leading up to or during the currency of any of the Security Documents, or
      in or pursuant to any notice or other document delivered to the Agent
      under or pursuant to any of the Security Documents, is false or incorrect
      or misleading in any respect
      which the Agent in its discretion considers to be material;
      or




12.2.4
    **execution**if
      a distress or execution or other process of a court or authority is levied
      on any of the property of any of the Security Parties before or after
      final judgment or by order of any competent court or authority and is not
      satisfied within seven days of levy; or




12.2.5
    **insolvency
      events**if
      any of the Security Parties:-





44




(a)
    resolves
      to appoint, or applies for, or consents to, the appointment of a receiver,
      administrative receiver, trustee, administrator or liquidator of itself or
      of all or part of its assets; or




(b)
    is
      unable or admits its inability to pay its debts as they fall due;
      or




(c)
    makes
      a general assignment for the benefit of creditors or enters into a
      moratorium on payment of any of its indebtedness;
or




(d)
    ceases
      trading or threatens to cease trading; or




(e)
    has
      appointed an Inspector under the Companies Act 1985 or any statutory
      provision which the Agent in its discretion considers analogous thereto;
      or




12.2.6
    **insolvency
      proceedings**if
      any proceedings are commenced or threatened, or any order or judgment is
      given by any court, for the bankruptcy, liquidation, winding up,
      administration or re-organisation of any of the Security Parties or for
      the appointment of a receiver, administrative receiver, administrator,
      liquidator or trustee of any of the Security Parties or of all or part of
      the assets of any of the Security Parties, or if any person appoints or
      purports to appoint such receiver, administrative receiver, administrator,
      liquidator or trustee; or




12.2.7
    **impossibility
      or illegality**if
      any event occurs which would, or would with the passage of time, render
      performance of any of the Security Documents by any of the Security
      Parties impossible, unlawful or unenforceable by the Banks or the Agent;
      or




12.2.8
    **conditions
      subsequent**if
      any of the conditions set out in Clause 3.4 is not satisfied within the
      time reasonably required by the Agent; or




12.2.9
    **revocation
      or modification of consents etc.**if
      any consent, licence, approval, authorisation, filing, registration or
      other requirement of any governmental, judicial or other public body or
      authority which is now, or which at any time during the Facility Period
      becomes, necessary to enable any of the Security Parties to comply with
      any of their obligations in or pursuant to any of the Security Documents
      is not obtained or is revoked, suspended, withdrawn or withheld, or is
      modified in a manner which the Agent considers is, or may be, prejudicial
      to the interests of the Banks, or ceases to remain in full force and
      effect; or





45




12.2.10
    **curtailment
      of business**if
      the business of any of the Security Parties is wholly or partially
      curtailed or suspended by any intervention by or under authority of any
      government, or if all or a substantial part of the undertaking, property
      or assets of any of the Security Parties is seized, nationalised,
      expropriated or compulsorily acquired by or under authority of any
      government; or




12.2.11
    **loss
      of Vessel**if
      any Vessel or any other vessel which may from time to time be mortgaged to
      the Banks (or to the Agent on their behalf) as security for the repayment
      of all or any part of the Indebtedness is destroyed, abandoned,
      confiscated, forfeited, condemned as prize or becomes a Total Loss except
      that a Total Loss shall not be an Event of Default if each
      of:-




(a)
    the
      Vessel or other vessel is insured in accordance with the Security
      Documents; and




(b)
    no
      insurer has refused to meet or has disputed the claim for Total Loss
      unless the Agent has reasonable grounds to believe that any such refusal
      or dispute is unlikely to succeed in a court of law;
and




(c)
    payment
      of all insurance proceeds in respect of the Total Loss is made in full to
      the Agent on behalf of the Banks (or, if such insurance proceeds are not
      so received, the Borrowers procure payment to the Agent of the relevant
      Attributable Amount) within one hundred and twenty days of the occurrence
      of the casualty giving rise to the Total Loss in question or such longer
      period as the Agent may in its sole discretion agree;
or




12.2.12
    **cross
      default**if
      the Borrowers or the Guarantor commit a default under any other agreement
      to which they are a party concerning any kind of financial liability;
      or




12.2.13
    **reduction
      of capital**if
      any of the Security Parties reduces its authorised or issued or subscribed
      capital; or





46




12.2.14
    **challenge
      to registration**if
      the registration of any Vessel or any Mortgage is contested or becomes
      void or voidable or liable to cancellation or termination, or if the
      validity or priority of any Mortgage is contested;
or




12.2.15
    **war**if
      the country of registration of any Vessel becomes involved in war (whether
      or not declared) or civil war or is occupied by any other power and the
      Agent in its discretion considers that, as a result, the security
      conferred by the Security Documents is materially prejudiced;
      or




12.2.16
    **notice
      of termination**if
      the Guarantor gives notice to the Agent to determine its obligations under
      the Guarantee; or




12.2.17
    **material
      adverse change etc.**if
      anything is done or permitted or omitted to be done by any of the Security
      Parties (other than the Managers) which in the reasonable opinion of the
      Agent jeopardises or imperils (or may jeopardise or imperil) the rights
      conferred on the Agent and the Banks by the Security Documents, or if
      there occurs (in the opinion of the Agent) any material adverse change in
      the business, affairs or financial condition of any of the Security
      Parties from that pertaining at the date of this Agreement;
    or




12.2.18
    **material
      adverse****change
      or cancellation of an Existing Charter**if
      at any time any Existing Charter is subject to a material adverse
      amendment (in the opinion of the Agent) or is terminated, revoked,
      cancelled, repudiated or otherwise ceases to be in full force and effect
      other than by effluxion of time and has not been replaced by another
      Charter within ten (10) Business Days; or




12.2.19
    **analogous
      events**if
      any event which (in the opinion of the Agent) is analogous to any of the
      events set out above shall occur.




**13**
    **Set-Off
      And Lien**




13.1
    **Set-off**The
      Borrowers irrevocably authorise the Agent and the Banks at any time after
      all or any part of the Indebtedness shall have become due and payable to
      set off without notice any liability of any of the Borrowers to any of the
      Banks or to the Agent (whether present or future, actual or contingent,
      and irrespective of the branch or office, currency or place of payment)
      against any credit balance from time to time standing on any account of
      any of the Borrowers (whether current or otherwise and whether or not
      subject to notice) with any branch of the Agent or of any Bank in or
      towards satisfaction of the Indebtedness and, in the name of the Agent or
      that Bank or that Borrower, to do all acts (including, without limitation,
      converting or exchanging any currency) and execute all documents which may
      be required to effect such application.





47




13.2
    **Lien**The
      Agent and each Bank shall have a lien on and be entitled to retain and
      realise as additional security for the repayment of the Indebtedness any
      cheques, drafts, bills, notes or negotiable or non-negotiable instruments
      and any stocks, shares or marketable or other securities and property of
      any kind of any of the Borrowers (or of the Agent or that Bank as agent or
      nominee of any of the Borrowers) from time to time held by the Agent or
      that Bank, whether for safe custody or
otherwise.




13.3
    **Application**Each
      of the Borrowers irrevocably authorises the Agent to apply all sums which
      the Agent may receive:-




13.3.1
    pursuant
      to a sale or other disposition of a Vessel or any right, title or interest
      in a Vessel; or




13.3.2
    by
      way of payment to the Agent of any sum in respect of the Insurances,
      Earnings or Requisition Compensation of a Vessel;
or




13.3.3
    otherwise
      arising under or in connection with any of the Security
      Documents




in or
towards satisfaction, or by way of retention on account, of the Indebtedness, in
such manner as the Agent may determine.




**14**
    **Assignment and Sub-Participation**




14.1
    **Right
      to assign**Each
      of the Banks may assign or transfer any of its rights and/or obligations
      under or pursuant to this Agreement to any other branch of that Bank or
      (with the prior written consent of the Borrowers, such consent not to be
      unreasonably withheld or delayed) to any other bank or financial
      institution, and may grant sub-participations in all or any part of its
      Commitment.




14.2
    **Borrowers'
      co-operation**The
      Borrowers will co-operate fully with the Banks in connection with any
      assignment, transfer or sub-participation; will execute and procure the
      execution of such documents as the Banks may require in connection
      therewith; irrevocably authorise the Agent to sign any Transfer
      Certificate on their behalf; and irrevocably authorise the Agent and the
      Banks (subject to any proposed assignee, transferee or sub-participant
      signing a suitable confidentiality undertaking) to disclose to any
      proposed assignee, transferee or sub-participant (whether before or after
      any assignment, transfer or sub-participation and whether or not any
      assignment, transfer or sub-participation shall take place) all
      information relating to the Security Parties, the Loan or the Security
      Documents which the Agent or the Banks may in its discretion consider
      necessary or desirable.





48




14.3
    **Rights
      of assignee**Any
      assignee, transferee or sub-participant of a Bank shall (unless limited by
      the express terms of the assignment, transfer or sub-participation) take
      the full benefit of every provision of the Security Documents benefiting
      that Bank.




14.4
    **Transfer
      Certificates**If
      any Bank wishes to transfer any of its rights and/or obligations under or
      pursuant to this Agreement, it may do so by delivering to the Agent a duly
      completed Transfer Certificate, in which event on the Transfer
      Date:-




14.4.1
    to
      the extent that that Bank seeks to transfer its rights and/or obligations,
      the Borrowers (on the one hand) and the Bank in question (on the other)
      shall be released from all further obligations towards the
      other(s);




14.4.2
    the
      Borrowers (on the one hand) and the Transferee (on the other) shall assume
      obligations towards the other(s) identical to those released pursuant to
      Clause 14.4.1;




14.4.3
    the
      Agent, each of the Banks and the Transferee shall have the same rights and
      obligations between themselves as they would have had if the Transferee
      had been an original party to this Agreement as a Bank;
  and




14.4.4
    the
      Transferee shall pay to the Agent for its own account a transfer fee of
      two thousand ($2,000) Dollars.




Each Bank
irrevocably authorises the Agent to sign on its behalf any Transfer Certificate
relating to the transfer of any of the rights and/or obligations of any other
Bank.





49




14.5
    **Security
      Documents**Unless
      otherwise expressly provided in any Security Document or otherwise
      expressly agreed between a Bank and any proposed Transferee and notified
      by that Bank to the Agent on or before the relevant Transfer Date, there
      shall automatically be assigned to the Transferee with any transfer of a
      Bank's rights and/or obligations under or pursuant to this Agreement the
      rights of that Bank under or pursuant to the Security Documents (other
      than this Agreement) which relate to the portion of the Bank's rights
      and/or obligations transferred by the relevant Transfer
      Certificate.




**15**
    **Payments,
      Mandatory Prepayment, Reserve Requirements and
      Illegality**




15.1
    **Payments**All
      amounts payable by any of the Borrowers under or pursuant to any of the
      Security Documents shall be paid to such accounts at such banks as the
      Agent may from time to time direct to the Borrowers, and (unless payable
      in any other Currency of Account) shall be paid in Dollars in same day
      funds (or such funds as are required by the authorities in the United
      States of America for settlement of international payments for immediate
      value). Payments shall be deemed to have been received by the Agent on the
      date on which the Agent receives authenticated advice of receipt, unless
      that advice is received by the Agent on a day other than a Business Day or
      at a time of day (whether on a Business Day or not) when the Agent in its
      discretion considers that it is impossible or impracticable for the Agent
      to utilise the amount received for value that same day, in which event the
      payment in question shall be deemed to have been received by the Agent on
      the Business Day next following the date of receipt of advice by the
      Agent.




15.2
    **No
      deductions or withholdings**All
      payments (whether of principal or interest or otherwise) to be made by any
      of the Borrowers pursuant to the Security Documents shall, subject only to
      Clause 15.3, be made free and clear of and without deduction for or on
      account of any Taxes or other deductions, withholdings, restrictions,
      conditions or counterclaims of any nature.




15.3
    **Grossing-up**If
      at any time any law requires (or is interpreted to require) a Borrower to
      make any deduction or withholding from any payment, or to change the rate
      or manner in which any required deduction or withholding is made, that
      Borrower will promptly notify the Agent and, simultaneously with making
      that payment, will pay to the Agent whatever additional amount (after
      taking into account any additional Taxes on, or deductions or withholdings
      from, or restrictions or conditions on, that additional amount) is
      necessary to ensure that, after making the deduction or withholding, the
      Agent and the Banks receive a net sum equal to the sum which they would
      have received had no deduction or withholding been made.





50




15.4
    **Evidence
      of deductions**If
      at any time a Borrower is required by law to make any deduction or
      withholding from any payment to be made by it pursuant to any of the
      Security Documents, that Borrower will pay the amount required to be
      deducted or withheld to the relevant authority within the time allowed
      under the applicable law and will, no later than thirty days after making
      that payment, deliver to the Agent an original receipt issued by the
      relevant authority, or other evidence acceptable to the Agent, evidencing
      the payment to that authority of all amounts required to be deducted or
      withheld.




15.5
    **Adjustment
      of due dates**If
      any payment or transfer of funds to be made under any of the Security
      Documents, other than a payment of interest on the Loan, shall be due on a
      day which is not a Business Day, that payment shall be made on the next
      succeeding Business Day (unless the next succeeding Business Day falls in
      the next calendar month in which event the payment shall be made on the
      next preceding Business Day). Any such variation of time shall be taken
      into account in computing any interest in respect of that
      payment.




15.6
    **Change
      in law**If,
      by reason of the introduction of any law, or any change in any law, or the
      interpretation or administration of any law, or in compliance with any
      request or requirement from any central bank or any fiscal, monetary or
      other authority:-




15.6.1
    any
      Bank or the Agent (or the holding company of any Bank or the Agent) shall
      be subject to any Tax with respect to payments of all or any part of the
      Indebtedness; or




15.6.2
    the
      basis of Taxation of payments to any Bank or to the Agent in respect of
      all or any part of the Indebtedness shall be changed;
or





51




15.6.3
    any
      reserve requirements shall be imposed, modified or deemed applicable
      against assets held by or deposits in or for the account of or loans by
      any branch of any Bank; or




15.6.4
    the
      manner in which any Bank or the Agent allocates capital resources to its
      obligations under this Agreement or any ratio (whether cash, capital
      adequacy, liquidity or otherwise) which any Bank or the Agent is required
      or requested to maintain shall be affected;
or




15.6.5
    there
      is imposed on any Bank or on the Agent (or on the holding company of any
      Bank or the Agent) any other condition in relation to the Indebtedness or
      the Security Documents;




and the
result of any of the above shall be to increase the cost to any Bank (or to the
holding company of any Bank) of that Bank making or maintaining its Commitment
or to cause any Bank or the Agent to suffer (in its opinion) a material
reduction in the rate of return on its overall capital below the level which it
reasonably anticipated at the date of this Agreement and which it would have
been able to achieve but for its entering into this Agreement, and/or performing
its obligations under this Agreement, then:





(i)
    the Bank affected shall notify the
Agent,




(ii)
    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 Agent 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 transaction 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 this clause 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**");





52




(iii)
    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 sub-clause (ii) 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.




15.7
    **Illegality
      and impracticality**Notwithstanding
      anything contained in the Security Documents, the obligations of the Banks
      to advance or maintain the Loan shall terminate in the event that a change
      in any law or in the interpretation of any law by any authority charged
      with its administration shall make it unlawful or, in the opinion of any
      Bank, impracticable for that Bank to advance or maintain its Commitment.
      In that event the Bank affected shall notify the Agent and the Agent
      shall, by written notice to the Borrowers, declare the Banks' obligations
      to be immediately terminated. If all or any part of the Loan shall have
      been advanced by the Banks to the Borrowers, the Indebtedness (including
      all accrued interest) shall be prepaid within thirty days from the date of
      such notice. Clause 5.6 shall apply to that prepayment if it is made on a
      day other than the last day of an Interest Period. The Agent and the Banks
      shall consult in good faith (as per the provisions of clause 15.6) with
      the Borrowers (but without incurring any legal obligations) with a view to
      trying to establish an alternative means of funding such Commitment, in a
      manner which does not breach any applicable law or
    regulation.




15.8
    **Changes
      in market circumstances**If
      at any time a Bank determines (which determination shall be final and
      conclusive and binding on the Borrowers) that, by reason of changes
      affecting the London Interbank market, adequate and fair means do not
      exist for ascertaining the rate of interest on the Loan pursuant to this
      Agreement:-





53




15.8.1
    that
      Bank shall give notice to the Agent and the Agent shall give notice to the
      Borrowers of the occurrence of such event;
and




15.8.2
    the
      Agent shall as soon as reasonably practicable certify to the Borrowers in
      writing the effective cost to the Banks of maintaining the Loan for such
      further period as shall be selected by the Banks and the rate of interest
      payable by the Borrowers for that period; or, if that is not acceptable to
      the Borrowers,




15.8.3
    the
      Agent on behalf of the Banks will negotiate with the Borrowers in good
      faith with a view to modifying this Agreement to provide a substitute
      basis for the Loan which is financially a substantial equivalent to the
      basis provided for in this Agreement.




If,
within thirty days of the giving of the notice referred to in
Clause 15.8.1, the Borrowers and the Agent fail to agree in writing on a
substitute basis for the Loan, the Borrowers will immediately prepay the
Indebtedness. Clause 5.6 shall apply to that prepayment if it is made on a day
other than the last day of an Interest Period.




15.9
    **Non-availability
      of currency**If
      a Bank is for any reason unable to obtain Dollars in the London Interbank
      market and is, as a result, or as a result of any other contingency
      affecting the London Interbank market, unable to advance or maintain its
      Commitment in Dollars, that Bank shall give notice to the Agent and the
      Agent shall give notice to the Borrowers and the Banks' obligations to
      make the Loan available shall immediately cease. In that event, if all or
      any part of the Loan shall have been advanced by the Banks to the
      Borrowers, the Agent on behalf of the Banks will negotiate with the
      Borrowers in good faith with a view to establishing a mutually acceptable
      basis for funding the Loan from an alternative source. If the Agent and
      the Borrowers have failed to agree in writing on a basis for funding the
      Loan from an alternative source by 11.00 a.m. on the second Business Day
      prior to the end of the then current Interest Period, the Borrowers will
      (without prejudice to their other obligations under or pursuant to this
      Agreement, including, without limitation, their obligation to pay interest
      on the Loan, arising on the expiry of the then current Interest Period)
      prepay the Indebtedness to the Agent on behalf of the Banks on the expiry
      of the then current Interest Period.





54




**16**
    **Communications**




16.1
    **Method**Except for Communications pursuant to Clause 9, which shall be made or
      given in accordance with Clause 9.20, any Communication may be given,
      delivered, made or served (as the case may be) under or in relation to
      this Agreement by letter or fax and shall be in the English language and
      sent addressed:-




16.1.1
    in
      the case of the Banks or the Agent to the Agent at its address at the head
      of this Agreement (fax no: +31 10 401 5323) marked for the attention of:
      The Global Shipping Group;




16.1.2
    in
      the case of the Borrowers to the Communications
Address;




or to
such other address or fax number as the Banks, the Agent or the Borrowers may
designate for themselves by written notice to the others.




16.2
    **Timing**A
      Communication shall be deemed to have been duly given, delivered, made or
      served to or on, and received by, the Borrowers:-




16.2.1
    in
      the case of a fax when the sender receives one or more transmission
      reports showing the whole of the Communication to have been transmitted to
      the correct fax number;




16.2.2
    if
      delivered to an officer of any of the Borrowers or left at the
      Communications Address at the time of delivery or leaving; or




16.2.3
    if
      posted, at 9.00 a.m. on the Business Day after posting by prepaid first
      class post.




A
Communication shall only be deemed to have been duly given, delivered, made or
served to or on, and received by, the Banks or the Agent on actual receipt of
the whole of that Communication by the Agent.




16.3
    **Indemnity**The Borrowers shall indemnify the Agent and each Bank against any cost,
      claim, liability, loss or expense (including legal fees and any Value
      Added Tax or any similar or replacement tax (if applicable)) which the
      Agent or any of the Banks may sustain or incur as a consequence of any
      Communication sent by or on behalf of any of the Borrowers by fax not
      being received by its intended recipient, or being received incomplete, or
      by reason of any Communication purportedly having been sent by or on
      behalf of any of the Borrowers having been sent
    fraudulently.





55




**17**
    **General
      Indemnities**




17.1
    **Currency**In
      the event of the Agent or a Bank receiving or recovering any amount
      payable under any of the Security Documents in a currency other than the
      Currency of Account, and if the amount received or recovered is
      insufficient when converted into the Currency of Account at the date of
      receipt to satisfy in full the amount due, the Borrowers shall, on the
      Agent's written demand, pay to the Agent such further amount in the
      Currency of Account as is sufficient to satisfy in full the amount due and
      that further amount shall be due to the Agent on behalf of the Banks as a
      separate debt under this Agreement.




17.2
    **Costs
      and expenses**The
      Borrowers will, within fourteen days of the Agent's written demand,
      reimburse the Agent (on behalf of itself and the Banks) for all costs and
      expenses (including Value Added Tax or any similar or replacement tax if
      applicable) of and incidental to:-




17.2.1
    the
      negotiation, preparation, execution and registration of the Security
      Documents (whether or not any of the Security Documents are actually
      executed or registered and whether or not all or any part of the Loan is
      advanced);




17.2.2
    any
      amendments, addenda or supplements to any of the Security Documents
      (whether or not completed);




17.2.3
    any
      other documents which may at any time be required by any Bank or by the
      Agent to give effect to any of the Security Documents or which any Bank or
      the Agent is entitled to call for or obtain pursuant to any of the
      Security Documents (including, without limitation, all premiums and other
      sums from time to time payable by the Agent in relation to the Mortgagees'
      Insurances); and





56




17.2.4
    the
      exercise of the rights, powers, discretions and remedies of the Banks
      and/or the Agent under or pursuant to the Security
    Documents.




17.3
    **Events
      of Default**The
      Borrowers shall indemnify the Banks and the Agent from time to time on
      demand against all losses and costs incurred or sustained by any Bank or
      by the Agent as a consequence of any Event of Default, including (without
      limitation) any Break Costs.




17.4
    **Funding
      costs**The Borrowers shall indemnify the Banks and the Agent from time to time on
      demand against all losses and costs incurred or sustained by any Bank or
      by the Agent if, for any reason, any Drawing is not advanced to the
      Borrowers after the relevant Drawdown Notice has been given to the Agent,
      or is advanced on a date other than that requested in the Drawdown Notice
      (unless, in either case, as a result of any default by the Agent or by any
      of the Banks) including (without limitation) any Break
    Costs.




17.5
    **Protection
      and enforcement**The
      Borrowers shall indemnify the Banks and the Agent from time to time on
      demand against all losses, costs and liabilities which any Bank or the
      Agent may from time to time sustain, incur or become liable for in or
      about the protection, maintenance or enforcement of the rights conferred
      on the Banks and/or the Agent by the Security Documents or in or about the
      exercise or purported exercise by the Banks and/or the Agent of any of the
      rights, powers, discretions or remedies vested in them under or arising
      out of the Security Documents, including (without limitation) any losses,
      costs and liabilities which any Bank or the Agent may from time to time
      sustain, incur or become liable for by reason of the Banks or the Agent
      being mortgagees of any Vessel and/or a lender to the Borrowers, or by
      reason of any Bank or the Agent being deemed by any court or authority to
      be an operator or controller, or in any way concerned in the operation or
      control, of any Vessel.




17.6
    **Liabilities
      of Banks and Agent**The
      Borrowers will from time to time reimburse the Banks and the Agent on
      demand for all sums which any Bank or the Agent may pay or become actually
      or contingently liable for on account of any Borrower or in connection
      with any Vessel (whether alone or jointly or jointly and severally with
      any other person) including (without limitation) all sums which any Bank
      or the Agent may pay or guarantees which any Bank or the Agent may give in
      respect of the Insurances, any expenses incurred by any Bank or by the
      Agent in connection with the maintenance or repair of any Vessel or in
      discharging any lien, bond or other claim relating in any way to any
      Vessel, and any sums which any Bank or the Agent may pay or guarantees
      which they may give to procure the release of any Vessel from arrest or
      detention.





57




17.7
    **Taxes**The
      Borrowers shall pay all Taxes to which all or any part of the Indebtedness
      or any of the Security Documents may be at any time subject and shall
      indemnify the Agent and the Banks on demand against all liabilities,
      costs, claims and expenses resulting from any omission to pay or delay in
      paying any such Taxes.




**18**
    **Miscellaneous**




18.1
    **Waivers**No
      failure or delay on the part of the Agent or of a Bank in exercising any
      right, power, discretion or remedy under or pursuant to any of the
      Security Documents, nor any actual or alleged course of dealing between
      the Agent or any Bank and any of the Borrowers, shall operate as a waiver
      of, or acquiescence in, any default on the part of any Security Party,
      unless expressly agreed to do so in writing by the Agent, nor shall any
      single or partial exercise by the Agent or a Bank of any right, power,
      discretion or remedy preclude any other or further exercise of that right,
      power, discretion or remedy, or the exercise by the Agent or a Bank of any
      other right, power, discretion or remedy.




18.2
    **No
      oral variations**No
      variation or amendment of any of the Security Documents shall be valid
      unless in writing and signed on behalf of the Banks and the
      Agent.




18.3
    **Severability**If
      at any time any provision of any of the Security Documents is invalid,
      illegal or unenforceable in any respect that provision shall be severed
      from the remainder and the validity, legality and enforceability of the
      remaining provisions shall not be affected or impaired in any
      way.




18.4
    **Successors
      etc.**The
      Security Documents shall be binding on the Security Parties and on their
      successors and permitted transferees and assignees, and shall inure to the
      benefit of the Bank and the Agent and their respective successors,
      transferees and assignees. None of the Borrowers may assign nor transfer
      any of its rights under or pursuant to any of the Security Documents
      without the prior written consent of the
Agent.





58




18.5
    **Further
      assurance**If
      any provision of the Security Documents shall be invalid or unenforceable
      in whole or in part by reason of any present or future law or any decision
      of any court, or if the documents at any time held by the Banks or by the
      Agent on their behalf are considered by the Banks for any reason
      insufficient to carry out the terms of this Agreement, then from time to
      time the Borrowers will promptly, on demand by the Agent, execute or
      procure the execution of such further documents as in the opinion of the
      Banks are necessary to provide adequate security for the repayment of the
      Indebtedness.




18.6
    **Other
      arrangements**The
      Banks and the Agent may, without prejudice to their rights under or
      pursuant to the Security Documents, at any time and from time to time, on
      such terms and conditions as they may in their discretion determine, and
      without notice to any Borrower, grant time or other indulgence to, or
      compound with, any other person liable (actually or contingently) to the
      Banks and/or the Agent in respect of all or any part of the Indebtedness,
      and may release or renew negotiable instruments and take and release
      securities and hold funds on realisation or suspense account without
      affecting the liabilities of the Borrowers or the rights of the Banks and
      the Agent under or pursuant to the Security
Documents.




18.7
    **Advisers**The
      Borrowers irrevocably authorise the Agent, at any time and from time to
      time during the Facility Period, to consult insurance advisers on any
      matters relating to the Insurances, including, without limitation, the
      collection of insurance claims, and from time to time to consult or retain
      advisers or consultants to monitor or advise on any other claims relating
      to the Vessels. The Borrowers will provide such advisers and consultants
      with all information and documents which they may from time to time
      require and will reimburse the Agent on demand for all costs and expenses
      incurred by the Agent in connection with the consultation or retention of
      such advisers or consultants.




18.8
    **Delegation**The
      Banks and the Agent may at any time and from time to time delegate to any
      person any of their rights, powers, discretions and remedies pursuant to
      the Security Documents on such terms as they may consider appropriate
      (including the power to sub-delegate).




18.9
    **Rights
      etc. cumulative**Every
      right, power, discretion and remedy conferred on the Banks and/or the
      Agent under or pursuant to the Security Documents shall be cumulative and
      in addition to every other right, power, discretion or remedy to which
      they may at any time be entitled by law or in equity. The Banks and the
      Agent may exercise each of their rights, powers, discretions and remedies
      as often and in such order as they deem appropriate. The exercise or the
      beginning of the exercise of any right, power, discretion or remedy shall
      not be interpreted as a waiver of the right to exercise that or any other
      right, power, discretion or remedy either simultaneously or
      subsequently.





59




18.10
    **No
      enquiry**The
      Banks and the Agent shall not be concerned to enquire into the powers of
      the Security Parties or of any person purporting to act on behalf of any
      of the Security Parties, even if any of the Security Parties or any such
      person shall have acted in excess of their powers or if their actions
      shall have been irregular, defective or informal, whether or not any Bank
      or the Agent had notice thereof.




18.11
    **Continuing
      security**The
      security constituted by the Security Documents shall be continuing and
      shall not be satisfied by any intermediate payment or satisfaction until
      the Indebtedness shall have been repaid in full and neither the Banks nor
      the Agent shall be under any further actual or contingent liability to any
      third party in relation to the Vessels, the Insurances, Earnings or
      Requisition Compensation or any other matter referred to in the Security
      Documents.




18.12
    **Security
      cumulative**The
      security constituted by the Security Documents shall be in addition to any
      other security now or in the future held by the Banks or by the Agent for
      or in respect of all or any part of the Indebtedness, and shall not merge
      with or prejudice or be prejudiced by any such security or any other
      contractual or legal rights of the Banks or the Agent, nor affected by any
      irregularity, defect or informality, or by any release, exchange or
      variation of any such security. Section 93 of the Law of Property Act 1925
      and all provisions which the Agent considers analogous thereto under the
      law of any other relevant jurisdiction shall not apply to the security
      constituted by the Security Documents.




18.13
    **Re-instatement**If
      the Banks or the Agent take any steps to exercise any of their rights,
      powers, remedies or discretions pursuant to the Security Documents and the
      result shall be adverse to the Banks and/or the Agent, the Borrowers, the
      Banks and the Agent shall be restored to their former positions as if no
      such steps had been taken.





60




18.14
    **No
      liability**Neither
      the Banks nor the Agent nor any agent or employee of any Bank and/or the
      Agent, nor any receiver and/or manager appointed by the Agent, shall be
      liable for any losses which may be incurred in or about the exercise of
      any of the rights, powers, discretions or remedies of the Banks and/or the
      Agent under or pursuant to the Security Documents nor liable as mortgagee
      in possession for any loss on realisation or for any neglect or default of
      any nature for which a mortgagee in possession might otherwise be
      liable.




18.15
    **Rescission
      of payments etc.**Any
      discharge, release or reassignment by the Banks and/or the Agent of any of
      the security constituted by, or any of the obligations of any Security
      Party contained in, any of the Security Documents shall be (and be deemed
      always to have been) void if any act (including, without limitation, any
      payment) as a result of which such discharge, release or reassignment was
      given or made is subsequently wholly or partially rescinded or avoided by
      operation of any law.




18.16
    **Subsequent
      Encumbrances**If
      the Agent receives notice of any subsequent Encumbrance affecting any
      Vessel or all or any part of the Insurances, Earnings or Requisition
      Compensation or the Accounts, the Agent may open a new account in its
      books for the Borrowers. If the Agent does not open a new account, then
      (unless the Agent gives written notice to the contrary to the Borrowers)
      as from the time of receipt by the Agent of notice of such subsequent
      Encumbrance, all payments made to the Agent shall be treated as having
      been credited to a new account of the Borrowers and not as having been
      applied in reduction of the Indebtedness.




18.17
    **Releases**If
      any Bank or the Agent shall at any time release any party from all or any
      part of any of the Security Documents, the liability of any other party to
      the Security Documents shall not be varied or
  diminished.




18.18
    **Discretions**Unless
      otherwise expressly indicated, where any Bank or the Agent is stated in
      the Security Documents to have a discretion and/or where the opinion of
      any Bank or the Agent is referred to and/or where the consent, agreement
      or approval of any Bank or the Agent is required for any course of action,
      or where anything is required to be acceptable to any Bank or to the
      Agent, the Banks and the Agent shall have a sole, absolute and unfettered
      discretion and/or may give or withhold their consent, agreement or
      approval at their sole, absolute and unfettered
  discretion.





61




18.19
    **Certificates**Any
      certificate or statement signed by an authorised signatory of the Agent
      purporting to show the amount of the Indebtedness (or any part of the
      Indebtedness) or any other amount referred to in any of the Security
      Documents shall, save for manifest error or on any question of law, be
      conclusive evidence as against the Borrowers of that amount.




18.20
    **Survival
      of representations and warranties**The
      representations and warranties on the part of the Borrowers contained in
      this Agreement shall survive the execution of this Agreement and the
      advance of the Loan.




18.21
    **Counterparts**This
      Agreement may be executed in any number of counterparts each of which
      shall be original but which shall together constitute the same
      instrument.




18.22
    **Contracts
      (Rights of Third Parties) Act 1999**No
      term of this Agreement is enforceable by a person who is not a party to
      it.




**19**
    **Law and Jurisdiction**




19.1
    **Governing
      law**This
      Agreement shall in all respects be governed by and interpreted in
      accordance with English law.




19.2
    **Jurisdiction**For
      the exclusive benefit of the Banks and the Agent, the parties to this
      Agreement irrevocably agree that the courts of England are to have
      jurisdiction to settle any disputes which may arise out of or in
      connection with this Agreement and that any Proceedings may be brought in
      those courts.




19.3
    **Alternative
      jurisdictions**Nothing
      contained in this Clause shall limit the right of the Banks or the Agent
      to commence any Proceedings against any of the Borrowers in any other
      court of competent jurisdiction nor shall the commencement of any
      Proceedings against any of the Borrowers in one or more jurisdictions
      preclude the commencement of any Proceedings in any other jurisdiction,
      whether concurrently or not.




19.4
    **Waiver
      of objections**Each
      of the Borrowers irrevocably waives any objection which it may now or in
      the future have to the laying of the venue of any Proceedings in any court
      referred to in this Clause, and any claim that those Proceedings have been
      brought in an inconvenient or inappropriate forum, and irrevocably agrees
      that a judgment in any Proceedings commenced in any such court shall be
      conclusive and binding on it and may be enforced in the courts of any
      other jurisdiction.





62




19.5
    **Service
      of process**Without
      prejudice to the right of the Agent and the Banks to use any other method
      of service permitted by law, each of the Borrowers irrevocably agrees that
      any writ, notice, judgment or other legal process shall be sufficiently
      served on it if addressed to it and left at or sent by post to the Address
      for Service, and in that event shall be conclusively deemed to have been
      served at the time of leaving or, if posted, at 9.00 a.m. on the Business
      Day after posting by prepaid first class
post.




**IN
WITNESS** of which
the parties to this Agreement have executed this Agreement the day and year
first before written.





63




**SCHEDULE
1**
  **The
Borrowers and the Vessels**
 **Name
      of Borrower**
    **Country
      of Incorporation**
    **Registered
      Office**
    **Name of
      Vessel**
    **Flag
      of Vessel**
    **Type
      of Vessel**
    **Charterer**
    **Period
      + (Option)**
    **Rate**
    **Class**
    **Index
      Amount**Urbana
      Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Maersk
      Barcelona"
    Bahamas
    Container
    AP
      Moller
    Till
      22/09/05 + (2*1yr)
    8350+(7500)
    NS
      (container carriers)
      
      MNS
    6.6%Gulfport
      Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Ankara"
    Bahamas
    Container
    AP
      Moller
    Till
      22/09/05 + (2*1yr)
    8350+(7500)
    +100A1
      container ship + LMC UMS
    6.6%Kokomo
      Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Maersk
      Belawan"
    Bahamas
    Container
    AP
      Moller
    Till
      15/09/05 + (2*1yr)
    8000+(7500)
    +100A1
      container ship + LMC UMS
    13.2%Kaplan
      Shipping Co. Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Maersk
      Brisbane"
    Bahamas
    Container
    AP
      Moller
    Till
      06/10/05 + (2*1yr)
    8350+(7500)
    +100A1
      container ship + LMC UMS
    6.6%MC
      Pelerin Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Coniston"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Statoil
    Till
      04/07/05 + (1yr)
    160,000+(200,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
      MNS
    6%MC
      Heron Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Auteuil"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Statoil
    Till
      01/07/05 + (1yr)
    150,000+(170,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
      MNS
    8%MC
      Cormorant Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Deauville"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Geogas
    Till
      07/02/05 + (1yr)
    127,500+(160,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
      MNS
    8%MC
      Tercel Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Longchamp"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Statoil
    Till
      14/06/05 + (1yr)
    130,000+(160,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
    6%
  64
  **Name
      of Borrower**
    **Country
      of Incorporation**
    **Registered Office**
    **Name of
      Vessel**
    **Flag
      of Vessel**
    **Type
      of Vessel**
    **Charterer**
    **Period
      + (Option)**
    **Rate**
      ****
    **Class**
    **Index
      Amount**MNSSphinx
      Limited
    St.
      Vincent and the Grenadines
    PO
      Box 613, Kingstown, St Vincent and the Grenadines
    "Malvern"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Statoil
    Till
      12/12/04 + (1yr)
    135,000+(150,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
      MNS
    6%MC
      Egret Shipping Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "Cheltenham"
    Bahamas
    Liquidated
      Petroleum Gas Carrier
    Statoil
    Till
      04/12/04 + (1yr)
    135,000+(150,000)
    NS
      (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2and
      Minimum Temperature 0OC
      Type 2PG)
      MNS
    6%MC
      Chantilly Limited
    Bahamas
    Mareva
      House, 4 George Street, Nassau, Bahamas
    "La
      Forge"
    Bahamas
    Very
      Large Gas Carrier
    Geogas
    Till
      28/09/06
    615,000
    HULL
      MACH
      LIQUEFIED
      GAS CARRIER
      UNRESTRICTED
      NAVIGATION
      AUT
      UMS
    27%
 65
 ******
**SCHEDULE
2**

**The
Banks and the Commitments******

**The
      Banks**
    **The
      Commitments****(in
      Dollars)**Fortis
      Bank (Nederland) N.V.
    45,000,000Coolsingel
      933012
      AE RotterdamThe
      NetherlandsFax:
      +31 10 401 5323Attn:
      Global Shipping Group**


66





**SCHEDULE
3**




**General
Terms and Conditions**












67


**SIGNED**by
    )duly
      authorised for and on behalf
    )of**URBANA
      SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**GULFPORT
      SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**KOKOMO
      SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**KAPLAN
      SHIPPING CO. LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      PELERIN SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      HERON SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      CORMORANT SHIPPING**
    )**LIMITED**
    )
  68
 
 **SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      TERCEL SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**SPHINX
      LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      EGRET SHIPPING LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**MC
      CHANTILLY LIMITED**
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**FORTIS
      BANK (NEDERLAND) N.V.**
    )(as
      a Bank)
    )**SIGNED**by
    )duly
      authorised for and on behalf
    )of**FORTIS
      BANK (NEDERLAND) N.V.**
    )(as
      Agent)
    )


69





**APPENDIX A**




To:
    **Fortis
      Bank (Nederland) N.V.**




From:
    **Urbana Shipping
Limited**


**Gulfport Shipping
Limited**


**Kokomo Shipping
Limited**


**Kaplan
      Shipping Co. Limited**


**MC Pelerin Shipping
Limited**


**MC
      Heron Shipping Limited**


**MC Cormorant Shipping
Ltd.**
 **MC
      Tercel Shipping Limited**
 **Sphinx
      Limited**
 **MC
      Egret Shipping Limited**
 **MC Chantilly
Limited**







[Date]





Dear
Sirs,




**Drawdown
Notice**




We refer
to the Loan Agreement dated  ______________2004 made between, amongst
others, ourselves and yourselves (" **the
Agreement** ").




Words and
phrases defined in the Agreement have the same meaning when used in this
Drawdown Notice.




Pursuant
to Clause 2.3 of the Agreement, we irrevocably request that you advance a
Drawing of [Tranche A] [Tranche B] to us on _______ 2004, which is a
Business Day, by paying the amount of the Drawing to [specify account
details].




We
warrant that the representations and warranties contained in Clause 4 of the
Agreement are true and correct at the date of this Drawdown Notice and will be
true and correct on
             
200 ; that no Event of Default nor Potential Event of Default has occurred and
is continuing, and that no Event of Default or Potential Event of Default will
result from the advance of the Drawing requested in this Drawdown
Notice.




[We
select the period of [       ] months as the
first Interest Period].




Yours
faithfully








.......................


For and
on behalf of


**Urbana
Shipping Limited**


**Gulfport
Shipping Limited**


**Kokomo
Shipping Limited**


**Kaplan
Shipping Co. Limited**





70


****


**MC
Pelerin Shipping Limited**


**MC
Heron Shipping Limited**


**MC
Cormorant Shipping Ltd.**


**MC
Tercel Shipping Limited**


**Sphinx
Limited**


**MC
Egret Shipping Limited**


**MC
Chantilly Limited**





71





**APPENDIX
B**




**Form
of Transfer Certificate**




To:  **Fortis
Bank (Nederland) N.V.**





**TRANSFER
CERTIFICATE**





This
transfer certificate relates to a secured loan facility agreement (as from time
to time amended, varied, supplemented or novated “ **the
Loan Agreement** ") dated
2004, on the terms and subject to the conditions of which a secured loan
facility of up to $45,000,000 was made available to Urbana Shipping Limited and
others, as joint and several borrowers, by a syndicate of banks on whose behalf
you act as agent and security trustee.





1
    Terms
      defined in the Loan Agreement shall, unless otherwise expressly indicated,
      have the same meaning when used in this certificate. The terms
      "**Transferor**"
      and "**Transferee**"
      are defined in the schedule to this
certificate.





2
    The
      Transferor:-





2.1
    confirms
      that the details in the Schedule under the heading "**Transferor's
      Commitment**"
      accurately summarise its Commitment; and





2.2
    requests
      the Transferee to accept by way of novation the transfer to the Transferee
      of the amount of the Transferor’s Commitment specified in the Schedule by
      counter-signing and delivering this certificate to the Agent at its
      address for Communications specified in the Loan
  Agreement.





3
    The
      Transferee requests the Agent to accept this certificate as being
      delivered to the Agent pursuant to and for the purposes of clause 14.4 of
      the Loan Agreement so as to take effect in accordance with the terms of
      that clause on the Transfer Date specified in the
Schedule.





4
    The
      Agent (on its own behalf and on behalf of each of the Borrowers and each
      of the Banks other than the Transferor) confirms its acceptance of this
      certificate for the purposes of clause 14.4 of the Loan
    Agreement.





5
    The
      Transferee confirms that:-





5.1
    it
      has received a copy of the Loan Agreement together with all other
      information which it has required in connection with this transaction;





5.2
    it
      has not relied and will not in the future rely on the Transferor or any
      other party to the Loan Agreement to check or enquire on its behalf into
      the legality, validity, effectiveness, adequacy, accuracy or completeness
      of any such information; and





5.3
    it
      has not relied and will not in the future rely on the Transferor or any
      other party to the Loan Agreement to keep under review on its behalf the
      financial condition, creditworthiness, condition, affairs, status or
      nature of any of the Security Parties.




72




6
    Execution
      of this certificate by the Transferee constitutes its representation to
      the Transferor and to all other parties to the Loan Agreement that it has
      the power to become a party to the Loan Agreement as a Bank on the terms
      of the Loan Agreement and has taken all steps to authorise execution and
      delivery of this certificate.





7
    The
      Transferee undertakes with the Transferor and each of the other parties to
      the Loan Agreement that it will perform in accordance with their terms all
      those obligations which by the terms of the Loan Agreement will be assumed
      by it after delivery of this certificate to the Agent and the satisfaction
      of any conditions subject to which this certificate is expressed to take
      effect.





8
    The
      Transferor makes no representation or warranty and assumes no
      responsibility with respect to the legality, validity, effectiveness,
      adequacy or enforceability of any of the Security Documents or any
      document relating to any of the Security Documents, and assumes no
      responsibility for the financial condition of any of the Security Parties
      or for the performance and observance by the Security Parties of any of
      their obligations under any of the Security Documents or any document
      relating to any of the Security Documents and any conditions and
      warranties implied by law are expressly
excluded.





9
    The
      Transferee acknowledges that nothing in this certificate or in the Loan
      Agreement shall oblige the Transferor to:-





9.1
    accept
      a re-transfer from the Transferee of the whole or any part of the rights,
      benefits and/or obligations transferred pursuant to this certificate; or





9.2
    support
      any losses directly or indirectly sustained or incurred by the Transferee
      for any reason including, without limitation, the non-performance by any
      party to any of the Security Documents of any obligations under any of the
      Security Documents.





10
    The
      address and fax number of the Transferee for the purposes of clause 9.20
      of the Loan Agreement are set out in the
Schedule.





11
    This
      certificate may be executed in any number of counterparts each of which
      shall be original but which shall together constitute the same
      instrument.





12
    This
      certificate shall be governed by and interpreted in accordance with
      English law.








**THE**  **SCHEDULE**





1
    ***Transferor***:





2
    ***Transferee***:





3
    ***Transfer
      Date***(not earlier that the fifth Business Day after the date of delivery of the
      Transfer Certificate to the Agent):





4
    ***Transferor’s
      Commitment***:





5
    ***Amount
      transferred***:




73




6
    ***Transferee’s
      address and fax number for the purposes of clause 9.20 of the Loan
      Agreement***:








[***name
      of Transferor***]
    [***name
      of Transferee***]By:
    By:Date:
    Date:








**Fortis
Bank (Nederland) N.V.** as
Agent


for and
on behalf of itself, each of the Borrowers and each of the Banks (other than the
Transferor)





By:





Date:





74


****DATED 
11th  October 2004**




**MC
SHIPPING INC**

**-
to -**

**FORTIS
BANK (NEDERLAND) N.V.**



**____________________________________**

**GUARANTEE
AND INDEMNITY**
**____________________________________**



**CONTENTS**
**Page**
1
    Definitions
      and Interpretation
    22
    Representations
      and Warranties
    33
    Guarantee
      and Indemnity
    44
    Preservation
      of Guarantor's Liability
    55
    Preservation
      of Credit Parties' Rights
    66
    Undertakings
    87
    Payments
    108
    Currency
    119
    Set-Off
      and Lien
    1210
    Application
      of Moneys
    1311
    Partial
      invalidity
    1312
    Further
      Assurance
    1413
    Miscellaneous
    1414
    Notices
    1415
    Counterparts
    1516
    Law
      and Jurisdiction
    15**


****


**GUARANTEE
AND INDEMNITY**


**Dated:**
    **11
      October 2004**
  **BY:**
  (1)
    **MC
      SHIPPING INC**, a
      corporation incorporated according to the law of the Republic of Liberia
      whose registered office is at 80 Broad Street, Monrovia, Liberia (the
      "**Guarantor**");
  **IN
FAVOUR OF:**
  (2)
    **FORTIS
      BANK (NEDERLAND) N.V.**acting as agent and security trustee for the Lenders (as hereinafter
      defined) through its office at Coolsingel 93, 3012 AE Rotterdam The
      Netherlands (the "**Security
      Agent**").
  **WHEREAS:-**
  (A)
    Each
      of the banks listed in Schedule 2 to the Loan Agreement (as defined below)
      (collectively the "**Lenders**")
      has agreed to lend to Urbana Shipping Limited ("**Urbana**"),
      Gulfport Shipping Limited ("**Gulfport**"),
      Kokomo Shipping Limited ("**Kokomo**"),
      Kaplan Shipping Co. Limited ("**Kaplan**"),
      MC Pelerin Shipping Limited ("**MC
      Pelerin**"),
      MC Heron Shipping Limited ("**MC
      Heron**"),
      MC Cormorant Shipping Limited ("**MC
      Cormorant**"),
      MC Tercel Shipping Limited ("**MC
      Tercel**"),
      MC Egret Shipping Limited ("**MC
      Egret**"),
      MC Chantilly Limited ("**MC
      Chantilly**"),
      each a Bahamian company and a wholly-owned subsidiary of the Guarantor,
      and Sphinx Limited ("**Sphinx**"),
      a St. Vincent and Grenadines corporation and a wholly-owned subsidiary of
      the Guarantor (Urbana, Gulfport, Kokomo, Kaplan, MC Pelerin, MC Heron, MC
      Cormorant, MC Tercel, MC Egret, MC Chantilly and Sphinx being herein
      collectively called the "**Borrowers**")
      on a joint and several basisits
      participation in a loan not exceeding forty five million Dollars
      (US$45,000,000) (the "**Loan**")
      on the terms and subject to the conditions set out in a loan agreement
      dated
                  
      October 2004 (the "**Loan
      Agreement**")
      made between the Borrowers (as borrowers), the Lenders (as lenders) and
      Fortis Bank (Nederland) N.V. as agent for the Lenders (together the
      "**Credit
      Parties**").
  (B)
    Pursuant
      to the Loan Agreement, and as a condition precedent to the several
      obligations of the Lenders to make the Loan available to the Borrowers,
      the Borrowers have, amongst other things, agreed to procure that the
      Guarantor execute and deliver this Guarantee and Indemnity in favour of
      the Security Agent as security agent for the Credit
    Parties.
  
  **THIS DEED WITNESSES** as
follows:-
  **1**
    **Definitions and Interpretation**
  1.1
    In
      this Guarantee and Indemnity:-
  " **Consolidated
Net Worth** " means,
at any relevant time, Consolidated Shareholder's Equity of the Guarantor and its
subsidiaries, plus shareholder loans (if any) less goodwill and any other
intangible assets.
  " **Consolidated
Shareholder's Equity** " and
" **Consolidated
Net Income** " have
the meanings attributed to them in the Guarantor's audited accounts for the year
ended 31 December 2003.
  " **EBITDA** " means,
at any relevant time, the Consolidated Net Income of the Guarantor and its
subsidiaries plus interest expenses, taxes, depreciation, amortisation and
provision for impairment loss (if any) for the previous period of twelve (12)
months.
  " **Guarantor's
Liabilities** " means
all of the liabilities and obligations of the Guarantor to any of the Credit
Parties under or pursuant to this Guarantee and Indemnity, from time to time,
whether in respect of principal, interest, costs or otherwise and whether
present, future, actual or contingent.
  " **Guarantor's
Security Documents** " means
this Guarantee and Indemnity and any and all documents which may at any time be
executed by the Guarantor as security for the payment of all or any part of the
Guarantor's Liabilities.
  " **Liquid
Assets** " means
the aggregate of cash and cash equivalents, marketable securities and available
but undrawn credit lines not subject to any third party
Encumbrances.
  " **Net
Interest Coverage Ratio** " means,
at any relevant time, the amount of EBITDA for the immediately preceding period
of twelve (12) months divided by the amount of interest expense in the
immediately preceding period of twelve (12) months under financing arrangements.
  2
  1.2
    Unless
      otherwise specified in this Guarantee and Indemnity, or unless the context
      otherwise requires, all words and expressions defined in the Loan
      Agreement shall have the same meaning when used in this Guarantee and
      Indemnity.
  1.3
    In
      this Guarantee and Indemnity:-
 
 1.3.1
    words denoting the plural number include the singular and
      vice versa;
  1.3.2
    words
      denoting persons include corporations, partnerships, associations of
      persons (whether incorporated or not) or governmental or
      quasi-governmental bodies or authorities and vice
versa;
  1.3.3
    references
      to Clauses are references to clauses of this Guarantee and
      Indemnity;
  1.3.4
    references
      to this Guarantee and Indemnity include the recitals to this Guarantee and
      Indemnity;
  1.3.5
    the
      headings and contents page(s) are for the purpose of reference only, have
      no legal or other significance, and shall be ignored in the interpretation
      of this Guarantee and Indemnity;
  1.3.6
    reference
      to any document (including, without limitation, to any of the Security
      Documents) are, unless the context otherwise requires, references to that
      document as amended, supplemented, novated or replaced from time to
      time;
  1.3.7
    references
      to statutes or provisions of statutes are references to those statutes, or
      those provisions, as from time to time amended, replaced or re-enacted;
      and
  1.3.8
    references
      to any Credit Party include its successors, transferees and
      assignees.
  **2**
    **Representations and Warranties**
  The
Guarantor represents and warrants to the Security Agent at the date of this
Guarantee and Indemnity and (by reference to the facts and circumstances then
pertaining) on each day throughout the Facility Period that:-
  3
  2.1
    all
      representations and warranties given by the Borrowers in the Loan
      Agreement in respect of the Guarantor and/or the Guarantor's Security
      Documents are and will remain correct and none of them is or will become
      misleading;
  2.2
    it
      is not necessary to ensure the legality, validity, enforceability or
      admissibility in evidence of any of the Guarantor's Security Documents
      that it be filed, recorded or enrolled with any court or other authority
      in any country or that any stamp, registration or similar tax be paid on
      or in relation to any of the Guarantor's Security Documents;
  2.3
    the
      Guarantor is not in breach of, or default under, any agreement of any sort
      binding on it or on all or any part of its assets;
and
  2.4
    the
      Guarantor is not aware of any material facts or circumstances which have
      not been disclosed to the Security Agent and which might, if disclosed,
      have adversely affected the decision of a person considering whether or
      not to make loan facilities of the nature contemplated by the Loan
      Agreement available to the Borrowers.
  **3**
    **Guarantee and Indemnity**
  The
Guarantor:-
  3.1
    irrevocably
      and unconditionally guarantees the due and punctual payment of each and
      every part of the Indebtedness in accordance with the terms of the
      Security Documents so that, if any of the Indebtedness is not paid when it
      is due and payable, whether on maturity or otherwise, the Guarantor will,
      immediately on demand, make such payment to the Security Agent in the
      manner specified by the Security Agent, together with interest at the
      Default Rate on the amount demanded from the date of demand until the date
      of payment, both before and after judgment;
and
  3.2
    agrees,
      as a separate and independent obligation, that, if any of the Indebtedness
      is not recoverable from the Guarantor under Clause 3.1 for any reason, the
      Guarantor will be liable as a principal debtor by way of indemnity for the
      same amount as that for which the Guarantor would have been liable had
      that Indebtedness been recoverable, and agrees to discharge its liability
      under this Clause 3.2 by making payment to the Security Agent
      immediately on demand together with interest at the Default Rate on the
      amount demanded from the date of demand until the date of payment, both
      before and after judgment.
  4
  **4**
    **Preservation of Guarantor's Liability**
  4.1
    This
      Guarantee and Indemnity is a continuing security for the full amount of
      the Indebtedness from time to time until the expiry of the Facility
      Period.
  4.2
    Any
      Credit Party may without the Guarantor's consent and without notice to the
      Guarantor and without in any way releasing or reducing the Guarantor's
      Liabilities:-
  4.2.1
    amend,
      vary, novate, or replace any of the Security Documents (other than the
      Guarantor's Security Documents); and/or
  4.2.2
    agree
      with the Borrowers to increase or reduce the amount of the Loan, or vary
      the terms and conditions for its repayment or prepayment (including,
      without limitation, the rate and/or method of calculation of interest
      payable on the Loan); and/or
  4.2.3
    allow
      any time or other indulgence to any of the other Security Parties under or
      in connection with any of the Security Documents;
and/or
  4.2.4
    renew,
      vary, release or refrain from enforcing any of the Security Documents
      (other than the Guarantor's Security Documents);
and/or
  4.2.5
    compound
      with any of the other Security Parties;
and/or
  4.2.6
    enter
      into, renew, vary or terminate any other agreement or arrangement with any
      of the other Security Parties; and/or
  4.2.7
    do
      or omit or neglect to do anything which might, but for this provision,
      operate to release or reduce the liability of the Guarantor under this
      Guarantee and Indemnity.
  4.3
    The
      Guarantor's Liabilities shall not be affected
by:-
  4.3.1
    the
      absence of, or any defective, excessive or irregular exercise of, any of
      the powers of any of the other Security Parties; nor
  5
  4.3.2
    any
      security given or payment made to any Credit Party by any of the other
      Security Parties being avoided or reduced under any law (whether English
      or foreign) relating to bankruptcy or insolvency or analogous circumstance
      in force from time to time; nor
  4.3.3
    any
      change in the constitution of the Guarantor or of any of the other
      Security Parties or of any Security Party or the absorption of or
      amalgamation by any Credit Party in or with any other entity or the
      acquisition of all or any part of the assets or undertaking of any Credit
      Party by any other entity; nor
  4.3.4
    the
      liquidation, administration, receivership, bankruptcy or insolvency of the
      Guarantor or any of the other Security Parties;
nor
  4.3.5
    any
      of the Credit Documents (other than this Guarantee and Indemnity) being
      defective, void or unenforceable, or the failure of any other person to
      provide any Credit Party with any security, guarantee or indemnity
      envisaged by the Loan Agreement; nor
  4.3.6
    any
      composition, assignment or arrangement being made by any of the other
      Security Parties with any of its creditors;
nor
  4.3.7
    anything
      which would, but for this provision, have released or reduced the
      liability of the Guarantor to any Credit Party.
  4.4
    Any
      Credit Party may continue the accounts of the Borrowers or open one or
      more new accounts for the Borrowers notwithstanding any demand under this
      Guarantee and Indemnity, and the Guarantor's liability at the date of
      demand shall not be released or affected by any subsequent payment into or
      out of any of the Borrowers' accounts with any Credit
    Party.
  **5**
    **Preservation of Credit
      Parties' Rights**
  5.1
    This
      Guarantee and Indemnity is in addition to any other security, guarantee or
      indemnity now or in the future held by any of the Credit Parties in
      respect of the Indebtedness, whether from the Borrowers or any of them,
      the Guarantor or any other person, and shall not merge with, prejudice or
      be prejudiced by, any such security, guarantee or indemnity or any
      contractual or legal right of any of the Credit
Parties.
  6
  5.2
    Any
      release, settlement, discharge or arrangement relating to the Guarantor's
      Liabilities shall be conditional on no payment, assurance or security
      received by any Credit Party in respect of the Indebtedness being avoided
      or reduced under any law (whether English or foreign) in force from time
      to time relating to bankruptcy, insolvency or any (in the opinion of the
      Security Agent) analogous circumstance, and, after any such avoidance or
      reduction, each Credit Party shall be entitled to exercise all of its
      rights, powers, discretions and remedies under or pursuant to the
      Guarantor's Security Documents and/or any other rights, powers,
      discretions or remedies which it would otherwise have been entitled to
      exercise, as if no release, settlement, discharge or arrangement had taken
      place.
  5.3
    Following
      the full payment of the Indebtedness, the Security Agent shall be entitled
      to retain the Guarantor's Security Documents until the Security Agent is
      satisfied in its discretion that no Credit Party will have to make any
      payment under any law referred to in
Clause 5.2.
  5.4
    Until
      the expiry of the Facility Period the Guarantor shall not:-
  5.4.1
    be
      entitled to participate in any sums received by any Credit Party in
      respect of any of the Indebtedness; nor
  5.4.2
    be
      entitled to participate in any security held by any Credit Party in
      respect of any of the Indebtedness nor stand in the place of, or be
      subrogated for, any Credit Party in respect of any such security;
      nor
  5.4.3
    take
      any step to enforce any claim against any of the other Security Parties
      (or their respective estates or effects), nor claim or exercise any right
      of set off or counterclaim against any of the other Security Parties, nor
      make any claim in the bankruptcy or liquidation of any of the other
      Security Parties, in respect of any sums paid by the Guarantor to any
      Credit Party or in respect of any sum which includes the proceeds of
      realisation of any security held by any Credit Party under or pursuant to
      any of the Guarantor's Security Documents;
nor
  7
  5.4.4
    take
      any steps to enforce any other claim which it may have against any of the
      other Security Parties without the prior written consent of the Security
      Agent, and then only on such terms and subject to such conditions as the
      Security Agent may impose.
  5.5
    Any
      Credit Party may, but shall not be obliged to, resort for its own benefit
      to any other means of payment at any time and in any order it thinks fit
      without releasing or reducing the Guarantor's Liabilities.
  5.6
    Any
      Credit Party may enforce any of the Guarantor's Security Documents either
      before or after resorting to any other means of payment without entitling
      the Guarantor to any benefit from or share in any such other means of
      payment until the expiry of the Facility Period.
  5.7
    The
      Guarantor agrees that it is, and will throughout the Facility Period
      remain, a principal debtor in respect of the Guarantor's
      Liabilities.
  5.8
    No
      failure to exercise, nor any delay in exercising, on the part of any
      Credit Party, any right or remedy under the Guarantor's Security Documents
      shall operate as a waiver, nor shall any single or partial exercise of any
      right or remedy prevent any further or other exercise or the exercise of
      any other right or remedy. The rights and remedies provided in the
      Guarantor's Security Documents are cumulative and not exclusive of any
      rights or remedies provided by law.
  **6**
    **Undertakings**
  6.1
    The
      Guarantor shall pay to the Security Agent on demand on a full indemnity
      basis all costs and expenses incurred by any Credit Party in or about or
      incidental to the exercise by it of its rights under any of the
      Guarantor's Security Documents, together with interest at the Default Rate
      on the amount demanded from the date of demand until the date of payment,
      both before and after judgment.
  6.2
    The
      Guarantor has not taken, and will not take without the prior written
      consent of the Security Agent (and then only on such terms and subject to
      such conditions as the Security Agent may impose), any security from any
      of the other Security Parties in connection with this Guarantee and
      Indemnity, and any security taken by the Guarantor notwithstanding this
      Clause shall be held by the Guarantor in trust for the Credit Parties
      absolutely as a continuing security for the Guarantor's
      Liabilities.
  8
  6.3
    The
      Guarantor agrees to execute, at any time during the Facility Period, in
      favour of the Agent (as agent and security trustee of the Banks) pledges
      over and/or charges of all the Guarantor's right, title and interest in
      and to the shares of each of the Borrowers, and to execute and deliver to
      the Agent all documents which the Agent may require to obtain the full
      benefit of such pledges and/or charges.
  6.4
    The
      Guarantor shall supply to the Security Agent as soon as the same become
      available, but in any event within 180 days after the end of each of its
      financial years, its audited consolidated financial statements for that
      financial year, and with its unaudited semi-annual management accounts
      within 90 days of the end of the half year. Each set of financial
      statements shall be certified by a director of the Guarantor as fairly
      representing its financial condition as at the date at which those
      financial statements were drawn up and shall be prepared in accordance
      with generally accepted accounting principles in the Guarantor's
      jurisdiction of incorporation.
  6.5
    The
      Guarantor shall supply to the Security
Agent:
  6.5.1
    all
      documents dispatched by the Guarantor to its shareholders (or any class of
      them) or its creditors generally at the same time as they are dispatched;
      and
  6.5.2
    promptly
      upon becoming aware of them, details of any litigation, arbitration or
      administrative proceedings which are current, threatened or pending
      against any of the Security Parties and which might, if adversely
      determined, have a material adverse effect on the business or financial
      condition of any of the Security Parties; and
  6.5.3
    promptly,
      such further information regarding the financial condition, business and
      operations of any of the Security Parties as the Security Agent may
      reasonably request.
  9
  6.6
    **Financial
      covenants**the Guarantor covenants with the Agent that it will, throughout the
      Facility Period,:-
  6.6.1
    maintain
      Liquid Assets of a minimum of US$5.0
million;
  6.6.2
    maintain
      a Consolidated Net Worth of at least twenty three million Dollars
      ($23,000,000) (to be tested quarterly by reference to the Guarantor's 10Q
      filings); and
  6.6.3
    maintain
      a Net Interest Coverage Ratio of at least 2.0 (to be tested quarterly, by
      reference to the Guarantor's 10Q filings).
  **7**
    **Payments**
  7.1
    All
      amounts payable by the Guarantor under or pursuant to any of the
      Guarantor's Security Documents shall be paid to such accounts at such
      banks as the Security Agent may from time to time direct to the Guarantor
      in the relevant currency in same day funds for immediate value. Payment
      shall be deemed to have been received on the date on which the Security
      Agent receives authenticated advice of receipt, unless that advice is
      received by the Security Agent on a day other than a Business Day or at a
      time of day (whether on a Business Day or not) when the Security Agent in
      its discretion considers that it is impossible or impracticable to utilise
      the amount received for value that same day, in which event the payment in
      question shall be deemed to have been received on the Business Day next
      following the date of receipt of advice by the Security
    Agent.
  7.2
    All
      payments to be made by the Guarantor pursuant to any of the Guarantor's
      Security Documents shall, subject only to Clause 7.3, be made free and
      clear of and without deduction for or on account of any taxes or other
      deductions, withholdings, restrictions, conditions or counterclaims of any
      nature, and the Guarantor will not claim any equity in respect of any
      payment due from it to any Credit Party under or in relation to any of the
      Guarantor's Security Documents.
  7.3
    If
      at any time any law requires (or is interpreted to require) the Guarantor
      to make any deduction or withholding from any payment, or to change the
      rate or manner in which any required deduction or withholding is made, the
      Guarantor will promptly notify the Security Agent and, simultaneously with
      making that payment, will pay whatever additional amount (after taking
      into account any additional taxes on, or deductions or withholdings from,
      or restrictions or conditions on, that additional amount) is necessary to
      ensure that, after making the deduction or withholding, each relevant
      Credit Party receives a net sum equal to the sum which it would have
      received had no deduction or withholding been made.
  10
  7.4
    If
      at any time the Guarantor is required by law to make any deduction or
      withholding from any payment to be made by it pursuant to any of the
      Guarantor's Security Documents, the Guarantor will pay the amount required
      to be deducted or withheld to the relevant authority within the time
      allowed under the applicable law and will, no later than thirty days after
      making that payment, deliver to the Security Agent an original receipt
      issued by the relevant authority, or other evidence acceptable to the
      Security Agent, evidencing the payment to that authority of all amounts
      required to be deducted or withheld.
  7.5
    Interest
      will be payable both before and after judgment on a daily basis and on the
      basis of a 360 day year and compounded at such intervals as the Security
      Agent shall in its discretion determine.
  7.6
    Any
      certificate or statement signed by an authorised signatory of the Security
      Agent purporting to show the amount of the Indebtedness or of the
      Guarantor's Liabilities (or any part of any of them) or any other amount
      referred to in any of the Credit Documents shall, save for manifest error
      or on any question of law, be conclusive evidence as against the Guarantor
      of that amount.
  **8**
    **Currency**
  8.1
    The
      Guarantor's liability under this Guarantee and Indemnity is to discharge
      the Indebtedness in the currency in which it is expressed to be payable
      (the "**Agreed
      Currency**").
  8.2
    If
      at any time any Credit Party receives (including by way of set off) any
      payment by or on behalf of the Guarantor in a currency other than the
      Agreed Currency, that payment shall take effect as a payment to that
      Credit Party of the amount in the Agreed Currency which that Credit Party
      is able to purchase (after deduction of any relevant costs) with the
      amount of the payment so received in accordance with its usual practice.
  11
  8.3
    To
      the extent that any payment to any Credit Party (whether by the Guarantor
      or any other person and whether under any judgment or court order or
      otherwise) in a currency other than the Agreed Currency shall on actual
      conversion into the Agreed Currency fall short of the relevant liability
      of the Borrowers expressed in the Agreed Currency, then the Guarantor as a
      separate and independent obligation will indemnify that Credit Party
      against the shortfall.
  **9**
    **Set-Off
      and Lien**
  9.1
    The
      Guarantor irrevocably authorises each Credit Party at any time to set off
      without notice any sums then due and payable by the Guarantor to that
      Credit Party under this Guarantee and Indemnity (irrespective of the
      branch or office, currency or place of payment) against any credit balance
      from time to time standing on any account of the Guarantor (whether
      current or otherwise, whether or not subject to notice and whether or not
      that credit balance is then due to the Guarantor) with any branch of to
      that Credit Party in or towards satisfaction of the Guarantor's
      Liabilities and, in the name of that Credit Party or the Guarantor, to do
      all acts (including, without limitation, converting or exchanging any
      currency) which may be required to effect such set-off.
  9.2
    Each
      Credit Party shall have a lien on and be entitled to retain and realise as
      additional security for any sums then due and payable by the Guarantor to
      that Credit Party under this Guarantee and Indemnity any cheques, drafts,
      bills, notes or negotiable or non-negotiable instruments and any stocks,
      shares or marketable or other securities and property of any kind of the
      Guarantor (or of the relevant Credit Party as agent or nominee of the
      Guarantor) from time to time held by that Credit Party, whether for safe
      custody or otherwise.
  9.3
    The
      Guarantor irrevocably authorises each Credit Party at any time to use the
      whole or any part of any credit balance from time to time standing on any
      of the Guarantor's accounts with any branch of that Credit Party to
      purchase the Agreed Currency as if it were a receipt in accordance with
      Clause 8.
  9.4
    Despite
      any term to the contrary in relation to any deposit or credit balance at
      any time on any account of the Guarantor with any Credit Party, no such
      deposit or credit balance shall be repayable or capable of being assigned,
      mortgaged, charged or otherwise disposed of or dealt with by the Guarantor
      until the Guarantor's Liabilities have been discharged in full, but each
      Credit Party may from time to time permit the withdrawal of all or any
      part of any such deposit or balance without affecting the continued
      application of this Clause.
  12
  **10**
    **Application
      of Moneys**
  10.1
    All
      sums which any Credit Party (other than the Security Agent) receives
      (including by way of set off) under or in connection with any of the
      Guarantor's Security Documents, otherwise than by payment from the
      Security Agent, shall be paid to the Security Agent immediately on
      receipt, and that payment to the Security Agent shall be deemed to have
      been made by the Guarantor rather than by the receiving Credit
      Party.
  10.2
    All
      sums which the Security Agent receives under or in connection with any of
      the Guarantor's Security Documents shall, unless otherwise agreed by the
      Security Agent or otherwise provided in the Loan Agreement, be applied by
      the Security Agent in or towards satisfaction, or by way of retention on
      account, of the Guarantor's Liabilities, in such manner as the Security
      Agent may in its discretion determine.
  10.3
    The
      Security Agent may place any money received by it under or in connection
      with any of the Guarantor's Security Documents to the credit of a suspense
      account on such terms and subject to such conditions as the Security Agent
      may in its discretion determine for so long as the Security Agent thinks
      fit without any obligation in the meantime to apply that money in or
      towards discharge of the Indebtedness, and, despite such payment, the
      Security Agent may claim against any of the other Security Parties or
      prove in the bankruptcy, liquidation or insolvency of any of the other
      Security Parties for the whole of the Indebtedness at the date of the
      Security Agent's demand for payment pursuant to this Guarantee and
      Indemnity, together with all interest, commission, charges and expenses
      accruing subsequently.
  **11**
    **Partial
      invalidity**
  If, at
any time, any provision of any of the Guarantor's Security Documents is or
becomes illegal, invalid or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction will in any way be affected or
impaired.
  13
  **12**
    **Further
      Assurance**
  The
Guarantor agrees that from time to time on the written request of the Security
Agent it will immediately execute and deliver to the Security Agent all further
documents which the Security Agent may require for the purpose of perfecting or
protecting the security intended to be created by the Guarantor's Security
Documents.
  **13**
    **Miscellaneous**
  13.1
    All
      the covenants and agreements of the Guarantor in this Guarantee and
      Indemnity shall bind the Guarantor and its successors and permitted
      assignees and shall inure to the benefit of the Credit Parties and their
      respective successors, transferees and
assignees.
  13.2
    The
      representations and warranties on the part of the Guarantor contained in
      this Guarantee and Indemnity shall survive the execution of this Guarantee
      and Indemnity.
  13.3
    No
      variation or amendment of this Guarantee and Indemnity shall be valid
      unless in writing and signed on behalf of the Guarantor and the Security
      Agent.
  13.4
    A
      person who is not a party to this Guarantee and Indemnity has no right
      under the Contracts (Rights of Third Parties) Act 1999 to enforce or to
      enjoy the benefit of any term of this Guarantee and
    Indemnity.
  **14**
    **Notices**
  The
provisions of clause 16 of the Loan Agreement shall apply (mutatis mutandis) to
this Guarantee and Indemnity as if it were set out in full with references to
this Guarantee and Indemnity substituted for references to the Loan Agreement
and with references to the Guarantor substituted for references to the
Borrowers.
  14
  **15**
    **Counterparts**
  This
Guarantee and Indemnity may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a single
copy of this Guarantee and Indemnity.
  **16**
    **Law and Jurisdiction**
  16.1
    This
      Guarantee and Indemnity shall in all respects be governed by and
      interpreted in accordance with English law.
  16.2
    For
      the exclusive benefit of the Security Agent, the Guarantor irrevocably
      agrees that the courts of England are to have jurisdiction to settle any
      disputes which may arise out of or in connection with this Guarantee and
      Indemnity and that any proceedings may be brought in those courts.
  16.3
    Nothing
      contained in this Clause shall limit the right of the Security Agent to
      commence any proceedings against the Guarantor in any other court of
      competent jurisdiction nor shall the commencement of any proceedings
      against the Guarantor in one or more jurisdictions preclude the
      commencement of any proceedings in any other jurisdiction, whether
      concurrently or not.
  16.4
    The
      Guarantor irrevocably waives any objection which it may now or in the
      future have to the laying of the venue of any proceedings in any court
      referred to in this Clause and any claim that those proceedings have been
      brought in an inconvenient or inappropriate forum, and irrevocably agrees
      that a judgment in any proceedings commenced in any such court shall be
      conclusive and binding on it and may be enforced in the courts of any
      other jurisdiction.
  16.5
    Without
      prejudice to any other mode of service allowed under any relevant law, the
      Guarantor:
  16.5.1
    irrevocably
      appoints Marine Legal Services Limited as its agent for service of process
      in relation to any proceedings before the English courts;
    and
  16.5.2
    agrees
      that failure by a process agent to notify the Guarantor of the process
      will not invalidate the proceedings
concerned.
  15
  **IN WITNESS** of which
this Guarantee and Indemnity has been duly executed and delivered as a deed the
day and year first before written.
 
 
 **SIGNED****SEALED**and**DELIVERED**
    )as
      a**DEED**
    )by**MC
      SHIPPING INC.**
    )acting
      by
    ))its
      duly authorised
    ))in
      the presence of:-
    )
  16