Exhibit
99.5  EXECUTION
VERSION  
 CREDIT
FACILITY AGREEMENT 
PROVIDING FOR A
US$57,600,000
SECURED TERM LOAN CREDIT FACILITY  TO BE MADE
AVAILABLE TO
K-SEA OPERATING PARTNERSHIP L.P.,
as Borrower  BY  DNB NOR BANK
ASA,
as Mandated Lead Arranger, Bookrunner, Administrative Agent
and Security Trustee,  and the Banks and Financial Institutions
identified on Schedule 1,
as Lenders 
  June 4, 2008


TABLE OF CONTENTS  PageSECTION 1.
  DEFINED
  TERMS
  11.1
  Specific Definitions
  11.2
  Computation of Time Periods; Other Definitional Provisions
  191.3
  Accounting Terms
  201.4
  Certain Matters Regarding Materiality
  201.5
  Forms of Documents
  20SECTION 2.
  REPRESENTATIONS
  AND WARRANTIES
  202.1
  Representations and Warranties
  20SECTION 3.
  THE
  LOAN
  273.1
  Purpose
  273.2
  Making of the Advances
  273.3
  Drawdown Notice
  283.4
  Effect of Drawdown Notice
  283.5
  Several Obligations
  283.6
  Pro Rata Treatment
  283.7
  Receipt of Funds
  28SECTION 4.
  CONDITIONS
  PRECEDENT
  294.1
  Conditions Precedent to the Initial Advance
  294.2
  Conditions Precedent to the Delivery Advance
  314.3
  Further Conditions Precedent
  334.4
  Breakfunding Costs
  344.5
  Satisfaction after Drawdown
  34SECTION 5.
  REPAYMENT
  AND PREPAYMENT
  345.1
  Repayment
  345.2
  Voluntary Prepayment
  345.3
  Mandatory Prepayment
  345.4
  Interest and Costs; Application of Prepayments; No Reborrowing
  35SECTION 6.
  INTEREST
  AND RATE
  356.1
  Applicable Rate
  356.2
  Default Rate
  366.3
  Interest Periods
  366.4
  Interest Payments
  366.5
  Non-availability of Funds
  36  i


TABLE OF CONTENTS (continued)  PageSECTION 7.
  PAYMENTS
  377.1
  Place of Payments, No Set Off
  377.2
  Tax Credits
  387.3
  Computations; Banking Days
  387.4
  Mitigation Obligations; Replacement of Lenders
  39SECTION 8.
  EVENTS
  OF DEFAULT
  408.1
  Events of Default
  408.2
  Indemnification
  438.3
  Application of Moneys
  44SECTION 9.
  COVENANTS
  449.1
  Affirmative Covenants
  449.2
  Negative Covenants
  509.3
  Financial Covenants
  539.4
  Asset Maintenance
  53SECTION 10.
  ASSIGNMENTS
  5310.1
  Assignments
  5310.2
  Participations
  5410.3
  Security Interest
  5510.4
  Promissory Notes
  5510.5
  Loan Register
  55SECTION 11.
  ILLEGALITY,
  INCREASED COSTS, ETC
  5511.1
  Illegality
  5511.2
  Increased Costs
  5511.3
  Lenders Certificate
  5611.4
  Compensation for Losses
  56SECTION 12.
  CURRENCY
  INDEMNITY
  5712.1
  Currency Conversion
  5712.2
  Change in Exchange Rate
  5712.3
  Additional Debt Due
  5712.4
  Rate of Exchange
  57SECTION 13.
  FEES
  AND EXPENSES
  5713.1
  Fees
  5713.2
  Expenses
  5713.3
  Right of Setoff
  58  ii


TABLE OF CONTENTS (continued)  PageSECTION 14.
  ADMINISTRATIVE
  AGENT AND SECURITY TRUSTEE
  5814.1
  Appointment of Administrative Agent
  5814.2
  Appointment of Security Trustee
  5914.3
  Distribution of Payments
  5914.4
  Holder of Interest in Note
  5914.5
  No Duty to Examine, Etc
  5914.6
  Administrative Agent and Security Trustee as Lender
  5914.7
  Acts of the Agents
  5914.8
  Certain Amendments
  6014.9
  Assumption re Event of Default
  6114.10
  Limitations of Liability
  6114.11
  Indemnification of the Agents
  6114.12
  Consultation with Counsel
  6214.13
  Resignation
  6214.14
  Representations of Lenders
  6214.15
  Notification of Event of Default
  6214.16
  No Agency or Trusteeship if DnB NOR only Lender
  62SECTION 15.
  INDEMNIFICATION
  6315.1
  Indemnification
  63SECTION 16.
  MISCELLANEOUS
  6316.1
  Time of Essence
  6316.2
  Prior Agreements, Merger
  6416.3
  USA Patriot Act Notice; OFAC and Bank Secrecy Act
  6416.4
  Further Assurances
  6416.5
  Remedies Cumulative and Not Exclusive; No Waiver
  6416.6
  Successors and Assigns
  6516.7
  Waiver; Amendment
  6516.8
  Amendments
  6516.9
  Invalidity
  6516.10
  Notices
  6516.11
  Counterparts; Electronic Delivery
  6616.12
  References
  6616.13
  Headings
  66SECTION 17.
  APPLICABLE
  LAW, JURISDICTION AND WAIVERS
  6717.1
  Governing Law
  6717.2
  Submission to Jurisdiction
  6717.3
  WAIVER OF IMMUNITY
  6717.4
  WAIVER OF JURY TRIAL
  67  iii


SCHEDULE1
  
  The Lenders
  and the CommitmentsEXHIBITSA
  
  Form of
  NoteB1
  
  Form of
  Parent GuarantyB2
  
  Form of
  Shipowner GuarantyC
  
  Form of
  MortgageD
  
  Form of
  Earnings AssignmentE1
  
  Form of
  Pre-Delivery Insurances AssignmentE2
  
  Form of
  Insurances AssignmentF
  
  Form of
  Building Contract AssignmentG
  
  Form of
  Assignment and Assumption AgreementH
  
  Form of
  Compliance CertificateI
  
  Form of
  Drawdown NoticeJ
  
  Form of
  Interest NoticeK
  
  Form of
  Officers Certificate  iv


CREDIT FACILITY AGREEMENT  THIS CREDIT
FACILITY AGREEMENT is made as of June 4, 2008, by and among (1) K-SEA
OPERATING PARTNERSHIP L.P., a limited partnership organized and existing under
the laws of the State of Delaware (the Borrower), (2) the banks and
financial institutions listed on Schedule 1, as lenders (together with any bank
or financial institution which becomes a Lender pursuant to Section 10,
the Lenders), and (3) DNB NOR BANK ASA, a banking company organized and
existing under the laws of the Kingdom of Norway (DnB NOR), as mandated lead
arranger (in such capacity, the Mandated Lead Arranger), as bookrunner (in
such capacity, the Bookrunner), as administrative agent for the Lenders (in
such capacity, the Administrative Agent) and as security trustee for the
Lenders (in such capacity, the Security Trustee).  W I T N E S S E T
H  T H A T :  WHEREAS, the
Borrower wishes to partially finance the pre-delivery and post-delivery
acquisition costs of a 185,000 barrel articulated tug and barge unit currently
under construction or to be constructed by Manitowoc Marine Group, LLC and to
be delivered upon completion to the Borrowers wholly-owned direct subsidiary,
K-Sea Transportation LLC, a limited liability company organized and existing
under the laws of the State of Delaware (the Shipowner Guarantor);  WHEREAS, at
the request of the Borrower, DnB NOR has agreed to serve as the Mandated Lead
Arranger, Bookrunner, Administrative Agent and Security Trustee under the terms
of this Agreement and the Lenders have agreed to provide to the Borrower a
secured term loan credit facility in the amount of 80% of the Acquisition Costs
(as defined below) of the 185,000 barrel articulated tug and barge unit,
subject to a maximum aggregate amount of Fifty Seven Million Six Hundred
Thousand United States Dollars ($57,600,000);  WHEREAS, each
of the Shipowner Guarantor and K-Sea Transportation Partners L.P., a limited
partnership organized and existing under the laws of the State of Delaware (the
Parent Guarantor), has agreed to guarantee the obligations of the Borrower
with respect to, inter alia, this Agreement;  NOW,
THEREFORE, in consideration of the premises set forth above, the covenants and
agreements hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of which the parties hereby acknowledge, the parties
hereto agree as set forth below:  SECTION 1.  DEFINED TERMS.  1.1  Specific
Definitions.  In this Agreement the
words and expressions specified below shall, except where the context otherwise
requires, have the meanings attributed to them below:  Acceptable Accounting Firm
  means PricewaterhouseCoopers
  LLP, or such other recognized international accounting firm as shall be  1


approved by the
  Administrative Agent, such approval not to be unreasonably withheld;Acquisition Costs
  means any and all costs,
  expenses and payments made by or on behalf of either of the Borrower or the
  Shipowner Guarantor in connection with the construction and acquisition by
  the Shipowner Guarantor of the Vessel, or arising under or related to the
  Building Contract, such costs, expenses or payments shall include, but not be
  limited to payments made to the Builder under the Building Contract, naval
  engineer or architect fees, outfitting of the Vessel or any related parts or
  spares in connection therewith, any owner supplied equipment, the costs of
  transporting and delivering the Vessel to the Charterer and capitalized
  interest costs;Administrative Agent
  shall have the meaning
  ascribed thereto in the preamble;Advance(s)
  means any amount advanced to
  the Borrower with respect to the Facility or (as the context may require) the
  aggregate amount of all such Advances for the time being outstanding;Affiliate
  means with respect to any
  Person, any other Person directly or indirectly controlled by or under common
  control with such Person. For the purposes of this definition, control
  (including, with correlative meanings, the terms controlled by and under
  common control with) as applied to any Person means the possession directly
  or indirectly of the power to direct or cause the direction of the management
  and policies of that Person whether through ownership of voting securities or
  by contract or otherwise;Affiliate Vessel
  means any vessel (other than
  the Vessels) owned by the Parent Guarantor or a Subsidiary thereof;Agreement
  means this Credit Facility
  Agreement, as the same shall be amended, modified or supplemented from time
  to time;Annex VI
  means Regulations for the
  Prevention of Air Pollution from Ships to the International Convention for
  the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997);Applicable Margin
  means that rate per annum to
  be determined from time to time according to the Borrowers Total Debt to
  EBITDA  2


Ratio, as follows:  Total Debt to EBITDA Ratio
  
  Applicable Margin< 2.00
  
  1.05% per
  annum= > 2.00
  and < 2.50
  
  1.20% per
  annum= > 2.50
  and < 3.00
  
  1.45% per
  annum= > 3.00
  
  1.85% per
  annum  such determination to be made
  in accordance with Section 6.1; provided, however, that
  the Applicable Margin shall not be less than 1.85% for the 12 months
  following the execution of this Agreement;Applicable Rate
  means any rate of interest
  applicable to the Facility from time to time pursuant to Section 6.1;Approved Ship Broker
  means Marcon
  International, Inc. or other ship brokers selected by the Borrower and
  approved by the Administrative Agent and the Majority Lenders in their
  reasonable discretion;Assignment and Assumption
  Agreement(s)
  means the Assignment and
  Assumption Agreement(s) executed pursuant to Section 10
  substantially in the form set out in Exhibit G;Assignment Notices
  means:
  
  (a) the notice with
  respect to the Building Contract Assignment substantially in the form set out
  in Exhibit 1 thereto;
  
  (b) the notices with
  respect to the Earnings Assignment substantially in the form set out in
  Exhibit 1 thereto;
  
  (c) the notices with
  respect to the Pre-Delivery Insurances Assignment substantially in the form
  set out in Exhibit 3 thereto; and
  
  (d) the notices with
  respect to the Insurances Assignment substantially in the form set out in
  Exhibit 3 theretoAssignments
  means the Building Contract
  Assignment, the Earnings Assignment, the Pre-Delivery Insurances Assignment
  and the Insurances Assignment;Banking Day(s)
  means day(s) on which
  banks are open for the transaction  3


of business in New York, New
  York;Barge
  means that certain double
  skin oil tank barge vessel under construction by the Builder and designated
  as Hull No.770 and, upon delivery, to be registered in the name of the
  Shipowner Guarantor under U.S. flag;Bookrunner
  shall have the meaning
  ascribed thereto in the preamble;Borrower
  shall have the meaning
  ascribed thereto in the preamble;Building Contract
  Assignment
  means the assignment in
  respect of the Building Contract to be executed by the Shipowner Guarantor in
  favor of the Security Trustee pursuant to Section 4.1(c) substantially
  in the form set out in Exhibit F;Building Contract
  means that certain
  shipbuilding agreement for the construction of the Vessels dated as of
  October 30, 2007 by and between the Builder and the Shipowner Guarantor;Builder
  means Manitowoc Marine Group,
  LLC, a limited liability company organized and existing under the laws of the
  State of Nevada;Capital Expenditures
  means any expenditure or
  liability that is properly charged to a capital account or otherwise
  capitalized on Borrowers consolidated balance sheet in accordance with GAAP;Capital Lease Obligations
  means, with respect to any
  Person, the obligations of such Person to pay rent or other amounts under any
  lease of (or other arrangement conveying the right to use) real or personal
  property, or a combination thereof, which obligations are required to be
  classified and accounted for as capital leases on a balance sheet of such
  Person under GAAP, and the amount of such obligations shall be the
  capitalized amount thereof determined in accordance with GAAP;Capital Stock
  means, as to any Person, all
  shares, interests, partnership interests, limited liability company
  membership interests, participations, rights in or other equivalents (however
  designated) of such Persons equity (however designated) and any rights,
  warrants or options exchangeable for or convertible into such shares,
  interests, participations, rights or other equity;Change of Control
  means: (a) the
  acquisition of ownership, directly or indirectly, beneficially or of record,
  by any Person or  4


group (within the meaning of
  the Exchange Act and the rules of the Securities and Exchange Commission
  thereunder as in effect on the date hereof), of ownership interests
  representing more than 50% of the general partnership interest in the Parent
  Guarantor or more than 50% of the aggregate ordinary voting power represented
  by the issued and outstanding ownership interests of the Borrower; or
  (b) for a period of twelve (12) consecutive calendar months, a majority
  of the board of Borrower or the Parent Guarantor shall no longer be composed
  of individuals (i) who were members of said board on the first day of
  such period, (ii) whose election or nomination to said board was
  approved by individuals referred to in clause (i) above constituting at
  the time of such election or nomination at least a majority of said board, or
  (iii) whose election or nomination to said board was approved by
  individuals referred to in clauses (i) and (ii) above constituting
  at the time of such election or nomination at least a majority of said board;Charter
  means the charter party
  agreement relating to the Vessels to be entered into between the Shipowner
  Guarantor, as owner, and Charterer, as charterer;Charterer
  means Tesoro Corporation, or
  its affiliate Goldstar Maritime Company, each a corporation organized and
  existing under the laws of the State of Delaware;Classification Society
  shall mean the American
  Bureau of Shipping or such other member of the International Association of
  Classification Societies acceptable to the Majority Lenders with which the
  Vessels are entered and which conducts periodic physical surveys and/or
  inspections of the Vessels;Code
  means the United States
  Internal Revenue Code of 1986, as amended from time to time;Collateral
  means, all property or other
  assets, real or personal, tangible or intangible, whether now owned or
  hereafter acquired in which any Creditor has been granted a security interest
  pursuant to a Transaction Document;Commitment(s)
  means in relation to a
  Lender, the portion of the Facility set out opposite its name in
  Schedule 1 or, as the case may be, in any relevant Assignment and
  Assumption Agreement;  5


Compliance Certificate
  means a certificate
  certifying: (a) the compliance by the Borrower with all of its covenants
  contained herein and showing the calculations of those covenants contained in
  Sections 9.3 and 9.4 hereof in reasonable detail; and (b) the Borrowers
  current Total Debt to EBITDA Ratio and the corresponding Applicable Margin;
  delivered by the chief financial officer of the Borrower to the
  Administrative Agent from time to time pursuant to
  Section 9.1(d) in the form set out in Exhibit H, or in such
  other form as the Administrative Agent may agree;Consent and Agreement
  means the consent and
  agreement relating to this Agreement to be executed by the Parent Guarantor
  and the Shipowner Guarantor in the form attached hereto;Constitutional Documents
  means, as to any Person which
  is: (a) a corporation, the certificate or articles of incorporation and
  by-laws of such Person; (b) a limited liability company, the certificate
  of formation and the limited liability company agreement of such Person;
  (c) a partnership, the certificate of partnership and partnership
  agreement of such Person; or (d) any other form of entity or
  organization, the organizational documents of such Person analogous to the
  foregoing;Creditor(s)
  means each of the
  Administrative Agent, the Security Trustee and the Lenders or any one of
  them;Default
  means an event which with the
  giving of notice or lapse of time, or both, would constitute an Event of
  Default;Default Rate
  means a rate per annum equal
  to the sum of (i) the Applicable Rate plus (ii) two percent (2%);Delivery Advance
  means the Advance to be made
  to the Borrower in respect of the delivery of the Vessels by the Builder to
  the Shipowner Guarantor pursuant to the Building Contract;Delivery Date
  means the date on which the
  Vessels are delivered by the Builder to the Shipowner Guarantor pursuant to
  the Building Contract;DOC
  means a document of
  compliance issued to an Operator in accordance with Rule 13 of the ISM
  Code;Dollars and the sign $
  means the legal currency, at
  any relevant time hereunder, of the United States of America and, in relation
  to all payments hereunder, in same day funds settled through the  6


New York Clearing House
  Interbank Payments System (or such other Dollar funds as may be determined by
  the Administrative Agent to be customary for the settlement in New York City
  of banking transactions of the type herein involved);Drawdown Date(s)
  means the dates, each being a
  Banking Day, upon which the Borrower has requested that an Advance be made
  available to the Borrower, and such Advance is made, as provided in
  Section 3;Drawdown Notice
  shall have the meaning
  ascribed thereto in Section 3.4;Earnings Assignment(s)
  means the assignment in
  respect of the earnings of each of the Vessels from any and all sources,
  including, without limitation, the Charter, to be executed by the Shipowner
  Guarantor in favor of the Security Trustee pursuant to Section 4.2(b) substantially
  in the form set out in Exhibit D;EBITDA
  means, with
  respect to any fiscal period of the Parent Guarantor and its consolidated
  Affiliates, including, without limitation, the Borrower, on a consolidated
  basis, the sum of:
  
  (a) 
  the net income (or net loss) of the Borrower (determined in accordance with
  GAAP) for such fiscal period, without giving effect to any extraordinary
  pre-tax gains or losses; plus
  
  (b)  to
  the extent that any of the items referred to in any of clauses
  (i) through (iii) below were deducted in calculating the net income
  referred to in (a) above:
  
  (i)  Interest Expense of Borrower for such fiscal period;
  
  (ii)  federal and state income tax expenses of the Borrower for
  such fiscal period;
  
  (iii)  the amount of all depreciation and amortization for such
  fiscal period; minus
  
  (c)  to
  the extent added in calculating such net income, gains from sales, exchanges
  and other dispositions of assets not in the ordinary course of business.Environmental Affiliate(s)
  means any Person, the
  liability of which for Environmental Claims any Security Party or Subsidiary
  of any Security Party may have assumed by contract or operation of law;  7


Environmental Approval(s)
  shall have the meaning
  ascribed thereto in Section 2.1(q);Environmental Claim(s)
  shall have the meaning
  ascribed thereto in Section 2.1(q);Environmental Law(s)
  shall have the meaning
  ascribed thereto in Section 2.1(q);ERISA
  means the Employee Retirement
  Income Security Act of 1974, as amended from time to time;ERISA Affiliate
  means a trade or business
  (whether or not incorporated) that, together with any Security Party, is
  treated as a single employer under Section 414(b) or (c) of
  the Code or, solely for purposes of Section 302 of ERISA and
  Section 412 of the Code, is treated as a single employer under
  Section 414 of the Code;ERISA Funding Event
  means (i) any failure by
  any Plan to satisfy the minimum funding standards (for purposes of
  Section 412 of the Code or Section 302 of ERISA), whether or not
  waived; (ii) the filing pursuant to Section 412 of the Code or
  Section 303 of ERISA of an application for a waiver of the minimum
  funding standard with respect to any Plan; (iii)  the failure by any
  Security Party or ERISA Affiliate to make any required contribution to a
  Multiemployer Plan that could reasonably be expected to result in a Material
  Adverse Effect; (iv) the receipt by any Security Party or ERISA
  Affiliate from a plan administrator of a determination that any Plan is in
  at risk status (within the meaning of Section 430(i) of the
  Code); (v) the incurrence by any Security Party or ERISA Affiliate of
  any liability with respect to the withdrawal or partial withdrawal from any
  Plan or Multiemployer Plan; or (vi) the receipt by any Security Party or
  ERISA Affiliate from a plan administrator of a determination that a
  Multiemployer Plan is in endangered status within the meaning of
  Section 432 of the Code or Section 305 of ERISA;ERISA Termination Event
  means (i) the imposition
  of any Lien in favor of the PBGC on any asset of any Security Party or any
  ERISA Affiliate thereof; (ii) the receipt by the any Security Party or
  ERISA Affiliate from the PBGC or a plan administrator of any notice relating
  to the PBGCs intention to terminate any Plan or to appoint a trustee to
  administer any Plan under Section 4042 of ERISA; (iii) the receipt
  by the Borrower or any Subsidiary or ERISA Affiliate of any notice that a
  Multiemployer Plan is in critical status within the meaning of
  Section 432 of the Code or Section 305 of ERISA;  8


(iv) the filing of a
  notice of intent to terminate a Plan under Section 4041 of ERISA; or
  (v) the occurrence of any event or condition described in
  Section 4042(a)(1) or 4042(a)(3) of ERISA with respect to any Plan or
  the receipt by any Security Party or ERISA Affiliate of notice from a plan
  actuary or plan administrator of the occurrence of any event or condition
  described in Section 4042(a)(2) or 4042(a)(4) of ERISA with respect to
  any Plan;Event(s) of Default
  means any of the events set
  out in Section 8.1;Exchange Act
  shall mean the Securities and
  Exchange Act of 1934, as amended;Excluded Taxes
  means, with respect to any Creditor or any
  other recipient of any payment to be made by or on account of any obligation
  of the Borrower hereunder, (a) income or franchise taxes imposed on (or
  measured by) its net income by the United States of America, or by the
  jurisdiction under the laws of which such recipient is organized or in which
  its principal office is located or, in the case of any Lender, in which its
  applicable lending office is located, (b) any branch profits taxes imposed
  by the United States of America or any similar tax imposed by any other
  jurisdiction in which such Creditor or such other recipient is located, and
  (c) in the case of a Foreign Lender (other than an assignee pursuant to
  a request by the Borrower under Section 7.4 hereof), any withholding tax
  that is imposed on amounts payable to such Foreign Lender at the time such
  Foreign Lender becomes a party to this Agreement or is attributable to such
  Foreign Lenders failure or inability to comply with Section 7.1 hereof,
  except to the extent that such Foreign Lenders assignor (if any) was
  entitled, at the time of assignment, to receive additional amounts from the
  Borrower with respect to such withholding tax pursuant to Section 7.1
  hereof;Facility
  means the term loan credit
  facility to be made available by the Lenders to the Borrower in multiple
  Advances pursuant to Section 3 in an amount of 80% of the Acquisition
  Costs, subject to a maximum aggregate principal amount of Fifty Seven Million
  Six Hundred Thousand Dollars ($57,600,000), or the balance thereof from time
  to time outstanding;Facility Swap
  means any Interest Rate
  Agreement by and between any Security Party and any Creditor with respect to
  the  9


Facility;Fair Market Value
  means, in respect of each of
  the Vessels, a charter-free appraisal on an as is, willing seller, willing
  buyer basis of the Vessel(s) from an Approved Ship Broker, no such
  appraisal to be dated more than thirty (30) days prior to the date on which
  such appraisal is required pursuant to this Agreement;Fee Letter
  means the letter dated
  June     , 2008 and entered into by the Borrower and
  DnB NOR in respect of the fees referred to therein;Final Payment
  means an amount as may be
  necessary to repay the outstanding aggregate principal amount of the Facility
  in full together with accrued but unpaid interest and any other amounts owing
  by the Borrower to any Creditor pursuant to a Transaction Document;Final Payment Date
  means the date that is 83
  months after the Delivery Date;Fixed Charge Coverage Ratio
  means, at any date of
  determination, the ratio of (a) EBITDA less Maintenance CAPEX divided by
  (b) Fixed Charges, in each case for the four fiscal quarter period
  ending on such date or, if such date is not the last day of a fiscal quarter,
  for the immediately preceding four fiscal quarter period; provided that, for
  any such determination, EBITDA shall be adjusted to include, for the relevant
  four fiscal quarter period, pro forma EBITDA in an amount reasonably
  acceptable to the Administrative Agent respecting any vessel or business
  acquisition for which debt service is incurred and included in Fixed Charges;Fixed Charges
  means the sum, for any period
  for the Parent Guarantor and its consolidated Affiliates, including, without
  limitation, the Borrower and the Parent Guarantor, on a consolidated basis,
  of the following: (a) Interest Expense, plus (b) the current
  portion of Capital Lease Obligations, plus (c) Scheduled Principal
  Payments, plus (d) cash income taxes;Foreign Lender
  means any Lender that is organized under the
  laws of a jurisdiction other than the United States of America, any State
  thereof or the District of Columbia;Foreign Plan
  means an employee benefit
  plan (as defined in Section 3(3) of ERISA) that is excluded from
  coverage  10


under ERISA by
  Section 4(b)(4) thereof and is maintained or contributed to by a
  Security Party or for which a Security Party has any liability;GAAP
  shall have the meaning
  ascribed thereto in Section 1.3;Guarantee
  means, with respect to any
  Person (the guarantor), any obligation, contingent or otherwise, of the
  guarantor guaranteeing or having the economic effect of guaranteeing any
  Indebtedness or other obligation of any other Person (the primary obligor)
  in any manner, whether directly or indirectly, and including any obligation
  of the guarantor, direct or indirect, (a) to purchase or pay (or advance
  or supply funds for the purchase or payment of) such Indebtedness or other
  obligation or to purchase (or to advance or supply funds for the purchase of)
  any security for the payment thereof, (b) to purchase or lease property,
  securities or services for the purpose of assuring the owner of such
  Indebtedness or other obligation of the payment thereof, (c) to maintain
  working capital, equity capital or any other financial statement condition or
  liquidity of the primary obligor so as to enable the primary obligor to pay
  such Indebtedness or other obligation, or (d) as an account party in
  respect of any letter of credit or letter of guaranty issued to support such
  Indebtedness or obligation; provided that the term Guarantee shall not include
  any endorsement for collection or deposit in the ordinary course of business;IAPPC
  means a valid international
  air pollution prevention certificate for a vessel issued under Annex VI;Indebtedness
  means, with respect to any
  Person, without duplication: (a) all obligations of such Person for
  borrowed money or with respect to deposits or advances of any kind;
  (b) all obligations of such Person evidenced by bonds, debentures, notes
  or similar instruments; (c) all obligations of such Person upon which
  interest charges are customarily paid; (d) all obligations of such
  Person under conditional sale or other title retention agreements relating to
  property acquired by such Person; (e) all obligations of such Person in
  respect of the deferred purchase price of property or services (excluding
  current accounts payable incurred in the ordinary course of business);
  (f) all Indebtedness of others secured by (or for which the holder of
  such Indebtedness has an existing right, contingent or otherwise, to be secured
  by) any Lien on property owned  11


or acquired by such Person,
  whether or not the Indebtedness secured thereby has been assumed;
  (g) all Guarantees by such Person of Indebtedness of others,
  (h) all Capital Lease Obligations of such Person; (i) all operating
  lease obligations of such Person; (j) all obligations, contingent or
  otherwise, of such Person as an account party in respect of letters of credit
  and letters of guaranty; and (k) all obligations, contingent or
  otherwise, of such Person in respect of bankers acceptances; provided,
  however, that Indebtedness shall not include (x) Secured Nonrecourse
  Obligations and (y) nonrecourse obligations incurred in connection with
  leveraged lease transactions as determined in accordance with GAAP;Indemnitee
  shall have the meaning
  ascribed thereto in Section 15.1;Initial Advance
  means the first Advance to be
  made under the Facility;Initial Payment Date
  means the date which is 3
  months after the Delivery Date;Insurances Assignment
  means the assignment in
  respect of the insurances of each of the Vessels to be executed by the
  Shipowner Guarantor in favor of the Security Trustee pursuant to
  Section 4.2(b) substantially in the form of Exhibit E2;Interest Expense
  means, for any period, the
  sum, for the Parent Guarantor and its consolidated Affiliates, including,
  without limitation, the Borrower and the Shipowner Guarantor, on a
  consolidated basis, the following: (a) all interest in respect of
  Indebtedness (including the interest component of any payments in respect of
  Capital Lease Obligations) accrued or capitalized during such period (whether
  or not actually paid during such period) plus (b) the net amount payable
  (or minus the net amount receivable) under Interest Rate Agreements relating
  to interest during such period (whether or not actually paid or received
  during such period);Interest Notice
  means a notice from the
  Borrower to the Administrative Agent specifying the duration of any relevant
  Interest Period substantially in the form of Exhibit J;Interest Period(s)
  means period(s) of one
  (1), three (3) or six (6) months as selected by the Borrower or as
  otherwise agreed among the Lenders and the Borrower;Interest Rate Agreement(s)
  means any interest rate
  protection agreement, interest rate  12


future agreement, interest
  rate option agreement, interest rate swap agreement, interest rate cap
  agreement, interest rate collar agreement, interest rate hedge agreement,
  currency swap agreement, freight forward agreement or other similar agreement
  or arrangement designed to protect against fluctuations in interest rates or
  currency exchange rates;ISM Code
  means the International
  Safety Management Code for the Safe Operating of Ships and for Pollution
  Prevention constituted pursuant to Resolution A.741(18) of the International
  Maritime Organization and incorporated into the Safety of Life at Sea
  Convention and includes any amendments or extensions thereto and any
  regulation issued pursuant thereto;ISPS Code
  means the International Ship
  and Port Facility Security Code adopted by the International Maritime
  Organization (as the same may be amended from time to time);ISSC
  means a valid and current
  International Ship Security Certificate issued under the ISPS Code;Lender(s)
  shall have the meaning
  ascribed thereto in the preamble;LIBOR
  means, subject to
  Section 6.5, the rate for deposits of Dollars for a period equivalent to
  the relevant Interest Period at or about 11:00 a.m. (London time) on the
  second London Banking Day before the first day of such period as set by the
  British Bankers Association; provided that if on such date no such
  rate is available from the British Bankers Association for the relevant
  Interest Period, LIBOR for such period shall be the arithmetic mean of the
  rates respectively quoted by three (3) Reference Banks (including,
  without limitation, DnB NOR) to the Administrative Agent as the offered rate
  for deposits of Dollars in an amount approximately equal to the amount in
  relation to which LIBOR is to be determined for a period equivalent to the
  relevant Interest Period to prime banks in the London Interbank Market at or
  about 11:00 a.m. (London time) on the second Banking Day before the
  first day of such period;Lien
  means, with respect to any
  asset, any interest in property securing an obligation owed to, or a claim
  by, any person other than the owner of the property, whether such interest
  shall be based on common law, maritime law, statute,  13


contract or conveyance and
  including, but not limited to, the security interest lien arising from any
  pledge, mortgage, chattel mortgage, charge, encumbrance, conditional sale or
  trust receipt, or from a charter, consignment or bailment for security
  purposes and any tax lien, mechanics lien, materialmans lien, workmans
  lien, repairmans lien, any financing statement or other similar charge,
  encumbrance or security interest;Maintenance CAPEX
  means all Capital
  Expenditures made for the purpose of maintaining (and not increasing) the
  operating capacity of each of the Vessels and each Affiliate Vessel during
  the twelve (12) calendar months immediately preceding any date of
  determination thereof;Majority Lenders
  means, at any time, Lenders
  holding an aggregate of more than 66 2/3% of the total Commitments;Mandated Lead Arranger
  shall have the meaning
  ascribed thereto in the preamble;Material Adverse Effect
  shall mean a material adverse
  effect on (a) the ability of the Borrower to repay the Facility or
  perform any of its obligations under any Transaction Document to which it is
  a party, (b) the ability of any Security Party to perform its
  obligations under any Transaction Document to which it is a party or
  (c) the business, property, assets, liabilities, operations or condition
  (financial or otherwise) of the Security Parties taken as a whole;Material Indebtedness
  means Indebtedness (other
  than the Facility), or outstanding obligations in respect of one or more
  Interest Rate Agreements, of any one or more of the Parent Guarantor, the
  Borrower and its Subsidiaries in an aggregate principal amount exceeding
  $5,000,000; provided that for purposes of determining Material
  Indebtedness, the principal amount of the obligations of the Parent
  Guarantor, the Borrower or any Subsidiary in respect of any Interest Rate
  Agreement at any time shall be the maximum aggregate amount (giving effect to
  any netting agreements) that the Parent Guarantor, the Borrower or such
  Subsidiary would be required to pay if such Interest Rate Agreement were
  terminated at such time;Material Subsidiaries
  means any Subsidiary of the
  Parent Guarantor that has (a) net assets greater than $15,000,000 at the
  end of any fiscal quarter of the Parent Guarantor or (b) net revenue
  greater  14


than $15,000,000 for the most
  recent four consecutive fiscal quarters of the Parent Guarantor, in each case
  as determined starting with the fiscal quarter that ended on
  December 31, 2007;Materials of Environmental
  Concern
  shall have the meaning
  ascribed thereto in Section 2.1(o);Mortgage
  means, with respect to the
  Vessels, the first preferred United States fleet mortgage, to be executed by
  the Shipowner Guarantor in favor of the Security Trustee pursuant to
  Section 4.2(b), substantially in the form set out in Exhibit C;MTSA
  means the Maritime and Transportation Security Act, 2002, as amended,
  inter alia, by Public Law 107-295;Multiemployer Plan
  means, at any time, a
  multiemployer plan as defined in Section 4001(a)(3) of ERISA to
  which any Security Party or ERISA Affiliate has any liability or obligation
  to contribute or has within any of the six preceding plan years had any
  liability or obligation to contribute;Non-Excluded Taxes
  means Taxes other than
  Excluded Taxes;Note
  means the promissory note to
  be executed by the Borrower to the order of the Security Trustee pursuant to
  Section 4.1(c), to evidence the Facility substantially in the form set
  out Exhibit A;Obligations
  means the obligations of any
  Security Party under or in connection with any Transaction Document,
  including but not limited to, the obligations to repay the Facility when due;Operator
  means, in respect of each of
  the Vessels, the Person who is concerned with the operation of the Vessels
  and falls within the definition of Company set out in Rule 1.1.2 of
  the ISM Code;Parent Guarantor
  shall have the meaning
  ascribed thereto in the preamble;Parent Guaranty
  means the guaranty to be
  executed by the Parent Guarantor in respect of the obligations of the
  Borrower under and in connection with this Agreement and the Note in favor of
  the Security Trustee pursuant to Section 4.l(c), substantially in the
  form of Exhibit B1;  15


Payment Dates
  means each of the Initial
  Payment Date, the dates falling at three month intervals thereafter and the
  Final Payment Date, which shall be the last Payment Date;PBGC
  means the Pension Benefit
  Guaranty Corporation or any successor entity thereto;Permitted Acquisition
  means the purchase, holding
  or acquisition of (including pursuant to any merger) any capital stock or
  other securities (including any option, warrant or other right to acquire any
  of the foregoing) of any other Person, or the purchase or acquisition of (in
  one transaction or a series of transactions (including pursuant to any
  merger)) any assets of any other Person constituting a business unit; provided
  that (a) at the time thereof and immediately after giving effect thereto
  no Default shall have occurred and be continuing, and (b) such Person or
  business unit, as the case may be, is in substantially the same business as
  Borrower;Permitted Lien(s)
  means any Lien described
  under Section 9.2(a) hereof;Person
  means: (i) any
  individual, sole proprietorship, corporation, partnership (general or
  limited), limited liability company, business trust, bank, trust company,
  syndicate, foundation, joint venture, association, joint stock company,
  trust, enterprise, or other unincorporated organization, whether or not a legal
  entity; or (ii) any government, intergovernmental body or agency, or any
  department, political subdivision or instrumentality of any government,
  intergovernmental body or agency;Plan
  means any employee benefit
  plan (other than a Multiemployer Plan) subject to the provisions of Title IV
  of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
  respect to which any Security Party or ERISA Affiliate is (or, if such plan
  were terminated, would under Section 4069 of ERISA be deemed to be) an
  employer as defined in Section 3(5) of ERISA;Pre-Delivery Advance
  means any Advance other than
  the Delivery Advance;Pre-Delivery Insurances
  Assignment
  means the assignment in
  respect of the builders risk insurances of each of the Vessels to be
  executed by the Shipowner Guarantor in favor of the Security Trustee pursuant
  to Section 4.1(c) substantially in the form of  16


Exhibit E1;Reference Banks
  means DnB NOR and such other
  commercial banks rated at least AA- or higher as selected by the
  Administrative Agent;Required Percentage
  shall have the meaning set
  forth for such term in Section 9.4;Scheduled Principal
  Payments
  means, with respect to any
  Person as of any date, all scheduled payments of principal on Indebtedness
  paid by such Person during the twelve (12) calendar month period immediately
  preceding such date;Secured Nonrecourse
  Obligations
  means (a) secured
  obligations of Borrower taken on a consolidated basis where recourse of the
  payee of such obligations is expressly limited to an assigned lease or loan
  receivable and the property related thereto, or (b) liabilities of
  Borrower taken on a consolidated basis to any manufacturer of leased
  equipment where such liabilities are payable solely out of revenues derived
  from the leasing or sale of such equipment; excluding, however, nonrecourse
  obligations incurred in connection with leveraged lease transactions as
  determined in accordance with GAAP;Security Document(s)
  means the Parent Guaranty,
  the Shipowner Guaranty, the Mortgage, the Assignments and any other documents
  that may be executed as security for the Facility and the Borrowers
  obligations in connection therewith;Security Party(ies)
  means the Borrower, the
  Parent Guarantor and the Shipowner Guarantor or any of them;Security Trustee
  shall have the meaning
  ascribed thereto in the preamble;Shipowner Guarantor
  shall have the meaning
  ascribed thereto in the preamble;Shipowner Guaranty
  means the guaranty to be
  executed by the Shipowner Guarantor in respect of the obligations of the
  Borrower under and in connection with this Agreement and the Note in favor of
  the Security Trustee pursuant to Section 4.1(c) substantially in
  the form of Exhibit B2;SMC
  means the safety management
  certificate issued in respect of each of the Vessels in accordance with
  Rule 13 of the ISM code;  17


Subordinated Indebtedness
  means all Indebtedness which
  is subordinated to the Obligations by its terms or pursuant to a
  subordination agreement, in each case, reasonably acceptable to the
  Administrative Agent;Subsidiary(ies)
  means, with respect to any
  Person (the Parent) at any date, any other Person the accounts of which
  would be consolidated with those of the Parent in the Parents consolidated
  financial statements if such financial statements were prepared in accordance
  with GAAP as of such date, as well as any other Person (a) of which
  securities or other ownership interests representing more than 50% of the
  equity or more than 50% of the ordinary voting power or, in the case of a
  partnership, more than 50% of the general partnership interests are, as of
  such date, owned, Controlled or held by the Parent, or (b) the financial
  statements of which shall be (or should be) consolidated with the financial
  statements of such Person in accordance with GAAP.Tax Returns
  means all returns, reports,
  information statements and similar documents (including any additional or
  supporting schedules, attachments, exhibits, and other material attached
  thereto and including any amendments thereof) required by law to be filed
  with any taxing authority with respect to the liability of any Security Party
  or any Subsidiary thereof for any Tax which such taxing authority is
  responsible for determining, assessing or collecting;Taxes
  means any present or future
  taxes, levies, duties, charges, fees, deductions or withholdings imposed,
  levied, collected or assessed by any taxing authority;Total Debt
  means, as of any date, all
  Indebtedness of the Parent Guarantor and its consolidated Affiliates,
  including, without limitation, Borrower, on a consolidated basis, of the
  kinds and types (without duplication) described in clauses (a), (b), (c),
  (d), (e), (f), (g), (h), (j) (excluding obligations in respect of
  letters of credit issued as credit support of obligations for borrowed money
  of Borrower or the Parent Guarantor included in the determination of Total
  Debt) and (k) of the definition of Indebtedness.Total Debt to EBITDA Ratio
  means, at any date of
  determination, the ratio of Total Debt divided by EBITDA for the four fiscal
  quarter period ending on such date or, if such date is not the last day of a  18


fiscal quarter, for the
  immediately preceding four fiscal quarter period; provided that, for
  any such determination, EBITDA shall be adjusted (a) to include, for the
  relevant four fiscal quarter period, pro forma EBITDA in an amount reasonably
  acceptable to the Administrative Agent respecting any vessel or business
  acquisition for which debt is incurred and included in Total Debt and
  (b) to exclude, for the relevant four fiscal quarter period, pro forma
  EBITDA in an amount reasonably acceptable to the Administrative Agent
  respecting any vessel or business disposition.Total Loss
  shall have the meaning
  ascribed thereto in the Mortgage;Transaction Document(s)
  means this Agreement, the
  Note, any Facility Swap, the Security Documents or any one of them;Tug
  means that certain 131 x 44
  dual mode ATB tug boat under construction by the Builder and designated as
  Hull No. 820 and, upon delivery, to be registered in the name of the
  Shipowner Guarantor under U.S. flag;Vessel(s)
  means each of the Barge and
  the Tug; andWithdrawal Liability(ies)
  means liability to a
  Multiemployer Plan as a result of a complete or partial withdrawal from such
  Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of
  Title IV of ERISA.  1.2  Computation
of Time Periods; Other Definitional Provisions.  In this Agreement and the other Transaction
Documents, in the computation of periods of time from a specified date to a
later specified date, the word from means from and including and the words to
and until each mean to but excluding; words importing either gender include
the other gender; references to writing include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words including,
includes and include shall be deemed to be followed by the words without
limitation; references to articles, sections (or subdivisions of sections),
exhibits, annexes or schedules are to this Agreement or such other Transaction
Document, as applicable; references to agreements and other contractual
instruments (including this Agreement and the other Transaction Documents)
shall be deemed to include all subsequent amendments, amendments and restatements,
supplements, extensions, replacements and other modifications to such
instruments (without, however, limiting any prohibition on any such amendments,
extensions and other modifications by the terms of this Agreement or any other
Transaction Document); references to any matter that is approved or requires approval
of a party shall mean approval given in the sole and absolute discretion of
such party unless otherwise specified.  19


1.3  Accounting
Terms.  Unless otherwise specified
herein, all accounting terms used in this Agreement and in the other
Transaction Documents shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Administrative Agent or to the Lenders under this Agreement shall be
prepared, in accordance with generally accepted accounting principles for the
United States (GAAP).  1.4  Certain
Matters Regarding Materiality.  To
the extent that any representation, warranty, covenant or other undertaking of
any Security Party in this Agreement is qualified by reference to those which
are not reasonably expected to result in a Material Adverse Effect or
language of similar import, no inference shall be drawn therefrom that any
Creditor has knowledge or approves of any noncompliance by any Security Party
with any governmental rule.  1.5  Forms
of Documents.  Except as otherwise
expressly provided in this Agreement, references to documents or certificates substantially
in the form of Exhibits to another document shall mean that such documents or
certificates are duly completed in the form of the related Exhibits with
substantive changes subject to the provisions of Section 14.8 of this
Agreement, as the case may be, or the correlative provisions of the other
Transaction Documents.  SECTION 2.  REPRESENTATIONS AND WARRANTIES.  2.1  Representations
and Warranties.  In order to induce
the Creditors to enter into this Agreement and to induce the Lenders to make
the Facility available, the Borrower hereby represents and warrants to the
Creditors (which representations and warranties shall survive the execution and
delivery of this Agreement and the Note and the drawdown of the Facility
hereunder) that:  (a)  Due
Organization and Power.  each
Security Party is duly formed and validly existing in good standing under the
laws of its jurisdiction of incorporation or formation and is duly qualified to
do business as a foreign entity in each jurisdiction wherein the nature of the
business transacted thereby makes such qualification necessary, except where
failure to so qualify would not have a Material Adverse Effect, has full power
and authority and, to the best of its knowledge after due investigation, all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now being conducted and to own its properties and has full
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party, and has complied with all
statutory, regulatory and other requirements relative to such business,
property and instruments to which it is a party, or to which its property is
subject, other than those agreements for which non-compliance, either singly or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect;  (b)  Authorization
and Consents.  all necessary action
has been taken to authorize, and all consents and authorities (other than
consents and authorities required from time to time in respect of the operation
of the Tug or the Barge in the ordinary course of business the failure of which
to obtain would not alone or  20


in the aggregate be reasonably
likely to result in a Material Adverse Effect) have been obtained and remain in
full force and effect to permit, each Security Party to enter into and perform
its obligations under the Transaction Documents to which it is a party and, in
the case of the Borrower, to borrow, service and repay the Facility and, as of
the date of this Agreement, no further consents or authorities are necessary
for the service and repayment of the Facility or any part thereof;  (c)  Binding
Obligations.  each of the Transaction
Documents constitute or will, when executed and delivered, constitute the
legal, valid and binding obligations of each Security Party as is a party
thereto enforceable against each such Security Party in accordance with their
respective terms, except to the extent that such enforcement may be limited by
equitable principles, principles of public policy or applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting generally the
enforcement of creditors rights;  (d)  No
Violation.  the execution and
delivery of, and the performance of the provisions of, the Transaction
Documents to which it is to be a party by each Security Party do not contravene
any applicable law or regulation existing at the date hereof the violation of
which is reasonably likely to have a Material Adverse Effect or any contractual
restriction binding on such Security Party or the Constitutional Documents of
such Security Party and the proceeds of the Facility shall be used by the
Borrower exclusively for the financing of the Vessels;  (e)  Filings;
Stamp Taxes.  other than the recording of the Mortgage with the
appropriate authorities for the United States of America and the filing of UCC
Financing Statements in the State of New York and the State of Delaware in
respect of the Assignments, and the payment and filing or recording fees
consequent thereto, it is not necessary for the legality, validity,
enforceability or admissibility into evidence of any Transaction Document that
any of them or any document relating thereto be registered, filed recorded or
enrolled with any court or authority in any relevant jurisdiction or that any
stamp, registration or similar Taxes be paid on or in relation to this
Agreement or any other Transaction Document;  (f)  Approvals;
Consents.  all consents, licenses,
approvals and authorizations currently required, as of the date of this
Agreement or any Drawdown Date, whether by statute or otherwise, in connection
with the entry into and performance by each Security Party, and the validity
and enforceability against each Security Party, of this Agreement and the other
Transaction Documents have been obtained and are in full force and effect other
than consents, licenses, approvals and authorizations required from time to
time in respect of the operation of the Tug or the Barge in the ordinary course
of business the failure of which to obtain would not alone or in the aggregate
be reasonably likely to result in a Material Adverse Effect;  (g)  Litigation.  no action, suit or proceeding is pending or
threatened in writing against any Security Party or any Subsidiary thereof
before any court,  21


board of arbitration or
administrative agency which reasonably could or might result in any Material
Adverse Effect;  (h)  No
Default.  no Security Party or
Subsidiary thereof is in default under any agreement by which it is bound, or
is in default in respect of any financial commitment or obligation, in each
case, which could or might result in any Material Adverse Effect;  (i)  The
Vessels.  upon the date of the making
of the Delivery Advance and at all times thereafter, each of the Vessels shall:  (i)  be
in the sole and absolute ownership of the Shipowner Guarantor and duly
registered in the Shipowner Guarantors name under the United States flag,
unencumbered, save and except for the Mortgage recorded against it and other
Permitted Liens;  (ii)  be
classed in the highest classification and rating for vessels of the same age
and type with the Classification Society without any material outstanding
recommendations;  (iii) 
shall be operationally seaworthy and in every way fit for its intended service;
and  (iv)  be
insured in accordance with the provisions of the Mortgage recorded against it and
the requirements thereof in respect of such insurances shall have been complied
with;  (v)  be
in compliance with all relevant laws, regulations and requirements (including
Environmental Laws), statutory or otherwise, as are applicable to (A) vessels
documented under the United States flag and (B) vessels engaged in a trade
similar to that performed or to be performed by each of the Vessels, except in
each case where the failure to so comply is not reasonably likely to have a
Material Adverse Effect;  (j)  Insurance.  each Security Party and each Subsidiary
thereof has insured its properties and assets against such risks and in such
amounts as are customary for companies engaged in similar businesses; for the
avoidance of doubt no Security Party shall be required to maintain mortgagees
interest insurance in respect of the transactions contemplated by this
Agreement nor shall any Security Party be obligated to make any reimbursement
with respect to such mortgagees interest insurance;  (k)  Financial
Information.  all financial
statements, information and other data furnished by the Borrower or any
Security Party to the Administrative Agent are complete and correct, such
financial statements have been prepared in accordance with GAAP and accurately
and fairly present the financial condition of the parties covered thereby as of
the respective dates thereof and the results of  22


the operations thereof for the
period or respective periods covered by such financial statements, and since
the date of such financial statements, information or data most recently
delivered to the Administrative Agent there has been no Material Adverse Effect
as to the Parent Guarantor and its consolidated Subsidiaries and no such party
has any contingent obligations, liabilities for taxes or other outstanding
financial obligations which are material in the aggregate except as disclosed
in such statements, information and data;  (l)  Tax
Returns.  each Security Party has
filed or caused to be filed all material Tax Returns required by law to have
been filed by it and has paid or caused to be paid all Taxes payable by it
which have become due, except (i) Taxes not yet delinquent, (ii) Taxes
the nonpayment of which could not reasonably be expected to have a Material
Adverse Effect and (iii) Taxes being contested in good faith by
appropriate proceedings and for which adequate reserves have been set aside on
its books;  (m)  ERISA.  (i) provided that none of the funds used
by the Lenders to acquire or maintain their respective interests in the
Facility will constitute plan assets (as described in United States
Department of Labor Regulations Section 2510.3-101, 29 C.F.R. Section 2510.3-101,
as amended and as modified in application by Section 3(42) of ERISA, or
applicable successor regulation) of an employee benefit plan (as defined in Section 3(3) of
ERISA) subject to Part 4 of Title I of ERISA or of a plan (as
defined in Section 4975(e)(1) of the Code) subject to Section 4975
of the Code, the execution and delivery of this Agreement and the consummation
of the transactions hereunder will not involve any prohibited transaction for
purposes of Section 406 of ERISA or Section 4975 of the Code; (ii) there
are no Foreign Plans; (iii) no ERISA Termination Event has occurred; and (iv) no
ERISA Funding Event exists or has occurred;  (n)  Chief
Executive Office.  the chief
executive office of each Security Party is located in East Brunswick, New
Jersey;  (o)  Foreign
Trade Control Regulations.  to the
best of the Borrowers knowledge, neither the use of proceeds hereunder as
contemplated hereby nor any Security Partys conduct of its business will
violate any of the provisions of the Foreign Assets Control Regulations of the
United States of America (Title 31, Code of Federal Regulations,
Chapter V, Part 500, as amended), any of the provisions of the Cuban
Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions
of the Libyan Assets Control Regulations of the United States of America
(Title 31, Code of Federal Regulations, Chapter V, Part 550, as
amended), any of the provisions of the Iranian Transaction Regulations of the
United States of America (Title 31, Code of Federal Regulations, Chapter V, Part 560,
as amended), any of the provisions of the Iraqi Sanctions Regulations
(Title 31, Code of Federal Regulations, Chapter V, Part 575, as
amended), any of the provisions of the Federal Republic of Yugoslavia (Serbia
and Montenegro) and Bosnia Serb-controlled areas of the  23


Republic of Bosnia and
Herzegovina Assets Control Regulations (Title 31, Code of Federal
Regulations, Chapter V, Part 585 as amended) or any of the provisions of
the Regulations of the United States of America Governing Transactions in
Foreign Shipping of Merchandise (Title 31, Code of Federal Regulations,
Chapter V, Part 505, as amended);  (p)  Equity
Ownership.  the Shipowner Guarantor
is a wholly-owned direct Subsidiary of the Borrower; the Parent Guarantor owns
100% of the limited partnership interests in the Borrower and 100% of the
ownership interests in K-Sea OLP GP, LLC which is the sole general partner of
the Borrower; except as may be otherwise disclosed in writing from time to time
by the Borrower to the Administrative Agent, K-Sea General Partner L.P. is the
sole general partner of the Parent Guarantor and K-Sea General Partner GP LLC
is the sole general partner of K-Sea General Partner L.P.;  (q)  Environmental
Matters and Claims.  (a) except
as such will not reasonably be expected to result in a Material Adverse Effect (i) 
each Security Party, each of its Subsidiaries and their Affiliates shall, when
required to operate their business as then being conducted, be in compliance
with all applicable United States federal and state, local, foreign and
international laws, regulations, conventions and agreements relating to
pollution prevention or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water,
navigable waters, waters of  the
contiguous zone, ocean waters and international waters), including, without
limitation, laws, regulations, conventions and agreements relating to (1) emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and by-products (Materials of
Environmental Concern), or (2) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (Environmental Laws); (ii)  each Security Party,
each of its Subsidiaries and their Affiliates shall, when required, have all
permits, licenses, approvals, rulings, variances, exemptions, clearances,
consents or other authorizations required under applicable Environmental Laws (Environmental
Approvals) and shall, when required, be in compliance with all Environmental
Approvals required to operate their business as then being conducted; (iii) as
of the date of this Agreement or any Drawdown Date, none of the Security
Parties, any Subsidiary thereof nor any Affiliate thereof has received any
notice of any claim, action, cause of action, investigation or demand by any
Person, alleging potential liability for, or a requirement to incur, material
investigator costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any
Materials of Environmental Concern at any location, whether or not owned by
such Person, or (2) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law or Environmental Approval  24


(Environmental Claim) (other
than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Security Parties in respect thereof have been paid in full or which are
fully covered by insurance (including permitted deductibles)); and (iv) there
are no existing circumstances that may prevent or interfere with such full
compliance in the future; and (b) except as heretofore disclosed in writing
to the Administrative Agent there is no Environmental Claim pending or
threatened against any Security Party, any Subsidiary thereof or any Affiliate
thereof and there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge or disposal of any Materials of Environmental Concern, that
could form the basis of any Environmental Claim against such Persons the
adverse disposition of which reasonably may be expected to result in a Material
Adverse Effect;  (r)  Compliance
with ISM Code, ISPS Code, MTSA and Annex VI.  each of the Vessels complies and the Operator
complies with the requirements of the ISM Code, the ISPS Code, the MTSA and, to
the extent required under the laws and regulations of the United States and
each other jurisdiction in which a Vessel operates or is expected to operate,
Annex VI including (but not limited to) the maintenance and renewal of valid
certificates pursuant thereto;  (s)  No
Threatened Withdrawal of DOC, ISSC, SMC or IAPPC.  there is no actual or, to the best of the
Borrowers knowledge, threatened withdrawal of the Operators DOC or either of
the Vessels ISSC, SMC or, to the extent required under the laws and
regulations of the United States and each other jurisdiction in which a Vessel
operates or is expected to operate, IAPPC or other certification or
documentation related to the ISM Code, the ISPS Code, the MTSA and, to the
extent required under the laws and regulations of the United States and each
other jurisdiction in which a Vessel operates or is expected to operate, Annex
VI or otherwise required for the operation of such vessels in respect of either
of the Vessels;  (t)  Liens.  there are no Liens of any kind on the Collateral
except for Permitted Liens;  (u)  Use
of Proceeds.  the Borrower requires
the Facility for use in connection with the financing of the Acquisition Costs
by the Borrower and the Shipowner Guarantor and the Borrowers and the
Shipowner Guarantors use of the Facility does not contravene any law, official
requirement or other regulatory measure or procedure implemented to combat money
laundering (as defined in Article 1 of the Directive (91/308/EEC) of the
Council of the European Communities) and comparable United States Federal and
state laws;  (v)  Investment
Company.  no Security Party is
required to be registered as an investment company (as defined in the
Investment Company Act of 1940, as amended)  25


(w)  Margin
Stock.  none of the proceeds of the
Facility shall be used to purchase or carry margin stock within the meanings of
Regulations T, U or X of the Board of Governors of the Federal Reserve System;
no Security Party is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System;  (x)  No
Proceedings to Dissolve.  there are
no proceedings or actions pending or contemplated by any Security Party, or
contemplated by any third party, to dissolve or terminate any Security Party;  (y)  Solvency.  in the case of the Parent Guarantor and its
Subsidiaries collectively, (i) the sum of its assets, at a fair valuation,
does and/or will exceed its liabilities, including, to the extent they are
reportable as such in accordance with GAAP, contingent liabilities, (ii) the
present fair market salable value of its assets is not and/or shall not be less
than the amount that will be required to pay its probable liability on its then
existing debts, including, to the extent they are reportable as such in
accordance with GAAP, contingent liabilities, as they mature, (iii) it
does not and shall not have unreasonably small working capital (including the
availability of borrowing capacity) with which to continue its business and (iv) it
has not incurred, does not intend to incur and does not believe it will incur,
debts beyond its ability to pay such debts as they mature;  (z)  Jurisdiction;
Governing Law.  (i) the Borrowers
irrevocable submission under this Agreement to the jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York, the Borrowers agreement that this Agreement be governed
by New York law, and the Borrowers agreement not to claim any immunity to
which it or its assets may be entitled are legal, valid and binding under the
laws of its jurisdiction of organization and (ii) any judgment obtained in
the courts of the State of New York and the United States District Court for
the Southern District of New York will be recognized and enforceable by the
courts of its jurisdiction of organization, subject to any statutory or other
conditions of such jurisdiction;  (aa)  Compliance with Laws.  each Security Party is and/or shall be in
compliance with all applicable laws except where the failure to comply would
not alone or in the aggregate reasonably be expected to result in a Material
Adverse Effect;  (bb)  Citizenship.  each of the Shipowner Guarantor and the
Borrower is a citizen of the United States within the meaning of 46 U.S.C.
§50501 and the regulations promulgated thereunder for purposes of engaging in
the coastwise trade and in foreign commerce of the United States;  (cc)  No Other Name.  other than as previously disclosed in writing
to the Administrative Agent, the Borrower has not changed its name nor has done  26


business in any name other than
that set forth in the introductory paragraph of this Agreement;  (dd)  Title. 
the Borrower will ensure that the Shipowner Guarantor has and at all
times will defend and continue to have good and marketable title to all of the
Collateral, free and clear of all Liens subject only to Permitted Liens; and,
upon delivery of the Vessels, the Vessels will be documented in the name of the
Shipowner Guarantor with the United States Coast Guard National Vessel
Documentation Center in Falling Waters, West Virginia;  (ee)  Subsidiaries.  the Parent Guarantor legally and beneficially
owns, directly or indirectly, the majority or all of the issued and outstanding
Capital Stock of the Borrower and the Borrower legally and beneficially owns
directly all of the Capital Stock of the Shipowner Guarantor; all such Capital
Stock of the Borrower and the Shipowner Guarantor is free and clear of any
Liens, claims, pledges or other encumbrances whatsoever; and  (ff)  Survival.  all representations, covenants and warranties
made herein and in any certificate or other document delivered pursuant hereto
or in connection herewith shall survive the making of the Facility and the
issuance of the Note.  SECTION 3.  THE LOAN.  3.1  Purpose.  The Lenders shall make the Facility available
to the Borrower for the purpose of partially financing the Acquisition Costs of
the Vessels.  3.2  Making
of the Advances.  Each of the
Lenders, relying upon each of the representations and warranties set out in Section 2,
hereby severally and not jointly agrees with the Borrower that, subject to and
upon the terms of this Agreement, it will, not later than 11:00 A.M. (New
York time) on the Drawdown Date of each Advance (except as provided in Section 3.7),
make its portion of the relevant Advance (in an amount not exceed its
Commitment ratably with the other Lenders according to their respective
Commitments), in Federal or other funds immediately available in New York City,
to the Borrower through the Administrative Agent at its address set forth in Section 16.10
or to such account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders. 
Unless the Administrative Agent determines that any applicable condition
specified in Section 4 has not been satisfied, the Administrative Agent
will make the funds so received from the Lenders available to the Borrower at
the aforesaid address, subject to the receipt of the funds by the
Administrative Agent as provided in the immediately preceding sentence, not
later than 12:00 P.M. (New York City time) on the date of such Advance,
and in any event as soon as practicable after receipt.  It is understood that the Facility will be
made available in multiple Advances after the date hereof according to the payment
schedules in the Building Contract.  The
amount of any Advance shall not exceed 80% of (a) the actual payment due
under the Building Contract (on the basis of invoices received from the Builder
for construction installments) and (b) other Acquisition Costs, which the
Borrower shall evidence to the satisfaction of the Administrative Agent.  No Advance  27


shall be made after the Delivery Advance.  The aggregate amount of all Advances shall
not exceed Fifty Seven Million Six Hundred Thousand Dollars ($57,600,000).  3.3  Drawdown
Notice.  The Borrower shall, at least
three (3) Banking Days before a Drawdown Date, serve a notice (a Drawdown
Notice), substantially in the form of Exhibit I, on the Administrative
Agent which notice shall: (a) be in writing addressed to the
Administrative Agent; (b) be effective on receipt by the Administrative
Agent; (c) specify the amount of the Advance to be drawn; (d) specify
the Banking Day on which such Advance is to be drawn and, subject to the terms
of Section 6.3 hereof, specify the Interest Period; (e) specify the
disbursement instructions; and (f) be irrevocable.  3.4  Effect
of Drawdown Notice.  The Drawdown
Notice shall be deemed to constitute a warranty by the Borrower (a) that
the representations and warranties stated in Section 2 (updated mutatis
mutandis) are true and correct on and as of the date of the Drawdown
Notice and will be true and correct on and as of the Drawdown Date as if made
on such date, and (b) that no Event of Default or Default has occurred and
is continuing.  3.5  Several
Obligations.  The failure of any
Lender to make its pro  rata portion of the Facility on the
Drawdown Date shall not relieve any other Lender of its obligation to make its pro
rata portion of the Facility on the Drawdown Date, and neither the
Administrative Agent, the Security Trustee nor any other Lender shall be
responsible for the failure of any Lender to make its pro rata portion of the Facility.  3.6  Pro
Rata Treatment.  The borrowing from
the Lenders hereunder shall be made from the Lenders, each payment of fees and
expenses under Section 13 shall be made for account of the Lenders, each
payment or prepayment of principal of the Facility by the Borrower shall be
made for account of the Lenders pro  rata in accordance with the
respective unpaid principal amounts of the Facility held by the Lenders; and
each payment of interest on the Facility by the Borrower shall be made for the
account of the Lenders pro  rata in accordance with the amounts of
interest due and payable to the respective Lenders.  3.7  Receipt
of Funds.  Unless the Administrative
Agent shall have received notice from a Lender prior to the Drawdown Date that
such Lender shall not make available to the Administrative Agent such Lenders
share of the Facility, the Administrative Agent may assume that such Lender has
made such share available to the Administrative Agent on the Drawdown Date in
accordance with this Section 3.7 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the
extent that such Lender shall not have so made such share available to the
Administrative Agent, such Lender and the Borrower (but without duplication)
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a
rate per annum equal to the Applicable Rate and (ii) in the case of such
Lender, the LIBOR Rate for overnight or weekend deposits.  If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lenders share of the Facility for purposes of this Agreement
as of the Drawdown Date.  Nothing in this
Section 3.7 shall be deemed to relieve any Lender of its obligation to
make its share of the Facility to the  28


extent provided in this Agreement. 
In the event that the Borrower is required to repay any portion of the
Facility to the Administrative Agent pursuant to this Section 3.7 as
between the Borrower and the defaulting Lender, the liability for any
breakfunding costs as described in Section 4.4 shall be borne by the
defaulting Lender.  If the defaulting
Lender has not paid any such breakage costs upon demand by the Administrative
Agent therefor, the Borrower shall pay such breakage costs upon demand by the
Administrative Agent and the Borrower shall be entitled to recover any such
payment for breakfunding costs made by the Borrower from the defaulting Lender.  SECTION 4.  CONDITIONS PRECEDENT.  4.1  Conditions
Precedent to the Initial Advance. 
The obligation of the Lenders to make the Initial Advance available to
the Borrower under this Agreement shall be expressly subject to the following
conditions precedent:  (a)  Corporate
Authority.  the Administrative Agent
shall have received a certificate substantially in the form attached hereto as Exhibit K
from an officer of each Security Party which certificate shall certify and, in
the case of items (i) through (iii) below, attach true and complete
copies of the following:  (i)  the Constitutional
Documents of such Security Party;  (ii)  the
resolutions of the board of directors and equity holders (or as otherwise
required by such Security Partys Constitutional Documents or by applicable
law) evidencing approval of the Transaction Documents to which it is a party
and authorizing an appropriate officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its behalf, or other evidence of such
approvals and authorizations;  (iii) 
all documents evidencing any other necessary action (including actions by such
parties thereto other than the Security Parties as may be required by the
Administrative Agent), approvals or consents with respect to the Transaction
Documents;  (iv)  the
names, titles and signatures of each of the officers and directors  of such Security Party;  (v)  with
respect to the Borrower and the Shipowner Guarantor only, the record ownership
of all of such Security Partys issued and outstanding Capital Stock; and  (vi) 
that the representations and warranties (updated mutatis  mutandis)
with respect to solvency set forth in this Agreement or in any other
Transaction Document to which it is a party are true and correct as if made on
and as of such date;  29


(b)  Good
Standing Certificates.  the
Administrative Agent shall have received certificates from the jurisdiction of
incorporation or formation, as the case may be, of each Security Party as to
the good standing thereof.  (c)  Transaction
Documents.  each Security Party shall
have duly executed and delivered the following Transaction Documents to which
it is a party:  (i)  this
Agreement;  (ii)  the
Note;  (iii) 
the Parent Guaranty;  (iv)  the
Shipowner Guaranty;  (v)  the
Building Contract Assignment and the Assignment Notice with respect thereto;
and  (vi)  the
Pre-Delivery Insurances Assignment and the Assignment Notice with respect
thereto.  (d)  UCC
Financing Statements and Searches. 
the Administrative Agent shall have received evidence that Uniform
Commercial Code Financing Statements have been filed with the State of Delaware
and in such other jurisdictions as the Administrative Agent may reasonably
require;  the Administrative Agent shall
have received evidence, including Uniform Commercial Code searches,
satisfactory to it that the Collateral is not subject to any Liens other than
Permitted Liens;  (e)  Liens.  the Administrative Agent shall have received
evidence satisfactory to it and to its legal advisor that, save for the Liens
created by the Building Contract Assignment, there are no Liens of any kind
whatsoever on either of the Vessels or on any Collateral except as Permitted
Liens;  (f)  Building
Contract.  the Administrative Agent
shall have received a  true and complete
copy, certified by the Borrower to the satisfaction of the Administrative
Agent, of the Building Contract;  (g)  Charter.  the Administrative Agent shall have received
a true and complete copy, certified by the Borrower to the satisfaction of the
Administrative Agent, of the Charter, which Charter shall be in form and
substance satisfactory in all respects to the Administrative Agent;  (h)  Environmental
Claims.  the Administrative Agent
shall be satisfied that no Security Party and no Affiliate thereof is subject
to any Environmental Claim which could have a Material Adverse Effect;  30


(i)  Fees.  the Administrative Agent shall have received
payment in full of all fees and expenses due under Section 13 and the Fee
Letter;  (j)  Know Your Customer Requirements.  the Administrative Agent shall have received
documentation, andother evidence as is reasonably requested by
the Administrative Agent in order for each of the Creditors to carry out and be
satisfied with the results of all necessary know your client or other checks
which is required to carry out in relation to the transactions contemplated by
the Transaction Documents, including but not
limited to:  (i)  certified list of directors, including titles, business and
residential addresses and dates of birth;  (ii)  requisite United States tax forms; and  (iii)  the Administrative Agents anti-money laundering
questionnaire.  (k)  Compliance
Certificate.  the Administrative
Agent shall have received a Compliance Certificate with respect to the most
recently ended fiscal quarter;  (l)  Legal
Opinions.  the Administrative Agent
shall have received legal opinions addressed to the Administrative Agent from (i) Holland &
Knight LLP, counsel to the Security Parties, and (ii) Seward &
Kissel LLP, special counsel to the Creditors, in each case in such form as the
Administrative Agent may require, as well as such other legal opinions as the
Administrative Agent shall have required as to all or any matters under the
laws of the United States of America, the State of New York and the State of
Delaware covering the representations and conditions which are the subjects of
Sections 2 and 4.1.  4.2  Conditions
Precedent to the Delivery Advance. 
The obligation of the Lenders to make the Delivery Advance available to
the Borrower under this Agreement shall be expressly and separately subject to
the following further conditions precedent on the relevant Drawdown Date:  (a)  The
Vessels.  the Administrative Agent
shall have received  (i) 
evidence satisfactory to it that each of the Vessels is in the sole and
absolute ownership of the Shipowner Guarantor and duly registered in the
Shipowner Guarantors name under the United States flag, unencumbered, save and
except for the Mortgage recorded against it and other Permitted Liens;  (ii) 
evidence satisfactory to it that each of the Vessels is classed in the highest
classification and rating for vessels of the same age and type with the
Classification Society without any material outstanding recommendations;  31


(iii)   evidence satisfactory to it that each of the
Vessels is operationally seaworthy and in every way fit for its intended
service;  (iv) 
evidence satisfactory to it that each of the Vessels is insured in accordance
with the provisions of the Mortgage recorded against it and the requirements
thereof in respect of such insurances are being complied with; and  (v) 
evidence satisfactory to it that each of the Vessels is in compliance with all
relevant laws, regulations and requirements (including environmental laws,
regulations, and requirements), statutory or otherwise, as are applicable to (A) vessels
documented under the United States flag and (B) vessels engaged in a trade
similar to that performed or to be performed by each of the Vessels, except
where the failure to so comply would not have a Material Adverse Effect, which
evidence shall include:  (A)  a copy of the current
certificate of inspection issued by the United Sates Coast Guard for each
Vessel, if available, reflecting no outstanding recommendations; and  (B)  current Certificates
of Financial Responsibility with respect to the Vessels.  (b)  Transaction
Documents.  each Security Party shall
have duly executed and delivered the following Transaction Documents to which
it is a party:  (i)  the Mortgage;  (ii)  the Earnings
Assignment;  (iii)  the Insurances
Assignment; and  (iv)  the
Assignment Notices (other than those previously delivered in connection with
the Building Contract Assignment and the Pre-Delivery Insurances Assignment);  (c)  Recording
of the Mortgage.  the Administrative
Agent shall have received satisfactory evidence that the Mortgage on the
Vessels: (i) has been duly recorded under the laws of the United States; (ii) constitutes
a first preferred mortgage lien under the laws of such jurisdiction; and (iii) was
recorded prior to delivery of the Vessels to the Charterer pursuant to the
Charter;  (d)  UCC
Financing Statements and Searches. 
the Administrative Agent shall have received evidence that Uniform
Commercial Code Financing Statements have been filed with the State of Delaware
and in such other jurisdictions as the Administrative Agent may reasonably
require;  the Administrative Agent shall
have received evidence, including Uniform  32


Commercial Code searches,
satisfactory to it that the Collateral is not subject to any Liens other than
Permitted Liens;  (e)  Vessel
Appraisals.  the Administrative Agent
shall have received appraisals, in form and substance satisfactory to the
Administrative Agent, of the Fair Market Value of each of the Vessels showing
the Fair Market Value of each of the Vessels to be not less than the Required
Percentage of the Facility;  (f)  Environmental
Claims.  the Administrative Agent
shall be satisfied that no Security Party and no Affiliate thereof is subject
to any Environmental Claim which could reasonably be expected to have a
Material Adverse Effect;  (g)  ISM
Code, ISPS Code, MTSA and Annex VI. 
the Administrative Agent shall have received a copy of the Operators
DOC and the SMC, ISSC and, to the extent required under the laws and
regulations of the United States and each other jurisdiction in which a Vessel
operates or is expected to operate, IAPPC for each of the Vessels, where
applicable.  (h)  Legal
Opinions.  the Administrative Agent
shall have received legal opinions addressed to the Administrative Agent from (i) Holland &
Knight LLP, counsel to the Security Parties, and (ii) Seward &
Kissel LLP, special counsel to the Creditors, in each case in such form as the
Administrative Agent may require, as well as such other legal opinions as the
Administrative Agent shall have required as to all or any matters under the
laws of the United States of America, the State of New York and the State of
Delaware covering the representations and conditions which are the subjects of
Sections 2 and 4.1.  4.3  Further
Conditions Precedent.  The obligation
of the Lenders to make any Advance available to the Borrower under this
Agreement shall be expressly and separately subject to the following further
conditions precedent on each Drawdown Date:  (a)  the
Administrative Agent shall have received the Drawdown Notice in accordance with
the terms of Section 3.4;  (b)  the
Administrative Agent shall have received:  (i) 
copies of the invoices received from the Builder for construction installments
due under the Building Contract;  (ii) 
satisfactory evidence of such other Acquisition Costs to which such Advance
relates; and  (iii) 
satisfactory evidence that the Borrower has paid its portion of the applicable
construction installments under the Building Contract.  (c)  the
representations stated in Section 2 (updated mutatis  mutandis
to such date) shall be true and correct as if made on and as of that date;  33


(d)  no
Event of Default or Default shall have occurred and be continuing;  (e)  the
Administrative Agent shall be satisfied that no change in any applicable laws,
regulations, rules or in the interpretation thereof shall have occurred
which make it unlawful for any Security Party to make any payment as required
under the terms of the Transaction Documents or any of them; and  (f) 
there shall have been no Material Adverse Effect since the date hereof.  4.4  Breakfunding
Costs.  In the event that, on the date
specified for the making of the Facility in the Drawdown Notice, the Lenders
shall not be obliged under this Agreement to make the Facility available, the
Borrower shall indemnify and hold the Lenders fully harmless against any losses
which the Lenders (or any thereof) may sustain as a result of borrowing or
agreeing to borrow funds to meet the drawdown requirement of the Drawdown
Notice and the certificate of the relevant Lender or Lenders shall, absent
manifest error, be conclusive and binding on the Borrower as to the extent of
any such losses.  4.5  Satisfaction
after Drawdown.  Without prejudice to
any of the other terms and conditions of this Agreement, in the event the
Lenders, in their sole discretion, advance the Facility prior to the satisfaction
of all or any of the conditions referred to in Sections 4, the Borrower
hereby covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within seven (7) days after the Drawdown Date
(or such longer period as the Creditors, in their sole discretion, may agree).  SECTION 5.  REPAYMENT AND PREPAYMENT.  5.1  Repayment.  Subject to the provisions of Section 5
regarding application of prepayments, the Borrower shall repay the principal of
the Facility in twenty eight (28) consecutive installments on the Payment
Dates, each such installment being in the amount equal to one-twenty-eighth
(1/28th) of Thirty-Seven and
One Half percent (37.5%) of the outstanding aggregate principal amount of the
Facility as of the date of, and after giving effect to the drawdown of, the
Delivery Advance, plus the Final Payment which shall be paid on the Final
Payment Date.  5.2  Voluntary
Prepayment.  The Borrower may prepay,
upon two (2) Banking Days written notice, the Facility or any portion thereof
without premium or penalty other than breakage costs, if any, pursuant to Section 5.4.  Each prepayment shall be in a minimum amount
of One Million Dollars ($1,000,000) plus any One Million Dollar ($1,000,000)
multiple thereof or the full amount of the Facility.  5.3  Mandatory
Prepayment.  (a)  Sale
of Both Vessels.  On (i) the
sale of both Vessels or (ii) the earlier of (x) one hundred twenty
(120) days after the Total Loss of both Vessels or (y) the date on which
the insurance proceeds in respect of such loss are received by the Borrower (or
the Parent Guarantor) or the Security Trustee as assignee thereof, the Borrower
shall prepay the Facility in full; provided, however, that, at  34


the written request of the
Borrower, any prepayment required to be made pursuant to this Section 5.3(a) may
be paid to the Security Trustee to be placed in an interest bearing cash
collateral account until the last day of then current Interest Period or, if
earlier, a date on which a prepayment could occur without any break funding
costs.  The Security Trustee shall hold
the funds in the cash collateral account for the benefit of the Lenders, but
any interest accrued on the account (which shall accrue at LIBOR minus 0.25%
per annum) less costs for minimum reserve requirements shall be credited to the
Borrower.  All moneys (including accrued
interest) held in the cash collateral account shall serve as collateral for the
prepayment(s) required under this Section 5.3(a) and shall be
subject to a security interest in favor of the Security Trustee.  (b)  Sale
of a Vessel.  On (i) the sale of
a Vessel or (ii) the earlier of (x) one hundred twenty (120) days
after the Total Loss of a Vessel or (y) the date on which the insurance
proceeds in respect of such loss are received by the Shipowner Guarantor, the
Borrower or the Parent Guarantor or the Security Trustee as assignee thereof,
the Borrower shall prepay that portion of the Facility equal to the total
outstanding amount of the Facility multiplied by a fraction (1) the
numerator of which is equal to the Fair Market Value (as of the most recent
appraisal prior to such disposition or loss) of the Vessel which is the subject
of such disposition or loss and (2) the denominator of which is equal to
the Fair Market Value (as of the most recent appraisal prior to such
disposition or loss) of both of the Vessels.  5.4  Interest
and Costs; Application of Prepayments; No Reborrowing.  Any prepayment of the Facility made hereunder
(including, without limitation, those made pursuant to Sections 5 and 9) shall
be subject to the condition that on the date of prepayment all accrued interest
to the date of such prepayment shall be paid in full with respect to the
Facility or portions thereof being prepaid, together with any and all actual
costs or expenses incurred by any Lender in connection with any breaking of
funding (as certified by such Lender, which certification shall, absent any
manifest error, be conclusive and binding on the Borrower).  All prepayments of the Facility under Section 5.3
shall be applied towards the installments of the Facility in the inverse order
of their due dates for payment.  No
payments made in prepayment or repayment of the Facility shall be available for
reborrowing.  SECTION 6.  INTEREST AND RATE.  6.1  Applicable
Rate.  The Facility shall bear
interest at the Applicable Rate which shall be the rate per annum which is
equal to the aggregate of (a) LIBOR for the relevant Interest Period plus (b) the
Applicable Margin.  The Applicable Rate
shall be determined by the Administrative Agent two (2) Banking Days prior
to the first day of the relevant Interest Period, provided, however,
that the Applicable Margin shall be adjusted, if necessary, effective on the
Banking Day immediately following the earlier of (i) delivery of or (ii) the
due date for delivery of each Compliance Certificate to the Administrative
Agent, and if the Applicable Margin is so adjusted during any Interest Period,
the Applicable Rate shall be re-calculated to reflect the current Applicable
Margin.  The Administrative Agent shall
promptly notify the Borrower in  35


writing of the Applicable Rate as and when determined.  Each such determination, absent manifest
error, shall be conclusive and binding upon the Borrower.  6.2  Default
Rate.  Any amounts due under this
Agreement, not paid when due, whether by acceleration or otherwise, shall bear
interest thereafter from the due date thereof until the date of payment at the
Default Rate.  In addition, following the
occurrence of any Event of Default, the Administrative Agent may, and upon
instruction of the Majority Lenders shall, deliver a notice to the Borrower advising
the Borrower that an Event of Default has occurred.  From the date such Event of Default first
occurred until such Event of Default is cured to the satisfaction of the
Majority Lenders, the Facility shall bear interest at the Default Rate.  6.3  Interest
Periods.  The Borrower shall give the
Administrative Agent an Interest Notice specifying the Interest Period selected
at least three (3) Banking Days prior to the end of any then existing
Interest Period.  If at the end of any
then existing Interest Period the Borrower fails to give an Interest Notice the
relevant Interest Period shall be three (3) months.  The Borrowers right to select an Interest
Period shall be subject to the following restrictions: (a) no selection of
an Interest Period shall be effective unless each Lender is satisfied that the
necessary funds will be available to such Lender for such period and that no
Event of Default or Default shall have occurred and be continuing; and (b) no
Interest Period shall extend beyond the Final Payment Date.  6.4  Interest
Payments.  Accrued interest on the
Facility shall be payable on the last day of each Interest Period, except that
if the Borrower shall select an Interest Period in excess of three (3) months,
accrued interest shall be payable in arrears during such Interest Period on each
three (3) month anniversary of the commencement of such Interest Period
and upon the end of such Interest Period.  6.5  Non-availability
of Funds.  If the Administrative
Agent shall determine that, by reason of circumstances affecting the London
Interbank Market generally, adequate and reasonable means do not or will not
exist for ascertaining the Applicable Rate for the Facility for any Interest
Period, the Administrative Agent shall give notice of such determination to the
Borrower.  The Borrower and the
Administrative Agent shall then negotiate in good faith in order to agree upon
a mutually satisfactory interest rate and/or Interest Period to be substituted
for those which would otherwise have applied under this Agreement.  If the Borrower and the Administrative Agent
are unable to agree upon such a substituted interest rate and/or Interest
Period within thirty (30) days of the giving of such determination notice,
the Administrative Agent shall set an interest rate and Interest Period to take
effect from the expiration of the Interest Period in effect at the date of
determination, which rate shall be equal to the Applicable Margin plus the cost
to the Lenders (as certified by each Lender) of funding the Facility.  In the event the state of affairs referred to
in this Section 6.5 shall extend beyond the end of the Interest Period,
the foregoing procedure shall continue to apply until circumstances are such
that the Applicable Rate may be determined pursuant to Section 6.  36


SECTION 7.  PAYMENTS.  7.1  Place
of Payments, No Set Off.  (a) All payments
to be made hereunder by the Borrower shall be made to the Administrative Agent,
not later than 11 a.m. New York time (any payment received after 11 a.m.
New York time shall be deemed to have been paid on the next Banking Day) on the
due date of such payment, at its office located at 200 Park Avenue, New York,
NY 10166-0396 or to such other office of the Administrative Agent as the
Administrative Agent may direct, without set-off or counterclaim and free from,
clear of, and without deduction for, any Non-Excluded Taxes, provided, however,
that if the Borrower shall at any time be compelled by law to withhold or
deduct any Non-Excluded Taxes from any amounts payable to the Creditors
hereunder, then the Borrower shall pay such additional amounts in Dollars as
may be necessary in order that the net amounts received after withholding or
deduction shall equal the amounts which would have been received if such
withholding or deduction were not required and, in the event any withholding or
deduction is made, whether for Non-Excluded Taxes or otherwise, the Borrower
shall promptly send to the Administrative Agent, as soon as practicable after
making such payment and withholding, documentary evidence of such withholding
or deduction reasonably satisfactory to the Administrative Agent;  (b) Each Foreign Lender shall deliver to the
Borrower and the Administrative Agent on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so, whichever of the
following documents applies to such Foreign Lender:  (i)  a properly
completed and duly signed United States Internal Revenue Service Form W-8BEN
(or applicable successor form) that includes such Foreign Lenders United
States federal taxpayer identification number, claiming eligibility for the
benefits of an income tax treaty to which the United States is a party;  (ii)  a properly
completed and duly signed United States Internal Revenue Service Form W-8ECI
(or applicable successor form) that includes such Foreign Lenders United
States federal taxpayer identification number;  (iii) in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of
the Code, (A) a certificate in the form of Exhibit L and (B) a
properly completed and duly signed 
United States Internal Revenue Service Form W-8BEN (or applicable
successor form); or  (iv) any other form prescribed by applicable law
as a basis for claiming exemption from, or a reduction in the rate of, United
States federal withholding tax, properly completed and duly signed, together
with such supplementary documentation as may be prescribed by  37


applicable law or regulations
to enable the Borrower to determine the withholding or deduction required to be
made;  (c) The Administrative Agent shall deliver to the
Borrower from time to time upon the request of the Borrower a properly
completed and duly signed United States Internal Revenue Service Form W-8IMY
(or applicable successor form) together with such supplementary documentation
as is prescribed by applicable law or regulations to enable the Borrower to
determine the withholding or deduction required to be made;  (d) If the Administrative Agent or a Lender
receives a refund of any Tax paid by the Borrower or for which the Borrower
paid any additional amounts pursuant to Section 7.1(a) or for which
the Borrower paid an indemnity pursuant to Section 11.2 or 15.1, it shall
pay over such refund to the Borrower (but only to the extent of such Tax,
indemnity, or additional amounts paid by the Borrower, net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant taxing authority with respect to such
refund), provided, that the Borrower, upon the request of the Administrative
Agent or such Lender, shall repay such amount to the Administrative Agent or
such Lender if and to the extent that the Administrative Agent or such Lender
is required to repay such refund to such taxing authority;  (e) To the extent that the Borrower pays a
Non-Excluded Tax on behalf of the Administrative Agent or any Lender pursuant
to Section 7.1, 11.2 or 15.1 or pays any additional amount with respect to
any Tax pursuant to Section 7.1(a) or pays an indemnity to the
Administrative Agent or any Lender with respect to any Tax pursuant to Section 11.2
or 15.1, the Borrower shall, without any further action, be subrogated to the
rights and remedies of the Administrative Agent or Lender on whose behalf such
Tax was paid (or to or for the benefit of which such additional amount or
indemnity was paid) with respect to the transaction or event giving rise to
such Tax, and the Administrative Agent or Lender (as the case may be) shall
cooperate with Borrower to enable the Borrower to pursue such rights and
remedies, if any, to the extent reasonably requested by the Borrower and at the
Borrowers expense.  7.2  Tax
Credits.  If any Lender obtains the
benefit of a credit against the liability thereof for Taxes imposed by any
taxing authority for all or part of the Taxes as to which the Borrower has paid
additional amounts as aforesaid (and each Lender agrees to use its best efforts
to obtain the benefit of any such credit which may be available to it, provided
it has knowledge that such credit is in fact available to it), then such Lender
shall pay to the Borrower an amount equal to the amount of the credit so
obtained.  7.3  Computations; Banking Days.  (a)  All
computations of interest and fees shall be made by the Creditors on the basis
of a 360-day year, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for  38


which interest or fees are
payable.  Each determination by a
Creditor of an interest rate or fee hereunder shall be conclusive and binding
for all purposes, absent manifest error.  (b) 
Whenever any payment under this Agreement or under the Note shall be stated to
be due on a day other than a Banking Day, such payment shall be due and payable
on the next succeeding Banking Day unless the next succeeding Banking Day falls
in the following calendar month, in which case it shall be payable on the
immediately preceding Banking Day.  7.4  MitigationObligations; Replacement of Lenders.  (a) If any Lender requests compensation under Section 11.2
hereof, or if the Borrower is required to pay any additional amount to any
Lender or any taxing authority for account of any Lender pursuant to Section 7.1
hereof, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 7.1 or 11.2
hereof, as the case may be, in the future, and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.  (b) If any Lender requests compensation under Section 11.2
hereof, or if the Borrower is required to pay any additional amount to any
Lender or any taxing authority for account of any Lender pursuant to Section 7.1
hereof, or if any Lender defaults in its obligation to fund Advances hereunder,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.1 hereof), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its interest in the Facility,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts),
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 11.2 hereof or payments required to be made
pursuant to Section 7.1 hereof, such assignment will result in a reduction
in such compensation or payments.  A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise,  39


the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.  SECTION 8.  EVENTS OF DEFAULT.  8.1  Events
of Default.  The occurrence of any of
the following events shall be an Event of Default:  (a)  Non-Payment
of Principal.  any payment of
principal is not paid when due; or  (b)  Non-Payment
of Interest or Other Amounts.  any
interest or any other amount becoming payable to a Creditor under this
Agreement or under any other Transaction Document is not paid on the due date
or date of demand (as the case may be), and such default continues unremedied
for a period of three (3) Banking Days; or  (c)  Representations.  any representation, warranty or other
statement made by any Security Party or in any Transaction Document or in any
other instrument, document or other agreement delivered in connection with any
Transaction Document proves to have been untrue or misleading in any material
respect as at the date as of which made or confirmed; or  (d)  Mortgage.  an event of default shall have occurred and
be continuing under the Mortgage; or  (e)  Covenants.  any Security Party: (i) defaults in the
due and punctual observance or performance of Sections 9.1(b) (except Section 9.1(b)(iv)),
9.1(f), 9.1(p), 9.1(r), 9.3(a), 9.3(b) or 9.4; or (ii) defaults in
the due and punctual observance or performance of any other term, covenant or
agreement contained in any Transaction Document or in any other instrument,
document or other agreement delivered in connection with any Transaction
Document and such default continues unremedied or unchanged, as the case may
be, for a period of thirty (30) days after notice thereof from the Administrative
Agent to the Borrower; or  (f)  Indebtedness.  any Security Party shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
and after any applicable grace and/or notice period as a result of which such
Material Indebtedness is accelerated by the holder thereof; or  (g)  Cross-Default.  any event or condition occurs that results in
any Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (after giving effect to any applicable grace period and/or
notice period) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to  40


require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity
and such holder or holders in each case shall have so caused or required; provided
that this subsection (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale, transfer or total loss of the
property or assets securing such Indebtedness; or  (h)  Involuntary
Proceeding.  an involuntary proceeding
shall be commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of any Security Party or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Security Party or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered; or  (i) Bankruptcy.  any Security Party shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Section 8.1,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing; or  (j)  Termination
of Operations; Sale of Assets. 
except as expressly permitted under this Agreement, any Security Party
ceases its operations or sells or otherwise disposes of all or substantially
all of its assets  or all or substantially
all of the assets of any Security Party are seized or otherwise appropriated;
or  (k)  Judgments.  (i) any judgment or order is made the
effect whereof would be to render invalid any Transaction Document or any
material provision thereof, or any Security Party asserts that any such
agreement or provision thereof is invalid; or (ii) one or more judgments
(excluding only the covered amounts of insured claims, exclusive of deductibles
and excess liability beyond coverage limits and provided that underwriters have
not raised defenses to coverage) for the payment of money in an aggregate
amount in excess of $1,000,000.00 shall be rendered against any Security Party
or any combination thereof and the same shall remain undischarged for a period
of thirty (30) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of such Security Party to enforce any such judgment and
either (A) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order, or (B) there  41


shall be a period of ten (10) consecutive
days after entry thereof during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal, or otherwise, shall not be in
effect; provided that any such judgment or order shall not give rise to
an Event of Default under this subsection (k) if and for so long as and to
the extent of (x) the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and the insurer
covering full payment thereof, and (y) such insurer has been notified, and
has not disputed the claim for payment, of the amount of such judgment or
order; or  (l)  Inability
to Pay Debts.  any Security Party is
unable to pay or admits its inability to pay its debts as they fall due or a
moratorium shall be declared in respect of any material indebtedness of any
Security Party thereof; or  (m)  Change
in Financial Position.  any change in
the financial position of any Security Party which, in the reasonable opinion
of the Majority Lenders, shall have a Material Adverse Effect; or  (n)  Change
of Control.  a Change of Control
shall occur with respect to the Parent Guarantor or the Parent Guarantor shall
cease to own directly or indirectly, a majority of aggregate voting power
represented by the issued and outstanding ownership interests of the Borrower
or the Shipowner Guarantor; or  (o)  ERISA
Event.  (i) an ERISA Termination
Event described in clause (i), (ii) or (iv) of the definition
thereof shall occur or (ii) an ERISA Funding Event, or an ERISA
Termination Event described in clause (iii) or (v) of the
definition thereof, shall occur or exist that, in the reasonable opinion of the
Majority Lenders, when taken together with all other ERISA Funding Events and
such ERISA Termination Events that exist or have occurred and are continuing,
could reasonably be expected to have a Material Adverse Effect; or  (p)  Environmental
Proceedings.  except for specific
matters disclosed in writing to the Creditors prior to the date of this
Agreement, any indictment occurring after the date of this Agreement, of any
Security Party under any Environmental Law, or commencement of criminal
proceedings, which is reasonably likely to result in a Material Adverse Effect,
against any Security Party under any Environmental Law, pursuant to which
indictment, statute or proceeding the penalties or remedies sought or available
include forfeiture of any of the property of such Security Party and such
proceedings shall continue for more than 30 days; provided, however,
that the Creditors agree that an Event of Default shall not be deemed to have
occurred prior to the date on which Borrower receives notice thereof from the
Administrative Agent; or  (q)  Amendment
of Constitutional Documents.  any
Constitutional Document of any Security Party shall be amended, revoked or
rescinded in any material way without the prior written consent of the
Creditors; or  42


(r)  Forfeiture
of Vessel.  a proceeding shall have
been commenced on behalf of the United States to effect the forfeiture of a
Vessel or any notice shall have been issued on behalf of the United States of
the seizure of a Vessel; or  (s)  Loss
of Tax Status.  the Parent Guarantor
shall at any time fail to maintain its status as an exempt partnership under
section 7704(c) of the Code; or  (t)  Building
Contract.  (i) the Building
Contract is rescinded, cancelled or otherwise terminated for any reason; or (ii) the
Vessels are not delivered to the Borrower by August 1, 2010; or  (u)  Invalidity.  any material provision of any Transaction
Document after delivery thereof shall for any reason cease to be valid binding
on or enforceable against any Security Party which is a party thereto, or any
Security Party shall so state in writing except if such invalidity or
unenforceability is solely due to the gross negligence or willful misconduct of
any Creditor.  Upon and
during the continuance of any Event of Default, the Lenders obligation to make
the Facility available shall cease and the Administrative Agent on the
instructions of the Majority Lenders may, by notice to the Borrower, declare
the entire unpaid balance of the then outstanding Facility, accrued interest
and any other sums payable by the Borrower hereunder or under the Note due and
payable, whereupon the same shall forthwith be due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; provided that upon the happening of an event specified
in subsections (h), (i) or (l) of this Section 8.1
with respect to the Borrower, the Note shall be immediately due and payable
without declaration or other notice to the Borrower.  In such event, the Lenders may proceed to
protect and enforce their rights by action at law, suit in equity or in
admiralty or other appropriate proceeding, whether for specific performance of
any covenant contained in any Transaction Document, or in aid of the exercise
of any power granted herein or therein, or the Lenders may proceed to enforce
the payment of the Note or to enforce any other legal or equitable right of the
Lenders, or proceed to take any action authorized or permitted under the terms
of any Transaction Document or by applicable law for the collection of all sums
due, or so declared due, on the Note, including, without limitation, the right
to appropriate and hold or apply (directly, by way of set-off or otherwise) to
the payment of the obligations of the Borrower to the Lenders hereunder and/or
under the Note (whether or not then due) all moneys and other amounts of the
Borrower then or thereafter in possession of any Lender, the balance of any
deposit account (demand or time, mature or unmatured) of the Borrower then or
thereafter with any Lender and every other claim of the Borrower then or
thereafter against any of the Lenders.  8.2  Indemnification.  The Borrower agrees to, and shall, indemnify
and hold each of the Creditors harmless against any loss, as well as against
any reasonable costs or expenses (including reasonable legal fees and
expenses), which any of the Creditors sustains or incurs as a consequence of
any default in payment of the principal amount of the Facility, interest
accrued thereon or any other amount payable under this Agreement or any other
Transaction Document including, but not limited to, all actual losses incurred
in liquidating or re-employing fixed deposits made by third parties or funds
acquired to effect or maintain the Facility or any portion  43


thereof.  Any Creditors
certification in reasonable detail of such costs and expenses shall, absent any
manifest error, be conclusive and binding on the Borrower.  8.3  Application
of Moneys.  Except as otherwise
provided in any other Transaction Document, all moneys received by any Creditor
under or pursuant to this Agreement or any of the other Transaction Documents
after the occurrence of any Event of Default (unless cured to the satisfaction
of the Majority Lenders) shall be applied by the Administrative Agent in the
following manner:  (a)  first,
in or towards the payment or reimbursement of any expenses or liabilities
incurred by the Administrative Agent, the Security Trustee or the Lenders in
connection with the ascertainment, protection or enforcement of its rights and
remedies hereunder, under the Note and under any of the Security Documents,  (b)  secondly,
in or towards payment of any interest owing in respect of the Facility,  (c)  thirdly,
in or towards repayment of principal of the Facility,  (d)  fourthly,
in or towards payment of all other sums which may be owing to the
Administrative Agent, the Security Trustee or the Lenders under this Agreement,
under the Note, under the Fee Letter or under any of the Security Documents,  (e)  fifthly,
in or towards payments of any amounts then owed under any Facility Swap, and  (f)  sixthly,
the surplus (if any) shall be paid to the Borrower or to whosoever else may be
entitled thereto.  SECTION 9.  COVENANTS.  9.1  Affirmative
Covenants.  The Borrower hereby
covenants and undertakes with the Lenders that, from the date hereof and so
long as any principal, interest or other moneys are owing in respect of any
Transaction Document, the Borrower shall:  (a)  Performance
of Agreements.  duly perform and
observe, and procure the observance and performance by all other parties
thereto (other than the Creditors) of, the terms of each Transaction Document;  (b)  Notice
of Default, etc.  promptly upon
obtaining knowledge thereof, inform the Administrative Agent of the occurrence
of (i) any Event of Default or any Default, (ii) any litigation or
governmental proceeding pending or threatened against any Security Party or
against any of such Security Partys Subsidiaries or Affiliates which could
reasonably be expected to have a Material Adverse Effect, (iii) the
withdrawal of either of the Vessels rating by its Classification Society, (iv) the
issuance by its Classification Society of any material recommendation or  44


notation affecting class and (v) any
other event or condition which is reasonably likely to have a Material Adverse
Effect;  (c)  Obtain
Consents.  without prejudice to Section 2.1
and this Section 9.1, obtain every consent and do all other acts and
things which may from time to time be necessary or advisable for the continued
due performance of any Security Partys respective obligations under any
Transaction Document;  (d)  Financial
Information.  deliver to each Lender
or, in lieu thereof, notify each Lender of the electronic availability (through
the Securities and Exchange Commission) of:  (i)  as
soon as available but not later than one hundred (120) days after the end of
each fiscal year of the Parent Guarantor, complete copies of the consolidated
financial reports of the Parent Guarantor and its Subsidiaries (together with a
Compliance Certificate), all in reasonable detail, which shall include at least
the consolidated balance sheet of the Parent Guarantor and its Subsidiaries as
of the end of such year and the related consolidated statements of income and
sources and uses of funds for such year, which shall be audited reports
prepared by an Acceptable Accounting Firm;  (ii)  as
soon as available but not later than forty-five (45) days after the end of
each of the first three quarters of each fiscal year of the Parent Guarantor, a
quarterly interim consolidated balance sheet of the Parent Guarantor and its
Subsidiaries and the related consolidated profit and loss statements and
sources and uses of funds (together with a Compliance Certificate), all in
reasonable detail, unaudited, but certified to be true and complete by the
chief financial officer of the Parent Guarantor;  (iii) 
promptly after the same becomes publicly available (but in any event no later
than the delivery of the next required Compliance Certificate), copies of all
registration statements and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents), proxy statements and other filings which the Parent Guarantor or
any Subsidiary shall have filed with the Securities and Exchange Commission or
any similar governmental authority or with any national securities exchange, as
the case maybe;  (iv) 
promptly upon the mailing thereof to the shareholders of the Parent Guarantor,
copies of all financial statements, reports, proxy statements and other
communications provided to the Parent Guarantors shareholders;  (v)  such
other statements (including, without limitation, monthly consolidated
statements of operating revenues and expenses), lists of assets and accounts,
budgets, forecasts, reports and other financial  45


information
with respect to its business as the Administrative Agent may from time to time
reasonably request, certified to be true and complete by the chief financial
officer of the Parent Guarantor;  (e)  Vessel
Valuations.  (i) the Borrower
shall obtain and deliver to the Administrative Agent an appraisal of the Fair
Market Value of each of the Vessels from an Approved Ship Broker as of the
Delivery Date and thereafter the Borrower shall obtain and deliver to the
Administrative Agent a desktop appraisal of the Fair Market Value of each of
the Vessels from an Approved Ship Broker annually on the anniversary of the
Delivery Date; all such appraisals are to be at the Borrowers cost.  In the event the Borrower fails or refuses to
obtain the appraisals requested pursuant to this Section 9.1(e) within
thirty (30) days of an Administrative Agents request therefor, the
Administrative Agent shall be authorized to obtain such appraisals, at the
Borrowers cost, from an Approved Ship Broker, which appraisals shall be deemed
the equivalent of appraisals duly obtained by the Borrower pursuant to this Section 9.1(e),
but the Administrative Agents actions in doing so shall not excuse any default
of the Borrower under this Section 9.1(e); and  (ii) permit
the Administrative Agent to conduct, and the Borrower and the Shipowner
Guarantor shall cooperate in the conduct of, a visual appraisal of any or all
of the Vessels at Borrowers expense, once over every twelve (12) month period
of this Agreement in the absence of an Event of Default and at any time during
the continuance of an Event of Default. 
Any such visual appraisal shall be completed in such a way that as to
not interfere with the commercial operations of the Vessels.  The first twelve-month period will begin on
the date of this Agreement; provided that Borrower will allow access to
any appraiser selected by the Administrative Agent to attend and appraise a
Vessel in drydock at any time on reasonable notice; provided  further
that each fiscal year, upon the request of the Administrative Agent, the
Borrower shall provide the Administrative Agent with a drydock schedule and
location of drydock;  (f)  Existence.  do or cause to be done, and procure that each
other Security Party shall do or cause to be done, all things necessary to
preserve and keep in full force and effect its legal existence and all
licenses, franchises, permits and assets necessary to the conduct of its
business;  (g)  Books
and Records.  at all times keep, and
cause each Security Party to keep, proper books of record and account on a
consolidated basis into which full and correct entries shall be made in
accordance with GAAP;  (h)  Taxes
and Assessments.  (i) pay and
discharge, and cause each other Security Party to pay and discharge, all
material Taxes imposed upon it or upon its income or property prior to the date
upon which penalties attach thereto; provided, however, that it
shall not be required to pay and discharge, or cause to be paid and discharged,
any such Tax so long as (A) such Tax is being contested  46


in good faith by appropriate
proceedings; (B) it shall set aside on its books adequate reserves with
respect thereto, determined in accordance with GAAP; and (C) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect; provided, further, that if any such
Tax lawfully imposed shall remain unpaid after the date upon which a Lien on
any Collateral arises or may be imposed as a result of such non-payment, or if
any Lien is claimed for any other reason against any of the Collateral, which
if foreclosed would in the opinion of the Administrative Agent adversely affect
the value of the Creditors security interest in any of the Collateral, the
Creditors may, after the occurrence and during the continuation of an Event of
Default or if in the opinion of Administrative Agent such non-payment or other
claim would be reasonably like to result in a Material Adverse Effect, pay and
discharge such Taxes and Liens, and the amount so paid by the Creditors shall
be payable on demand by the Borrower; and  (ii) 
shall cause each Security Party to comply with all laws and all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official, applicable to the Collateral or to the operation of the business of
such Security Party, the failure to comply with which is reasonably likely to
result in a Material Adverse Effect;  (i)  Inspection.  allow, and cause each Security Party to
allow, any representative or representatives designated by the Administrative
Agent, subject to applicable laws and regulations, to visit and inspect any of
the Collateral, and, on request, to examine its books of account, records,
reports and other papers (including, without limitation, copies of all
internally generated inspection or survey reports) relating to the Collateral
and to discuss its affairs, finances and accounts with its officers, all at
such reasonable times and as often as the Administrative Agent reasonably
requests;  (j)  Compliance
with Statutes, Agreements, etc.  do
or cause to be done, and cause each Security Party to do and cause to be done,
all things necessary to comply with all material contracts or agreements to
which such Person is a party, and all material laws (including, without
limitation, all Environmental Laws), and the rules and regulations
thereunder, applicable to such Person, including, without limitation, those
laws, rules and regulations relating to employee benefit plans and
environmental matters, in each case the failure to comply with which is
reasonably likely to result in a Material Adverse Effect;  (k)  Environmental
Matters.  (i) promptly upon the
occurrence of any of the following conditions, provide to the Administrative
Agent a certificate of a chief executive officer or chief financial officer
thereof, specifying in detail the nature of such condition and its proposed
response or the response of its Environmental Affiliates: (a) the receipt
by any other Security Party or the receipt by any Environmental Affiliates of a
Security Party of any written communication whatsoever from any governmental or
regulatory authority, Classification Society, or other similarly appropriate
authority that alleges that such Person is not in  47


compliance with any applicable
Environmental Law or Environmental Approval, if such noncompliance could
reasonably be expected to have a Material Adverse Effect, (b) knowledge by
any Security Party or any Environmental Affiliates of a Security Party that
there exists any Environmental Claim pending or threatened against any such
Person, which could reasonably be expected to have a Material Adverse Effect,
or (c) any release, emission, discharge or disposal of any material that
could form the basis of any Environmental Claim against any Security Party or
against any Environmental Affiliates of a Security Party, if such Environmental
Claim could reasonably be expected to have a Material Adverse Effect.  Upon the written request by the
Administrative Agent, it shall submit to the Administrative Agent at reasonable
intervals, a report providing an update of the status of any issue or claim
identified in any notice or certificate required pursuant to this subsection;  (ii) ,
except where failure to do so could not reasonably be expected to have a
Material Adverse Effect, (A) shall require that any and all subcharterers,
managers, employees, contractors, subcontractors, agents, representatives,
Affiliates, consultants, occupants and any and all other Persons in each case
with respect to either Vessel, (x) comply in all material respects with
all applicable Environmental Laws, (y) use, employ, process, emit,
generate, store, handle, transport, dispose of and/or arrange for the disposal
of any and all Materials of Environmental Concern in, on, or, directly or
indirectly, related to or in connection with any of the Vessels or any portion
thereof in a manner consistent with prudent industry practice and in compliance
in all material respects with all applicable Environmental Laws, and in a
manner which does not pose a significant risk to human health, safety
(including occupational health and safety) or the environment, and (z) obtain,
maintain, and have on board each of the Vessels any required Certificate of
Financial Responsibility; and (B), and it shall require that any charterer of
any of the Vessels or any other Person that may have custody of any of the
Vessels shall, upon the occurrence or discovery of an Environmental Claim with
respect to any such Vessel, promptly carry out, using Borrowers or such other
Persons own funds or proceeds of insurance with respect thereto, such actions
as may be necessary to remediate or cure such Environmental Event in compliance
in all material respects with all Applicable Laws, to comply in all material
respects with all applicable Environmental Laws and to alleviate any
significant risk to human health or the environment if the same arises from a
condition on or in respect of either of the Vessels, whether existing prior to
or during the term of this Agreement or the term of any such the charter.  Once Borrower or such other Person commences
such actions, Borrower shall, and shall cause such other Person to, thereafter
diligently and expeditiously proceed to comply in all material respects in a
timely manner with all Environmental Laws and to eliminate any significant risk
to human health or the environment arising from such Environmental  48


Claim and
shall, at the request of the Administrative Agent, give periodic progress
reports to the Administrative Agent and the Lenders on its compliance efforts
and actions; provided, however, that nothing contained herein
will relieve or discharge or in any way affect the obligation of Borrower to
cure promptly any violations of Applicable Law or to pay and discharge any
Liens against any of the Vessels;  (l)  ERISA.  forthwith upon (i) the occurrence of any
ERISA Termination Event or (ii) the occurrence or existence of any ERISA
Funding Event, furnish or cause to be furnished to the Lenders written notice
thereof;  (m)  Vessel
Management.  cause each of the
Vessels to be managed both commercially and technically by the Borrower or a
wholly-owned Subsidiary thereof;  (n)  ISM
Code, ISPS Code, MTSA and Annex VI Matters.  (i) 
procure that the relevant Operator shall comply with and ensure that their
respective Vessel shall comply with the requirements of the ISM Code, the ISPS
Code, MTSA and, to the extent required under the laws and regulations of the
United States and each other jurisdiction in which a Vessel operates or is
expected to operate, Annex VI in accordance with the respective implementation
schedules thereof, including (but not limited to) the maintenance and renewal
of valid certificates pursuant thereto throughout the Facility Period;  (ii)  and
shall procure that the relevant Operator shall reasonably promptly inform the
Administrative Agent if there is any threatened or actual withdrawal of its
DOC, SMC, ISSC or, to the extent such has been issued as required under the
laws and regulations of the United States and each other jurisdiction in which
a Vessel operates or is expected to operate, IAPPC in respect of the applicable
Vessel; and  (iii) 
upon request of the Administrative Agent, shall procure that the relevant
Operator shall reasonably promptly inform the Administrative Agent upon the
issue to the relevant Borrower or Operator of a DOC and to the applicable
Vessel of an SMC, ISSC or IAPPC;  (o)  Brokerage
Commissions, etc.  indemnify and hold
the Creditors harmless from any claim resulting from acts or omissions of the
Borrower for any brokerage commission, fee, or compensation from any broker or
third party resulting from the transactions contemplated hereby;  (p)  Insurance.  maintain, and cause each Security Party to
maintain, with financially sound and reputable insurance companies insurance on
all their respective properties and against all such risks and in at least such
amounts as are  49


usually insured against by companies of
established reputation engaged in the same or similar business from time to
time; and on the Delivery and at any time thereafter, maintain such insurances
as are required pursuant to the Mortgage (notwithstanding the foregoing, the
Security Parties shall not be required to maintain Mortgagees Interest
Insurance);  (q)  Maintenance
of Properties.  (i) maintain,
and cause each other Security Party to maintain, all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted; and (ii) require at all times that any demise charterer or
operator of any of the Vessels  shall use
its due diligence to operate, maintain, repair, insure, man and supply the
Vessels or either of them in a careful and proper manner, comply in all
material respects with and conform to all governmental laws, rules and
regulations and insurance restrictions relating thereto, and operate any such
Vessels with competent and duly qualified personnel;  (r)  Citizenship.  remain: (i) with respect to the
Borrower, a limited partnership, and, with respect to the Shipowner Guarantor,
a limited liability company, in each case organized under the laws of the State
of Delaware or another state within the United States; and (ii) a citizen
of the United States within the meaning of 46 U.S.C. §50501 and the regulations
promulgated thereunder for purposes of engaging in the coastwise trade and in
foreign commerce of the United States; and  (s)  Defense
of Title.  warrant and defend the
Shipowner Guarantors good and marketable title in and to the Collateral and
the Administrative Agents and the Security Trustees Liens on the Collateral,
against all claims and demands whatsoever.  9.2  Negative
Covenants.  The Borrower hereby
covenants and undertakes with the Lenders that, from the date hereof and so
long as any principal, interest or other moneys are owing in respect of any
Transaction Document, the Borrower shall not, and shall procure that each other
Security Party shall not, without the prior written consent of the
Administrative Agent (or the Majority Lenders or all of the Lenders if required
by Section 14.7):  (a)  Liens.  create, assume or permit to exist, any Lien
whatsoever upon any Collateral except:  (i) 
prior to the Delivery Date, Liens of or, arising through, the Builder arising
under the Building Contract or by applicable law during the construction period
of the Vessels;  (ii) 
Liens for taxes not yet payable for which adequate reserves have been maintained;  (iii) 
each of the Mortgage, the Assignments and other Liens in favor of a Creditor;  50


(iv) 
Liens against either of the Vessels permitted to exist under the terms of the
Mortgage;  (v)  Liens
arising out of time charters (including the Charter), voyage charters or
contracts of affreightment with unrelated third parties in respect of a Vessel;
provided, however, that any such Lien permitted by this
subsection 9.2(a)(v) shall at all times be subordinated in all respects to
Liens in favor of the Creditors arising under the Transaction Documents;  (vi) 
pledges of certificates of deposit or other cash collateral securing any
Security Partys reimbursement obligations in connection with letters of credit
now or hereafter issued for the account of such Security Party in connection
with the establishment of the financial responsibility of the Security Parties
under 33 C.F.R. Part 130 or 46 C.F.R. Part 540, as the case
may be, as the same may be amended or replaced;  (vii) 
pledges or deposits to secure obligations under workmens compensation laws or
similar legislation, deposits to secure public or statutory obligations,
warehousemens or other like liens, or deposits to obtain the release of such
Liens and deposits to secure surety, appeal or customs bonds on which a
Security Party is the principal, as to all of the foregoing, only to the extent
arising and continuing in the ordinary course of business; and  (viii) 
other Liens incidental to the conduct of the business of each such party, the
ownership of any such partys property and assets and which do not in the
aggregate materially detract from the value of each such partys property or
assets or materially impair the use thereof in the operation of its business;  (b)  Changes
in Borrower.  and shall not permit
any other Security Party to: (i) materially change the nature of its
business; (ii) change the form of organization of its business; or (iii) without
thirty (30) days prior written notice to the Administrative Agent, change its
name or jurisdiction of organization;  (c)  Changes
in Offices.  change the location of
the chief executive office of any Security Party, the office of the chief place
of business any such parties, the office of the Security Parties in which the
records relating to the earnings or insurances of either of the Vessels are
kept unless the Lenders shall have received sixty (60) days prior written
notice of such change;  (d)  Sale
or Pledge of Equity Interests.  sell,
assign, transfer, pledge or otherwise convey or dispose of (including by way of
spin-off, installment sale or otherwise) any of the equity interests of the
Borrower or the Shipowner Guarantor;  51


(e)  Sale
of Assets.  (i) sell, or
otherwise dispose of, any Collateral (including, without limitation, either of
the Vessels) unless otherwise in accordance with this Agreement or the other
Transaction Documents; or (ii), with respect to any Security Party, sell, or
otherwise dispose (in one transaction or in a series of transactions) of all or
substantially all assets (including by way of spin-off, installment sale or
otherwise); provided, however, that with respect to subsection (ii) hereof,
the consent of the Lenders shall not be unreasonably withheld;  (f)  Sale
of Parent Guarantors Material Subsidiaries.  sell, or otherwise dispose of the Material
Subsidiaries of the Parent Guarantor;  (g)  Consolidation
and Merger.  consolidate with, or
merge into, any Person, or merge any Person into it; provided, however,
that (i) any Person may merge into the Borrower or the Shipowner Guarantor
in a transaction in which the Borrower or the Shipowner Guarantor is the
surviving entity, and (ii) any Security Party may merge with or into any
other Security Party or any other Subsidiary of the Parent Guarantor, provided
the security interests of the Security Trustee in the Collateral are preserved
to the reasonable satisfaction of the Majority Lenders;  (h)  Change
Fiscal Year.  change its fiscal year;  (i)  Transactions
with Affiliates.  sell, lease or
otherwise transfer, or permit any of its Subsidiaries to sell, lease or
otherwise transfer, any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except: (i) in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arms-length basis
from unrelated third parties; and (ii) transactions between or among the
Borrower and its Subsidiaries not involving any other Affiliate;  (j)  Limitations
on Advances and Distributions.  (i) make
distributions to any limited or general partner of the Borrower during the
continuance of an Event of Default if, following the occurrence of such Event
of Default, the Administrative Agent sends a notice to the Borrower asserting
or confirming such Event of Default (regardless of whether any notice shall have
been required to create such Event of Default in any case); or (ii)  make
any loans or advances to any Affiliate or related Persons of the Borrower,
except the Parent Guarantor and wholly-owned Subsidiaries of the Borrower;  (k)  Acquisitions.  purchase, hold or acquire (including pursuant
to any merger), and shall not permit any of its Subsidiaries to purchase, hold
or acquire (including pursuant to any merger), any capital stock or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions (including pursuant to any merger)) any assets of any other
Person constituting a  52


business unit, except (a) as
permitted by Section 9.2(l) and (b) Permitted Acquisitions by
the Borrower or any Subsidiary; provided that the Borrower shall have
delivered to the Administrative Agent not less than 5 Banking Days prior to the
consummation of any such Permitted Acquisition a certificate of the chief
financial officer of the Borrower in form and substance satisfactory to the
Administrative Agent evidencing projected pro forma compliance with Sections
9.3 and 9.4 after giving effect to such Permitted Acquisition for the period
from the date of such Permitted Acquisition to the Final Payment Date; and  (l)  Partnerships,
Joint Ventures.  become, and shall
not permit any of its Subsidiaries to become, a general partner, in any general
or limited partnership or joint venture, except with respect to any purchase or
other acquisition of any capital stock or other ownership or profit interest,
warrants, rights, options, obligations or other securities of any Person, any
capital contribution to such Person or any other investment in such Person
which individually or in the aggregate with all such other investments during
the term hereof shall not exceed $20,000,000.  9.3  Financial
Covenants.  The Borrower hereby
covenants and undertakes with the Lenders that, from the date hereof and so
long as any principal, interest or other moneys are owing in respect of any
Transaction Document, the Borrower shall:  (a)  Fixed
Charge Coverage Ratio.  procure that
the Parent Guarantor maintain at all times a minimum Fixed Charge Coverage
Ratio of greater than 1.85:1.00;  (b)  Total
Debt to EBITDA Ratio.  maintain, at
the end of each fiscal quarter of the Parent Guarantor, a Total Debt to EBITDA
Ratio, for the four fiscal quarters ended as of the end of such quarter, not
greater than 4.00:1.00.  9.4  Asset
Maintenance.  If at any time on or
after the Delivery Date the aggregate Fair Market Value of the Vessels is less
than one hundred twenty percent (120%) of the Facility, (such percentage being
the Required Percentage) the Borrower shall, within a period of
thirty (30) days following receipt by the Borrower of written notice from
the Security Trustee notifying the Borrower of such shortfall and specifying
the amount thereof (which amount shall, in the absence of manifest error, be
deemed to be conclusive and binding on the Borrower), either (i) deliver
to the Security Trustee, upon the Security Trustees request, such additional
collateral as may be satisfactory to the Lenders in their sole discretion of
sufficient value to restore compliance with the Required Percentage or (ii) prepay
such amount of the Facility (together with interest thereon and any other
monies payable in respect of such prepayment pursuant to Section 5.4) as
shall result in the aggregate Fair Market Value of the each of the Vessels
being not less than the Required Percentage.  SECTION 10.  ASSIGNMENTS.  10.1  Assignments.  This Agreement shall be binding upon, and
inure to the benefit of, the Borrower and the Creditors and their respective
successors and assigns, except  53


that the Borrower may not assign any of its rights or obligations
hereunder.  Each Lender shall be entitled
to assign its rights and obligations under this Agreement in the Facility to
any subsidiary, holding company or other affiliate of such Lender, or, with the
consent of the Borrower and the Administrative Agent, such consent not to be
unreasonably withheld, to any other commercial bank or financial institution
(in a minimum amount of not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof), provided in each case that such assignment will
not result in any increase in the Borrowers obligations under Section 7.1,
11.2 or 15, and such Lender shall forthwith give at least ten (10) days
prior written notice of any such assignment to the Borrower and pay the
Administrative Agent an assignment fee of $5,000 for each such assignment or
participation; provided, however, that any such assignment must
be made pursuant to an Assignment and Assumption Agreement and shall become
effective only upon acceptance thereof by the Administrative Agent and the
recording thereof by the Administrative Agent in the Loan Register pursuant to Section 10.5.  At the expense of the applicable Lenders, the
Borrower shall take all reasonable actions requested by the Administrative
Agent or any Lender to effect such assignment, including, without limitation,
the execution of a written consent to any Assignment and Assumption
Agreement.  The Commitment of the
assigning Lender shall in no event not be less than $10,000,000.  The maximum number of Lenders shall be four.  10.2  Participations.  Any Lender may at any time sell to one or
more commercial banks or other financial institutions (each of such commercial
banks and other financial institutions being herein called a Participant)
participating interests in the Facility, its Commitment or other interests of
such Lender hereunder; provided, however, that:  (a)  no
participation contemplated in this Section 10.2 shall relieve such Lender
from its Commitment or its other obligations hereunder;  (b)  such
Lender shall remain solely responsible for the performance of its Commitment
and such other obligations applicable to it under this Agreement;  (c)  the
Borrower and the other Creditors shall continue to deal solely and directly
with such Lender and shall be under no obligation to deal directly with any
Participant;  (d)  no
Participant, unless such Participant is an Affiliate of such Lender, shall be
entitled to require such Lender to take or refrain from taking any action
hereunder, except that such Lender may agree with any Participant that such
Lender will not, without such Participants consent, approve any amendment or
waiver of any provision of this Agreement or any other Transaction Document, or
consent to any departure by the Borrower from the terms thereof, if any such
amendment, waiver or consent would require the affirmative consent of such
Lender pursuant to Section 14.8 hereof; and  (e)  no
participation contemplated in this Section 10.2 shall result in any
increase in the Borrowers obligations under Sections 7.1, 11.2 or 15.  54


10.3  Security
Interest.  Notwithstanding any other
provision set forth in this Agreement, any Lender may at any time create a
security interest in all or any portion of its rights under this Agreement and
the other Transaction Documents.  10.4  Promissory
Notes.  At the request of the
Administrative Agent (acting upon a request from any Lender), the Borrower
shall duly execute and deliver (in exchange for the return of the original
promissory note executed in connection with this Agreement) to the
Administrative Agent for further distribution to the Lenders a promissory note
or notes (each a Lender Note) in favor of each Lender evidencing the portion
of the Facility owing by the Borrower to such Lender hereunder.  All Lender Notes shall collectively be deemed
the Note hereunder.  10.5  Loan
Register.  The Administrative Agent,
acting solely for this purpose as an agent of the Borrower, shall maintain at
its offices a copy of each Assignment and Assumption delivered to it and a register
for the recordation of the names and addresses of the Lenders and principal
amount of the Facility owing to each Lender pursuant to the terms hereof from
time to time (the Loan Register).  The
entries in the Loan Register shall be conclusive, and the Borrower, the Parent
Guarantor, the Shipowner Guarantor, and the other Creditors may treat each
Person whose name is recorded in the Loan Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Loan Register shall be available for inspection by the
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.  SECTION 11.  ILLEGALITY, INCREASED COSTS, ETC.  11.1  Illegality.  In the event that by reason of any change in
any applicable law, regulation or regulatory requirement or in the
interpretation thereof, a Lender has a reasonable basis to conclude that it has
become unlawful for any Lender to maintain or give effect to its obligations as
contemplated by this Agreement, such Lender shall inform the Administrative
Agent and the Borrower to that effect, whereafter the liability of such Lender
to make its Commitment available shall forthwith cease and the Borrower shall
be required either to repay to such Lender that portion of the Facility
advanced by such Lender immediately or, if such Lender so agrees, to repay such
portion of the Facility to the Lender on the last day of any then current
Interest Period in accordance with and subject to the provisions of Section 11.4.  In any such event, but without prejudice to
the aforesaid obligations of the Borrower to repay such portion of the
Facility, the Borrower and the relevant Lender shall negotiate in good faith
with a view to agreeing on terms for making such portion of the Facility
available from another jurisdiction or otherwise restructuring such portion of
the Facility on a basis which is not unlawful.  11.2  Increased
Costs.  If any change in applicable
law, regulation or regulatory requirement, or in the interpretation or
application thereof by any governmental or other authority, shall:  (i) 
subject any Lender to any Non-Excluded Taxes with respect to its income from
the Facility, or any part thereof; or  55


(ii) 
change the basis of taxation to any Lender of payments of principal or interest
or any other payment due or to become due pursuant to this Agreement (other
than a change in the basis of any Excluded Tax); or  (iii) 
impose, modify or deem applicable any reserve requirements or require the
making of any special deposits against or in respect of any assets or
liabilities of, deposits with or for the account of, or loans by, a Lender; or  (iv) 
impose on any Lender any other condition affecting the Facility or any part
thereof;  and the result
of the foregoing is either to increase the cost to such Lender of making
available or maintaining its Commitment or any part thereof or to reduce the
amount of any payment received by such Lender, then and in any such case if
such increase or reduction in the opinion of such Lender materially affects the
interests of such Lender under or in connection with this Agreement:  (A)  the Lender shall
notify the Administrative Agent and the Borrower of the happening of such
event, and  (B)  the Borrower agrees
forthwith upon demand to pay to such Lender such amount as such Lender
certifies to be necessary to compensate such Lender for such additional cost or
such reduction; provided, however, that the foregoing provisions
shall not be applicable in the event that increased costs to the Lender result
from the exercise by the Lender of its right to assign its rights or
obligations under Section 10.  11.3  Lenders
Certificate.  A certificate or
determination notice of any Lender as to any of the matters referred to in this
Section 11 shall, absent manifest error, be prima facie evidence
thereof.  The Administrative Agent and
each Lender shall deliver to the Borrower such documents and information as the
Borrower may reasonably request to verify the accuracy of any claim for
compensation or indemnification by a Lender under this Section 11.  11.4  Compensation
for Losses.  Where the Facility or
any portion thereof is to be repaid by the Borrower pursuant to this Section 11,
the Borrower agrees simultaneously with such repayment to pay to the relevant
Lender all accrued interest to the date of actual payment on the amount repaid
and all other sums then payable by the Borrower to the relevant Lender pursuant
to this Agreement, together with such amounts as may be certified by the
relevant Lender to be necessary to compensate such Lender for any actual loss,
premium or penalties incurred or to be incurred thereby on account of funds
borrowed to make, fund or maintain its Commitment or such portion thereof for
the remainder (if any) of the then current Interest Period or Interest Periods,
if any, but otherwise without penalty or premium.  56


SECTION 12.  CURRENCY INDEMNITY.  12.1  Currency
Conversion.  If for the purpose of
obtaining or enforcing a judgment in any court in any country it becomes
necessary to convert into any other currency (the judgment currency) an
amount due in Dollars under this Agreement or any other Transaction Document
then the conversion shall be made, in the discretion of the Administrative
Agent, at the rate of exchange prevailing either on the date of default or on
the day before the day on which the judgment is given or the order for enforcement
is made, as the case may be (the conversion date), provided that the
Administrative Agent shall not be entitled to recover under this section any
amount in the judgment currency which exceeds at the conversion date the amount
in Dollars due under this Agreement or any other Transaction Document.  12.2  Change
in Exchange Rate.  If there is a
change in the rate of exchange prevailing between the conversion date and the
date of actual payment of the amount due, the Borrower shall pay such additional
amounts (if any, but in any event not a lesser amount) as may be necessary to
ensure that the amount paid in the judgment currency when converted at the rate
of exchange prevailing on the date of payment will produce the amount then due
under this Agreement or any other Transaction Document in Dollars; any excess
over the amount due received or collected by the Lenders shall be remitted to
the Borrower.  12.3  Additional
Debt Due.  Any amount due from the
Borrower under this Section 12 shall be due as a separate debt and shall
not be affected by judgment being obtained for any other sums due under or in
respect of this Agreement and/or any other Transaction Document.  12.4  Rate
of Exchange.  The term rate of
exchange in this Section 12 means the rate at which the Administrative
Agent in accordance with its normal practices is able on the relevant date to
purchase Dollars with the judgment currency and includes any premium and costs
of exchange payable in connection with such purchase.  SECTION 13.  FEES AND EXPENSES.  13.1  Fees.  The Borrower shall pay, quarterly in arrears,
with the final payment to be made on the date of the Delivery Advance, from the
date of this Agreement, to the Administrative Agent (for the account of the
Lenders), a commitment fee of forty percent (40%) of the Applicable Margin,
payable on the undrawn portion of the Facility. 
The Borrower shall also pay to the Administrative Agent such fees as the
parties have agreed pursuant to the Fee Letter.  13.2  Expenses.  The Borrower agrees, whether or not the
transactions hereby contemplated are consummated, on demand to pay, or
reimburse the Administrative Agent and the Security Trustee for its payment of,
the reasonable expenses of the Administrative Agent, the Security Trustee and
(after the occurrence and during the continuance of an Event of Default) the
Lenders incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto requested by the Borrower or
incurred in connection with the enforcement or defense of any of the Creditors
rights or remedies with respect thereto or in the preservation of the
Administrative Agents, the Security Trustees and the Lenders priorities  57


under the documentation executed and delivered in connection therewith)
including, without limitation, all reasonable documented costs and expenses of
preparation, negotiation, execution and administration of this Agreement and
the documents referred to herein, the reasonable fees and disbursements of the
Administrative Agents or Security Trustees counsel in connection therewith,
as well as the reasonable documented fees and expenses of any independent
appraisers, surveyors, engineers and other consultants retained by the
Administrative Agent or the Security Trustee in connection with this
transaction, all reasonable costs and expenses, if any, in connection with the
enforcement of this Agreement or any other Transaction Document and stamp and
other similar taxes, if any, incident to the execution and delivery of the
documents (including, without limitation, the Note) herein contemplated and to
hold the Creditors free and harmless in connection with any liability arising
from the nonpayment of any such stamp or other similar taxes.  Such taxes and, if any, interest and
penalties related thereto as may become payable after the date hereof shall be
paid immediately by the Borrower to the Administrative Agent, the Security Trustee
or the Lenders, as the case may be, when liability therefor is no longer
contested by such party or parties or reimbursed immediately by the Borrower to
such party or parties after payment thereof (if the Administrative Agent, the
Security Trustee or the Lenders, at their sole discretion, chooses to make such
payment).  13.3  Right
of Setoff.  In addition to any rights
now or hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of an Event of Default, each Creditor is hereby authorized at any time or from
time to time, without presentment, demand, protest or other notice of any kind
to any Security Party or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Creditor (including, without limitation, by branches and agencies of such
Creditor wherever located) to or for the credit or the account of the Borrower
or any other Security Party but in any event excluding assets held in trust for
any such Person against and on account of the Obligations and liabilities of
such Security Party, as applicable, to such Creditor under this Agreement or under
any of the other Transaction Documents, including, without limitation, all
claims of any nature or description arising out of or connected with this
Agreement or any other Transaction Document, irrespective of whether or not
such Creditor shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.  SECTION 14.  ADMINISTRATIVE AGENT AND SECURITY TRUSTEE.  14.1  Appointment
of Administrative Agent.  Each of the
Lenders irrevocably appoints and authorizes the Administrative Agent, which for
the purposes of this Section 14 shall be deemed to include the
Administrative Agent acting in its capacity as Security Trustee pursuant to Section 14.2
to take such action as agent on its behalf and to exercise such powers under
any Transaction Document as is delegated to the Administrative Agent by the
terms of such Transaction Document. 
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under any Transaction Document or in connection therewith, except
for its or their own gross negligence or willful misconduct.  58


14.2  Appointment
of Security Trustee.  Each of the
Lenders (in its capacity as a lender under this Agreement and, to the extent
applicable, in its capacity as a swap provider under any Facility Swap)
irrevocably appoints the Security Trustee as security trustee on its behalf
with regard to (i) the security, powers, rights, titles, benefits and
interests (both present and future) constituted by and conferred on the Lenders
or any of them or for the benefit thereof under or pursuant to any Transaction
Document (including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given, made or
undertaken to any Lender in any Transaction Document),  (ii) all moneys, property and other
assets paid or transferred to or vested in any Lender or any agent of any
Lender or received or recovered by any Lender or any agent of any Lender
pursuant to, or in connection with, any Transaction Document whether from any
Security Party or any other Person and (iii) all money, investments,
property and other assets at any time representing or deriving from any of the
foregoing, including all interest, income and other sums at any time received
or receivable by any Lender or any agent of any Lender in respect of the same
(or any part thereof).  The Security
Trustee hereby accepts such appointment.  14.3  Distribution
of Payments.  Whenever any payment is
received by the Administrative Agent from any Security Party for the account of
the Lenders, or any of them, whether of principal or interest on the Note,
commissions, fees under Section 13 or otherwise, it shall thereafter cause
to be distributed on the same Banking Day if received before 11 a.m. New
York time, or on the next Banking Day if received thereafter, like funds
relating to such payment ratably to the Lenders according to their respective
Commitments, in each case to be applied according to the terms of this
Agreement.  14.4  Holder
of Interest in Note.  The
Administrative Agent may treat each Lender as the holder of all of the interest
of such Lender in the Note.  14.5  No
Duty to Examine, Etc.  Neither the
Administrative Agent nor the Security Trustee shall be under any duty to
examine or pass upon the validity, effectiveness or genuineness of any of any
Transaction Document or any instrument, document or communication furnished
pursuant to any Transaction Document, and each of the Administrative Agent and
the Security Trustee shall be entitled to assume that the same are valid,
effective and genuine, have been signed or sent by the proper parties and are
what they purport to be.  14.6  Administrative
Agent and Security Trustee as Lender. 
With respect to that portion of the Facility made available by it, each
of the Administrative Agent and the Security Trustee shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not the Administrative Agent or the Security Trustee, as the case may be,
and the term Lender or Lenders shall include the Administrative Agent or
the Security Trustee, as the case may be, in its capacity as a Lender.  Both the Administrative Agent and the
Security Trustee and their respective affiliates may accept deposits from, lend
money to and generally engage in any kind of business with, a Security Party as
if it were not the Administrative Agent or the Security Trustee, as the case
may be.  14.7  Acts
of the Agents.  The Administrative
Agent and the Security Trustee shall have duties and discretion, and shall act
as follows:  59


(a)  Obligations
of the Agents.  the obligations of
the Administrative Agent or the Security Trustee, as the case may be, under
each of the Transaction Documents are only those expressly set forth in each
such Transaction Document;  (b)  No
Duty to Investigate.  neither
Administrative Agent nor the Security Trustee, as the case may be, shall at any
time, unless requested to do so by a Lender or Lenders, be under any duty to
investigate whether an Event of Default or a Default has occurred or to investigate
the performance of any Security Party under or pursuant to any Transaction
Document;  (c)  Discretion
of the Agents.  the Administrative
Agent and the Security Trustee, as the case may be, shall each be entitled to
use its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, and with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, any Transaction Document, unless the Administrative Agent or the
Security Trustee, as the case may be, shall have been instructed by the
Majority Lenders to exercise such rights or to take or refrain from taking such
action; provided, however, that neither the Administrative Agent nor the Security
Trustee, as the case may be, shall be required to take any action which exposes
the Administrative Agent or the Security Trustee, as the case may be, to
personal liability or which is contrary to this Agreement, any other
Transaction Document or applicable law;  (d)  Instructions
of Majority Lenders.  the
Administrative Agent or the Security Trustee, as the case may be, shall in all
cases be fully protected in acting or refraining from acting under any
Transaction Document in accordance with the instructions of the Majority
Lenders (or when applicable, all the Lenders), and any action taken or failure
to act pursuant to such instructions shall be binding on all of the Lenders.  14.8  Certain
Amendments.  No Transaction Document
and no term of any Transaction Document may be amended unless such amendment is
approved by the Borrower and the Majority Lenders, provided that no such
amendment shall, without the consent of each Lender affected thereby, (i) 
reduce the interest rate or extend the time of payment of scheduled principal
payments or interest or fees on the Facility, or reduce the principal amount of
the Facility or any fees hereunder, (ii) increase or decrease the
Commitment of any Lender or subject any Lender to any additional obligation (it
being understood that a waiver of any Event of Default or any mandatory
repayment of Facility shall not constitute a change in the terms of any
Commitment of any Lender), (iii) amend, modify or waive any provision of
this Section 14.8, (iv) amend the definition of Majority Lenders, (v) consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement, (vi) release any Security Party from any
of its obligations under any Transaction Document except as expressly provided in
this Agreement or in such Transaction Document or (vii) amend any
provision relating to the maintenance of collateral under Section 9.4.  All amendments approved by the Majority
Lenders under this Section 14.8 must be in writing and signed by the
Borrower and each of the Lenders.  A
change in classification societies from the Classification Society to another
member of the International Association of Classification Societies must be
approved by the Majority Lenders.  60


In the event that any Lender is unable to or refuses to sign an
amendment approved by the Majority Lenders hereunder, such Lender hereby
appoints the Administrative Agent as its Attorney-in-Fact for the purposes of
signing such amendment.  No provision of
this Section 14 or any other provisions relating to the Administrative
Agent may be modified without the consent of the Administrative Agent.  14.9  Assumption
re Event of Default.  Except as
otherwise provided in Section 14.14, the Administrative Agent and the
Security Trustee, as the case may be, shall each be entitled to assume that no
Event of Default or Default has occurred and is continuing, unless the
Administrative Agent or the Security Trustee, as the case may be, has been
notified by a Security Party of such fact, or has been notified by a Creditor
that such Creditor considers that an Event of Default or Default (specifying in
detail the nature thereof) has occurred and is continuing.  In the event that the Administrative Agent or
the Security Trustee, as the case may be, shall have been notified by any
Security Party or any other Creditor in the manner set forth in the preceding
sentence of any Event of Default or Default, the Administrative Agent or the
Security Trustee, as the case may be, shall notify the other Creditors and
shall take action and assert such rights under the Transaction Documents as the
Majority Lenders shall request in writing.  14.10  Limitations
of Liability.  No Creditor shall be
under any liability or responsibility whatsoever:  (a)  to
any Security Party or any other Person as a consequence of any failure or delay
in performance by, or any breach by, any other Creditor or any other Person of
any of its or their obligations under any Transaction Document;  (b)  to
any other Creditor as a consequence of any failure or delay in performance by,
or any breach by, any Security Party of any of its respective obligations under
any Transaction Document; or  (c)  to
any other Creditor for any statements, representations or warranties contained
in any Transaction Document or in any document or instrument delivered in
connection with the transactions contemplated by the Transaction Documents; or
for the validity, effectiveness, enforceability or sufficiency of any Transaction
Document or any document or instrument delivered in connection with the
transactions contemplated by the Transaction Documents.  14.11  Indemnification
of the Agents.  The Lenders agree to
indemnify each of the Administrative Agent and the Security Trustee (to the
extent not reimbursed by the Security Parties or either thereof), pro  rata
according to the respective amounts of their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and expenses incurred in investigating claims
and defending itself against such liabilities) which may be imposed on,
incurred by or asserted against, the Administrative Agent or the Security
Trustee or both, as the case may be, in any way relating to or arising out of
any Transaction Document, any action taken or omitted by the Administrative
Agent or the Security Trustee, as the case may be, thereunder or the preparation,
administration, amendment or  61


enforcement of, or waiver of any provision of, any Transaction
Document, except that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative Agents
or the Security Trustees, as the case may be, gross negligence or willful
misconduct.  14.12  Consultation
with Counsel.  The Administrative
Agent and the Security Trustee may each consult with legal counsel selected by
the Administrative Agent or the Security Trustee, as the case may be, and shall
not be liable for any action taken, permitted or omitted by it in good faith in
accordance with the advice or opinion of such counsel.  14.13  Resignation.  The Administrative Agent or the Security
Trustee, as the case may be, may resign at any time by giving sixty (60)
days written notice thereof to the Lenders and the Borrower.  Upon any such resignation, the Majority
Lenders shall have the right to appoint a successor Administrative Agent or the
Security Trustee, as the case may be.  If
no successor Administrative Agent or the Security Trustee, as the case may be,
shall have been so appointed by the Lenders and shall have accepted such
appointment within sixty (60) days after the retiring Administrative Agents
or the Security Trustees, as the case may be, giving notice of resignation,
then the retiring Administrative Agent or the Security Trustee, as the case may
be, may, on behalf of the Lenders, appoint a successor Administrative Agent or
the Security Trustee, as the case may be, which shall be a bank or trust
company of recognized standing.  The appointment
of any successor Administrative Agent or the Security Trustee, as the case may
be, shall be subject to the prior written consent of the Borrower, such consent
not to be unreasonably withheld.  After
any retiring Administrative Agents or the Security Trustees, as the case may
be, resignation as Administrative Agent or the Security Trustee, as the case
may be, hereunder, the provisions of this Section 14 shall continue in
effect for its benefit with respect to any actions taken or omitted by it while
acting as Administrative Agent or the Security Trustee, as the case may be.  14.14  Representations
of Lenders.  Each Lender represents
and warrants to each other Creditor that:  (a)  in
making its decision to enter into this Agreement and to make its Commitment
available hereunder, it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Security
Parties, that it has made an independent credit judgment and that it has not
relied upon any statement, representation or warranty by any other Creditor;
and  (b)  so
long as any portion of its Commitment remains outstanding, it shall continue to
make its own independent evaluation of the financial condition and affairs of
the Security Parties.  14.15  Notification
of Event of Default.  Each Creditor
hereby undertakes to promptly notify the other Creditors of the existence of
any Event of Default which shall have occurred and be continuing of which such
Creditor has actual knowledge.  14.16  No
Agency or Trusteeship if DnB NOR only Lender.  If at any time DnB NOR is the only Lender,
all references to the terms Administrative Agent and Security  62


Trustee in this Agreement and each other Transaction Document shall be
deemed to be references to DnB NOR as Lender and not as Administrative Agent or
Security Trustee.  SECTION 15.  INDEMNIFICATION.  15.1  Indemnification.  The Borrower and, by its execution and
delivery of the Consent and Agreement set forth below, the Parent Guarantor
jointly and severally agree to indemnify each Creditor, its respective
successors and assigns, and its respective officers, directors, employees,
representatives and agents (each an Indemnitee) from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of
any kind or nature whatsoever (including, without limitation, the reasonable,
documented fees and disbursements of counsel for such Indemnitee in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be designated a party thereto)
that may at any time (including, without limitation, at any time following the
payment of the obligations of the Borrower hereunder) be imposed on, asserted
against or incurred by, any Indemnitee as a result of, or arising out of or in
any way related to or by reason of, (a) any violation by any Security
Party (or any charterer or other operator of any Vessel) of any applicable
Environmental Law, (b) any Environmental Claim arising out of the
management, use, control, ownership or operation of property or assets by any
Security Party (or, after foreclosure, by any Creditor or any of their
respective successors or assigns), (c) the breach of any representation,
warranty or covenant set forth in this Agreement (including the use of the
proceeds of the Facility and any claim made for any brokerage commission, fee
or compensation from any Person arising from act or omissions of any Security
Party), or (d) the execution, delivery, performance or non-performance of
any Transaction Document, or any of the documents referred to herein or
contemplated hereby (whether or not the Indemnitee is a party thereto).  If and to the extent that the obligations of
the Security Parties under this Section are unenforceable for any reason,
the Borrower and, by its execution and delivery of the Consent and Agreement
set forth below, the Parent Guarantor jointly and severally agree to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.  The
obligations of the Security Parties under this Section 15.1 shall survive
the termination of this Agreement and the repayment to the Creditors of all
amounts owing thereto under or in connection herewith.  Notwithstanding anything contained herein to
the contrary, none of the Security Parties shall have any liability under this Section 15.1
to any Indemnitee that arises out of such Indemnitees gross negligence or
willful misconduct or that consists of or relates to any Excluded Tax.  SECTION 16.  MISCELLANEOUS.  16.1  Time
of Essence.  Time is of the essence
of this Agreement but no failure or delay on the part of any Creditor to
exercise any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise by any Creditor of any power
or right hereunder preclude any other or further exercise thereof or the exercise
of any other power or right.  The
remedies provided herein are cumulative and are not exclusive of any remedies
provided by law.  63


16.2  Prior
Agreements, Merger.  Any and all
prior understandings and agreements heretofore entered into between the
Security Parties on the one part, and the Creditors, on the other part, whether
written or oral, other than the Fee Letter, are superseded by and merged into
this Agreement and the other Transaction Documents and agreements (the forms of
which are exhibited hereto) to be executed and delivered in connection herewith
to which the Security Parties and/or any of the Creditors are parties, which
alone fully and completely express the agreements between the Security Parties
and the Creditors.  16.3  USA
Patriot Act Notice; OFAC and Bank Secrecy Act.  The Administrative Agent hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56, signed into law October 26, 2001) (the Patriot Act),
and the policies and practices of the Administrative Agent, each of the
Creditors is required to obtain, verify and record certain information and
documentation that identifies the Borrower, which information includes the name
and address of the Borrower and such other information that will allow the
Creditors to identify the Borrower in accordance with the Patriot Act.  In addition, the Borrower shall: (a) ensure
that no Person who owns a controlling interest in or otherwise controls the
Borrower or any subsidiary of any thereof is or shall be listed on the
Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (OFAC), the
Department of the Treasury or included in any Executive Orders; (b) not
use or permit the use of the proceeds of the Facility to violate any of the
foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto; and (c) comply, and cause any of its subsidiaries
to comply, with all applicable Bank Secrecy Act laws and regulations, as
amended.  16.4  Further
Assurances.  The Borrower agrees that
if this Agreement or any Transaction Document shall, in the reasonable opinion
of the Creditors, at any time be deemed by the Creditors for any reason
insufficient in whole or in part to carry out the true intent and spirit hereof
or thereof, it shall execute or cause to be executed such other documents or
deliver or cause to be delivered such further assurances as in the opinion of
the Creditors may be required in order to more effectively accomplish the
purposes of this Agreement or any other Transaction Document.  16.5  Remedies
Cumulative and Not Exclusive; No Waiver. 
Each and every right, power and remedy herein given to the
Administrative Agent shall be cumulative and shall be in addition to every
other right, power and remedy of the Administrative Agent now or hereafter existing
at law, in equity or by statute, and each and every right, power and remedy,
whether herein given or otherwise existing, may be exercised from time to time,
in whole or in part, and as often and in such order as may be deemed expedient
by the Administrative Agent, and the exercise or the beginning of the exercise
of any right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy.  No failure, delay or omission by
the Administrative Agent or any of the Creditors in the exercise of any right
or power or in the pursuance of any remedy accruing upon any breach or default
by the Borrower or any Security Party shall impair any such right, power or
remedy or be construed to be a waiver of any such right, power or remedy or to
be an acquiescence therein; nor shall the acceptance by the Administrative
Agent or any of the Creditors of any security or of any payment of or on
account of any of the amounts due from the Borrower or any Security Party to
the Administrative Agent and maturing after any breach or default or of any
payment on  64


account of any past breach or default be construed to be a waiver of
any right with respect to any future breach or default or of any past breach or
default not completely cured thereby.  In
addition to the rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to any of the
Obligations, the Administrative Agent shall have rights and remedies of a
secured party under the UCC.  16.6  Successors
and Assigns.  This Agreement and all
obligations of the Borrower hereunder shall be binding upon the successors and
assigns of the Borrower and shall, together with the rights and remedies of the
Administrative Agent hereunder, inure to the benefit of the Administrative
Agent, its respective successors and assigns.  16.7  Waiver;
Amendment.  None of the terms and
conditions of this Agreement may be changed, waived, modified or varied in any
manner whatsoever unless in writing duly signed by the Borrower and the
Administrative Agent (with the consent of the Majority Lenders).  16.8  Amendments.  Subject to Section 14.8, any provision
of this Agreement or any other Transaction Document may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower, the Administrative Agent, the Security Trustee and the Majority
Lenders.  16.9  Invalidity.  If any provision of this Agreement shall at
any time, for any reason, be declared invalid, void or otherwise inoperative by
a court of competent jurisdiction, such declaration or decision shall not
affect the validity of any other provision or provisions of this Agreement, or
the validity of this Agreement as a whole and, to the fullest extent permitted
by law, the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the
Administrative Agent in order to carry out the intentions of the parties hereto
as nearly as may be possible.  The
invalidity and unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.  16.10  Notices.  All notices, requests, demands and other
communications to any party hereunder shall be in writing (including prepaid
overnight courier, facsimile transmission, electronic transmission or similar
writing) and shall be given to the Borrower, the Administrative Agent or the
Security Trustee at the address, facsimile number or email address of each set
forth below and to the Lenders at each such Lenders address, facsimile numbers
or email address set forth in Schedule 1 or at such other address,
facsimile number or email address as such party may hereafter specify for the
purpose by notice to each other party hereto. 
Any notice sent by facsimile or electronic transmission shall be
confirmed by letter dispatched as soon as practicable thereafter.  If to the Borrower:K-SEA OPERATING PARTNERSHIP L.P.One Tower Center Boulevard, 17th FloorEast Brunswick, NJ 08816Facsimile No.: 732-565-3699Telephone No.: 732-565-3828Email: jnicola@k-sea.comAttention: John J. Nicola  65


If to the Administrative Agent or Security Trustee:DNB NOR BANK
  ASA200 Park
  AvenueNew York, NY
  10166-0396Facsimile
  No.: 212-681-3900Telephone
  No.: 212-681-3800Email:
  cathleen.buckley@dnbnor.no/ 
  nikolai.nachamkin@dnbnor.noAttention:
  Cathleen Buckley/ Nikolai Nachamkin  Every
notice or other communication shall, except so far as otherwise expressly
provided by this Agreement, be deemed to have been received (provided that it
is received prior to 2 p.m. local time; otherwise it shall be deemed to
have been received on the next following Banking Day) (i) if given by
facsimile or electronic transmission, on the date of dispatch thereof (provided
further that if the date of dispatch is not a Banking Day in the locality of
the party to whom such notice or demand is sent, it shall be deemed to have
been received on the next following Banking Day in such locality) or (ii) if
given by mail, prepaid overnight courier or any other means, when received at
the address specified in this Section or when delivery at such address is
refused.  16.11  Counterparts;
Electronic Delivery.  This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute one and the same
instrument.  Delivery of an executed
counterpart of this Agreement by facsimile or electronic transmission shall be
deemed as effective as delivery of an originally executed counterpart.  In the event that the Borrower delivers an
executed counterpart of this Agreement by facsimile or electronic transmission,
the Borrower shall also deliver an originally executed counterpart as soon as
practicable, but the failure of the Borrower to deliver an originally executed
counterpart of this Agreement shall not affect the validity or effectiveness of
this Agreement.  16.12  References.  References herein to Sections, Exhibits and
Schedules are to be construed as references to sections of, exhibits to, and
schedules to, this Agreement, unless the context otherwise requires.  16.13  Headings.  In this Agreement, Section headings are
inserted for convenience of reference only and shall not be taken into account
in the interpretation of this Agreement.  66


SECTION 17.  APPLICABLE LAW, JURISDICTION AND WAIVERS.  17.1  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to principles of conflicts of laws thereof other than Sections 5-1401 and
5-1402 of the General Obligations Law of the State of New York.  17.2  Submission
to Jurisdiction.  The Borrower hereby
irrevocably submits to the jurisdiction of the courts of the State of New York
and of the United States District Court for the Southern District of New York
in any action or proceeding brought against it by any of the Creditors under
this Agreement or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Borrower by mailing or delivering the same by hand
to the Borrower at the address indicated for notices in this Agreement.  The service, as herein provided, of such
summons or other legal process in any such action or proceeding shall be deemed
personal service and accepted by the Borrower as such, and shall be legal and
binding upon the Borrower for all the purposes of any such action or
proceeding.  Final judgment (a certified
or exemplified copy of which shall be conclusive evidence of the fact and of
the amount of any indebtedness of the Borrower to the Creditors) against the
Borrower in any such legal action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment.  The Borrower shall advise the Administrative
Agent promptly of any change of address for the purpose of service of
process.  Notwithstanding anything herein
to the contrary, the Creditors may bring any legal action or proceeding in any
other appropriate jurisdiction.  17.3  WAIVER
OF IMMUNITY. TO THE EXTENT THAT THE BORROWER OR GUARANTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER
THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO
ITSELF OR ITS PROPERTY, EACH OF THE BORROWER AND THE GUARANTOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.  17.4  WAIVER
OF JURY TRIAL.  IT IS MUTUALLY AGREED
BY AND AMONG THE BORROWER, THE GUARANTOR AND THE CREDITORS THAT EACH OF THEM HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT.  [Signature page follows]  67


IN WITNESS whereof the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the day and year
first above written.   K-SEA OPERATING PARTNERSHIP L.P., by its generalpartner
  K-SEA OLP, LP, LLC,as BorrowerBy:
  
  /s/ John J.
  NicolaName:
  John J. NicolaTitle:
  Chief Financial OfficerDNB NOR BANK ASA,as
  Administrative Agent and Security TrusteeBy:
  
  /s/ Nikolai A. NachamkinName:
  Nikolai A. NachamkinTitle:
  Senior Vice PresidentBy:
  
  /s/ Cathleen BuckleyName:
  Cathleen BuckleyTitle:
  Vice President


The Lenders:DNB NOR BANK ASABy:
  
  /s/ Nikolai A. NachamkinName:
  Nikolai A. NachamkinTitle:
  Senior Vice PresidentBy:
  
  /s/ Cathleen BuckleyName:
  Cathleen BuckleyTitle:
  Vice President


CONSENT AND AGREEMENT  Each of the
undersigned, referred to in the foregoing Agreement as the Parent Guarantor
and the Shipowner Guarantor respectively, hereby consents and agrees to said
Agreement and to the documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be
performed by the undersigned pursuant to or in connection with said Agreement
and agrees particularly to be bound by the representations, warranties and
covenants relating to the undersigned contained in Sections 2 and 9 of said
Agreement to the same extent as if the undersigned were a party to said
Agreement.  K-SEA TRANSPORTATION PARTNERS L.P.,by its general partner K-SEA GENERAL PARTNER L.P.,
  by its general partner K-SEA GENERAL PARTNER GP, LLC,
  as Parent GuarantorBy:
  
  /s/ John J.
  NicolaName:
  John J. NicolaTitle:
  Chief Financial OfficerK-SEA TRANSPORTATION LLC,as Shipowner GuarantorBy:
  
  /s/ John J.
  NicolaName:
  John J. NicolaTitle:
  Chief Financial Officer


Schedule 1 Lenders and Commitments  Lenders
  
  CommitmentDNB NOR BANK
  ASA
  200 Park Avenue
  New York, NY 10166-0396
  Facsimile No.: 212-681-3900
  Telephone No.: 212-681-3800
  Email: cathleen.buckley@dnbnor.no/
  nikolai.nachamkin@dnbnor.no/
  Attention: Cathleen Buckley/Nikolai Nachamkin
  
  $
  57,600,000