----

1 INTERPRETATION

2 GUARANTEEFACILITY

3 REDUCTION OFGUARANTEES

4 SETTLEMENT OFGUARANTEES

5 INDEMNITY OF THEOBLIGORS

6 DEFAULTINTEREST

7 CONDITIONSPRECEDENT

8 REPRESENTATIONS ANDWARRANTIES

9 GENERAL UNDERTAKINGS ANDFINANCIAL COVENANTS

10 CORPORATEUNDERTAKINGS

11 PAYMENTS ANDCALCULATIONS

12 APPLICATION OFRECEIPTS

13 EVENTS OFDEFAULT

14 FEES ANDEXPENSES

15 INDEMNITIES

16 NO SET-OFF OR TAXDEDUCTION

17 ILLEGALITY,ETC

18 INCREASEDCOSTS

19 SET-OFF

20 TRANSFERS AND CHANGES INISSUING OFFICE

21 VARIATIONS ANDWAIVERS

22 NOTICES

23 JOINT AND SEVERALLIABILITY

24 SUPPLEMENTAL

25 LAW ANDJURISDICTION

SCHEDULE 1 GUARANTEE ISSUEREQUEST 

SCHEDULE 2 CONDITIONPRECEDENT DOCUMENTS 

SCHEDULE 3 FINANCIALCOVENANTS 

SCHEDULE 4 FORM OFCOMPLIANCE CERTIFICATE 

EXECUTIONPAGE 

APPENDIX A FORM OF DELIVERYSECURITY ASSIGNMENT 

APPENDIX B FORM OF CORPORATEGUARANTEE 

APPENDIX C FORM OFGUARANTEE 

APPENDIX D FORM OFINTERCREDITOR AGREEMENT 

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| (1)   | ARGYLE MARITIME      CORP.,      CATON MARITIME      CORP.,      DORCHESTER MARITIME      CORP.,      LONGWOODS MARITIME      CORP.,      McHENRY MARITIME CORP.      and      SUNSWYCK MARITIME      CORP.,      as Joint and Several Obligors; and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | THE ROYAL BANK OF SCOTLAND      PLC,      as Issuer |
|-----------------|-----------------------------------------------------|

| 1   | INTERPRETATION |
|---------------|----------------|

| 1.1   | Definitions.      Subject to Clause 1.5, in thisAgreement: |
|-----------------|------------------------------------------------------------|

| (a)   | 30      April 2007 (or such later date as the Issuer may agree with the Obligors);      or |
|-----------------|--------------------------------------------------------------------------------------------|

| (b)   | if      earlier, the date on which the Commitment is fully cancelled or      terminated; |
|-----------------|------------------------------------------------------------------------------------------|

| (a)   | this      Agreement; |
|-----------------|----------------------|

| (b)   | the      Corporate Guarantee; |
|-----------------|-------------------------------|

| (c)   | the      Pre-delivery Security Assignments;and |
|-----------------|------------------------------------------------|

| (d)   | the      Fee Letter; |
|-----------------|----------------------|

| (e)   | the      Intercreditor Agreement; and |
|-----------------|---------------------------------------|

| (f)   | any      other document (whether creating a Security Interest or not) which is      executed at any time by the Obligor or any other person as security for,      or to establish any form of subordination or priorities arrangement in      relation to, any amount payable to the Issuer under this Agreement or any      of the other documents referred to in this  definition; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | for      principal, interest or any other sum payable in respect of any moneys      borrowed or raised by the debtor; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------|

| (b)   | under      any loan stock, bond, note or other security issued by the      debtor; |
|-----------------|------------------------------------------------------------------------------------|

| (c)   | under      any acceptance credit, guarantee or letter of credit facility made      available to the debtor; |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (d)   | under      a financial lease, a deferred purchase consideration arrangement or any      other agreement having the commercial effect of a borrowing or raising of      money by the debtor (other than normal trade credit not exceeding 180      days); |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | under      any foreign exchange transaction, any interest or currency swap or any      other kind of derivative transaction entered into by the debtor      or,      if the agreement under which any such transaction is entered into requires      netting of mutual liabilities, the liability of the debtor for the net      amount;      or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | under      a guarantee, indemnity or similar obligation entered into by the debtor in      respect of a liability of another person which would fall within      paragraphs (a) to (e) if the references to the debtor referred to the      other person; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      rate per annum equal to the offered quotation for deposits in Dollars for      a period equal to, or as near as possible equal to, that      period which      appears on REUTERS      BBA Page LIBOR 01 at      or about 11.00 a.m. (London time) on the Quotation      Date for that      period      (and, for the purposes of this Agreement, “REUTERS      BBA Page LIBOR 01”      means the display designated as “REUTERS      BBA Page LIBOR 01”      on the Reuters      Money News Service      or such other page as may replace REUTERS      BBA Page LIBOR 01 on      that service for the purpose of displaying rates comparable to that rate      or on such other service as may be nominated by the British Bankers’      Association as the information vendor for the purpose of displaying      British Bankers’ Association Interest Settlement Rates for Dollars);      or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | if      no rate is quoted on REUTERS BBA Page LIBOR 01 the rate per annum      determined by the Issuer to be the rate at which deposits in Dollars are      offered to the Issuer by leading banks in the London Interbank Market at      the Issuer’s request at or about 11.00 a.m. (London time) on the Quotation      Date for that period for a period equal to that period and for delivery on      the first Business Day of it; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Security      Interests created by the Finance Documents and Other Pre-delivery Security      Assignments; |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (b)   | any      Security Interest created in favour of a plaintiff or defendant in any      proceedings or arbitration as security for costs and expenses where the      relevant Obligor is actively prosecuting or defending such proceedings or      arbitration in good faith; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Security      Interests arising by operation of law in respect of taxes which are not      overdue for payment or in respect of taxes being contested in good faith      by appropriate steps and in respect of which appropriate reserves have      been made; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | England      and Wales; |
|-----------------|-------------------------|

| (b)   | the      country under the laws of which the company is incorporated or      formed; |
|-----------------|--------------------------------------------------------------------------------------|

| (c)   | a      country in which the company’s central management and control is or has      recently been exercised; |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (d)   | a      country in which the overall net income of the company is subject to      corporation tax, income tax or any similartax; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| (e)   | a      country in which assets of the company (other than securities issued by,      or loans to, related companies) having a substantial value are situated,      in which the company maintains a permanent place of business, or in which      a Security Interest created by the company must or should be registered in      order to ensure its validity or priority;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | a      country the courts of which have jurisdiction to make a winding up,      administration or similar order in relation to the company or which would      have such jurisdiction if their assistance were requested by the courts of      a country referred to in paragraphs (b) or (c)  above; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | a      mortgage, charge (whether fixed or floating) or pledge, any maritime or      other lien or assignment by way of security or any other security interest      of any kind; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      security rights of a plaintiff under an action in rem;      and |
|-----------------|--------------------------------------------------------------------------|

| (c)   | any      arrangement entered into by a person (A) the effect of which is to place      another person (B) in a position which is similar, in economic terms, to      the position in which B would have been had he held a security interest      over an asset of A; but this paragraph (c) does not apply to a right of      set off or combination of accounts conferred by the standard terms of      business of a bank or financialinstitution; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | all      amounts which have become due for payment by the Obligors or any Security      Party under the Finance Documents have been  paid; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | no      amount is owing or has accrued (without yet having become due for payment)      under any Finance Document; |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| (c)   | none      of the Obligors nor any Security Party has any future or contingent      liability under Clause 14, 15 or 16 or any other provision of this      Agreement or another FinanceDocument; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | the      Issuer does not consider that there is a significant risk that any payment      or transaction under a Finance Document would be set aside, or would have      to be reversed or adjusted, in any present or possible future bankruptcy      of an Obligor or a Security Party or in any present or possible future      proceeding relating to a Finance Document or any asset covered (or      previously covered) by a Security Interest created by a Finance Document;      and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | each      Guarantee has been returned to the Issuer by the Seller endorsed to the      effect that it is cancelled; |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| (a)   | in      relation to the Guarantee to be issued in respect of Ship A, 28 February      2010; |
|-----------------|---------------------------------------------------------------------------------------------|

| (b)   | in      relation to the Guarantee to be issued in respect of Ship B, 31 August      2010; |
|-----------------|-------------------------------------------------------------------------------------------|

| (c)   | in      relation to the Guarantee to be issued in respect of Ship C, 31 January      2011; |
|-----------------|--------------------------------------------------------------------------------------------|

| (d)   | in      relation to the Guarantee to be issued in respect of Ship D, 31 May      2011; |
|-----------------|----------------------------------------------------------------------------------------|

| (e)   | in      relation to the Guarantee to be issued in respect of Ship E, 30 March      2011; and |
|-----------------|----------------------------------------------------------------------------------------------|

| (f)   | in      relation to the Guarantee to be issued in respect of Ship F, 31 July      2011. |
|-----------------|-----------------------------------------------------------------------------------------|

| 1.2   | Construction of certain      terms. In      this Agreement: |
|-----------------|-------------------------------------------------------------|

| 1.3   | Meaning of      “month”. A      period of one or more “months”      ends on the day in the relevant calendar month numerically corresponding      to the day of the calendar month on which the period started      (“the numerically corresponding      day”),      but: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | on      the Business Day following the numerically corresponding day if the      numerically corresponding day is not a Business Day or, if there is no      later Business Day in the same calendar month, on the Business Day      preceding the numerically corresponding day;or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | on      the last Business Day in the relevant calendar month, if the period      started on the last Business Day in a calendar month or if the last      calendar month of the period has no numerically corresponding      day; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.4   | Meaning of      “subsidiary”. A      company (S) is a subsidiary of another company (P)  if: |
|-----------------|----------------------------------------------------------------------------------------------------------|

| (a)   | a      majority of the issued shares in S (or a majority of the issued shares in      S which carry unlimited rights to capital and income distributions) are      directly owned by P or are indirectly attributable to P;  or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | P      has direct or indirect control over a majority of the voting rights      attaching to the issued shares of S;or |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| (d)   | P      otherwise has the direct or indirect power to ensure that the affairs of S      are conducted in accordance with the wishes of  P; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| 1.5   | General      Interpretation.      In this Agreement: |
|-----------------|------------------------------------------------------|

| (a)   | references      in Clause 1.1 to a Finance Document or any other document being in the      form of a particular appendix include references to that form with any      modifications to that form which the Issuer approves or reasonably      requires; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | references      to, or to a provision of, a Finance Document or any other document are      references to it as amended or supplemented, whether before the date of      this Agreement or otherwise; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | references      to, or to a provision of, any law include any amendment, extension,      re-enactment or replacement, whether made before the date of this      Agreement or otherwise; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | words      denoting the singular number shall include the plural and vice versa;      and |
|-----------------|-------------------------------------------------------------------------------------------|

| (e)   | Clauses      1.1 to 1.5 apply unless the contrary intention  appears. |
|-----------------|-----------------------------------------------------------------------|

| 1.6   | Headings. In      interpreting a Finance Document or any provision of a Finance Document,      all clause, sub-clause and other headings in that and any other Finance      Document shall be entirelydisregarded. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2   | GUARANTEE      FACILITY |
|---------------|-------------------------|

| 2.1   | Availability of guarantee      facility.      Subject to the other provisions of this Agreement, the Issuer shall make      available to the Obligors a guarantee facility in an amount of $84,000,000      which shall be made available by the following  Guarantees: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship A; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship B; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship C; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship D; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship E; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | a      Guarantee in an amount not exceeding $14,000,000 as a performance      guarantee in favour of the Seller to secure the second, third and fourth      instalments of the Contract Price due from the relevant Obligor under the      Shipbuilding Contract for Ship F. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2   | Request for issue of      Guarantees.      Subject to the following conditions, an Obligor may make a request for a      Guarantee to be issued by ensuring that the Issuer receives a completed      Guarantee Issue Request not later than 11 a.m. (London time) 3 Business      Days prior to the intended Guarantee IssueDate. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3   | Availability.      The conditions referred to in Clause 2.2 are  that: |
|-----------------|------------------------------------------------------------------------|

| (a)   | a      Guarantee Issue Date has to be a Business Day during the Availability      Period; |
|-----------------|-------------------------------------------------------------------------------------------|

| (b)   | the      maximum amount of a Guarantee shall be $14,000,000 and shall not, when      aggregated with the amount of all other issued Guarantees, exceed the      Commitment; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      Issuer must receive, together with the Guarantee Issue Request, a final      draft of the form of Guarantee which it is being requested to issue on the      intended Guarantee Issue Date; and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | the      form of each Guarantee has to be approved in writing by the Issuer at      least 2 Business Days prior to the intended Guarantee Issue Date but it      must in any event contain expressprovisions: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | limiting      the total amount payable by the Issuer under it to a stated maximum amount      in Dollars; and |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (ii)   | stating      that it shall expire or be reduced to zero not later than the relevant      Termination Date. |
|------------------|------------------------------------------------------------------------------------------------------------|

| 2.4   | Cancellation of guarantee      facility.      The Obligor may cancel the Available Commitment in whole or in part      subject to the condition that the Issuer has received from the Obligor at      least 7 Business Days’ prior written notice specifying the amount to be      cancelled and the date on which the cancellation is to take effect. The      Commitment shall be reduced permanently by the amount of the Available      Commitment so cancelled. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.5   | Change of beneficial ownership      of Obligors or the Corporate Guarantor. If      without the consent of the Issuer a change occurs after the date of this      Agreement in the ultimate beneficial ownership of any shares in any      Obligor or the Corporate Guarantor or in the ultimate voting rights      attaching to any of those shares from that disclosed to the Issuer      pursuant to Schedule 2 Part A 10: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      Obligors shall promptly notify the Issuer upon becoming aware of that      event; and |
|-----------------|------------------------------------------------------------------------------------------------|

| (b)   | the      Issuer shall not be obliged to provide a Guarantee requested in a      Guarantee Issue Request and the Issuer may, by not more than 10 days’      notice to the Obligors cancel the Available Commitment and require the      Obligors either to procure the cancellation of any issued Guarantees or to      provide cash security in respect of such issued Guarantees on the same      terms mutatis mutandis as set out in Clause5.6. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3   | REDUCTION OF      GUARANTEES |
|---------------|------------------------------|

| 3.1   | Reduction of Outstanding      Guarantee Amounts.      The Outstanding Guarantee Amount of a Guarantee shall not be treated as      reduced for the purposes of this Agreement unless and    until: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      Issuer has received a written confirmation from the Seller of the amount      of such reduction; or |
|-----------------|--------------------------------------------------------------------------------------------------------------|

| (b)   | the      Issuer has notified the relevant Obligor in writing that (notwithstanding      the absence of a written confirmation from the Seller) it is satisfied      that its liability under the Guarantee has been irrevocably reduced or      discharged; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      amount of the Guarantee irrevocably and unconditionally reduces in      accordance with its terms; or |
|-----------------|----------------------------------------------------------------------------------------------------------------|

| (d)   | the      expiry date of the Guarantee elapses and the Issuer has notified the      relevant Obligor in writing that it is satisfied that no claim or demand      has been made, or may thereafter be made, under the Guarantee, such      notification not to be unreasonably withheld or  delayed. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4   | SETTLEMENT OF      GUARANTEES |
|---------------|-------------------------------|

| 4.1   | Notification of Settlement      Amounts.      The Issuer shall, immediately after receiving a demand from, or after      being notified by, the Seller that it is required to make payment under a      Guarantee, notify the relevant Obligor that such payment is due and of the      Settlement Amount and the SettlementDate. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2   | Relevant Obligor’s settlement      obligation.      The relevant Obligor shall: |
|-----------------|---------------------------------------------------------------------------------------|

| (a)   | immediately      after notification from the Issuer under Clause 4.1, acknowledge to the      Issuer that it will reimburse the Settlement Amount; and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | pay      to the Issuer the Settlement Amount in Dollars on the Settlement      Date. |
|-----------------|--------------------------------------------------------------------------------------|

| 4.3   | Relevant Obligor’s failure to      reimburse. If      the relevant Obligor fails to reimburse the Settlement Amount to the      Issuer on the Settlement Date pursuant to Clause 4.2, it shall pay to the      Issuer interest on the Settlement Amount from the Settlement Date to the      date the Issuer is reimbursed by the relevant Obligor at the rate      described in Clause 6 such interest to be compounded in accordance with      Clause 6.6 and payable on demand. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5   | INDEMNITY OF THE      OBLIGORS |
|---------------|--------------------------------|

| 5.1   | Obligors’ undertaking to      indemnify.      Each Obligor agrees that it shall: |
|-----------------|----------------------------------------------------------------------------------------|

| (a)   | pay      to the Issuer upon demand by the Issuer an amount equal to each      amount: |
|-----------------|---------------------------------------------------------------------------------------|

| (i)   | demanded      from the Issuer under a Guarantee;or |
|-----------------|----------------------------------------------------|

| (ii)   | paid      by the Issuer to the Seller under Clause5.8; |
|------------------|--------------------------------------------------------|

| (b)   | indemnify,      as a principal and independent debtor, the Issuer on demand against all      actions, claims, demands, liabilities, costs, losses, damages and expenses      incurred, suffered or sustained or any penalty or other expenditure which      may result or which the Issuer may incur, suffer or sustain in connection      with or arising out of or in relation to any Guaranteed Obligations and/or      the payment under or other performance of a Guarantee (including without      limitation any correspondent bankcharges). |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.2   | Guarantee      payments.      Each Obligor: |
|-----------------|---------------------------------------------|

| (a)   | irrevocably      authorises the Issuer to make any payment demanded from it pursuant to a      Guarantee if that demand is made in accordance with its    terms; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | accepts      that any demand for payment made by the Seller pursuant to a Guarantee and      which is made in accordance with its terms shall be conclusive evidence      that the Issuer was liable to make payment under the Guarantee and any      payment which the Issuer makes pursuant to any such demand shall be      accepted by the Obligors as binding upon the Obligors;  and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | acknowledges      and agrees that the Issuer shall not in any circumstances whatsoever be      liable to the Obligors in respect of any loss or damage suffered by the      Obligors by reason of the Issuer making a payment to the Seller in      connection with any payment demanded under a Guarantee. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.3   | Continuing      indemnities.      The liabilities and obligations of the Obligors under the indemnities set      out in Clause 5.1 shall remain in force as a continuing security      until: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      full, prompt and complete performance of all the terms of such indemnities      including the proper and valid payment of all amounts that may become due      to the Issuer under this Clause 5.3;and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | subject      to Clause 5.4, an absolute discharge or release of the Obligors signed by      the Issuer; |
|-----------------|---------------------------------------------------------------------------------------------------------|

| 5.4   | Discharges.      Any such discharge or release referred to in Clause 5.3, and any      composition or arrangement which the Obligors may effect with the Issuer,      shall be deemed to be made subject to the condition that it will be void      if any payment or security which the Issuer, may previously have received      or may thereafter receive is set aside under any applicable law or proves      to have been for any reason invalid.   |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.5   | No      impairment.      Without limiting the generality of Clauses 5.3 and 5.4, the Obligors shall      neither be discharged from any of their liabilities or obligations under      Clause 5.1 by, nor have any claim against the Issuer in respect of: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | any      misrepresentation or non-disclosure respecting the affairs or condition of      the Issuer made to the Obligors by any person;  or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      Seller and/or the Issuer releasing or granting any time or any indulgence      whatsoever or making any settlement, composition or arrangement with the      Obligors, the Seller or any other person; or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      Seller and/or the Issuer asserting or pursuing, failing or neglecting to      assert or pursue, or delaying in asserting or pursuing, or waiving, any of      their rights or remedies against the Obligors, the Seller or any other      person; or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | the      Seller and/or the Issuer and/or the Obligors, with the consent of the      Obligors (or with or without the consent of the Obligors in the case of      any variation agreed between the Seller and the Obligors or the person      whose obligations are guaranteed thereby), making, whether expressly or by      conduct, any variation to any Guaranteed Obligations or a Guarantee;      or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | the      Seller and/or the Issuer and/or the Obligors: |
|-----------------|--------------------------------------------------------|

| (i)   | taking,      accepting, varying, dealing with, enforcing, abstaining from enforcing,      surrendering or releasing any security in relation to the Seller or the      Issuer or any Obligor or any other person in such manner as it or they      think fit; or |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | claiming,      proving for, accepting or transferring any payment in respect of the      obligations and liabilities of any Obligor and/or the Seller relative to      any Guaranteed Obligations or under this Agreement in any composition by,      or winding up of, any Obligor and/or any third party or abstaining from so      claiming, proving, accepting or transferring;or |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | any      assignment or transfer by the Seller of, or any succession to, any of its      rights relative to any Guaranteed Obligations or a    Guarantee. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.6   | Provision of cash collateral      security.      Forthwith upon, or at any time following the occurrence of an Event of      Default which is continuing the Issuer shall be entitled (but not obliged)      to demand payment by the Obligors of, and the Obligors forthwith upon such      demand shall pay to the Issuer for credit to an account of the Obligors      with the Issuer (subject to such Security Interest as the Issuer may      reasonably specify or require), such amount as shall be the aggregate      of: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | any      Settlement Amount then due from the Obligors to the Issuer pursuant to      Clause 4.2 and not reimbursed; and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

| (ii)   | the      Outstandings. |
|------------------|------------------------|

| 5.7   | Application of cash collateral      security.      Subject always to the overriding provisions of Clause 15, moneys received      by the Issuer pursuant to Clause 5.6 shall be applied (as between the      Obligors on the one hand and the Issuer on the other) in the following      manner: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | firstly,      in or towards payment of any Settlement Amount then due from the Obligors      to the Issuer pursuant to Clause 4.2 and not  reimbursed; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | secondly,      in payment to the Issuer for application from time to time by it (and the      Obligors hereby irrevocably authorise the Issuer so to apply any such      moneys) in or towards payment of, or reimbursement to the Issuer for, any      amount which the Issuer shall or may at any time and from time to time      thereafter pay or be or become liable to pay to the Seller under or      pursuant to or in connection with a Guarantee (including any amount      payable under Clause 5.8); and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | thirdly,      in or towards payment of all other sums which may be owing to the Issuer      under or in connection with aGuarantee. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------|

| 5.8   | Negotiation with the      Seller.      Each Obligor: |
|-----------------|------------------------------------------------------|

| (a)   | irrevocably      authorises the Issuer to negotiate with the Seller at any time after the      occurrence of any Event of Default which is continuing with a view to      arranging for the prepayment by the Issuer, for the account of the      Obligors of any Guaranteed Obligations; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | agrees      that at any time after the occurrence of any Event of Default which is      continuing the Issuer shall be entitled (but not, so far as the Obligors      are concerned, bound) to pay to the Seller, in such manner and upon such      terms as the Issuer and      the Seller shall agree, any Guaranteed  Obligations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6   | DEFAULT      INTEREST |
|---------------|-----------------------|

| 6.1   | Payment of default interest on      overdue amounts.      The Obligors shall pay interest in accordance with the following      provisions of this Clause 6 on any amount payable by the Obligors under      any Finance Document which the Issuer does not receive on or before the      relevant date, that is: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      date on which the Finance Documents provide that such amount is due for      payment; or |
|-----------------|---------------------------------------------------------------------------------------------------|

| (b)   | if      a Finance Document provides that such amount is payable on demand, the      date on which the demand is served on the Obligors;  or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | if      such amount has become immediately due and payable under Clause 13.4, the      date on which it became immediately due and  payable. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| 6.2   | Default rate of      interest.      Interest shall accrue on an overdue amount from (and including) the      relevant date until the date of actual payment (as well after as before      judgment) at the rate per annum determined by the Issuer to be 1.5 per      cent. above, the rate set out in Clause6.3. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.3   | Calculation of default rate of      interest.      The rate referred to in Clause 6.2 is, in respect of successive periods of      any duration (including at call) up to 3 months which the Issuer may      select from time to time: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | LIBOR;      or |
|-----------------|----------------|

| (b)   | if      the Issuer determines that Dollar deposits for any such period are not      being made available to it by leading banks in the London Interbank Market      in the ordinary course of business, a rate from time to time determined by      the Issuer by reference to the cost of funds to it from such other sources      as the Issuer may from time to timedetermine. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.4   | Notification of interest      periods and default rates.      The Issuer shall promptly notify the Obligors of each interest rate      determined by it under Clause 6.3 and of each period selected by it for      the purposes of that Clause; but this shall not be taken to imply that the      Obligors are liable to pay such interest only with effect from the date of      the Issuer’s notification. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.5   | Payment of accrued default      interest.      Subject to the other provisions of this Agreement, any interest due under      this Clause shall be paid on the last day of the period by reference to      which it was determined. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.6   | Compounding of default      interest.      Any such interest which is not paid at the end of the period by reference      to which it was determined shall thereupon be  compounded. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7   | CONDITIONS      PRECEDENT |
|---------------|---------------------------|

| 7.1   | Documents, fees and no      default.      The Issuer’s obligation to issue any Guarantee is subject to the following      conditions precedent: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | that,      on or before the service of the first Guarantee Issue Request, the Issuer      receives the documents described in Part A of Schedule 2 in form and      substance satisfactory to it; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | that,      on or before a Guarantee Issue Date but prior to the issue of a Guarantee,      the Issuer receives the documents described in Part B of Schedule 2 in a      form satisfactory to it; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | that,      on or before each Guarantee Issue Date, the Issuer has received all      arrangement and commitment fees payable pursuant to Clause 18.1; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | that      both at the date of each Guarantee Issue Request and at each Guarantee      Issue Date: |
|-----------------|---------------------------------------------------------------------------------------------------|

| (i)   | no      Event of Default or Potential Event of Default has occurred and is      continuing or would result from the issue of the Guarantee;      and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | the      representations and warranties in Clause 8.1 and those of the Obligors or      any Security Party which are set out in the other Finance Documents would      be true and not misleading if repeated on each of those dates with      reference to the circumstances then existing; |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | that      the Issuer has received, and found to be acceptable to it, any further      opinions, consents, agreements and documents in connection with the      Finance Documents which the Issuer may reasonably request by notice to the      Obligors prior to the Guarantee IssueDate. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.2   | Waivers of conditions      precedent. If      the Issuer, at its discretion, permits any Guarantee to be issued before      certain of the conditions referred to in Clause 7.1 are satisfied, the      Obligor shall ensure that those conditions are satisfied within 14      Business days after the Guarantee Issue Date (or such longer period as the      Issuer may specify). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8   | REPRESENTATIONS AND      WARRANTIES |
|---------------|-------------------------------------|

| 8.1   | General.      Each Obligor represents and warrants to the Issuer as    follows. |
|-----------------|---------------------------------------------------------------------------------|

| 8.2   | Status. It      is duly incorporated and validly existing and in good standing under the      laws of the Marshall Islands. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------|

| 8.3   | Share capital and      ownership. It      has an authorised share capital of 500 registered and/or bearer shares      without par value, all of which shares have been issued, and the legal      title and beneficial ownership of all those shares is held, free of any      Security Interest or other claim, by Westbrook Holdings      Limited. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.4   | Corporate      power. It      has the corporate capacity, and has taken all corporate action and      obtained all consents necessary forit: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | to      execute the Shipbuilding Contract to which it is a party and to purchase      and pay for its Ship under that Shipbuilding  Contract; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      execute the Finance Documents to which it is a party;  and |
|-----------------|--------------------------------------------------------------------|

| (c)   | to      make all the payments contemplated by, and to comply with, those Finance      Documents. |
|-----------------|--------------------------------------------------------------------------------------------------|

| 8.5   | Consents in      force.      All the consents referred to in Clause 8.4 remain in force and nothing to      the best of the Obligors’ knowledge and belief has occurred which makes      any of them liable to revocation. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.6   | Legal validity; effective      Security Interests.      The Finance Documents to which it is a party, do now or, as the case may      be, will, upon execution and delivery (and, where applicable, registration      as provided for in the Finance Documents): |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | constitute      its legal, valid and binding obligations enforceable against it in      accordance with their respective terms;and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | create      legal, valid and binding Security Interests enforceable in accordance with      their respective terms over all the assets to which they, by their terms,      relate; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.7   | No third party Security      Interests.      Without limiting the generality of Clause 8.6, at the time of the      execution and delivery of each FinanceDocument: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      relevant Obligor or Obligors which are a party to that Finance Document      will have the right to create all the Security Interests which that      Finance Document purports to create;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | no      third party will to the best of the Obligors’ knowledge and belief have      any Security Interest (except for Permitted Security Interests) or any      other interest, right or claim over, in or in relation to any asset to      which a Security Interest created by a Finance Document,      relates. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.8   | No      conflicts.      The execution by that Obligor of each Finance Document to which it is a      party and its compliance with each Finance Document to which it is a party      will not involve or lead to a contraventionof: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | any      law or regulation in force at the date of this Agreement;    or |
|-----------------|--------------------------------------------------------------------------|

| (b)   | the      constitutional documents of that Obligor;or |
|-----------------|------------------------------------------------------|

| (c)   | any      contractual or other obligation or restriction which is binding on that      Obligor or any of its assets. |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| 8.9   | No withholding      taxes. No      tax is imposed in any jurisdiction in which that Obligor is ordinarily      resident for tax by way of withholding or deduction or otherwise on any      payment to be made under thisAgreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.10   | No default. No      Event of Default or Potential Event of Default has occurred and is      continuing. |
|------------------|---------------------------------------------------------------------------------------------------------|

| 8.11   | Information.      All information which has been provided in writing by or on behalf of the      Obligors or any Security Party to the Issuer in connection with any      Finance Document was to the best of the Obligors’ knowledge and belief      true and not misleading as at the time it was given; all audited and      unaudited accounts which have been so provided satisfied the requirements      of Clause 9.6; and there has been no material adverse change in the      financial position or state of affairs of the Obligors from that disclosed      in the latest of those accounts. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.12   | No      litigation. No      legal or administrative action involving the Obligors has been commenced      or taken or, to that Obligor’s knowledge, is likely to be commenced or      taken which, in either case, would be likely to have a material adverse      effect on the Obligors’ financial position or    profitability. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.13   | Validity and completeness of      Shipbuilding Contracts.      Each Shipbuilding Contract constitutes valid, binding and enforceable      obligations of the Seller and the relevant Obligor respectively in      accordance with its terms subject to any relevant insolvency laws      affecting creditors’ rights generallyand: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | each      copy of the Shipbuilding Contracts delivered to the Issuer before the date      of this Agreement is a true and complete copy;  and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | no      amendments or additions to the Shipbuilding Contracts have been agreed nor      has any Obligor or the Seller waived any of their respective rights under      the Shipbuilding Contracts. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.14   | No rebates      etc.      There is no agreement or understanding to allow or pay any rebate,      premium, commission, discount or other benefit or payment (howsoever      described) to the Obligors, the Seller or a third party in connection with      the purchase by the Obligors of the Ships, other than as disclosed to the      Issuer in writing on or prior to the date of this    Agreement. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.15   | Compliance with certain      undertakings. At      the date of this Agreement, each Obligor is in compliance with Clause 9.12      and (save as disclosed in writing to the Issuer) Clauses 9.3 and      9.8. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.16   | Taxes paid.      Each Obligor has paid all taxes applicable to, or imposed on or in      relation to it or its business. |
|------------------|--------------------------------------------------------------------------------------------------------------------------|

| 8.17   | Conformity of Financial      Covenants. The      financial covenants set out in Schedule 3 conform to the financial      covenants given by the Corporate Guarantor and its subsidiaries under the      Bank of America Facilities. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9   | GENERAL      UNDERTAKINGS AND FINANCIAL      COVENANTS |
|---------------|--------------------------------------------------------|

| 9.1   | General.      Each Obligor undertakes with the Issuer to comply with the following      provisions of this Clause 9 at all times during the Security Period,      except as the Issuer may otherwisepermit. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.2   | No disposal of      assets.  |
|-----------------|-----------------------------------|

| (a)   | No      Obligor will transfer or otherwise disposeof: |
|-----------------|-------------------------------------------------------|

| (i)   | its      rights under the Shipbuilding Contract to which it is a party, whether by      one transaction or a number of transactions, whether related or not save      where the Guarantee relating thereto has been cancelled or where that      Obligor has provided cash security in relation to such Guarantee on the      same terms mutatis mutandis as set out in Clause 5.6;  or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | any      debt payable to it or any other right (present, future or contingent      right) to receive a payment, including any right to damages or      compensation. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | No      Obligor will create or permit to arise any Security Interest (except for      Permitted Security Interests) over its rights under the Shipbuilding      Contract and the Refund Guarantees to which it is a  party. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.3   | No other liabilities or      obligations to be incurred. No      Obligor will incur any liability or obligation  except: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------|

| (a)   | liabilities      and obligations under the Shipbuilding Contract, the Finance Documents,      the Loan Agreement and the Finance Document (as defined in the Loan      Agreement) to which it is a party;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | liabilities      or obligations incurred in the ordinary course of supervising the      construction of, providing supplies for, operating and chartering its Ship      (and for the avoidance of doubt the management fees payable by the      Obligors to the Approved Managers shall be a permitted expense);      and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | provided      the terms of Clause 10.3(c) are complied with, inter-company Indebtedness      from other companies which are in the same ultimate beneficial ownership      as the Obligors. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.4   | Information provided to be      accurate.      All financial and other information which is provided in writing by or on      behalf of each Obligor under or in connection with any Finance Document      will to the best of that Obligor’s knowledge and belief be true and not      misleading and will not omit any material fact or consideration which, if      disclosed would reasonably be expected to adversely affect the decision of      a person considering whether to enter into this  Agreement. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.5   | Provision of financial      statements.      Each Obligor will procure that there is sent to the  Issuer: |
|-----------------|-----------------------------------------------------------------------------------------------------------|

| (a)   | as      soon as possible, but in no event later than 120 days after the end of      each of the Corporate Guarantor’s financial years, the annual audited      accounts of the Corporate Guarantor and its consolidated      subsidiaries; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | as      soon as possible, but in no event later than 30 days after the end of each      quarter in each of the Corporate Guarantor’s financial years unaudited      accounts of the Corporate Guarantor and its consolidated subsidiaries      which are certified as to their correctness by its chief financial      officer. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.6   | Form of financial      statements.      All accounts (audited and unaudited) delivered under Clause 9.5      will: |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (a)   | be      prepared in accordance with all applicable laws and generally accepted      accounting principles of the U.S.A. consistently  applied; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | give      a true and fair view of the financial condition of the relevant Obligor at      the date of those accounts and of its profit for the period to which those      accounts relate; and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | fully      disclose or provide for all significant liabilities of the relevant      Obligor. |
|-----------------|----------------------------------------------------------------------------------------------|

| 9.7   | Shareholder and creditor      notices.      Each Obligor will send the Issuer, at the same time as they are      despatched, copies of all communications which are despatched to its      shareholders or creditors or any class ofthem. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.8   | Consents.      Each Obligor will maintain in force and promptly obtain or renew, and will      promptly send certified copies to the Issuer of, all consents      required: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | for      that Obligor to perform its obligations under any Finance Document to      which it is a party; |
|-----------------|----------------------------------------------------------------------------------------------------------|

| (b)   | for      the validity or enforceability of any Finance Document to which it is a      party; |
|-----------------|----------------------------------------------------------------------------------------------|

| 9.9   | Maintenance of Security      Interests.      Each Obligor will: |
|-----------------|-----------------------------------------------------------------|

| (a)   | at      its own cost, do all that it reasonably can to ensure that any Finance      Document validly creates the obligations and the Security Interests which      it purports to create; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | without      limiting the generality of paragraph (a), at its own cost, promptly      register, file, record or enrol any Finance Document with any applicable      court or authority, pay any applicable stamp, registration or similar tax      in respect of any Finance Document, give any notice or take any other step      which, in the reasonable opinion of the Issuer is or has become necessary      or desirable for any Finance Document to be valid, enforceable or      admissible in evidence or to ensure or protect the priority of any      Security Interest which it creates. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.10   | Notification of      litigation.      Each Obligor will provide the Issuer with details of any legal or      administrative action involving any Obligor or any Security Party promptly      upon becoming aware of the same where such legal or administrative action      might, if adversely determined, have a material adverse effect on the      ability of that Obligor to perform its obligations under any Finance      Document to which it is a party |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.11   | No amendment to Shipbuilding      Contracts. No      Obligor will agree to any amendment or supplement to, or waive or fail to      enforce, the Shipbuilding Contract to which it is a party or any of its      provisions (and for the purposes of this Clause 9.11 an amendment of a      Shipbuilding Contract will always be material if alone or with any      previous variations it increases the Contract Price thereunder by more      than 5%). |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.12   | Chief Executive      Office.      Each Obligor will maintain its chief executive office, and keep its      corporate documents and records, at Suite 306, Commerce Building, One      Chancery Lane, Hamilton, MH12,Bermuda. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.13   | Confirmation of no      default.      Each Obligor will, within 2 Business Days after service by the Issuer of a      written request, serve on the Issuer a notice which is signed by the      representative director of such Obligor and  which: |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | states      that no Event of Default or Potential Event of Default has occurred and is      continuing; or |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (b)   | states      that no Event of Default or Potential Event of Default has occurred,      except for a specified event or matter, of which all material details are      given. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.14   | Notification of      default.      Each Obligor will notify the Issuer as soon as it becomes aware      of: |
|------------------|-------------------------------------------------------------------------------------------------------------|

| (a)   | the      occurrence of an Event of Default or a Potential Event of Default;      or |
|-----------------|-------------------------------------------------------------------------------------|

| (b)   | any      matter which indicates that an Event of Default or a Potential Event of      Default may have occurred and iscontinuing; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| 9.15   | Provision of further      information.      Each Obligor will, as soon as practicable after receiving the request,      provide the Issuer with any additional financial or other information      relating: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | to      it and its Shipbuilding Contract;or |
|-----------------|---------------------------------------------|

| (b)   | to      any other matter relevant to, or to any provision of, a Finance      Document; |
|-----------------|----------------------------------------------------------------------------------------|

| 9.16   | Financial      Covenants. |
|------------------|---------------------------|

| (a)   | the      Obligors undertake to comply at all times with the financial covenants set      out in Schedule 3; |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (b)   | the      Obligors shall provide to the Issuer within 60 days after the end of each      financial quarter of the Corporate Guarantor’s financial year a compliance      certificate in the form set out in Schedule 4 executed by the chief      financial officer of the Corporate Guarantor and confirming that the      financial covenants set out in Schedule 3 have been complied with during      each financial quarter; and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | a      formal review of the financial covenants set out in Schedule 3 will be      undertaken by the Issuer upon expiry and prepayment of the Bank of America      Facilities whichever is earlier. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.17   | Dividends.      The Obligors shall procure that the Corporate Guarantor does not pay any      dividend or make any other form of distribution except where the following      conditions are met: |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | no      Event of Default has occurred and is continuing at the time that the      proposed dividend or distribution is to bemade; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      aggregate amount of all dividends or distributions in respect of any      financial year of the Corporate Guarantor shall not exceed 50% of the      Consolidated Net Income for such financialyear; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | prior      to the making of the proposed dividend or distribution the Obligors have      provided to the Issuer a certificate executed by the chief financial      officer of the Corporate Guarantor confirming that the Corporate Guarantor      is in compliance with the minimum Consolidated Fixed Charge Coverage Ratio      as set out in Schedule 3 for the Measurement Period immediately preceding      the date of the proposed dividend or  distribution. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10   | CORPORATE      UNDERTAKINGS |
|----------------|-----------------------------|

| 10.1   | General.      Each Obligor also undertakes with the Issuer to comply with the following      provisions of this Clause 10 at all times during the Security Period      except as the Issuer may otherwisepermit. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2   | Maintenance of      status.      Each Obligor will maintain its separate corporate existence and remain in      good standing under the laws of the Marshall  Islands. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3   | Negative      undertakings. No      Obligor will: |
|------------------|---------------------------------------------------|

| (a)   | carry      on any business other than in relation to the construction, purchase and      eventual ownership, chartering and operation of its Ship; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | effect      any form of redemption, purchase or return of share capital;      or |
|-----------------|----------------------------------------------------------------------------------|

| (c)   | provide      any form of credit or financial assistanceto: |
|-----------------|------------------------------------------------------------|

| (i)   | a      person who is directly or indirectly interested in that Obligor’s share or      loan capital; or |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (ii)   | any      company in or with which such a person is directly or indirectly      interested or connected; |
|------------------|---------------------------------------------------------------------------------------------------------|

| (d)   | issue,      allot or grant any person a right to any shares in its capital or      repurchase or reduce its issued sharecapital; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------|

| (e)   | acquire      any shares or other securities other than US or UK Treasury bills and      certificates of deposit issued by major North American or European banks,      or enter into any transaction in a derivative;  or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | enter      into any form of amalgamation, merger or de-merger or any form of      reconstruction or reorganisation. |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| 11   | PAYMENTS AND      CALCULATIONS |
|----------------|--------------------------------|

| 11.1   | Currency and method of      payments.      All payments to be made by the Obligors to the Issuer under a Finance      Document shall be made to theIssuer: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | by      not later than 11.00 a.m. (New York City time) on the due      date; |
|-----------------|------------------------------------------------------------------------------|

| (b)   | in      same day Dollar funds settled through the New York Clearing House      Interbank Payments System (or in such other Dollar funds and/or settled in      such other manner as the Issuer shall specify as being customary at the      time for the settlement of international transactions of the type      contemplated by this Agreement);and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | to      the account of the Issuer at American Express Bank Limited, 3 World      Financial Centre, 23rd Floor, New York, NY 10285-2300 USA Account No      000261123 for credit to the Issuer reference “TBS : Argyle and Others :      Guarantee Facility”, or to such other account with such other bank as the      Issuer may from time to time notify to the  Obligors. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.2   | Payment on non-Business      Day. If      any payment by the Obligors under a Finance Document would otherwise fall      due on a day which is not a BusinessDay: |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      due date shall be extended to the next succeeding Business Day;      or |
|-----------------|----------------------------------------------------------------------------------|

| (b)   | if      the next succeeding Business Day falls in the next calendar month, the due      date shall be brought forward to the immediately preceding Business      Day; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.3   | Basis for calculation of      periodic payments.      All interest and commitment fee and any other payments under any Finance      Document which are of an annual or periodic nature shall accrue from day      to day and shall be calculated on the basis of the actual number of days      elapsed and a 360 day year. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.4   | Issuer      accounts.      The Issuer shall maintain an account showing any and all sums owing to the      Issuer from the Obligors and each Security Party under the Finance      Documents and all payments in respect of those amounts made by the      Obligors and any Security Party. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.5   | Accounts prima facie      evidence. If      the account maintained under Clause 11.4 shows an amount to be owing by      the Obligors or a Security Party to the Issuer, that account shall be      prima facie evidence that that amount is owing to the    Issuer. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12   | APPLICATION OF      RECEIPTS |
|----------------|------------------------------|

| 12.1   | Normal order of      application.      Except as any Finance Document may otherwise provide, any sums which are      received or recovered by the Issuer under or by virtue of any Finance      Document shall be applied: |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | FIRST:      in or towards satisfaction of any amounts then due and payable under the      Finance Documents (or any of them) in such order of application and/or      such proportions as the Issuer may specify by notice to the Obligors and      the Security Parties; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | SECONDLY:      in retention of an amount equal to any amount not then due and payable      under any Finance Document but which the Issuer, by notice to the Obligors      and the Security Parties, states in its opinion will or may become due and      payable in the future and, upon those amounts becoming due and payable, in      or towards satisfaction of them in accordance with the provisions of this      Clause; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | THIRDLY:      any surplus shall be paid to the Obligors or to any other person appearing      to be entitled to it. |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| 12.2   | Variation of order of      application.      The Issuer may, by notice to the Obligors and the Security Parties,      provide for a different manner of application from that set out in Clause      12.1 either as regards a specified sum or sums or as regards sums in a      specified category or categories. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.3   | Notice of variation of order of      application.      The Issuer may give notices under Clause 12.2 from time to time; and such      a notice may be stated to apply not only to sums which may be received or      recovered in the future, but also to any sum which has been received or      recovered on or after the third Business Day before the date on which the      notice is served. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.4   | Appropriation rights      overridden.      This Clause 12 and any notice which the Issuer gives under Clause 12.2      shall override any right of appropriation possessed, and any appropriation      made, by the Obligors or any SecurityParty. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13   | EVENTS OF      DEFAULT |
|----------------|------------------------|

| 13.1   | Events of      Default. An      Event of Default      occurs if: |
|------------------|------------------------------------------------------------------|

| (a)   | any      Obligor or any Security Party fails to pay when due or (if so payable) on      demand any sum payable under a Finance Document (and so that for this      purpose (i) sums payable on demand shall be treated as having been paid      when due within 3 Business Days of receipt of the demand and (ii) if the      failure is caused by a disruption to the payments system referred to in      Clause 11.1(b) which disruption is beyond the control of the Obligors,      such failure shall not constitute an Event of Default if payment is made      within 3 Business days of its due date);or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any      breach occurs of Clause 7.2, 9.3, 10.2 or 10.3;  or |
|-----------------|--------------------------------------------------------------|

| (c)   | any      breach occurs of Clause 9.16(a); or |
|-----------------|----------------------------------------------|

| (d)   | any      breach by any Obligor or any Security Party occurs of any provision of a      Finance Document (other than a breach covered by paragraph (a) or (b)) and      if, in the opinion of the Issuer, such default is capable of remedy, such      default continues unremedied 10 Business days after written notice from      the Issuer requesting action to remedy the same;  or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | any      representation, warranty or statement made by, or by an officer of, any      Obligor or a Security Party in a Finance Document or in a Guarantee Issue      Request or any other notice or document relating to a Finance Document is      untrue or misleading in any material respect when it is made;      or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | any      of the following occurs in relation to any Financial Indebtedness of a      Relevant Person: |
|-----------------|-------------------------------------------------------------------------------------------------------|

| (i)   | any      Financial Indebtedness of a Relevant Person is not paid when due or, if so      payable, on demand (or in either such case, within any applicable grace      period); or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | any      Financial Indebtedness of a Relevant Person becomes due and payable or      capable of being declared due and payable prior to its stated maturity      date as a consequence of any event of default;  or |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | a      lease, hire purchase agreement or charter creating any Financial      Indebtedness of a Relevant Person is terminated by the lessor or owner or      becomes capable of being terminated as a consequence of any termination      event; or |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | any      overdraft, loan, note issuance, acceptance credit, letter of credit,      guarantee, foreign exchange or other facility, or any swap or other      derivative contract or transaction, relating to any Financial Indebtedness      of a Relevant Person ceases to be available or becomes capable of being      terminated as a result of any event of default, or cash cover is required,      or becomes capable of being required, in respect of such a facility as a      result of any event of default; or |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v)   | any      Security Interest securing any Financial Indebtedness of a Relevant Person      becomes enforceable; |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (g)   | any      of the following occurs in relation to a Relevant  Person: |
|-----------------|---------------------------------------------------------------------|

| (i)   | a      Relevant Person becomes, in the opinion of the Issuer, unable to pay its      debts as they fall due; or |
|-----------------|-----------------------------------------------------------------------------------------------------------------|

| (ii)   | all      or substantially all of the assets of a Relevant Person are subject to any      form of execution, attachment, arrest, sequestration or distress in      respect of a sum of, or sums aggregating, $500,000 or more or the      equivalent in another currency and is not discharged within 1 month of the      same being levied or sued out; or |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | any      administrative or other receiver is appointed over any substantial part of      the assets of a Relevant Person; or |
|-------------------|------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | an      administrator is appointed (whether by the court or otherwise) in respect      of a Relevant Person; or |
|------------------|-----------------------------------------------------------------------------------------------------------------|

| (v)   | any      formal declaration of bankruptcy or any formal statement to the effect      that a Relevant Person is insolvent or likely to become insolvent is made      by a Relevant Person or by the directors of a Relevant Person or, in any      proceedings, by a lawyer acting for a Relevant Person; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (vi)   | a      provisional liquidator is appointed in respect of a Relevant Person, a      winding up order is made in relation to a Relevant Person or a winding up      resolution is passed by a Relevant Person; or |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (vii)   | a      resolution is passed, an administration notice is given or filed, an      application or petition to a court is made or presented or any other step      is taken by (aa) a Relevant Person, (bb) the members or directors of a      Relevant Person, (cc) a holder of Security Interests which together relate      to all or substantially all of the assets of a Relevant Person, or (dd) a      government minister or public or regulatory authority of a Pertinent      Jurisdiction having jurisdiction over that Relevant Person for or with a      view to the winding up of that or another Relevant Person or the      appointment of a provisional liquidator or administrator in respect of      that or another Relevant Person, or that or another Relevant Person      ceasing or suspending business operations or payments to creditors, save      that this paragraph does not apply to a fully solvent winding up of a      Relevant Person other than an Obligor which is, or is to be, effected for      the purposes of an amalgamation or reconstruction previously approved by      the Issuer and effected not later than 3 months after the commencement of      the winding up; or |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (viii)   | an      administration notice is given or filed, an application or petition to a      court is made or presented or any other step is taken by a creditor of a      Relevant Person (other than a holder of Security Interests which together      relate to all or substantially all of the assets of a Relevant Person) for      the winding up of a Relevant Person or the appointment of a provisional      liquidator or administrator in respect of a Relevant Person in any      Pertinent Jurisdiction having jurisdiction over that Relevant Person,      unless the proposed winding up, appointment of a provisional liquidator or      administration is being contested in good faith, on substantial grounds      and not with a view to some other insolvency law procedure being      implemented instead and either (aa) the application or petition is      dismissed or withdrawn within 30 days of being made or presented, or (bb)      within 30 days of the administration notice being given or filed, or the      other relevant steps being taken, other action is taken which will ensure      that there will be no administration and (in both cases (aa) or (bb)) the      Relevant Person will continue to carry on business in the ordinary way and      without being the subject of any actual, interim or pending insolvency law      procedure; or |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ix)   | a      Relevant Person or its directors take any steps (whether by making or      presenting an application or petition to a court, or submitting or      presenting a document setting out a proposal or proposed terms, or      otherwise) with a view to obtaining, in relation to that or another      Relevant Person, any form of moratorium, suspension or deferral of      payments, reorganisation of debt (or certain debt) by reason of financial      difficulties or arrangement with all or a substantial proportion (by      number or value) of creditors or of any class of them or any such      moratorium, suspension or deferral of payments, reorganisation or      arrangement is effected by court order, by the filing of documents with a      court, by means of a contract or in any other way at all;    or |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (x)   | any      meeting of the members or directors, or of any committee of the board or      senior management, of a Relevant Person is held or summoned for the      purpose of considering a resolution or proposal to authorise or take any      action of a type described in paragraphs (iv) to (ix) or a step      preparatory to such action, or (with or without such a meeting) the      members, directors or such a committee resolve or agree that such an      action or step should be taken or should be taken if certain conditions      materialise or fail to materialise;or |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (xi)   | in      a Pertinent Jurisdiction other than England or Wales or to the      jurisdiction of whose courts any part of that Relevant Person’s assets are      subject, any event occurs, any proceedings are opened or commenced or any      step is taken which, in the opinion of the Issuer is similar to any of the      foregoing; or |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | any      Obligor ceases or suspends carrying on its business or a part of its      business which, in the opinion of the Issuer, is material in the context      of this Agreement; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | it      becomes unlawful in any Pertinent Jurisdiction or    impossible: |
|-----------------|--------------------------------------------------------------------------|

| (i)   | for      any Obligor or any Security Party to discharge any liability under a      Finance Document or to comply with any other obligation which the Issuer      considers material under a Finance Document unless provided that none of      the interests of the Issuer is prejudiced in any way during the relevant      period, the discharge of that liability or compliance with that obligation      or exercise or enforcement of those rights ceases to be unlawful within 30      days; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | for      the Issuer to exercise or enforce any right under, or to enforce any      Security Interest created by, a Finance Document;  or |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | any      official consent necessary to enable any Obligor or any Security Party to      comply with any provision which the Issuer considers material of a Finance      Document or any of the Shipbuilding Contracts is not granted, expires      without being renewed, is revoked or becomes liable to revocation or any      condition of such a consent is not fulfilled; or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | any      provision which the Issuer considers in its reasonable opinion material of      a Finance Document proves to have been or becomes invalid or      unenforceable, or a Security Interest created by a Finance Document proves      to have been or becomes invalid or unenforceable or such a Security      Interest proves to have ranked after, or loses its priority to, another      Security Interest or any other third party claim or interest;      or |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | the      security constituted by a Finance Document is in any way imperilled or in      jeopardy; or |
|-----------------|------------------------------------------------------------------------------------------------------|

| (m)   | an      Event of Default (as defined in the Loan Agreement) occurs;    or |
|-----------------|---------------------------------------------------------------------------|

| (n)   | any      other event occurs or any other circumstances arise or develop including,      without limitation a change in the financial position, state of affairs or      prospects of any Obligor in the light of which the Issuer considers that      there is a significant risk that any Obligor is, or will later become,      unable to discharge its liabilities under the Finance Documents as they      fall due. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.2   | Actions following an Event of      Default.      On, or at any time after, the occurrence of an Event of Default and while      the Event of Default is continuing the Issuer      may: |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | serve      on the Obligors a notice stating that all obligations of the Issuer to the      Obligors under this Agreement are terminated;  and/or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | serve      on the Obligors a notice stating that all other amounts accrued or owing      under this Agreement are immediately due and payable or are due and      payable on demand; and/or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | take      any other action which, as a result of the Event of Default or any notice      served under paragraph (a) or (b), the Issuer is entitled to take under      any Finance Document or any applicablelaw. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.3   | Termination of      obligations. On      the service of a notice under Clause 13.2(a), all the obligations of the      Issuer to the Obligors under this Agreement shall terminate and the amount      specified in Clause 5.6 shall become immediately due and payable or, as      the case may be, payable on demand. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.4   | Acceleration of      liabilities. On      the service of a notice under Clause 13.2(b), all amounts accrued or owing      from the Obligors or any Security Party under this Agreement and every      other Finance Document shall become immediately due and payable or, as the      case may be, payable on demand. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.5   | Multiple notices; action      without notice.      The Issuer may serve notices under Clauses 13.2(a) and (b) simultaneously      or on different dates and it may take any action referred to in Clauses      13.2 if no such notice is served or simultaneously with or at any time      after the service of both or either of such  notices. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.6   | Exclusion of Issuer      liability.      Neither the Issuer nor any receiver or manager appointed by the Issuer,      shall have any liability to      the Obligors or a Security Party: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | for      any loss caused by an exercise of rights under, or enforcement of a      Security Interest created by, a Finance Document or by any failure or      delay to exercise such a right or to enforce such a Security Interest;      or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | as      mortgagee in possession or otherwise, for any income or principal amount      which might have been produced by or realised from any asset comprised in      such a Security Interest or for any reduction (however caused) in the      value of such an asset; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | except      that this does not exempt the Issuer or a receiver or manager from      liability for losses shown to have been caused directly and mainly by the      dishonesty or the wilful misconduct of the Issuer’s own officers and      employees or (as the case may be) such receiver’s or manager’s own      partners or employees. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.7   | Relevant      Persons. In      this Clause 13 a “Relevant      Person”      means any Obligor and any SecurityParty. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------|

| 13.8   | Interpretation. In      Clause 13.1(f) references to an event of default or a termination event      include any event, howsoever described, which is similar to an event of      default in a facility agreement or a termination event in a finance lease;      and in Clause 13.1(g) “petition”      includes an application. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14   | FEES AND      EXPENSES |
|----------------|------------------------|

| 14.1   | Arrangement and commitment      fees. The      Obligors shall pay to the Issuer: |
|------------------|---------------------------------------------------------------------------------------|

| (a)   | on      Guarantee Issue Date in respect of each Guarantee an arrangement fee in      respect of such Guarantee in the amount specified in the Fee Letter;      and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | quarterly      in arrears during the period from (and including) the first Guarantee      Issue Date to the date of cancellation or termination of the last      Guarantee and on the last day of that period a commitment fee at the rate      specified in the Fee Letter. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.2   | Costs of negotiation,      preparation etc.      The Obligors shall pay to the Issuer on its demand the amount of all      expenses incurred by the Issuer in connection with the negotiation,      preparation, execution or registration of any Finance Document or any      related document or with any transaction contemplated by a Finance      Document or a related document. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.3   | Costs of variation, amendments,      enforcement etc.      The Obligors shall pay to the Issuer, on the Issuer’s demand, the amount      of all expenses incurred by the Issuer (in the case of paragraphs (a) and      (b) such expenses to be reasonably incurred) in connection with: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | any      amendment or supplement to a Finance Document, or any proposal for such an      amendment to be made; |
|-----------------|----------------------------------------------------------------------------------------------------------------|

| (b)   | any      consent or waiver by the Issuer under or in connection with a Finance      Document, or any request for such a consent or  waiver; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | any      step taken by the Issuer with a view to the protection, exercise or      enforcement of any right or Security Interest created by a Finance      Document or for any similarpurpose. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | There      shall be recoverable under paragraph (c) the full amount of all legal      expenses, whether or not such as would be allowed under rules of court or      any taxation or other procedure carried out under such    rules. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.4   | Documentary      taxes.      The Obligors shall promptly pay any tax payable on or by reference to any      Finance Document, and shall, on the Issuer’s demand, fully indemnify the      Issuer against any claims, expenses, liabilities and losses resulting from      any failure or delay by the Obligors to pay such a  tax. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.5   | Certification of      amounts. A      notice which is signed by 2 officers of the Issuer, which states that a      specified amount, or aggregate amount, is due to the Issuer under this      Clause 14 and which indicates (without necessarily specifying a detailed      breakdown) the matters in respect of which the amount, or aggregate      amount, is due shall (save in the case of manifest error) be prima facie      evidence that the amount, or aggregate amount, is  due. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15   | INDEMNITIES |
|----------------|-------------|

| 15.1   | Indemnities regarding issue of      Guarantees.      Without prejudice to the Obligors’ indemnity contained in Clause 5, the      Obligors shall fully indemnify the Issuer on its demand in respect of all      claims, expenses, liabilities and losses which are made or brought against      or incurred by the Issuer, or which the Issuer reasonably and with due      diligence estimates that it will incur, as a result of or in connection      with: |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | a      Guarantee not being issued on the date specified in the relevant Guarantee      Issue Request for any reason other than a default by the      Issuer; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any      failure (for whatever reason) by the Obligors to make payment of any      amount due under a Finance Document on the due date or, if so payable, on      demand (after giving credit for any default interest paid by the Obligors      on the amount concerned under Clause6); |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      occurrence and/or continuance of an Event of Default or a Potential Event      of Default; |
|-----------------|-----------------------------------------------------------------------------------------------------|

|   | and      in respect of any tax (other than tax on its overall net income) for which      the Issuer is liable in connection with any amount paid or payable to the      Issuer (whether for its own account or otherwise) under any Finance      Document. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.2   | Breakage      costs.      Without limiting its generality, Clause 15.1 covers any claim, expense,      liability or loss, including a loss of a prospective profit, incurred by      the Issuer in liquidating or employing deposits from third parties      acquired or arranged to fund or maintain any overdue    amount. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.3   | Miscellaneous      indemnities.      The Obligors shall fully indemnify the Issuer on its demand in respect of      all claims, expenses, liabilities and losses which may be made or brought      against or incurred by the Issuer, in any country, as a result of or in      connection with any action taken, or omitted or neglected to be taken,      under or in connection with any Finance Document by the Issuer or by any      receiver appointed under a Finance Document other than claims, expenses,      liabilities and losses which are shown to have been directly and mainly      caused by the dishonesty or wilful misconduct or reckless action with      knowledge of the probable consequences of the officers or employees of the      Issuer. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.4   | Currency      indemnity. If      any sum due from the Obligors or any Security Party to the Issuer under a      Finance Document or under any order or judgment relating to a Finance      Document has to be converted from the currency in which the Finance      Document provided for the sum to be paid (the “Contractual      Currency”)      into another currency (the “Payment      Currency”)      for the purpose of: |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | making      or lodging any claim or proof against the Obligors or any Security Party,      whether in its liquidation, any arrangement involving it or otherwise;      or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | obtaining      an order or judgment from any court or other tribunal;  or |
|-----------------|---------------------------------------------------------------------------|

| (c)   | enforcing      any such order or judgment; |
|-----------------|--------------------------------------------|

|   | the      Obligors shall indemnify the Issuer against the loss arising when the      amount of the payment actually received by the Issuer is converted at the      available rate of exchange into the Contractual  Currency. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In      this Clause 15.4, the “available rate of      exchange”      means the rate at which the Issuer is able at the opening of business      (London time) on the Business Day after it receives the sum concerned to      purchase the Contractual Currency with the Payment    Currency. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | This      Clause 15.4 creates a separate liability of the Obligors which is distinct      from their other liabilities under the Finance Documents and which shall      not be merged in any judgment or order relating to those other      liabilities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.5   | Certification of      amounts. A      notice which is signed by 2 officers of the Issuer, which states that a      specified amount, or aggregate amount, is due to the Issuer under this      Clause 15 and which indicates (without necessarily specifying a detailed      breakdown) the matters in respect of which the amount, or aggregate      amount, is due shall (save in the case of manifest error) be prima facie      evidence that the amount, or aggregate amount, is  due. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16   | NO SET-OFF OR TAX      DEDUCTION |
|----------------|----------------------------------|

| 16.1   | No      deductions.      All amounts      due from an Obligor under a Finance Document shall be  paid: |
|------------------|--------------------------------------------------------------------------------------------------------|

| (a)   | without      any form of set-off, cross-claim or condition; and |
|-----------------|-----------------------------------------------------------------|

| (b)   | free      and clear of any tax deduction except a tax deduction which that Obligor      is required by law to make. |
|-----------------|---------------------------------------------------------------------------------------------------------------------|

| 16.2   | Grossing-up for      taxes. If      an Obligor is required by law to make a tax deduction from any      payment: |
|------------------|------------------------------------------------------------------------------------------------------------------|

| (a)   | that      Obligor shall notify the Issuer as soon as it becomes aware of the      requirement; |
|-----------------|------------------------------------------------------------------------------------------------|

| (b)   | that      Obligor shall pay the tax deducted to the appropriate taxation authority      promptly, and in any event before any fine or penalty    arises; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      amount due in respect of the payment shall be increased by the amount      necessary to ensure that the Issuer receives and retains (free from any      liability relating to the tax deduction) a net amount which, after the tax      deduction, is equal to the full amount which it would otherwise have      received. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.3   | Evidence of payment of      taxes.      Within one month after making any tax deduction, the Obligor concerned      shall deliver to the Issuer documentary evidence satisfactory to the      Issuer that the tax had been paid to the appropriate taxation      authority. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.4   | Tax credits. If      the Issuer receives for its own account a repayment or obtains relief or      credit in respect of tax paid or otherwise payable by it in respect of or      calculated by reference to the increased payment made by an Obligor under      Clause 16.2, it shall pay to the relevant Obligor a sum equal to the      proportion of the repayment, relief or credit which it allocates to the      amount due from that Obligor in respect of which that Obligor made the      increased payment: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      Issuer shall not be obliged to allocate to this transaction any part of a      tax repayment, relief or credit which is referable to a class or number of      transactions; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | nothing      in this Clause 16.4 shall oblige the Issuer to arrange its tax affairs in      any particular manner, to claim any type of relief, credit, allowance or      deduction instead of, or in priority to, another or to make any such claim      within any particular time; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | nothing      in this Clause 16.4 shall oblige the Issuer to make a payment which would      leave it in a worse position than it would have been in if the relevant      Obligor had not been required to make a tax deduction from a payment;      and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | any      allocation or determination made by the Issuer under or in connection with      this Clause 16.4 shall (save in the case of manifest error) be conclusive      and binding on the Obligors. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.5   | Exclusion of tax on overall net      income. In      this Clause 16 “tax      deduction”      means any deduction or withholding for or on account of any present or      future tax except tax on the Issuer’s overall net  income. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17   | ILLEGALITY,      ETC |
|----------------|----------------------|

| 17.1   | Illegality.      This Clause 17 applies if the Issuer notifies the Obligors that it has      become, or will with effect from a specified      date, become: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | unlawful      or prohibited as a result of the introduction of a new law, an amendment      to an existing law or a change in the manner in which an existing law is      or will be interpreted or applied; or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | contrary      to, or inconsistent with, anyregulation, |
|-----------------|--------------------------------------------------------|

|   | for      the Issuer to maintain or give effect to any of its obligations under this      Agreement or any Guarantee in the manner contemplated by this      Agreement. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.2   | Notification and effect of      illegality. On      the Issuer notifying the Obligors under Clause  17.1: |
|------------------|-----------------------------------------------------------------------------------------------------------|

| (a)   | the      Commitment shall be cancelled; |
|-----------------|-----------------------------------------|

| (b)   | the      Obligors shall use their best endeavours to procure the prompt      cancellation of the Outstandings and the return of each Guarantee to the      Issuer endorsed by the Seller to the effect that it is cancelled;      and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | by      no later than the date specified in the Issuer’s notice under Clause 17.1      as the date on which the notified event would become effective, the      Obligors shall pay to the Issuer the amount due under Clause      5.6. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.3   | Mitigation.      If circumstances arise which would result in a notification under Clause      17.1 then, without in any way limiting the rights of the Issuer under      Clause 17.2, the Issuer shall notify the Obligor and shall use reasonable      endeavours to transfer its obligations and liabilities under this      Agreement and the Guarantees and its rights under this Agreement and the      Finance Documents to another office or financial institution not affected      by the circumstances but the Issuer shall not be under any obligation to      take any such action if, in its opinion, to do so would or      might: |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | have      an adverse effect on its business, operations or financial condition;      or |
|-----------------|-----------------------------------------------------------------------------------------|

| (b)   | involve      it in any activity which is unlawful or prohibited or any activity that is      contrary to, or inconsistent with, any official requirement; or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | involve      it in any expense (unless indemnified to its satisfaction) or tax      disadvantage. |
|-----------------|---------------------------------------------------------------------------------------------------|

| 18   | INCREASED      COSTS |
|----------------|----------------------|

| 18.1   | Increased      costs.      This Clause 18      applies if the Issuer notifies the Obligors that it considers that as a      result of: |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      introduction or alteration after the date of this Agreement of a law or an      alteration after the date of this Agreement in the manner in which a law      is interpreted or applied (disregarding any effect which relates to the      application to payments under this Agreement of a tax on the Issuer’s      overall net income); or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | complying      with any regulation (including any which relates to capital adequacy or      liquidity controls or which affects the manner in which the Issuer      allocates capital resources to its obligations under this Agreement) which      is introduced, or altered, or the interpretation or application of which      is altered, after the date of thisAgreement, |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | the      Issuer (or a parent company of it) has incurred or will incur an      “increased      cost”. |
|--------|-------------------------------------------------------------------------------------------------------------------|

| 18.2   | Meaning of “increased      costs”. In      this Clause 18, “increased      costs”      means: |
|------------------|-----------------------------------------------------------------------------------------------------------------------|

| (a)   | an      additional or increased cost incurred as a result of, or in connection      with, the Issuer having entered into, or being a party to, this Agreement      or having taken an assignment of rights under this Agreement, of funding      or maintaining the Outstandings or other unpaid sums or performing its      obligations under this Agreement, or of having outstanding all or any part      of the Outstandings or other unpaid sums;or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | a      reduction in the amount of any payment to the Issuer under this Agreement      or in the effective return which such a payment represents to the Issuer      or on its capital; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | an      additional or increased cost of funding all or maintaining all or any part      of the Outstandings or other unpaid sums or (as the case may require) the      proportion of that cost attributable to the Outstandings or other unpaid      sums; or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | a      liability to make a payment, or a return foregone, which is calculated by      reference to any amounts received or receivable by the Issuer under this      Agreement; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For      the purposes of this Clause 18.2 the Issuer may in good faith allocate or      spread costs and/or losses among its assets and liabilities (or any class      of its assets and liabilities) on such basis as it considers      appropriate. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.3   | Payment of increased      costs.      The Obligors shall pay to the Issuer, on its demand, the amounts which the      Issuer from time to time notifies the Obligors that it has specified to be      necessary to compensate it for the increased cost (provided that such      demand is accompanied by a certificate from the Issuer confirming the      amount of its increased cost and including a calculation      thereof). |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.4   | Notice of      cancellation. If      the Obligors are not willing to continue to compensate the Issuer for the      increased cost under Clause 18.3, the Obligors may give the Issuer not      less than 14 days’ notice of its intention to cancel the Commitment and      procure the cancellation of theOutstandings. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.5   | Cancellation. A      notice under Clause 18.4 shall be irrevocable; and on the date specified      in its notice of intended cancellation: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      Commitment shall be cancelled; |
|-----------------|-----------------------------------------|

| (b)   | the      Obligors shall procure the cancellation of the Outstandings and the return      of each Guarantee to the Issuer endorsed by the Seller to the effect that      it is cancelled; and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      Obligors shall pay to the Issuer the amount due under Clause      5.6. |
|-----------------|---------------------------------------------------------------------------------|

| 18.6   | Mitigation.      If circumstances arise which would result in a notification under Clause      18.1 then, without in any way limiting the rights of the Issuer under      Clause 18.3, the Issuer shall notify the Obligor and shall use reasonable      endeavours to transfer its obligations and liabilities under this      Agreement and the Guarantees and its rights under this Agreement and the      Finance Documents to another office or financial institution not affected      by the circumstances but the Issuer shall not be under any obligation to      take any such action if, in its opinion, to do so would or      might: |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | have      an adverse effect on its business, operations or financial condition;      or |
|-----------------|-----------------------------------------------------------------------------------------|

| (b)   | involve      it in any activity which is unlawful or prohibited or any activity that is      contrary to, or inconsistent with, any official requirement; or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | involve      it in any expense (unless indemnified to its satisfaction) or tax      disadvantage. |
|-----------------|---------------------------------------------------------------------------------------------------|

| 19   | SET-OFF |
|----------------|---------|

| 19.1   | Application of credit      balances.      The Issuer      may without prior notice following the occurrence of an Event of Default      which is continuing: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | apply      any balance (whether or not then due) which at any time stands to the      credit of any account in the name of any Obligors at any office in any      country of the Issuer in or towards satisfaction of any sum then due from      the Obligors to the Issuer under any of the Finance Documents;      and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | for      that purpose: |
|-----------------|------------------------|

| (i)   | break,      or alter the maturity of, all or any part of a deposit of any      Obligor; |
|-----------------|-----------------------------------------------------------------------------------------|

| (ii)   | convert      or translate all or any part of a deposit or other credit balance into      Dollars; |
|------------------|---------------------------------------------------------------------------------------------------|

| (iii)   | enter      into any other transaction or make any entry with regard to the credit      balance which the Issuer considers appropriate. |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| 19.2   | Existing rights      unaffected.      The Issuer shall not be obliged to exercise any of its rights under Clause      19.1; and those rights shall be without prejudice and in addition to any      right of set-off, combination of accounts, charge, lien or other right or      remedy to which the Issuer is entitled (whether under the general law or      any document). |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.3   | No Security      Interest.      This Clause 19 gives the Issuer a contractual right of set-off only, and      does not create any equitable charge or other Security Interest over any      credit balance of the Obligors. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20   | TRANSFERS AND CHANGES IN      ISSUING OFFICE |
|----------------|----------------------------------------------|

| 20.1   | Transfer by      Obligor. No      Obligor      may, without the consent of the Issuer transfer any of its rights,      liabilities or obligations under any Finance  Document. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.2   | Transfer by      Issuer.      The Issuer may transfer all or any of the rights and interests which it      has under or by virtue of the Finance Documents with the prior written      consent of the Obligors, (not to be unreasonably withheld or delayed) or      without the consent of the Obligors if an Event of Default or a Potential      Event of Default has occurred and iscontinuing. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.3   | Rights of      transferee. In      respect of any breach of a warranty, undertaking, condition or other      provision of a Finance Document, or any misrepresentation made in or in      connection with a Finance Document, a transferee of any of the Issuer’s      rights or interests under or by virtue of the Finance Documents shall be      entitled to recover damages by reference to the loss incurred by that      transferee as a result of the breach or misrepresentation irrespective of      whether the Issuer would have incurred a loss of that kind or      amount. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.4   | Sub-participation; subrogation      assignment.      The Issuer may sub-participate all or any part of its rights and/or      obligations under or in connection with the Finance Documents without the      consent of, or any notice to, the Obligors; and the Issuer may assign, in      any manner and terms agreed by it, all or any part of those rights to an      insurer or surety who has become subrogated to  them. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.5   | Disclosure of      information.      The Issuer may disclose to a potential assignee or sub-participant any      information which the Issuer has received in relation to the Obligors, any      Security Party or their affairs under or in connection with any Finance      Document. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.6   | Change of issuing      office.      The Issuer may change its issuing office by giving notice to the Obligors      and the change shall become      effective on the later of: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      date on which the Obligors receive the notice;  and |
|-----------------|--------------------------------------------------------------|

| (b)   | the      date, if any, specified in the notice as the date on which the change will      come into effect. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| 20.7   | No additional      costs. If      the Issuer transfers or sub-participates any part of its rights and/or      obligations under the Finance Documents or changes its issuing office      pursuant to this Clause 20 and as a result of circumstances existing at      the date the transfer, sub-participation or change occurs, the Obligors      would be obliged to make an increased payment to the Issuer under any      applicable Clauses of this Agreement then the Issuer is only entitled to      recover payment under those Clauses to the same extent as the Issuer would      have been if the transfer, sub-participation or change of issuing office      had not occurred. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21   | VARIATIONS AND      WAIVERS |
|----------------|-----------------------------|

| 21.1   | Variations, waivers etc. by      Issuer. A      document shall be effective to vary, waive, suspend or limit any provision      of a Finance Document, or the Issuer’s rights or remedies under such a      provision or the general law, only if the document is signed, or      specifically agreed to by fax, by the Obligors and the Issuer and, if the      document relates to a Finance Document to which a Security Party is party,      by that Security Party. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.2   | Exclusion of other or implied      variations.      Except for a document which satisfies the requirements of Clauses 21.1, no      document, and no act, course of conduct, failure or neglect to act, delay      or acquiescence on the part of the Issuer (or any person acting on its      behalf) shall result in the Issuer (or any person acting on its behalf)      being taken to have varied, waived, suspended or limited, or being      precluded (permanently or temporarily) from enforcing, relying on or      exercising: |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | a      provision of this Agreement or another Finance Document;  or |
|-----------------|---------------------------------------------------------------------|

| (b)   | an      Event of Default; or |
|-----------------|------------------------------|

| (c)   | a      breach by any Obligor or a Security Party of an obligation under a Finance      Document or the general law; or |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| (d)   | any      right or remedy conferred by any Finance Document or by the general      law; |
|-----------------|----------------------------------------------------------------------------------------|

|   | and      there shall not be implied into any Finance Document any term or condition      requiring any such provision to be enforced, or such right or remedy to be      exercised, within a certain or reasonabletime. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22   | NOTICES |
|----------------|---------|

| 22.1   | General.      Unless otherwise specifically provided, any notice under or in connection      with any Finance Document shall be given by letter or fax and references      in the Finance Documents to written notices, notices in writing and      notices signed by particular persons shall be construed      accordingly. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.2   | Addresses for      communications. A      notice      shall be sent: |
|------------------|----------------------------------------------------------------------|

| (a)   | to      the Obligors:Suite      306 |
|-----------------|-------------------------------------|

| (b)   | to      the Issuer:The      Royal Bank of Scotland plc |
|-----------------|--------------------------------------------------------|

| 22.3   | Effective date of      notices.      Subject to Clauses      22.4 and 22.5: |
|------------------|-----------------------------------------------------------------------------|

| (a)   | a      notice which is delivered personally or posted shall be deemed to be      served, and shall take effect, at the time when it is      delivered; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | a      notice which is sent by fax shall be deemed to be served, and shall take      effect, 2 hours after its transmission is completed. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| 22.4   | Service outside business      hours. However,      if under Clause 22.3 a notice would be deemed to be  served: |
|------------------|----------------------------------------------------------------------------------------------------------------------|

| (a)   | on      a day which is not a business day in the place of receipt;    or |
|-----------------|--------------------------------------------------------------------------|

| (b)   | on      such a business day, but after 5 p.m. local  time; |
|-----------------|------------------------------------------------------------|

|   | the      notice shall (subject to Clause 22.5) be deemed to be served, and shall      take effect, at 9 a.m. on the next day which is such a business      day. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.5   | Illegible      notices.      Clauses 22.3 and 22.4 do not apply if the recipient of a notice notifies      the sender within 1 hour after the time at which the notice would      otherwise be deemed to be served that the notice has been received in a      form which is illegible in a materialrespect. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.6   | Valid      notices. A      notice under or in connection with a Finance Document shall not be invalid      by reason that its contents or the manner of serving it do not comply with      the requirements of this Agreement or, where appropriate, any other      Finance Document under which it is servedif: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      failure to serve it in accordance with the requirements of this Agreement      or other Finance Document, as the case may be, has not caused any party to      suffer any significant loss or prejudice;or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | in      the case of incorrect and/or incomplete contents, it should have been      reasonably clear to the party on which the notice was served what the      correct or missing particulars should havebeen. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.7   | English      language.      Any notice under or in connection with a Finance Document shall be in      English. |
|------------------|-----------------------------------------------------------------------------------------------------------------|

| 22.8   | Meaning of      “notice”. In      this Clause 22 “notice”      includes any demand, consent, authorisation, approval, instruction, waiver      or other communication. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23   | JOINT AND SEVERAL      LIABILITY |
|----------------|----------------------------------|

| 23.1   | General.      All liabilities and obligations of the Obligors under this Agreement      shall, whether expressed to be so or not, be several and, if and to the      extent consistent with Clause 23.2,joint. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.2   | No impairment of Obligor's      obligations.      The liabilities and obligations of an Obligor shall not be impaired      by: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------|

| (a)   | this      Agreement being or later becoming void, unenforceable or illegal as      regards any other Obligor; |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (b)   | the      Issuer entering into any rescheduling, refinancing or other arrangement of      any kind with any other Obligor; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      Issuer releasing any other Obligor or any Security Interest created by a      Finance Document; or |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (d)   | any      combination of the foregoing. |
|-----------------|----------------------------------------|

| 23.3   | Principal      debtors.      Each Obligor declares that it is and will, throughout the Security Period,      remain a principal debtor for all amounts owing under this Agreement and      the Finance Documents and no Obligor shall in any circumstances be      construed to be a surety for the obligations of any other Obligor under      this Agreement. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.4   | Subordination.      Subject to Clause 23.5, during the Security Period, no Obligor      shall: |
|------------------|------------------------------------------------------------------------------------------------|

| (a)   | claim      any amount which may be due to it from any other Obligor whether in      respect of a payment made, or matter arising out of, this Agreement or any      Finance Document, or any matter unconnected with this Agreement or any      Finance Document; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | take      or enforce any form of security from any other Obligor for such an amount,      or in any other way seek to have recourse in respect of such an amount      against any asset of any other Obligor;or |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | set      off such an amount against any sum due from it to any other Obligor;      or |
|-----------------|---------------------------------------------------------------------------------------|

| (d)   | prove      or claim for such an amount in any liquidation, administration,      arrangement or similar procedure involving any other Obligor or other      Security Party; or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | exercise      or assert any combination of theforegoing. |
|-----------------|----------------------------------------------------------|

| 23.5   | Obligor's required      action. If      during the Security Period, the Issuer, by notice to a Obligor, requires      it to take any action referred to in paragraphs (a) to (d) of Clause 23.4,      in relation to any other Obligor, that Obligor shall take that action as      soon as practicable after receiving the Issuer’s  notice. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24   | SUPPLEMENTAL |
|----------------|--------------|

| 24.1   | Rights cumulative,      non-exclusive.      The rights and remedies which the Finance Documents give to the Issuer      are: |
|------------------|------------------------------------------------------------------------------------------------------------------------------|

| (a)   | cumulative; |
|-----------------|-------------|

| (b)   | may      be exercised as often as appears expedient;and |
|-----------------|---------------------------------------------------------|

| (c)   | shall      not, unless a Finance Document explicitly and specifically states so, be      taken to exclude or limit any right or remedy conferred by any      law. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24.2   | Severability of      provisions. If      any provision of a Finance Document is or subsequently becomes void,      unenforceable or illegal, that shall not affect the validity,      enforceability or legality of the other provisions of that Finance      Document or of the provisions of any other Finance    Document. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24.3   | Counterparts. A      Finance Document may be executed in any number of      counterparts. |
|------------------|-------------------------------------------------------------------------------------------|

| 24.4   | Third party      rights. A      person who is not a party to this Agreement has no right under the      Contracts (of Third Parties) Act 1999 to enforce or to enjoy the benefit      of any term of this Agreement. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25   | LAW AND      JURISDICTION |
|----------------|---------------------------|

| 25.1   | English law.      This Agreement shall be governed by, and construed in accordance with,      English law. |
|------------------|------------------------------------------------------------------------------------------------------------|

| 25.2   | Exclusive English      jurisdiction.      Subject to Clause 25.3, the courts of England shall have exclusive      jurisdiction to settle any disputes which may arise out of or in      connection with this Agreement. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.3   | Choice of forum for the      exclusive benefit of the Issuer.      Clause 25.2 is for the exclusive benefit of the Issuer, which reserves      the rights: |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | to      commence proceedings in relation to any matter which arises out of or in      connection with this Agreement in the courts of any country other than      England and which have or claim jurisdiction to that matter;      and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      commence such proceedings in the courts of any such country or countries      concurrently with or in addition to proceedings in England or without      commencing proceedings in England. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.4   | Process      agent.      Each Obligor irrevocably appoints Curtis Davis Garrard LLP at its      registered office for the time being, presently at Waterview House,      Roundwood Avenue, Stockley Park, Uxbridge UB11 1AU, to act as its agent to      receive and accept on its behalf any process or other document relating to      any proceedings in the English courts which are connected with this      Agreement. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.5   | Issuer’s rights      unaffected.      Nothing in this Clause 25 shall exclude or limit any right which the      Issuer may have (whether under the law of any country, an international      convention or otherwise) with regard to the bringing of proceedings, the      service of process, the recognition or enforcement of a judgment or any      similar or related matter in anyjurisdiction. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.6   | Meaning of      “proceedings”. In      this Clause 25, “proceedings”      means proceedings of any kind, including an application for a provisional      or protective measure. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1   | We      refer to the facility agreement (the “Facility      Agreement”)      dated [l]      and made between Argyle Maritime Corp., Caton Maritime Corp., Dorchester      Maritime Corp., Longwoods Maritime Corp., McHenry Maritime Corp. and      Sunswyck Maritime Corp., as Obligors, and yourselves, as Issuer, in      connection with a guarantee facility of up to US$84,000,000. Terms defined      in the Facility Agreement have their defined meanings when used in this      Guarantee Issue Request. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Amount      of the Guarantee: [l]; |
|-----------------|------------------------------------|

| (b)   | Guarantee      Issue Date: [l]; |
|-----------------|---------------------------------|

| (c)   | Expiry      date of the Guarantee: [l]; |
|-----------------|-----------------------------------------|

| (d)   | Delivery      Instructions: [l]. |
|-----------------|----------------------------------|

| (a)   | the      representations and warranties in Clause 8 of the Facility Agreement would      remain true and not misleading if repeated on the date of this notice with      reference to the circumstances nowexisting; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | no      Event of Default or Potential Event of Default has occurred and is      continuing or will result from the issue of the  Guarantee. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1   | A      duly executed original of each Finance Document (and of each document      required to be delivered by each Finance Document) other than those      referred to in Part B |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2   | Copies      of the certificate of incorporation and constitutional documents and      evidence of the goodstanding (or its equivalent) of each Obligor and each      Security Party. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3   | Copies      of resolutions of the directors of each Obligor and each Security Party      and copies of the resolutions of the shareholders of each Obligor, in each      case authorising the execution of each of the Finance Documents to which      that Obligor or that Security Party is a party and, in the case of each      Obligor, authorising named officers to make Guarantee Issue Requests and      ratifying execution of the Shipbuilding  Contracts. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4   | The      original of any power of attorney under which any Finance Document is      executed on behalf of the Obligor or a Security  Party. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 5   | Copies      of all consents which any Obligor or any Security Party requires to enter      into, or make any payment under, any Finance Document or the Shipbuilding      Contracts. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6   | Copies      of the Shipbuilding Contracts of the Overall  Agreement. |
|---------------|----------------------------------------------------------------------|

| 7   | Such      documentary evidence as the Issuer and its legal advisers may require in      relation to the due authorisation and execution by the Seller of the      Shipbuilding Contracts of the OverallAgreement. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8   | Documentary      evidence that the agent for service of process named in Clause 28 has      accepted its appointment. |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| 9   | Favourable      legal opinions from lawyers appointed by the Issuer on such matters      concerning the laws of Bermuda and Marshall  Islands. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| 10   | A      written statement from a person acceptable to the Issuer confirming the      identity of the ultimate beneficial owner or owners of the shares in the      Obligors, the Corporate Guarantor and each other Security Party and of the      identity of the person or persons controlling the voting rights attached      to those shares. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11   | Such      documents and evidence as the Issuer shall require in relation to each      Security Party based on applicable law and regulations, and the Issuer’s      owner internal guidelines, relating to the Issuer’s knowledge of its      customers. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12   | Such      documentary evidence as the Issuer and its legal advisers may require in      relation to the due authorisation and execution by the parties to the      Intercreditor Agreement (other than theIssuer). |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13   | If      the Issuer so requires, in respect of any of the documents referred to      above, a certified English translation prepared by a translator approved      by the Issuer. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Each      of the documents specified in paragraphs 2, 3, 5, 6 and every other copy      document delivered under this Schedule shall be certified as a true and up      to date copy by a director, representative director or the secretary (or      equivalent officer) of the relevantObligor. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1   | the      Pre-delivery Security Assignment in respect of the Shipbuilding Contract      relating to such Ship (and of each document to be delivered thereunder);      and |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2   | favourable      legal opinions from lawyers appointed by the Issuer on such matters      concerning the laws of the Marshall Islands and  China. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 3   | a      copy of the relevant Refund Guarantee together with such documentary      evidence as the Agent, and its legal advisers may require in relation to      the due authorisation and execution by the Refund Guarantor of that Refund      Guarantee and that such Refund Guarantee has been registered with the      State Administration of Foreign Exchange in  China; |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a)   | Minimum      Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at      any time to be less than the sum of (i) $170,000,000, plus (ii) an amount      equal to 75% of the Consolidated Net Income earned in each full fiscal      quarter ending after 30 June 2006 (with no deduction for a net loss in any      such fiscal quarter) and (iii) an amount equal to 100% of the aggregate      increases in Shareholders’ Equity of Holdings and its Subsidiaries after      the date hereof by reason of the issuance and sale of Equity Interests of      Holdings or any Subsidiary (other than issuances to Holdings or a      wholly-owned Subsidiary), including upon any conversion of debt securities      of Holdings into such EquityInterests. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Minimum      Cash Liquidity. For each calendar month ending on or after the date      hereof, Qualified Cash, plus Availability in an average daily amount      during such calendar month not less than  $10,000,000. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Maximum      Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any      time during any period of four fiscal quarters of Holdings and its      Subsidiaries to be greater than2.50:1.00. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Minimum      Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed      Charge Coverage Ratio as of the end of any fiscal quarter of Holdings to      be less than the ratio set forth below opposite such fiscal      quarter: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Trading 4 Financial      Quarters                                         |  Minimum Consolidated        Fixed Charge Coverage      Ratio  |
|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
|  Closing      Date through  30      September 2007               |  1.4      : 1.0                                                          |
|  31      December 2007 and   each      fixed quarter thereafter  |  1.5      : 1.0                                                          |

| (a)   | readily      marketable obligations issued or directly and fully guaranteed or insured      by the United States of America or any agency or instrumentality thereof      having maturities of not more than 360 days from the date of acquisition      thereof; provided that the full faith and credit of the United States of      America is pledged in supportthereof; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | time      deposits with, or insured certificates of deposit or bankers’ acceptances      of, any commercial bank that (i) (A) is a Lender or (B) is organized under      the laws of the United States of America, any state thereof or the      District of Columbia or is the principal banking subsidiary of a bank      holding company organized under the laws of the United States of America,      any state thereof or the District of Columbia, and is a member of the      Federal Reserve System, (ii) issues (or the parent of which issues)      commercial paper rated as described in Clause (c) of this definition and      (iii) has combined capital and surplus of at least $1,000,000,000, in each      case with maturities of not more than 90 days from the date of acquisition      thereof; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | commercial      paper issued by any Person organised under the laws of any state of the      United States of America and rated at least “Prime-1” (or the then      equivalent grade) by Moody’s or at least “A-1” (or the then equivalent      grade) by S&P, in each case with maturities of not more than 180 days      from the date of acquisition thereof;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Investments,      classified in accordance with GAAP as current assets of the Obligors or      any of their Subsidiaries, in money market investment programs registered      under the Investment Company Act of 1940, which are administered by      financial institutions that have the highest rating obtainable from either      Moody’s or S&P, and the portfolios of which are limited solely to      Investments of the character, quality and maturity described in Clauses      (a), (b) and (c) of thisdefinition; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      following to the extent deducted in calculating such Consolidated Net      Income (and without duplication): (i) Consolidated Interest Charges, (ii)      the provision for Federal, state, local and foreign income taxes payable,      (iii) depreciation and amortisation expense and (iv) prepayment of fees      and write-offs of deferred financing fees in connection with the      refinancing of the Existing Credit Agreements, (v) consulting fees in      respect of the business re-engineering incurred in the second and third      fiscal quarters of the 2006 fiscal year in an aggregate amount not to      exceed $2,500,000 and (vi) net losses from the sales of Vessels as      permitted under this Agreement (in each case of or by Holdings and its      Subsidiaries for such Measurement Period) and  minus |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      following to the extent included in calculating such Consolidated Net      Income, all net gains from the sales of Vessels as permitted under this      Agreement (in each case of or by Holdings and its Subsidiaries for such      Measurement Period); |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      result of (i) Consolidated EBITDA, less (ii) the sum of (x) Federal,      state, local and foreign income taxes paid in cash and (y) Restricted      Payments made, in each case, for the most recently completed Measurement      Period, to |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      sum of (i) Consolidated Interest Charges for the most recently completed      Measurement Period, (ii) the aggregate principal amount of all regularly      scheduled principal payments or redemptions or similar acquisitions for      value of outstanding debt for borrowed money for the period of twelve (12)      consecutive months following such date of determination, but excluding any      principal payments scheduled to be made in respect of the Revolving Credit      Facility; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the      outstanding principal amount of all obligations, whether current or      long-term, for borrowed money (including Obligations hereunder) and all      obligations evidenced by bonds, debentures, notes, loan agreements or      other similar instruments, |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | all      purchase money Indebtedness, |
|-----------------|---------------------------------------|

| (c)   | all      direct obligations arising under letters of credit (including standby and      commercial), bankers’ acceptances, bank guaranties, surety bonds and      similar instruments, |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | all      obligations in respect of the deferred purchase price of property or      services (other than trade accounts payable in the ordinary course of      business), |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | all      Attributable Indebtedness, |
|-----------------|-------------------------------------|

| (f)   | without      duplication, all Guarantees with respect to outstanding Indebtedness of      the types specified in Clauses (a) through (e) above of Persons other than      the Obligors or any Subsidiary, and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | all      Indebtedness of the types referred to in Clauses (a) through (f) above of      any partnership or joint venture (other than a joint venture that is      itself a corporation or limited liability company) in which a Obligor or a      Subsidiary is a general partner or joint venturer, unless such      Indebtedness is expressly made non-recourse to such Obligor or such      Subsidiary; provided, however, for purposes of calculating the      “Consolidated Leverage Ratio”, Consolidated Funded Indebtedness shall not      include any portion of Permitted New Vessel Construction Indebtedness in      an aggregate amount up to $75,000,000 at any time outstanding and used to      finance a multi-purpose tweendeck or bulk carrier shipping vessel so long      as such vessel remains in the construction phase (i.e., such vessel has      not been delivered to Holdings or its Subsidiaries ready for fleet service      and operation). |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | all      interest, premium payments, debt discount, fees, charges and related      expenses in connection with borrowed money (including capitalized interest      but excluding capitalized interest on Permitted New Vessel Construction      Indebtedness) or in connection with the deferred purchase price of assets,      in each case to the extent treated as interest in accordance with      GAAP, |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | all      interest paid or payable with respect to discontinued operations      and, |
|-----------------|-------------------------------------------------------------------------------------|

| (c)   | the      portion of rent expense under Capitalized Leases that is treated as      interest in accordance with GAAP, in each case, of or by Holdings and its      Subsidiaries on a consolidated basis for the most recently completed      Measurement Period. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Consolidated      Funded Indebtedness as of such dateto, |
|-----------------|----------------------------------------------------------|

| (b)   | Consolidated      EBITDA of Holdings and its Subsidiaries on a consolidated basis for the      most recently completed MeasurementPeriod. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | extraordinary      gains and extraordinary losses for such Measurement  Period, |
|-----------------|---------------------------------------------------------------------------------|

| (b)   | the      net income of any Subsidiary during such Measurement Period to the extent      that the declaration or payment of dividends or similar distributions by      such Subsidiary of such income is not permitted by operation of the terms      of its Organisation Documents or any agreement, instrument or Law      applicable to such Subsidiary during such Measurement Period, except that      Holdings’ equity in any net loss of any such Subsidiary for      such-Measurement      Period shall be included in determining Consolidated Net Income,      and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | any      income (or loss) for such Period of any Person if such Person is not a      Subsidiary, except that Holdings’ equity in the net income of any such      Person for such Measurement Period shall be included in Consolidated Net      Income up to the aggregate amount of cash actually distributed by such      Person during such Period to Holdings or a Subsidiary as a dividend or      other distribution (and in the case of a dividend or other distribution to      a Subsidiary, such Subsidiary is not precluded from further distributing      such amount to Holdings as described in Clause (b) of this      proviso). |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1   | Attached      to this Certificate are the latest [audited][unaudited] accounts of the      Guarantor and its consolidated subsidiaries for the financial year      [quarter] ending on [l]. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2   | Set      out below are the respective amounts, in US Dollars, of Cash Equivalents,      Consolidated EBITDA, Consolidated Interest Charges, Consolidated Net      Income, Consolidated Tangible Net Worth and Qualified  Cash: |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                             |  US      Dollars  |
|--------------------------------------------------|-----------------------------|
|  Cash      Equivalents                 |  [l]              |
|  Consolidated      EBITDA              |  [l]              |
|  Consolidated      Interest Charges    |  [l]              |
|  Consolidated      Net Income          |  [l]              |
|  Consolidated      Tangible Net Worth  |  [l]              |
|  Qualified      Cash                   |  [l]              |

| 3   | Accordingly,      as at the date of this Certificate the financial covenants set out in      Appendix 8 of the Loan Agreement [are][are not] complied with, in      that as at [l]: |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Minimum      Consolidated Tangible Net WorthUS$[l]; |
|-----------------|-----------------------------------------------------|

| (b)   | Minimum      Cash LiquidityUS$[l]; |
|-----------------|------------------------------------|

| (c)   | Maximum      Consolidated Leverage Ratio[x.xx] |
|-----------------|------------------------------------------------|

| (d)   | Minimum      Consolidated Fixed Charge Coverage Ratio[x.xx] |
|-----------------|-------------------------------------------------------------|

| 4   | As      at [l]      no Event of Default has occurred and is continuing [or, specify / identify      any Event of Default]. |
|---------------|----------------------------------------------------------------------------------------------------------------------------|

----

----

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----

THIS DEEDis made on [l]2007

| (1) | [l],      a corporation organised and existing under the laws of the Marshall      Islands whose registered office is at Trust Company Complex, Ajeltake      Road, Ajeltake Island, Majuro, Marshall Islands M #96960 (the “Owner”);      and |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | THE ROYAL BANK OF SCOTLAND      plc, a company incorporated in Scotland acting through its office      at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX (the      “Issuer”, which      expression includes its successors andassigns). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | By      a guarantee facility agreement dated [l]      2007 and made between (i) the Borrowers (including the Owner) and (ii) the      Issuer it was agreed that the Issuer would make available to the Obligors      a guarantee facility of up toUS$84,000,000. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | It      is one of the conditions precedent to the availability of the guarantee      facility under the Guarantee Facility Agreement that the Owner enters into      this Deed as security for the Secured  Liabilities. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | This      Deed supplements the Guarantee Facility Agreement and is one of the      Predelivery Security Assignments referred to in  it. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| 1   | DEFINITIONS      AND INTERPRETATION |
|---------------|-------------------------------------|

| 1.1   | Defined      expressions. |
|-----------------|---------------------------|

| 1.2   | Definitions. |
|-----------------|--------------|

|   | (a) | the      Shipbuilding Contract; and |
|--------|-----|-------------------------------------|

|   | (b) | the      Refund Guarantees; |
|--------|-----|-----------------------------|

|   | (a) | all      rights and interests relating to any amount of any kind payable under the      terms of any Assigned Contract; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------|

|   | (b) | all      rights to reject or take delivery of the Ship pursuant to the Shipbuilding      Contract; |
|--------|-----|----------------------------------------------------------------------------------------------------|

|   | (c) | all      rights to commence, conduct, defend, compromise or abandon any legal or      arbitration proceedings relating to any Assigned Contract or to any matter      arising out of or in connection with an Assigned Contract;    and |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | all      rights to damages, interest, costs or other sums payable under any      judgment or order of any court, or any arbitration award, relating to any      Assigned Contract or to any matter arising out of or in connection with an      Assigned Contract; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.3   | Application      of construction and interpretation provisions of Guarantee Facility      Agreement. |
|-----------------|------------------------------------------------------------------------------------------------------|

| 1.4   | Inconsistency      between Guarantee Facility Agreement provisions and this    Deed. |
|-----------------|--------------------------------------------------------------------------------------|

| 2   | COVENANT      TO PAY |
|---------------|----------------------|

| 2.1   | Covenant      to pay Secured Liabilities. |
|-----------------|-------------------------------------------|

| (a)   | duly      and punctually to pay the Secured Liabilities;  and |
|-----------------|---------------------------------------------------------------|

| (b)   | to      observe and perform all its other obligations under the Finance      Documents. |
|-----------------|-----------------------------------------------------------------------------------------|

| 3   | ASSIGNMENT |
|---------------|------------|

| 3.1   | Assignment. |
|-----------------|-------------|

| 3.2   | Continuing      security. |
|-----------------|---------------------------|

| (a)   | the      Security Interests created by Clause 3.1 shall not be satisfied by any      intermediate payment or satisfaction of the Secured      Liabilities; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the      Security Interests created by Clause 3.1, and the rights of the Issuer      under this Deed, are only capable of being extinguished, limited or      otherwise adversely affected by an express and specific term in a document      signed by or on behalf of theIssuer; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | no      failure or delay by or on behalf of the Issuer to enforce or exercise a      Security Interest created by Clause 3.1 or a right of the Issuer under      this Deed, and no act, course of conduct, acquiescence or failure to act      (or to prevent the Owner from taking certain action) which is inconsistent      with such a Security Interest or such a right or with such a Security      Interest being a fixed security shall preclude or estop the Issuer (either      permanently or temporarily) from enforcing or exercising it or result in a      Security Interest expressed to be a fixed security taking effect as a      floating security; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | this      Deed shall be additional to, and shall not in any way impair or be      impaired by: |
|-----------------|------------------------------------------------------------------------------------------------|

| (i)   | any      other Security Interest whether in relation to property of the Owner or      that of a third party; or |
|-----------------|-----------------------------------------------------------------------------------------------------------------|

| (ii)   | any      other right of recourse as against the Owner or any third      party, |
|------------------|--------------------------------------------------------------------------------|

| 3.3   | No      obligations imposed on Issuer. |
|-----------------|----------------------------------------|

| 3.4   | Notice      of assignment and notice of appointment of  attorney. |
|-----------------|-------------------------------------------------------------------|

| (a)   | Immediately      after the execution of this Deed: |
|-----------------|----------------------------------------------------|

| (i)   | the      Owner shall give to the Seller notice of the assignments contained in      Clause 3.1 in the form set out in Appendix 1 and shall obtain from the      Seller a signed acknowledgement in the form set out in that Appendix;      and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | the      Owner shall give to the Refund Guarantor in relation to the first Refund      Guarantee a notice of appointment of attorney in the form set out in      Appendix 1 and shall obtain from the Refund Guarantor a signed      acknowledgement in the form set out in that  Appendix. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Immediately      upon receipt of the second Refund Guarantee the Owner shall give to the      Refund Guarantor in relation to such Refund Guarantee a notice of      appointment of attorney in the form set out in Appendix 1 and shall obtain      from the Refund Guarantor a signed acknowledgement in the form set out in      that Appendix. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.5   | Negative      pledge; disposal of assets. |
|-----------------|-------------------------------------------|

| 3.6   | Release      of security. |
|-----------------|---------------------------|

| 4   | REPRESENTATIONS      AND WARRANTIES |
|---------------|-------------------------------------|

| 4.1   | General. |
|-----------------|----------|

| 4.2   | Repetition      of Guarantee Facility Agreement representations and      warranties. |
|-----------------|--------------------------------------------------------------------------------------|

| 4.3   | Title      to Assigned Property. |
|-----------------|----------------------------------|

| 4.4   | No      restrictions on right to assign. |
|-----------------|------------------------------------------|

| 4.5   | No      third party Security Interests. |
|-----------------|-----------------------------------------|

| 4.6   | Validity      and completeness of AssignedContracts. |
|-----------------|------------------------------------------------------|

| (a)   | The      copies of the Assigned Contracts delivered to the Issuer in connection      with this Deed are true and complete copies, and there does not exist any      addendum, supplemental agreement or other document of any kind which has      the effect of varying the terms of any Assigned Contract or of excluding,      restricting or qualifying any right or interest which an Assigned Contract      creates in favour of the Owner; and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | each      Assigned Contract is in full force and is binding on and enforceable      against each of the parties to it in accordance with its terms but subject      to general principles of equity and laws effecting creditors’ rights      generally, and to the best of the Owner’s knowledge and belief no event      has occurred or matter arisen as a result of which any party to an      Assigned Contract is, may be or may later become entitled to rescind or      terminate any Assigned Contract or to refuse or suspend performance of its      obligations thereunder, or to raise any set-off or other defence in      respect of such obligations; and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | without      limiting the generality of paragraph (b), the Seller and the Refund      Guarantor are each in compliance with their respective obligations under      the Assigned Contracts. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5   | COVENANTS |
|---------------|-----------|

| 5.1   | General. |
|-----------------|----------|

| 5.2   | Performance      of Assigned Contracts. |
|-----------------|-----------------------------------------|

| (a)   | observe      and perform all its obligations and meet all its liabilities under or in      connection with each AssignedContract; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| (b)   | use      its best endeavours to ensure performance and observance by the other      parties of their obligations and liabilities under each Assigned      Contract; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | take      any action, or refrain from taking any action, which the Issuer may      reasonably specify in connection with any material breach, or possible      future material breach, of an Assigned Contract by the Owner or any other      party or with any other matter which arises or may later arise out of or      in connection with an AssignedContract. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.3   | No      variation, release etc. of AssignedContracts. |
|-----------------|-------------------------------------------------------|

| 5.4   |   Subject to      clause 9.11 of the Guarantee Facility Agreement, the Owner shall not,      whether by a document, by conduct, by acquiescence or in any other      way: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | vary      any Assigned Contract; |
|-----------------|----------------------------------|

| (b)   | release,      waive, suspend or subordinate or permit to be lost or impaired any      interest or right forming part of or relating to any Assigned      Property; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | waive      any person’s material breach of any Assigned  Contract; |
|-----------------|--------------------------------------------------------------------------|

| (d)   | rescind      or terminate any Assigned Contract or treat itself as discharged or      relieved from further performance of any of its obligations or liabilities      under an Assigned Contract; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | purport      to vary or revoke any notice or instruction relating to this Deed which      the Owner has given or may later give to any  person. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.5   | Payment      of moneys received under AssignedContracts. |
|-----------------|----------------------------------------------------------|

| 5.6   | Action      to protect validity of AssignedContracts. |
|-----------------|-------------------------------------------------------|

| (a)   | use      its best endeavours to ensure that all interests and rights conferred by      each Assigned Contract remain valid and enforceable in all respects in      accordance with its terms but subject to general principles of equity and      laws affecting creditors’ rights generally and retain the priority which      they were intended to have; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | without      prejudice to the Owner’s obligations under paragraph (a), take any action      which the Issuer may reasonably specify with a view to ensuring or      protecting the validity, enforceability and/or priority of any such      interest or right. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.7   | Action      to enforce Assigned Contracts. |
|-----------------|--------------------------------------------|

| (a)   | take      any action which the Issuer may reasonably direct for the purpose of      enforcing (through legal process, arbitration or otherwise) any right      which is part of, or which relates to, the Assigned Property;      and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | in      the absence of any such direction, not take any such    action. |
|-----------------|-------------------------------------------------------------------------|

| 5.8   | Termination      of, and proceedings relating to, Assigned  Contracts. |
|-----------------|------------------------------------------------------------------------|

| (a)   | the      termination of any AssignedContract; |
|-----------------|-----------------------------------------------|

| (b)   | the      commencement of, or any other action relating to, any legal proceedings or      arbitration relating to any Assigned Property or to any matter arising out      of or in connection with any AssignedProperty. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.9   | Provision      of information relating to AssignedContracts. |
|-----------------|--------------------------------------------------------------|

| (a)   | inform      the Issuer if any material breach of any Assigned Contract occurs or a      serious risk of such a breach arises and of any other event or matter      affecting an Assigned Contract which is material to the      Issuer; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | provide      the Issuer, promptly after service, with copies of all notices served on      or by the Owner under or in connection with any Assigned      Contract; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | provide      the Issuer with any information which it reasonably requests about any      Assigned Property or any matter relating to or affecting any Assigned      Property including the progress of the construction of the Ship;      and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | generally      provide the Issuer and its officers and representatives with full and      prompt co-operation and assistance relating to any Assigned      Property. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.10   | Builder’s      Certificate. |
|------------------|-----------------------------------|

| 5.11   | Provision      of copies of Assigned Contracts. |
|------------------|-------------------------------------------------|

| (a)   | deliver      to the Issuer a certified copy of any Assigned Contract to which the Owner      is a party; or |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (b)   | provide      the Issuer with a certified copy of any other Assigned      Contract. |
|-----------------|------------------------------------------------------------------------------------|

| 5.12   | No      action to jeopardise security. |
|------------------|----------------------------------------|

| 6   | PROTECTION      OF SECURITY |
|---------------|-----------------------------|

| 6.1   | Issuer’s      right to protect or maintainsecurity. |
|-----------------|-----------------------------------------------------------|

| 7   | ENFORCEABILITY      AND ISSUER’S POWERS |
|---------------|-----------------------------------------------|

| 7.1   | Right      to enforce security. |
|-----------------|---------------------------------|

| (a)   | the      security constituted by this Deed shall immediately become enforceable;      and |
|-----------------|-------------------------------------------------------------------------------------------|

| (b)   | the      Issuer shall be entitled at any time or times to exercise the powers set      out in Clauses 7.2 and 7.3 and in any other Finance Document;      and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      Issuer shall be entitled at any time ortimes: |
|-----------------|--------------------------------------------------------|

| (i)   | to      exercise the powers possessed by it as assignee of the Assigned Property      conferred by the law of any country or territory in which the Assigned      Property is physically present or deemed to be sited the courts of which      have or claim any jurisdiction in respect of the Owner, the Ship or any      item of Assigned Property; and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | without      limiting the scope of the Issuer’s powers under sub-paragraph (i) above,      to exercise the powers possessed by it as a creditor or as a person with a      Security Interest in the Assigned Property conferred by English      law. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.2   | Right      to take possession, exercise rightsetc. |
|-----------------|----------------------------------------------------|

| (a)   | to      exercise any right forming part of the Assigned Property, including any      right to terminate an AssignedContract; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      implement the Shipbuilding Contract and to take delivery of the Ship in      its own name and thereafter to lay up or employ the Ship as the Issuer may      see fit; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | to      undertake the supervision of the construction of the  Ship; |
|-----------------|---------------------------------------------------------------------|

| (d)   | to      collect and require payment of any amount payable under, or the right to      which is assigned or charged by, any Assigned Contract or which otherwise      forms part of the Assigned Property, and to take possession of any other      Assigned Property; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | to      vary the terms of any Assigned Contract, to enter into any arrangement of      any kind connected with an Assigned Contract, to replace, novate or      terminate any Assigned Contract and to release any person liable under any      Assigned Contract and/or any Security Interest relating to any person’s      obligations or liabilities under an Assigned  Contract; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | to      sell, mortgage, exchange, invest or in any other way deal with any      Assigned Property in any manner and for any consideration (including      shares, notes or other securities) and to do so, in the case of the Ship,      either on or after its delivery under the Shipbuilding      Contract; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | following      delivery of the Ship, to manage, insure, maintain and repair the Ship and      to employ, sail or lay up the Ship in such manner and for such period as      the Issuer may think fit; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | to      petition or apply for, or prove or claim in, any winding up,      administration, bankruptcy or similar procedure in respect of any person      having any liability under any Assigned  Contract; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | to      vote for or against and participate in, any composition, voluntary      arrangement, scheme of arrangement or reorganisation of any person having      a liability under any AssignedContract; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | to      enter into all kinds of transactions for the purpose of hedging risks      which have arisen or which the Issuer considers may arise in respect of      any Assigned Property out of movements in exchange rates, interest rates      or other risks of any kind; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | to      employ the services of any lawyers, ship-brokers or other experts or      advisers of any type or description, whether or not similar to the      foregoing; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | to      appoint all kinds of agents, whether to enforce or exercise any right      under or in connection with any Assigned Contract or for any other      purpose; and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (m)   | to      take over or commence or defend (if necessary using the name of the Owner)      any claims or legal or arbitration proceedings relating to, or affecting,      any Assigned Property which the Issuer may think fit and to abandon,      release or settle in any way any such claims or proceedings;      and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n)   | generally,      to enter into any transaction or arrangement of any kind and to do      anything in relation to any Assigned Property which the Issuer may think      fit. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.3   | Right      to appoint Receiver. |
|-----------------|---------------------------------|

| (a)   | the      Issuer may exercise any of the powers conferred by this Deed while a      Receiver is in office and isacting; |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| (b)   | an      appointment of a Receiver shall be by deed or, at the Issuer’s option, by      a document signed by any of its officers; and an appointment in respect of      some only of the Assigned Property may later be extended to all or any      part of the remaining AssignedProperty; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the      remuneration of a Receiver shall be fixed by the  Issuer; |
|-----------------|--------------------------------------------------------------------|

| (d)   | to      the fullest extent permitted by law, a Receiver shall be the Owner’s      agent, and the Owner shall be responsible, to the exclusion of any      liability on the part of the Issuer, for his remuneration and for his      contracts, acts and defaults; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | a      Receiver shall have all the powers conferred by Clause 7.2 as if the      reference to the Issuer in Clause 7.2 were a reference to the Receiver,      and all the powers conferred on a Receiver by the Law of Property Act      1925; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | in      addition, a Receiver who is an administrative receiver for the purposes of      the Insolvency Act 1986 shall have all the powers which an administrative      receiver has under that Act; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | the      Owner irrevocably and by way of security appoints every Receiver its      attorney on its behalf and in its name or otherwise to execute or sign any      document and do any act or thing which that Receiver considers necessary      or desirable with a view to or in connection with any exercise or proposed      exercise of any of his powers; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | a      Receiver may delegate to any person or persons of any of the powers      (including the discretions) conferred on him by, or pursuant to, this Deed      and may do so on terms authorising successive    sub-delegations; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | in      the case of joint Receivers any of the powers (including the discretions)      conferred by this Deed or by the general law (including the Insolvency Act      1986) may be exercised by any one or more of them, unless their      appointment specifically states thecontrary; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | the      Issuer may remove a Receiver, with or without appointing another Receiver;      such a removal may be effected by a document signed by any of the Issuer’s      officers; but this paragraph does not apply to a Receiver who is an      administrative receiver under the Insolvency Act  1986; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | the      Issuer may appoint a Receiver to replace a Receiver who has resigned or      for any other reason ceased to hold office;and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | a      Receiver shall be entitled to retain out of any money received by him such      amounts in respect of his expenses (or to cover estimated future expenses)      as he may from time to time agree with the  Issuer. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.4   | Law      of Property Act 1925 notapplicable. |
|-----------------|----------------------------------------------|

| 7.5   | No      liability of Issuer or Receiver. |
|-----------------|------------------------------------------|

| 8   | APPLICATION      OF MONEYS |
|---------------|----------------------------|

| 8.1   | General. |
|-----------------|----------|

| 9   | FURTHER      ASSURANCES |
|---------------|-------------------------|

| 9.1   | Owner’s      obligation to execute further documentsetc. |
|-----------------|----------------------------------------------------------------|

| (a)   | execute      and deliver to the Issuer (or as it may reasonably direct) any assignment,      mortgage, power of attorney, proxy or other document, governed by the law      of England or such other country as the Issuer may, in any particular      case, specify; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | effect      any registration or notarisation, give any notice or take any other      step; |
|-----------------|--------------------------------------------------------------------------------------------|

| 9.2   | Purposes      of further assurances. |
|-----------------|--------------------------------------|

| (a)   | validly      and effectively to create any Security Interest or right of any kind which      the Issuer intended should be created by or pursuant to this Deed or any      other Finance Document; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      create a specific mortgage or assignment of any particular Assigned      Property or otherwise to vest in the Issuer the title to any particular      Assigned Property; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | to      protect the priority, or increase the effectiveness, in any jurisdiction      of any Security Interest which is created, or which the Issuer intended      should be created, by or pursuant to this Deed or any other Finance      Document; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | to      enable or assist the Issuer or a Receiver to sell or otherwise deal with      any Assigned Property, to transfer title to, or grant any interest or      right relating to, any Assigned Property or to exercise any power which is      referred to in Clause 7.1 above or which is conferred by any Finance      Document; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | to      enable or assist the Issuer to enter into any transaction to commence,      defend or conduct any proceedings and/or to take any other action relating      to any Assigned Property in any country or under the law of any      country. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.3   | Terms      of further assurances. |
|-----------------|-----------------------------------|

| 9.4   | Obligation      to comply with notice. |
|-----------------|----------------------------------------|

| 9.5   | Additional      corporate action. |
|-----------------|-----------------------------------|

| (a)   | set      out the text of a resolution of the Owner’s directors specifically      authorising the execution of the document specified by the Issuer;      and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | state      that either the resolution was duly passed at a meeting of the directors      validly convened and held throughout which a quorum of directors entitled      to vote on the resolution was present or that the resolution has been      signed by all the directors and is valid under the Owner’s articles of      association or other constitutionaldocuments. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10   | POWER      OF ATTORNEY |
|----------------|------------------------|

| 10.1   | Appointment. |
|------------------|--------------|

| 10.2   | Ratification      of actions of attorney. |
|------------------|-------------------------------------------|

| 10.3   | Delegation. |
|------------------|-------------|

| 11   | INCORPORATION      OF GUARANTEE FACILITY AGREEMENTPROVISIONS |
|----------------|--------------------------------------------------------------|

| 11.1   | Incorporation      of specific provisions. |
|------------------|--------------------------------------------|

| 11.2   | Incorporation      of general provisions. |
|------------------|-------------------------------------------|

| 12   | SUPPLEMENTAL |
|----------------|--------------|

| 12.1   | No      restriction on other rights. |
|------------------|--------------------------------------|

| (a)   | any      other Finance Document; or |
|-----------------|-------------------------------------|

| (b)   | the      law of any country or territory the courts of which have or claim any      jurisdiction in respect of the Owner, the Ship or any Assigned      Property. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.2   | Exercise      of other rights. |
|------------------|--------------------------------|

| 12.3   | Settlement      or discharge conditional. |
|------------------|-------------------------------------------|

| 12.4   | Third      party rights. |
|------------------|--------------------------|

| 13   | LAW      AND JURISDICTION |
|----------------|---------------------------|

| 13.1   | English      law. |
|------------------|-------------------|

| 13.2   | Exclusive      English jurisdiction. |
|------------------|--------------------------------------|

| 13.3   | Choice      of forum for the exclusive benefit of the  Issuer. |
|------------------|----------------------------------------------------------------|

| (a)   | to      commence proceedings in relation to any matter which arises out of or in      connection with this Deed in the courts of any country other than England      and which have or claim jurisdiction to that matter;  and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      commence such proceedings in the courts of any such country or countries      concurrently with or in addition to proceedings in England or without      commencing proceedings in England. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.4   | Process      agent. |
|------------------|---------------------|

| 13.5   | Issuer’s      rights unaffected. |
|------------------|----------------------------------------|

| 13.6   | Meaning      of “proceedings”. |
|------------------|--------------------------------------------|

----

| OWNER                                                                                                                                                                                                                                   |     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------|
| EXECUTED as a DEEDby      [l]      acting byexpressly      authorised in accordance withthe      laws of the Marshall Islandsby      virtue of a power of attorney grantedby      [l]on      [l]such      execution being witnessed by: | )))))))) |   |
| Signature      of witness                                                                                                                                                                                                               |     |   |
| ISSUER                                                                                                                                                                                                                                  |     |   |
| EXECUTED as a DEEDby      ROYAL BANK OF SCOTLAND      plcacting      byexpressly      authorised in accordance withthe      laws of Scotland                                                                                            | )))))    |   |
| Signature      of witness                                                                                                                                                                                                               |     |   |

----

|   | To: | (1) | China      Communications Construction CompanyLtd |
|--------|-----|-----|---------------------------------------------------|

|   | No.      C88, An Ding Men Wai Street |
|--------|--------------------------------------|

|   | Beijing |
|--------|---------|

|   | 10011 |
|--------|-------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

|   | (2) | Nantong      Yahua Shipbuilding Co. Ltd. |
|--------|-----|------------------------------------------|

|   | 1#      Hongzha Road |
|--------|----------------------|

|   | Jinweigang |
|--------|------------|

|   | Nantong-Jiangsu |
|--------|-----------------|

|   | P.C.      226361 |
|--------|------------------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

| (i) | to      hold the Vessel (as defined in the Building Contract) to the order of the      Assignee; |
|-----|--------------------------------------------------------------------------------------------------|

| (ii) | to      deliver to or to the order of the Assignee the Builder’s Certificate and      any other document of title to theVessel; |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | to      pay to the Assignee all sums which you may become due to pay to us or to      our order forming part of the Building Contract  Rights. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (i) | nothing      in this notice nor in the Assignment should be interpreted as imposing any      obligation on the Assignee to you in respect of or relating to the      Building Contract or the Building Contract  Rights; |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii) | unless      and until you receive written notice from the Assignee to the contrary,      you should continue to deal with us in relation to the supervision of the      construction of the Vessel and the performance of our obligations under or      pursuant to the Building Contract; |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | the      Building Contract may not be substantially altered, amended or      supplemented, nor may we waive performance of any of your obligations      under or pursuant to the Building Contract, without in each case the prior      written consent of the Assignee; |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv) | without      the prior written consent of the Assignee, we may have the rights to agree      and give consents for changes to the Specifications for the purpose of      changing technical aspects of the construction of the Vessel which do not      change the main characteristics of the Vessel.  Such agreement      or consent given by us shall be legally binding upon the Assignee even if      these affect the contract price or scheduled delivery of the Vessel, until      such time as the Assignee gives you written notice that the security of      the Assignment has become enforceable, after which we shall cease to be      able to exercise even these rights;and |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (v) | we      may not exercise any right or purported right which we may have to      terminate the Building Contract without the prior written consent of the      Assignee. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Signed. |   |   |
|---------|--------|--------|

|   | For      and on behalf of |
|--------|---------------------------|

|   | [l] |
|--------|-----|

----

| To: | [l] |
|-----|-----|

|   | and |
|--------|-----|

|   | THE      ROYAL BANK OF SCOTLAND plc |
|--------|-------------------------------------|

| (i) | to      inform the Assignee in writing should any default be made by [l]      in the payment of any sum due to us under or in connection with the      Building Contract or should there occur any default or other event as a      result of which we claim to be entitled to terminate or cancel the      Building Contract; and |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii) | that      before exercising any right to terminate or cancel the Building Contract,      we will give to the Assignee at least fourteen days’ written notice of our      intention to do so and the opportunity during that period to rectify any      default. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Signed. |   |   |
|---------|--------|--------|

|   | For      and on behalf of |
|--------|---------------------------|

|   | China      Communications Construction CompanyLtd |
|--------|---------------------------------------------------|

| Signed. |   |   |
|---------|--------|--------|

|   | For      and on behalf of |
|--------|---------------------------|

|   | Nantong      Yahua Shipbuilding Co. Ltd. |
|--------|------------------------------------------|

----

|   | To: | (1) | China      Communications Construction CompanyLtd |
|--------|-----|-----|---------------------------------------------------|

|   | No.      C88, An Ding Men Wai Street |
|--------|--------------------------------------|

|   | Beijing |
|--------|---------|

|   | 10011 |
|--------|-------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

|   | (2) | Nantong      Yahua Shipbuilding Co. Ltd. |
|--------|-----|------------------------------------------|

|   | 1#      Hongzha Road |
|--------|----------------------|

|   | Jinweigang |
|--------|------------|

|   | Nantong-Jiangsu |
|--------|-----------------|

|   | P.C.      226361 |
|--------|------------------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

| cc: | [Refund      Guarantor] |
|-----|-------------------------|

| Signed: |   |   |
|---------|--------|--------|

|   | For      and on behalf of |
|--------|---------------------------|

|   | The      Royal Bank of Scotland plc |
|--------|-------------------------------------|

----

| To: | Bank      of Communications |
|-----|-----------------------------|

|   | Beijing      Branch |
|--------|---------------------|

| (a) | nothing      in this notice nor in the Security Assignment should be interpreted as      imposing any obligation on the Bank to you in respect of or relating to      the Refund Guarantee; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | the      Refund Guarantee and instructions herein contained may not be altered,      amended or supplemented without the prior written consent of the      Bank; |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | we      may not make any demand for payment under the Refund Guarantee without the      prior written consent of the Bank; |
|-----|----------------------------------------------------------------------------------------------------------------------------|

----

| To: | THE      ROYAL BANK OF SCOTLAND plc |
|-----|-------------------------------------|

|   | Shipping      Business Centre |
|--------|-------------------------------|

|   | 5-10      Great Tower Street |
|--------|------------------------------|

|   | London |
|--------|--------|

|   | EC3P      3HX |
|--------|---------------|

----

|   | To: | (1) | China      Communications Construction CompanyLtd |
|--------|-----|-----|---------------------------------------------------|

|   | No.      C88, An Ding Men Wai Street |
|--------|--------------------------------------|

|   | Beijing |
|--------|---------|

|   | 10011 |
|--------|-------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

|   | (2) | Nantong      Yahua Shipbuilding Co. Ltd. 1# HongzhaRoad |
|--------|-----|---------------------------------------------------------|

|   | Jinweigang |
|--------|------------|

|   | Nantong-Jiangsu |
|--------|-----------------|

|   | P.C.      226361 |
|--------|------------------|

|   | The      People’s Republic of China |
|--------|-------------------------------------------|

| cc: | Bank      of Communications |
|-----|-----------------------------|

|   | Beijing      Branch |
|--------|---------------------|

| Signed: |   |   |
|---------|--------|--------|

|   | For      and on behalf of |
|--------|---------------------------|

|   | The      Royal Bank of Scotland plc |
|--------|-------------------------------------|

----

----

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THISGUARANTEE is made on [l]

| (1) | TBS INTERNATIONAL      LIMITED, a company incorporated in Bermuda whose principal office      is at Suite 306, Commerce Building, One Chancery Lane, Hamilton HM12,      Bermuda (the “Guarantor”);      and |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | THE ROYAL BANK OF SCOTLAND      plc, a company incorporated in Scotland, acting through its office      at Shipping Business Centre, 5-10 Great Tower Street, London EC3P 3HX (the      “Issuer”, which      expression includes its successors andassigns). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | By      a guarantee facility agreement dated [l]      2007 and made between (i) Argyle Maritime Corp., Caton Maritime Corp.,      Dorchester Maritime Corp., Longwoods Maritime Corp., McHenry Maritime      Corp. and Sunswyck Maritime Corp. as joint and several Obligors and (ii)      the Issuer it was agreed that the Issuer would make available to the      Obligors a guarantee facility of up to  US$84,000,000. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | The      execution and delivery to the Issuer of this Guarantee is one of the      conditions precedent to the availability of the guarantee facility under      the said Guarantee FacilityAgreement. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1   | INTERPRETATION |
|---------------|----------------|

| 1.1   | Defined      expressions. |
|-----------------|---------------------------|

| 1.2   | Construction      of certain terms. |
|-----------------|-------------------------------------|

| 1.3   | Application      of construction and interpretation provisions of Guarantee Facility      Agreement. |
|-----------------|------------------------------------------------------------------------------------------------------|

| 2   | GUARANTEE |
|---------------|-----------|

| 2.1   | Guarantee      and indemnity. |
|-----------------|-------------------------------|

| (a)   | guarantees      the due payment of all amounts payable by the Obligors under or in      connection with the Guarantee Facility Agreement and every other Finance      Document; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | undertakes      to pay to the Issuer, on the Issuer’s demand, any such amount which is not      paid by the Obligors when due and payable;and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | fully      indemnifies the Issuer on its demand in respect of all claims, expenses,      liabilities and losses which are made or brought against or incurred by      the Issuer as a result of or in connection with any obligation or      liability guaranteed by the Guarantor being or becoming unenforceable,      invalid, void or illegal; and the amount recoverable under this indemnity      shall be equal to the amount which the Issuer would otherwise have been      entitled to recover. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2   | No      limit on number of demands. |
|-----------------|-------------------------------------|

| 3   | LIABILITY      AS PRINCIPAL AND INDEPENDENT DEBTOR |
|---------------|----------------------------------------------------|

| 3.1   | Principal      and independent debtor. |
|-----------------|----------------------------------------|

| 3.2   | Waiver      of rights and defences. |
|-----------------|-------------------------------------|

| (a)   | any      amendment or supplement being made to the Finance    Documents; |
|-----------------|--------------------------------------------------------------------------|

| (b)   | any      arrangement or concession (including a rescheduling or acceptance of      partial payments) relating to, or affecting, the Finance      Documents; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | any      release or loss (even though negligent) of any right or Security Interest      created by the Finance Documents; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (d)   | any      failure (even though negligent) promptly or properly to exercise or      enforce any such right or Security Interest, including a failure to      realise for its full market value an asset covered by such a Security      Interest; or |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | any      other Finance Document or any Security Interest now being or later      becoming void, unenforceable, illegal or invalid or otherwise defective      for any reason, including a neglect to register  it. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4   | EXPENSES |
|---------------|----------|

| 4.1   | Costs      of preservation of rights, enforcementetc. |
|-----------------|-------------------------------------------------------|

| 4.2   | Fees      and expenses payable under Guarantee Facility  Agreement. |
|-----------------|---------------------------------------------------------------------|

| 5   | ADJUSTMENT      OF TRANSACTIONS |
|---------------|---------------------------------|

| 5.1   | Reinstatement      of obligation to pay. |
|-----------------|------------------------------------------|

| 6   | PAYMENTS |
|---------------|----------|

| 6.1   | Method      of payments. |
|-----------------|--------------------------|

| (a)   | in      immediately available funds; |
|-----------------|--------------------------------------|

| (b)   | to      such account as the Issuer may from time to time notify to the      Guarantor; |
|-----------------|----------------------------------------------------------------------------------------|

| (c)   | without      any form of set-off, cross-claim or condition;  and |
|-----------------|------------------------------------------------------------------|

| (d)   | free      and clear of any tax deduction except a tax deduction which the Guarantor      is required by law to make. |
|-----------------|----------------------------------------------------------------------------------------------------------------------|

| 6.2   | Grossing-up      for taxes. |
|-----------------|-----------------------------|

| 6.3   | Tax      Credits. |
|-----------------|-------------------|

| 7   | INTEREST |
|---------------|----------|

| 7.1   | Accrual      of interest. |
|-----------------|---------------------------|

| 7.2   | Calculation      of interest. |
|-----------------|-------------------------------|

| 7.3   | Guarantee      extends to interest payable under Guarantee Facility      Agreement. |
|-----------------|-------------------------------------------------------------------------------------|

| 8   | SUBORDINATION |
|---------------|---------------|

| 8.1   | Subordination      of rights of Guarantor. |
|-----------------|--------------------------------------------|

| (a)   | claim,      or in a bankruptcy of any Obligor or any other Security Party prove for,      any amount payable to the Guarantor by an Obligor or any other Security      Party, whether in respect of this Guarantee or any other      transaction; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | take      or enforce any Security Interest for any such  amount; |
|-----------------|------------------------------------------------------------------|

| (c)   | claim      to set-off any such amount against any amount payable by the Guarantor to      an Obligor or any other Security Party;or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | claim      any subrogation or other right in respect of any Finance Document or any      sum received or recovered by the Issuer under a Finance      Document. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9   | ENFORCEMENT |
|---------------|-------------|

| 9.1   | No      requirement to commence proceedings against  Obligors. |
|-----------------|----------------------------------------------------------------|

| 9.2   | Conclusive      evidence of certain matters. |
|-----------------|----------------------------------------------|

| (a)   | any      judgment or order of a court in England or the Marshall Islands in      connection with the Guarantee Facility Agreement;  and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any      statement or admission of an Obligor in connection with the Guarantee      Facility Agreement, |
|-----------------|---------------------------------------------------------------------------------------------------------|

| 9.3   | Suspense      account. |
|-----------------|------------------------|

| 10   | REPRESENTATIONS      AND WARRANTIES |
|----------------|-------------------------------------|

| 10.1   | General. |
|------------------|----------|

| 10.2   | Status. |
|------------------|---------|

| 10.3   | Corporate      power. |
|------------------|-----------------------|

| (a)   | to      execute this Guarantee; and |
|-----------------|-------------------------------------|

| (b)   | to      make all the payments contemplated by, and to comply with this      Guarantee. |
|-----------------|----------------------------------------------------------------------------------------|

| 10.4   | Consents      in force. |
|------------------|-------------------------|

| 10.5   | Legal      validity. |
|------------------|----------------------|

| 10.6   | No      conflicts. |
|------------------|--------------------|

| (a)   | any      law or regulation in force at the date of this Guarantee;    or |
|-----------------|--------------------------------------------------------------------------|

| (b)   | the      constitutional documents of the Guarantor;or |
|-----------------|-------------------------------------------------------|

| (c)   | any      contractual or other obligation or restriction which is binding on the      Guarantor or any of its assets. |
|-----------------|----------------------------------------------------------------------------------------------------------------------|

| 10.7   | No      withholding taxes. |
|------------------|----------------------------|

| 10.8   | No      default. |
|------------------|------------------|

| 10.9   | Information. |
|------------------|--------------|

| 10.10   | No      litigation. |
|-------------------|---------------------|

| 11   | UNDERTAKINGS |
|----------------|--------------|

| 11.1   | General. |
|------------------|----------|

| 11.2   | Information      provided to be accurate. |
|------------------|-------------------------------------------|

| 11.3   | Provision      of financial statements. |
|------------------|-----------------------------------------|

| (a)   | as      soon as possible, but in no event later than 120 days after the end of      each financial year of the Guarantor, the annual audited accounts of the      Guarantor and its consolidated subsidiaries;and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | as      soon as possible, but in no event later than 30 days after the end of each      quarter in each financial year of the Guarantor the unaudited consolidated      accounts of the Guarantor and its consolidated subsidiaries which are      certified as to their correctness by its chief financial      officer. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.4   | Form      of financial statements. |
|------------------|------------------------------------|

| (a)   | be      prepared in accordance with all applicable laws and generally accepted      accounting principles of the U.S.A. consistently  applied; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | give      a true and fair view of the financial condition of the Guarantor and its      subsidiaries at the date of those accounts and of their profit for the      period to which those accounts relate;and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | fully      disclose or provide for all significant liabilities of the Guarantor and      its subsidiaries. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| 11.5   | Shareholder      and creditor notices. |
|------------------|----------------------------------------|

| 11.6   | Consents. |
|------------------|-----------|

| (a)   | for      the Guarantor to perform its obligations under this    Guarantee; |
|-----------------|----------------------------------------------------------------------------|

| (b)   | for      the validity or enforceability of this  Guarantee; |
|-----------------|-------------------------------------------------------------|

| 11.7   | Further      assurance. |
|------------------|-------------------------|

| (a)   | at      its own cost, do all that it reasonably can to ensure that this Guarantee      validly creates the obligations which it purports to create;      and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | without      limiting the generality of paragraph (a) above, at its own cost, promptly      register, file, record or enrol this Guarantee with any applicable court      or authority, pay any applicable stamp, registration or similar tax in      respect of this Guarantee, give any notice or take any other step which      may be or become necessary or desirable for this Guarantee to be valid,      enforceable or admissible inevidence. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.8   | Notification      of litigation. |
|------------------|----------------------------------|

| 11.9   | Notification      of default. |
|------------------|-------------------------------|

| (a)   | the      occurrence of an Event of Default or a Potential Event of Default;      or |
|-----------------|-------------------------------------------------------------------------------------|

| (b)   | any      matter which indicates that an Event of Default or a Potential Event of      Default may have occurred and iscontinuing; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| 11.10   | Maintenance      of status. |
|-------------------|-----------------------------|

| 11.11   | No      disposal of assets, change ofbusiness. |
|-------------------|------------------------------------------------|

| (a)   | transfer,      lease or otherwise dispose of all or a substantial part of its assets,      whether by one transaction or a number of transactions, whether related or      not except in the usual course of its trading operations;    or |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | make      any substantial change to the nature of its business from that existing at      the date of this Guarantee. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------|

| 11.12   | No      merger etc. |
|-------------------|---------------------|

| 11.13   | Chief      Executive Office. |
|-------------------|------------------------------|

| 12   | JUDGMENTS      AND CURRENCY INDEMNITY |
|----------------|---------------------------------------|

| 12.1   | Judgments      relating to Guarantee FacilityAgreement. |
|------------------|---------------------------------------------------------|

| 12.2   | Currency      indemnity. |
|------------------|--------------------------|

| 13   | SET-OFF |
|----------------|---------|

| 13.1   | Application      of credit balances. |
|------------------|--------------------------------------|

| (a)   | apply      any balance (whether or not then due) which at any time stands to the      credit of any account in the name of the Guarantor at any office in any      country of the Issuer in or towards satisfaction of any sum then due from      the Guarantor to the Issuer under this Guarantee;  and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | for      that purpose: |
|-----------------|------------------------|

| (i)   | break,      or alter the maturity of, all or any part of a deposit of the      Guarantor; |
|-----------------|-------------------------------------------------------------------------------------------|

| (ii)   | convert      or translate all or any part of a deposit or other credit balance into      Dollars; |
|------------------|---------------------------------------------------------------------------------------------------|

| (iii)   | enter      into any other transaction or make any entry with regard to the credit      balance which the Issuer considersappropriate. |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| 13.2   | Existing      rights unaffected. |
|------------------|----------------------------------|

| 14   | SUPPLEMENTAL |
|----------------|--------------|

| 14.1   | Continuing      guarantee. |
|------------------|----------------------------|

| 14.2   | Rights      cumulative, non-exclusive. |
|------------------|----------------------------------------|

| 14.3   | No      impairment of rights underGuarantee. |
|------------------|----------------------------------------------|

| 14.4   | Severability      of provisions. |
|------------------|----------------------------------|

| 14.5   | Guarantee      not affected by other security. |
|------------------|------------------------------------------------|

| 14.6   | Guarantor      bound by Guarantee FacilityAgreement. |
|------------------|------------------------------------------------------|

| 14.7   | Applicability      of provisions of Guarantee to otherrights. |
|------------------|---------------------------------------------------------------|

| 14.8   | Third      party rights. |
|------------------|--------------------------|

| 15   | ASSIGNMENT |
|----------------|------------|

| 15.1   | Assignment      by Issuer. |
|------------------|----------------------------|

| 16   | NOTICES |
|----------------|---------|

| 16.1   | Notices      to Guarantor. |
|------------------|----------------------------|

| 16.2   | Application      of certain provisions of Guarantee Facility  Agreement. |
|------------------|--------------------------------------------------------------------------|

| 16.3   | Validity      of demands. |
|------------------|---------------------------|

| (a)   | on      the date on which the amount to which it relates is payable by the      Obligors under the Guarantee FacilityAgreement; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| (b)   | at      the same time as the service of a notice under clause 13.2 (events of      default) of the Guarantee FacilityAgreement; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| 16.4   | Notices      to Issuer. |
|------------------|-------------------------|

| 17   | INVALIDITY      OF GUARANTEE FACILITY AGREEMENT |
|----------------|-------------------------------------------------|

| 17.1   | Invalidity      of Guarantee Facility Agreement. |
|------------------|--------------------------------------------------|

| (a)   | the      Guarantee Facility Agreement now being or later becoming, with immediate      or retrospective effect, void, illegal, unenforceable or otherwise invalid      for any other reason whatsoever, whether of a similar kind or not;      or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | without      limiting the scope of paragraph (a), a bankruptcy of an Obligor, the      introduction of any law or any other matter resulting in an Obligor being      discharged from liability under the Guarantee Facility Agreement, or the      Guarantee Facility Agreement ceasing to operate (for example, by interest      ceasing to accrue); |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.2   | Invalidity      of Finance Documents. |
|------------------|---------------------------------------|

| 18   | GOVERNING      LAW AND JURISDICTION |
|----------------|-------------------------------------|

| 18.1   | English      law. |
|------------------|-------------------|

| 18.2   | Exclusive      English jurisdiction. |
|------------------|--------------------------------------|

| 18.3   | Choice      of forum for the exclusive benefit of the  Issuer. |
|------------------|----------------------------------------------------------------|

| (a)   | to      commence proceedings in relation to any matter which arises out of or in      connection with this Guarantee in the courts of any country other than      England and which have or claim jurisdiction to that matter;      and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      commence such proceedings in the courts of any such country or countries      concurrently with or in addition to proceedings in England or without      commencing proceedings in England. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.4   | Process      agent. |
|------------------|---------------------|

| 18.5   | Issuer’      rights unaffected. |
|------------------|---------------------------------------|

| 18.6   | Meaning      of “proceedings”. |
|------------------|--------------------------------------------|

----

| GUARANTOR                                                                                   |   |   |
|---------------------------------------------------------------------------------------------|--------|--------|
| SIGNED byfor      and on behalf ofTBS      INTERNATIONAL LIMITEDin      the presence of:    | ))))   |   |
| ISSUER                                                                                      |   |   |
| SIGNED byfor      and on behalf ofTHE      ROYAL BANK OFSCOTLANDplcin      the presence of: | )))))  |   |

----

| From: | The      Royal Bank of Scotland plc |
|-------|-------------------------------------|

| To: | China      Communications Construction Company Ltd. ("CCCC"); |
|-----|---------------------------------------------------------------|

|   | (a) | the      2nd Instalment in the amount of U.S. Dollars seven million only (US$      7,000,000) payable by the BUYER within five (5) New York business days of      the receipt by the BUYER of (i) the Refund Guarantee issued by the      SELLER's Bank in respect of the 2nd, 3rd and 4th Instalments together with      documentary evidence that this has been duly registered with the State      Administration for Foreign Exchange ("SAFE") and (ii) a      telefax notice attaching the Stage Certificate issued by you and the      BUILDER in the form of the draft attached as Appendix A to the Overall      Agreement, countersigned by the Classification Surveyor, certifying that      the steel cutting of the first plate of the VESSEL in the BUILDER's      Shipyard has commenced, |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | the      3rd Instalment in the amount of U.S. Dollars seven million only (US$      7,000,000) payable by the BUYER within five (5) New York business days of      the receipt by the BUYER of a telefax notice attaching the Stage      Certificate issued by you and the BUILDER in the form of the draft      attached as Exhibit D to the Shipbuilding Contract, countersigned by the      Classification Society, certifying that the VESSEL's keel has been laid      within the meaning of Article 2.3 of the Shipbuilding Contract;      and |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | the      4th Instalment in the amount of U.S. Dollars seven million only (USD      7,000,000) payable by the BUYER within five (5) New York business days of      the receipt by the BUYER of a telefax notice attaching the Stage      Certificate issued by you and the BUILDER in the form of the draft      attached as Exhibit D to the Shipbuilding Contract, countersigned by the      Classification Surveyor, certifying that the VESSEL has been successfully      launched. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| By: |   |
|-----|--------|

|   | (Signature) |
|--------|-------------|

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THIS DEEDis madeon                                                      March2007

| (1) | ARGYLE MARITIME CORP.      (“Owner A”), CATON MARITIME CORP.      (“Owner B”), DORCHESTER MARITIME      CORP. (“Owner      C”), LONGWOODS      MARITIME CORP. (“Owner D”), McHENRY MARITIME CORP.      (“Owner E”), and      SUNSWYCK MARITIME      CORP. (“Owner      F”), each a corporation organised and existing under the laws of      the Marshall Islands and having its registered office at Trust Company      Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960      (together the “Owners” and      individually an “Owner”); |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | THE ROYAL BANK OF SCOTLAND      plc acting through its office at Level 5, 135 Bishopsgate, London      EC2M 3UR (the “Security      Trustee”); |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | THE ROYAL BANK OF SCOTLAND      plc acting through the Shipping Business Centre, 5-10 Great Tower      Street, London EC3R 3HX (the “Issuer”); |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | By      a loan agreement (the “Loan Agreement”) dated            March 2007 and made between (i) the Owners      as joint and several borrowers (ii) the banks and financial institutions      listed in Schedule 1 thereto (the “Lenders”) (iii) The      Royal Bank of Scotland plc as mandated lead arranger (iv) The Royal Bank      of Scotland plc as bookrunner, agent and swap bank and (iv) the Security      Trustee, the Lenders have agreed subject to the terms and conditions      specified therein to make a $150,000,000 term loan facility available to      the Owners for the purpose of part financing the acquisition cost of each      of six newbuilding multipurpose carriers being built in Yahua Shipyard,      China having hull nos. NYH5200720, NYH5200721, NYH5200722, NYH5200723,      NYH5200724 and NYH5200725 (hereinafter referred to as “Ship A”, “Ship B”, “Ship C”, “Ship D”, “Ship E” and “Ship F” respectively      and together the “Ships” and singly a “Ship”); |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (B) | Pursuant      to the Loan Agreement: |
|-----|--------------------------------------|

|   | (i) | Owner      A has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship A (the “Ship A Loan Agreement      Pre-delivery SecurityAssignment”); |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Owner      B has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship B (the “Ship B Loan Agreement      Pre-delivery SecurityAssignment”); |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Owner      C has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship C (the “Ship C Loan Agreement      Pre-delivery SecurityAssignment”); |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Owner      D has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship D (the “Ship D Loan Agreement      Pre-delivery SecurityAssignment”); |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | Owner      E has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship E (the “Ship E Loan Agreement      Pre-delivery SecurityAssignment”); |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | Owner      F has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship F (the “Ship F Loan Agreement      Pre-delivery Security Assignment” and together with the Ship A Loan      Agreement Pre-delivery Security Assignment, the Ship B Loan Agreement      Pre-delivery Security Assignment, the Ship C Loan Agreement Pre-delivery      Security Assignment, the Ship D Loan Agreement Pre-delivery Security      Assignment, the Ship E Loan Agreement Pre-delivery Security Assignment and      the “Loan Agreement      Pre-delivery Security Assignments” and singly a “Loan Agreement Pre-delivery      Security Assignment”); |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (C) | By      a guarantee facility agreement (the “Guarantee Facility      Agreement”) dated    March 2007 and made between (i) the      Owners as joint and several obligors (ii) the Issuing Bank, the Issuing      Bank has agreed subject to the terms and conditions specified therein to      make a $84,000,000 guarantee facility available to the Owners for the      purpose of providing performance guarantees in relation to the payment of      the second, third and fourth scheduled stage payments payable under the      shipbuilding contracts for each of the six  Ships; |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (D) | Pursuant      to the Guarantee FacilityAgreement: |
|-----|---------------------------------------------------|

|   | (vii) | Owner      A has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship A (the “Ship A Guarantee Facility      Agreement Pre-delivery Security  Assignment”); |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (viii) | Owner      B has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship B (the “Ship B Guarantee Facility      Agreement Pre-delivery Security  Assignment”); |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | Owner      C has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship C (the “Ship C Guarantee Facility      Agreement Pre-delivery Security  Assignment”); |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (x) | Owner      D has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship D (the “Ship D Guarantee Facility      Agreement Pre-delivery Security  Assignment”); |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xi) | Owner      E has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship E (the “Ship E Guarantee Facility      Agreement Pre-delivery Security  Assignment”); |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xii) | Owner      F has or shall execute in favour of the Security Trustee a pre-delivery      security assignment assigning its rights under the shipbuilding contract      and refund guarantees in respect of Ship F (the “Ship F Guarantee Facility      Agreement Pre-delivery Security Assignment” and together with the      Ship A Guarantee Facility Agreement Pre-delivery Security Assignment, the      Ship B Guarantee Facility Agreement Pre-delivery Security Assignment, the      Ship C Guarantee Facility Agreement Pre-delivery Security Assignment, the      Ship D Guarantee Facility Agreement Pre-delivery Security Assignment and      the Ship E Guarantee Facility Agreement Pre-delivery Security Assignment,      the “Guarantee Facility      Agreement Pre-delivery Security Assignments, and singly a “Guarantee Facility Agreement      Pre-delivery SecurityAssignment”); |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (E) | The      Security Trustee (on behalf of the Lenders) and the Issuer have agreed to      share pari passu in the security created in favour of the Security Trustee      under the Loan Agreement Pre-delivery Security Assignments and the      security created in favour of the Issuer under the Guarantee Facility      Agreement Pre-delivery SecurityAssignments. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1   | DEFINITIONS      AND INTERPRETATION |
|---------------|-------------------------------------|

| 1.1   | Defined      expressions. |
|-----------------|---------------------------|

| 1.2   | General      Interpretation. |
|-----------------|------------------------------|

| (a)   | Clause      headings are inserted for convenience only and shall not affect the      construction of this Deed and, unless otherwise specified, all references      to clauses and appendices are to clauses of, and appendices to, this      Deed; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | unless      the context otherwise requires, words denoting the singular number shall      include the plural and vice versa; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

| (c)   | references      to persons include bodies corporate and  unincorporate; |
|-----------------|-------------------------------------------------------------------------|

| (d)   | references      to assets include property, rights and assets of every      description; |
|-----------------|------------------------------------------------------------------------------------------|

| (e)   | references      to any document are to be construed as references to such document as      amended or supplemented from time to time;and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | references      to any enactment include re-enactments, amendments and extensions      thereof. |
|-----------------|-------------------------------------------------------------------------------------------------|

| 2   | REPRESENTATIONS      AND WARRANTIES |
|---------------|-------------------------------------|

| 2.1   | General. |
|-----------------|----------|

| 2.2   | Status. |
|-----------------|---------|

| 2.3   | Corporate      power. |
|-----------------|-----------------------|

| 2.4   | Consents      in force. |
|-----------------|-------------------------|

| 2.5   | Legal      validity. |
|-----------------|----------------------|

| 2.6   | No      conflicts. |
|-----------------|--------------------|

| (a)   | any      law or regulation in force at the date of this Agreement;    or |
|-----------------|--------------------------------------------------------------------------|

| (b)   | its      constitutional documents; or |
|-----------------|---------------------------------------|

| (c)   | any      contractual or other obligation or restriction which is binding on it or      any of its assets. |
|-----------------|-----------------------------------------------------------------------------------------------------------|

| 3   | RANKING      OF SECURITY |
|---------------|--------------------------|

| 3.1   | Ranking      of security. |
|-----------------|---------------------------|

| (i)   | upon      the occurrence of an Event of Default which is continuing as defined in      the Loan Agreement and the Security Trustee taking steps to enforce the      security created by the Loan Agreement Pre-delivery Security Assignments      the Issuer shall co-operate in relation to such enforcement and if      required by the Security Trustee shall take similar steps to enforce the      security created by the Guarantee Facility Pre-delivery Security      Assignments; and |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | upon      the occurrence of an Event of Default which is continuing as so defined in      the Guarantee Facility Agreement and the Issuer taking steps to enforce      the security created by the Guarantee Facility Pre-delivery Security      Assignments, the Security Trustee shall co-operate in relation to such      enforcement and if required by the Security Trustee shall take similar      steps to enforce the security created by the Loan Agreement Pre-delivery      Security Assignments, |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2   | Cash      Collateral. |
|-----------------|-----------------------|

| (a)   | the      Issuer shall not share in the proceeds of realisation of the security      created by the Loan Agreement Pre-delivery Security      Assignments; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | none      of the Security Trustee or the Lenders shall share in such cash      collateral; |
|-----------------|--------------------------------------------------------------------------------------------|

| (c)   | the      Issuer shall not be obliged to take any steps to enforce the security      created by the Guarantee Facility Pre-delivery Security      Assignments. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3   | Receipt      of Proceeds |
|-----------------|--------------------------|

| (a)   | Any      proceeds of the realisation of the security created by the Loan Agreement      Pre-delivery Security Assignments received by the Security Trustee shall      be held in trust for the Lenders and the Issuer and that part of the      proceeds to which the Issuer is entitled pursuant to Clause 3.1 above      shall be paid by the Security Trustee to the Issuer for application in      accordance with Clause 12 of the Guarantee Facility Agreement and that      part of the proceeds to which the Lenders are entitled pursuant to Clause      3.1 above shall be applied in accordance with Clause 17 of the Loan      Agreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Any      proceeds of realisation of the security created by the Guarantee Facility      Agreement Pre-delivery Security Assignments received by the Issuer shall      be held on trust for itself and the Lenders and that part of the proceeds      to which the Lenders are entitled pursuant to Clause 3.1 above shall be      paid by the Issuer to the Security Trustee for application in accordance      with Clause 17 of the Loan Agreement and that part of the proceeds to      which the Issuer is entitled pursuant to Clause 3.1 above shall be applied      in accordance with Clause 12 of the Guarantee Facility      Agreement. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4   | AMENDMENTS      TO THE LOAN AGREEMENT AND GUARANTEE FACILITY  AGREEMENT |
|---------------|-------------------------------------------------------------------------|

| 4.1   | Amendments      to the Loan Agreement. |
|-----------------|----------------------------------------|

| 4.2   | No      restrictions to the Guarantee Facility  Agreement. |
|-----------------|------------------------------------------------------------|

| 5   | TRANSFER      OF RIGHTS AND OBLIGATIONS UNDER THE LOAN AGREEMENT AND GUARANTEE FACILITY      AGREEMENT |
|---------------|--------------------------------------------------------------------------------------------------------|

| 5.1   | Transfer      of rights and obligations of Creditor Parties under the Loan Agreement and      the Finance Documents (as definedthereunder). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 5.2   | Transfer      of rights and obligation of Issuer under the Guarantee Facility Agreement      and the Finance Documents (as defined  thereunder). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 6   | NOTICES |
|---------------|---------|

| 6.1   | General. |
|-----------------|----------|

| 6.2   | Addresses      for communications. |
|-----------------|------------------------------------|

|   | (a) | to      the Owners: | P.O.      Box HM 2522 |
|--------|-----|---------------------|-----------------------|

|   | Hamilton      HMGX |
|--------|--------------------|

|   | Bermuda |
|--------|---------|

|   | Fax      No: +1 441 295 4957 |
|--------|------------------------------|

|   | Attn:      William J. Can |
|--------|---------------------------|

|   | with      a copy to: | TBS      Shipping Services Inc. |
|--------|----------------------|---------------------------------|

|   | 612      East Grassy Sprain Road |
|--------|----------------------------------|

|   | Yonkers,      NY 10710 USA |
|--------|----------------------------|

|   | Fax      No: +1 914 961 5121 |
|--------|------------------------------|

|   | Attn:      Ferdinand V. Lepere |
|--------|--------------------------------|

|   | (b) | to      the Security Trustee: | The      Royal Bank of Scotland plc |
|--------|-----|-------------------------------|-------------------------------------|

|   | Level      5 |
|--------|--------------|

|   | 135      Bishopsgate |
|--------|----------------------|

|   | London      EC2M 3UR |
|--------|----------------------|

|   | Fax      No: +44 207 207 085 4564 |
|--------|-----------------------------------|

|   | Att:      Syndicated Loans Agency |
|--------|-----------------------------------|

|   | (c) | to      the issuer | The      Royal Bank of Scotland plc |
|--------|-----|--------------------|-------------------------------------|

|   | Shopping      Business Centre |
|--------|-------------------------------|

|   | 5-10      Great Tower Street |
|--------|------------------------------|

|   | London      EC3P 3UX 1 |
|--------|------------------------|

|   | Fax      No: +44 207 283 7538 |
|--------|-------------------------------|

| 6.3   | Effective      date of notices. |
|-----------------|---------------------------------|

| (a)   | a      notice which is delivered personally or posted shall be deemed to be      served, and shall take effect, at the time when it is      delivered; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | a      notice which is sent by fax shall be deemed to be served, and shall take      effect, 2 hours after its transmission is  completed. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| 6.4   | Service      outside business hours. |
|-----------------|--------------------------------------|

| (a)   | on      a day which is not a business day in the place of receipt;    or |
|-----------------|--------------------------------------------------------------------------|

| (b)   | on      such a business day, but after 5 p.m. local  time; |
|-----------------|------------------------------------------------------------|

| 6.5   | Illegible      notices. |
|-----------------|-------------------------|

| 6.6   | Valid      notices. |
|-----------------|---------------------|

| 6.7   | English      language. |
|-----------------|------------------------|

| 6.8   | Meaning      of “notice”. |
|-----------------|---------------------------------------|

| 7   | MISCELLANEOUS |
|---------------|---------------|

| 7.1   | Counterparty. |
|-----------------|---------------|

| 7.2   | Third      party rights. |
|-----------------|--------------------------|

| 8   | LAW      AND JURISDICTION |
|---------------|---------------------------|

| 8.1   | English      law. |
|-----------------|-------------------|

| 8.2   | Exclusive      English jurisdiction. |
|-----------------|--------------------------------------|

| 8.3   | Choice      of forum for the exclusive benefit of the Security Trustee and the      Issuer. |
|-----------------|---------------------------------------------------------------------------------------------|

| (a)   | to      commence proceedings in relation to any matter which arises out of or in      connection with this Deed in the courts of any country other than England      and which have or claim jurisdiction to that matter;  and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | to      commence such proceedings in the courts of any such country or countries      concurrently with or in addition to proceedings in England or without      commencing proceedings in England. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.4   | Process      agent for Owners. |
|-----------------|--------------------------------|

| 8.5   | Security      Trustee’s and Issuer’s rightsunaffected. |
|-----------------|--------------------------------------------------------------------|

| 8.6   | Meaning      of “proceedings”. |
|-----------------|--------------------------------------------|

----

| OWNERS                                                                                                                              |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| EXECUTED      AS A DEEDbyfor      and on behalf of ARGYLE      MARITIME CORP.in      the presence of:                               | ))))   |   |
| EXECUTED      AS A DEEDbyfor      and on behalf of CATON      MARITIME CORP.in      the presence of:                                | ))))   |   |
| EXECUTED      AS A DEEDbyfor      and on behalf of DORCHESTER MARITIME      CORP.in      the presence of:                           | )))))  |   |
| EXECUTED      AS A DEEDbyfor      and on behalf of LONGWOODS MARITIME      CORP.in      the presence of:                            | )))))  |   |
| EXECUTED      AS A DEEDbyfor      and on behalf of McHENRY      MARITIME CORP.in      the presence of:                              | ))))   |   |
| EXECUTED      AS A DEEDbyfor      and on behalf of SUNSWYCK      MARITIME CORP.in      the presence of:                             | ))))   |   |
| SECURITY      TRUSTEEEXECUTED      AS A DEEDbyfor      and on behalf of THE      ROYAL BANK OF SCOTLAND plcin      the presence of: | )))))  |   |
| ISSUEREXECUTED      AS A DEEDbyfor      and on behalf of THE      ROYAL BANK OF SCOTLAND plcin      the presence of:                | )))))  |   |