ex-10_37.htm


    
      TBS
INTERNATIONAL LIMITED & SUBSIDIARIES                 EXHIBIT
10.37

    

     

     

     

    Date: 7
December 2007

     

     

     

    CLAREMONT
SHIPPING CORP.

    


    


    - and
-

    


    


    YORKSHIRE
SHIPPING CORP.

    as joint
and several borrowers

    


    


    - and
-

    


    


    CREDIT
SUISSE

    as
Lender

    


    


    


     

    
      LOAN

      


    

    


    relating
to

    a
US$40,000,000 facility

    to
finance

    the
purchase of m.v. “ELSA OLDENDORFF”

    (tbn m.v.
“ARAPAHO BELLE”)

    and m.v.
“GEBE OLDENDORFF”

    (tbn m.v.
“ONEIDA PRINCESS”)

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INDEX

    


    


    Clause                                                                                                                            Page

    


     

    1           INTERPRETATION [INSERT PAGE NUMBER]

    2           FACILITY [INSERT PAGE NUMBER]

    3           DRAWDOWN [INSERT PAGE NUMBER]

    4           INTEREST [INSERT PAGE NUMBER]

    5           INTEREST
PERIODS [INSERT PAGE
NUMBER]

    6           DEFAULT
INTEREST [INSERT PAGE
NUMBER]

    7           REPAYMENT
AND PREPAYMENT [INSERT PAGE
NUMBER]

    8           CONDITIONS
PRECEDENT [INSERT PAGE
NUMBER]

    9           REPRESENTATIONS
AND WARRANTIES [INSERT PAGE
NUMBER]

    10           GENERAL
UNDERTAKINGS [INSERT PAGE
NUMBER]

    11           CORPORATE
UNDERTAKINGS [INSERT PAGE
NUMBER]

    12           INSURANCE [INSERT PAGE NUMBER]

    13           SHIP
COVENANTS [INSERT PAGE
NUMBER]

    14           SECURITY
COVER [INSERT PAGE
NUMBER]

    15           PAYMENTS
AND CALCULATIONS [INSERT PAGE
NUMBER]

    16           APPLICATION
OF RECEIPTS [INSERT PAGE
NUMBER]

    17           EARNINGS
ACCOUNTS [INSERT PAGE
NUMBER]

    18           EVENTS OF
DEFAULT [INSERT PAGE
NUMBER]

    19           FEES AND
EXPENSES [INSERT PAGE
NUMBER]

    20           INDEMNITIES [INSERT PAGE NUMBER]

    21           NO SET-OFF
OR TAX DEDUCTION [INSERT PAGE
NUMBER]

    22           ILLEGALITY,
ETC [INSERT PAGE
NUMBER]

    23           INCREASED
COSTS [INSERT PAGE
NUMBER]

    24           SET-OFF [INSERT PAGE NUMBER]

    25           TRANSFERS
AND CHANGES IN LENDING OFFICE [INSERT
PAGE NUMBER]

    26           VARIATIONS
AND WAIVERS [INSERT PAGE
NUMBER]

    27           NOTICES [INSERT PAGE NUMBER]

    28           JOINT AND
SEVERAL LIABILITY [INSERT PAGE
NUMBER]

    29           SUPPLEMENTAL [INSERT PAGE NUMBER]

    30           LAW AND
JURISDICTION [INSERT PAGE
NUMBER]

    SCHEDULE
1  DRAWDOWN NOTICE [INSERT
PAGE NUMBER]

    SCHEDULE
2  CONDITION PRECEDENT DOCUMENTS [INSERT PAGE NUMBER]

    SCHEDULE
3  FINANCIAL COVENANTS [INSERT PAGE NUMBER]

    SCHEDULE 4  FORM
OF COMPLIANCE CERTIFICATE [INSERT PAGE
NUMBER]

    EXECUTION
PAGE [INSERT PAGE
NUMBER]

     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    


    


    THIS AGREEMENT is made on
[l]
2007

    


    BETWEEN

    


    
      	
              (1)  

            	
              CLAREMONT SHIPPING CORP.,
      and YORKSHIRE
      SHIPPING CORP.; and

            


    

     

    
      	
              (2)  

            	
              CREDIT
      SUISSE.

            


    

     

    BACKGROUND

    


    The
Lender has agreed to make available to the Borrowers a facility of up to
$40,000,000 for the purpose of part financing or refinancing their acquisition
of the German registered and Liberian flag vessels m.v. “ELSA OLDENDORFF” (tbn
“ARAPAHO BELLE”) and m.v. “GEBE OLDENDORFF” (tbn “ONEIDA PRINCESS”) from the
Seller.

    


    IT IS AGREED as
follows:

    


    
      	
              1  

            	
              INTERPRETATION

            


    

     

    
      	
              1.1  

            	
              Definitions.  Subject
      to Clause 1.5, in this Agreement:

            


    

     

    “Account Security
Deed”  means a deed creating security in respect of the
Earnings Account to be made by and between the Borrowers and the Mortgagee in
the Agreed Form;

     

    “Advance”  means the
principal amount of each borrowing by the Borrowers under this
Agreement;

     

    “Agreed Form”  means
in relation to any document, that document in the form approved in writing by
the Lender or as otherwise approved in accordance with any other approval
procedure specified in any relevant provision of any Finance
Documents;

     

    “Approved
Manager”  means, Roymar Ship Management Inc., a company
incorporated under the laws of New York and having a place of business at
Scarsdale Plaza, Suite 308, 455 Central Avenue, Scarsdale, New York 10583, USA
or such other company which the Lender may approve from time to time as the
manager of the Ships;

     

    “Availability
Period”  means the period commencing on the date of this
Agreement and ending on:

     

    
      (a)  31 March
2008 (or such later date as the Lender may agree with the Borrowers);
or

    

     

    
      	
              (b)  

            	
              if
      earlier, the date on which the Commitment is fully borrowed, cancelled or
      terminated;

            


    

     

    “Bank of America
Facilities”  means the credit facilities made available to
Albermarle Maritime Corp and others pursuant to the credit agreement dated 31
July 2006 made between Albermarle Maritime Corp, the Guarantor, Bank of America,
N.A. and others;

     

    “Bareboat
Charter”  means, in relation to each Ship, the bareboat charter
made or to be made between the relevant Borrower and the Bareboat Charterer in
respect of such Ship;

     

    “Bareboat
Charterer”  means a company to be nominated by the Borrowers
which is incorporated in the Philippines and owned or controlled by Magsaysay
Maritime Corporation, or such other company as the Borrowers may nominate with
the Lender’s approval which is not to be unreasonably withheld;

     

    “Borrower A”  means
Claremont Shipping Corp., being 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, MH
96960;

     

    “Borrower B”  means
Yorkshire Shipping Corp., being 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, MH
96960;

     

    “Borrowers”  means
together Borrower A and Borrower B and, in the singular, means either of
them;

     

    “Business Day”  means
a day on which banks are open in London and Switzerland and, in respect of a day
on which a payment is required to be made under a Finance Document, also in New
York City;

     

    “Commitment”  means
$40,000,000, as that amount may be reduced, cancelled or terminated in
accordance with this Agreement;

     

    “Confirmation”, in relation to
any continuing Transaction has the meaning given in the Master
Agreement;

     

    “Contract
Price”  means, in relation to each Ship, the aggregate amount
payable to the Seller pursuant to the terms of the MOA for such Ship being in
the case of Ship A, $29,000,000 and in the case of Ship
B,  $32,000,000;

     

    “Contractual
Currency”  has the meaning given in Clause 20.3;

     

    “Dollars” and “$”  means the lawful
currency for the time being of the United States of America;

     

    “Drawdown
Date”  means, in relation to an Advance, the date requested by
the Borrowers for the Advance to be made, or (as the context requires) the date
on which the Advance is actually made;

     

    “Drawdown
Notice”  means a notice in the form set out in Schedule 1 (or
in any other form which the Lender approves or reasonably
requires);

     

    “Earnings”  means, in
relation to a Ship, all moneys whatsoever which are now, or later become,
payable (actually or contingently) to the relevant Borrower and which arise out
of the use or operation of the Ship, including (but not limited
to):

    


    
      	
              (a)  

            	
              except
      to the extent that they fall within paragraph
  (b);

            


    

     

    
      	
              (i)  

            	
              all
      freight, hire and passage moneys;

            


    

     

    
      	
              (ii)  

            	
              compensation
      payable to the relevant Borrower in the event of requisition of the Ship
      for hire;

            


    

     

    
      	
              (iii)  

            	
              remuneration
      for salvage and towage services;

            


    

     

    
      	
              (iv)  

            	
              demurrage
      and detention moneys;

            


    

     

    
      	
              (v)  

            	
              damages
      for breach (or payments for variation or termination) of any charterparty
      or other contract for the employment of the Ship;
  and

            


    

     

    
      	
              (vi)  

            	
              all
      moneys which are at any time payable under any Insurances in respect of
      loss of hire; and

            


    

     

    
      	
              (b)  

            	
              if
      and whenever the Ship is employed on terms whereby any moneys falling
      within paragraphs (a)(i) to (vi) are pooled or shared with any other
      person, that proportion of the net receipts of the relevant pooling or
      sharing arrangement which is attributable to the
  Ship;

            


    

     

    “Earnings
Account”  means, in relation to a Ship, an account in the name
of the Borrower owning the Ship with the Lender in [l] designated “[l] - Earnings Account”,
or any other account (with that or another office of the Lender or with a bank
or financial institution other than the Lender) which is designated by the
Lender as the Earnings Account in relation to the Ship for the purposes of this
Agreement;

     

    “Environmental
Claim”  means:

     

    
      	
              (a)  

            	
              any
      claim by any governmental, judicial or regulatory authority which arises
      out of an Environmental Incident or an alleged Environmental Incident or
      which relates to any Environmental Law;
or

            


    

     

    
      	
              (b)  

            	
              any
      claim by any other person which relates to an Environmental Incident or to
      an alleged Environmental Incident,

            


    

     

    and
“claim” means a claim
for damages, compensation, fines, penalties or any other payment of any kind,
whether or not similar to the foregoing; an order or direction to take, or not
to take, certain action or to desist from or suspend certain action; and any
form of enforcement or regulatory action, including the arrest or attachment of
any asset;

     

    “Environmental
Incident”  means:

     

    
      	
              (a)  

            	
              any
      release of Environmentally Sensitive Material from a Ship;
    or

            


    

     

    
      	
              (b)  

            	
              any
      incident in which Environmentally Sensitive Material is released from a
      vessel other than a Ship and which involves a collision between a Ship and
      such other vessel or some other incident of navigation or operation, in
      either case, in connection with which a Ship is actually or potentially
      liable to be arrested, attached, detained or injuncted and/or a Ship
      and/or any Borrower and/or any Approved Manager of the Ship is at fault or
      allegedly at fault or otherwise liable to any legal or administrative
      action; or

            


    

     

    
      	
              (c)  

            	
              any
      other incident in which Environmentally Sensitive Material is released
      otherwise than from a Ship and in connection with which a Ship is actually
      or potentially liable to be arrested and/or where any Borrower and/or any
      Approved Manager of a Ship is at fault or allegedly at fault or otherwise
      liable to any legal or administrative
action;

            


    

     

    “Environmental
Law”  means any law relating to pollution or protection of the
environment, to the carriage of Environmentally Sensitive Material or to actual
or threatened releases of Environmentally Sensitive Material;

     

    “Environmentally Sensitive
Material”  means oil, oil products and any other substance
(including any chemical, gas or other hazardous or noxious substance) which is
(or is capable of being or becoming) polluting, toxic or hazardous;

     

    “Event of
Default”  means any of the events or circumstances described in
Clause 18.1;

     

    “Finance
Documents”  means:

     

    
      	
              (a)  

            	
              this
      Agreement;

            


    

     

    
      	
              (b)  

            	
              the
      Guarantee;

            


    

     

    
      	
              (c)  

            	
              the
      Mortgages;

            


    

     

    
      	
              (d)  

            	
              the
      Accounts Security Deed;

            


    

     

    
      	
              (e)  

            	
              the
      Multiparty Deeds;

            


    

     

    
      	
              (f)  

            	
              the
      Master Agreement Security Deed;

            


    

     

    
      	
              (g)  

            	
              the
      Shares Pledges; and

            


    

     

    
      	
              (h)  

            	
              any
      other document (whether creating a Security Interest or not) which is
      executed at any time by any Borrower 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 Lender and/or the Swap Bank and/or
      the Mortgagee under this Agreement and/or the Master Agreement and/or any
      of the other documents referred to in this
  definition;

            


    

     

    “Financial
Indebtedness”  means, in relation to a person (the “debtor”), a liability of the
debtor:

     

    
      	
              (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 or
      dematerialised equivalent 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 (a) to
      (e) if the references to the debtor referred to the other
      person;

            


    

     

    “First Sub-Time Charter” means
in relation to each Ship, the time charter made or to be made between the Time
Charterer and the relevant Borrower in respect of such Ship;

     

    “GAAP”  means
generally accepted accounting principles in the United States;

     

    “Guarantee”  means a
guarantee in the form set out in Appendix D;

     

    “Guarantor”  means
TBS International Limited, a company incorporated in Bermuda whose principal
office is at Suite 306, Commerce Building, One Chancery Lane, Hamilton HM12,
Bermuda;

     

    “Insurances”  means,
in relation to a Ship:

     

    
      	
              (a)  

            	
              all
      policies and contracts of insurance, including entries of the Ship in any
      protection and indemnity or war risks association, which are effected in
      respect of the Ship, her Earnings or otherwise in relation to her;
      and

            


    

     

    
      	
              (b)  

            	
              all
      rights and other assets relating to, or derived from, any of the
      foregoing, including any rights to a return of a
  premium;

            


    

     

    “Interest
Period”  means a period determined in accordance with Clause
5;

     

    “ISM Code”  means the
International Safety Management Code (including the guidelines on its
implementation), adopted by the International Maritime Organisation as the same
may be amended or supplemented from time to time (and the terms “safety management system”,
“Safety Management
Certificate” and “Document of Compliance” have
the same meanings as are given to them in the ISM Code);

     

    “ISPS Code”  means
the International Ship and Port Facility Security Code as adopted by the
International Maritime Organisation, as the same may be amended or supplemented
from time to time;

     

    “ISSC”  means a
valid and current International Ship Security Certificate issued under the ISPS
Code;

     

    “Lender”  means
Credit Suisse of Paradeplatz 8, CH-8070, Zurich, Switzerland, acting through its
branch at St. Albans Graben 1-3, PO Box CH-4002, Basel, Switzerland (or through
another branch notified to the Borrower under Clause 25.5) or its successor or
assign;

     

    “LIBOR” means, for an Interest
Period, 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, the relevant
Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00
a.m. (London time) on the Quotation Date for that Interest Period (and, for the
purposes of this Agreement, “Reuters BBA Page LIBOR 01”
means the display designated as “Page 01” on the Reuters Money News Service or
such other page as may replace Page 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 the British Bankers' Association Interest Settlement Rates
for Dollars);

     

    “Loan”  means the
principal amount for the time being outstanding under this
Agreement;

     

    “Major
Casualty”  means, in relation to a Ship, any casualty to the
Ship in respect of which the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or deductible, exceeds
$500,000 or the equivalent in any other currency;

     

    “Margin”  means the
rate calculated in accordance with Clause 4.12;

     

    “Master
Agreement”  means the master agreement (on the 2002 ISDA
(Multicurrency-Crossborder) form) made or to be made between the Borrowers and
the Swap Bank and includes all Transactions from time to time entered into and
Confirmations from time to time exchanged under such master
agreement;

     

    “Master Agreement Security
Deed”  means a deed creating a charge over the rights and
interests of the Borrowers under the Master Agreement (including in respect of
any Transaction thereunder) in the Agreed Form;

     

    “MOAs” means together the Ship
A MOA and the Ship B MOA and, in the singular, means either of
them;

     

    “Mortgage”  means, in
relation to a Ship, the first preferred
Panamanian ship mortgage on that Ship to be executed by the relevant Borrower in
favour of the Mortgagee in the Agreed Form;

     

    “Mortgagee”  means
Credit Suisse of Paradeplatz 8, CH-8070, Zurich, Switzerland, acting through its
branch at St. Albans Graben 1-3, PO Box CH-4002, Basel, Switzerland (or its
successor or assign);

     

    “Multiparty
Deed”  means, in relation to a Ship, a deed containing amongst
other things (i) an assignment of the relevant Borrower’s interest in the
Earnings, the Insurances and any Requisition Compensation of that Ship, (ii) an
assignment of the relevant Borrower’s rights under the relevant Bareboat Charter
and the Second Sub-Time Charter (iii) an assignment of the Bareboat Charterer’s
interest in the Insurances of that Ship and the relevant Time Charter, (iv) an
assignment of the Time Charterer’s rights under the First Sub-Time Charter and
(v) an assignment of TBS Worldwide’s rights under the TBS Worldwide Time
Charters to be made by and between the relevant Borrower, the Bareboat
Charterer, the Time Charterer, TBS Worldwide and the Mortgagee in the Agreed
Form;

     

    “Negotiation
Period”  has the meaning given in Clause 4.6;

     

    “Payment
Currency”  has the meaning given in Clause 20.4;

     

    “Permitted Security
Interests”  means:

     

    
      	
              (a)  

            	
              Security
      Interests created by the Finance
Documents;

            


    

     

    
      	
              (b)  

            	
              liens
      for unpaid master’s and crew’s wages in accordance with usual maritime
      practice;

            


    

     

    
      	
              (c)  

            	
              liens
      for salvage;

            


    

     

    
      	
              (d)  

            	
              liens
      arising by operation of law for not more than 2 months’ prepaid hire
      under any charter in relation to a Ship not prohibited by this
      Agreement;

            


    

     

    
      	
              (e)  

            	
              liens
      for master’s disbursements incurred in the ordinary course of trading and
      any other lien arising by operation of law or otherwise in the ordinary
      course of the operation, repair or maintenance of a Ship, provided such
      liens do not secure amounts more than 30 days overdue (unless the
      overdue amount is being contested by the relevant Borrower in good faith
      by appropriate steps) and subject, in the case of liens for repair or
      maintenance, to
Clause 13.12(g);

            


    

     

    
      	
              (f)  

            	
              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 Borrower is actively prosecuting or defending such proceedings or
      arbitration in good faith; and

            


    

     

    
      	
              (g)  

            	
              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;

            


    

     

    “Pertinent
Jurisdiction”,   in relation to a company,
means:

     

    
      	
              (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 similar
tax;

            


    

     

    
      	
              (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;

            


    

     

    “Potential Event of
Default”  means an event or circumstance which, with the giving
of any notice, the lapse of time, a determination of the Lender and/or the
satisfaction of any other condition, would constitute an Event of
Default;

     

    “Quotation Date” means, in
relation to any Interest Period (or any other period for which an interest rate
is to be determined under any provision of a Finance Document), the day on which
quotations would ordinarily be given by leading banks in the London Interbank
Market for deposits in the currency in relation to which such rate is to be
determined for delivery on the first day of that Interest Period or other
period;

     

    “RBS Facilities” means the loan
and guarantee facilities made available to Argyle Maritime Corp. and others
pursuant to two facility agreements each dated 29 March 2007 made between Argyle
Maritime Corp., The Royal Bank of Scotland plc and others;

     

    “Related Party
Charters”  means, in relation to a Ship, the Bareboat Charter,
the Time Charter, the First Sub-Time Charter, the Second Sub-Time Charter and
the TBS Worldwide Time Charters in relation to such Ship and which are the
subject of the assignments under the relevant Multiparty Deed;

     

    “Relevant
Person”  has the meaning given in Clause 18.7;

     

    “Repayment
Date”  means a date on which a repayment is required to be made
under Clause 7;

     

    “Requisition
Compensation”  includes all compensation or other moneys
payable by reason of any act or event such as is referred to in paragraph (b) of
the definition of “Total Loss”;

     

    “Second Sub-Time
Charter”  means in relation to each Ship, the time charter made
or to be made between the relevant Borrower and TBS Worldwide in respect of such
Ship;

     

    “Secured
Liabilities”  means all liabilities which the Borrowers, the
Security Parties or any of them have, at the date of this Agreement or at any
later time or times, under or in connection with any Finance Document or the
Master Agreement or any judgment relating to any Finance Document or the Master
Agreement; and for this purpose, there shall be disregarded any total or partial
discharge of these liabilities, or variation of their terms, which is effected
by, or in connection with, any bankruptcy, liquidation, arrangement or other
procedure under the insolvency laws of any country;

     

    “Security
Interest”  means:

     

    
      	
              (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 financial
institution;

            


    

     

    “Security
Party”  means the Borrowers and the Guarantor and any person
who, as a surety or mortgagor, as a party to any subordination or priorities
arrangement, or in any similar capacity, executes a document falling within the
last paragraph of the definition of “Finance Documents” but for the avoidance of
doubt “Security Party” shall not include, the Bareboat Charterer, the Time
Charterer, TBS Worldwide and the Approved Manager;

     

    “Security
Period”  means the period commencing on the date of this
Agreement and ending on the date on which the Lender notifies the Borrowers and
the Security Parties that:

     

    
      	
              (a)  

            	
              all
      amounts which have become due for payment by any Borrower or any Security
      Party under the Finance Documents and the Master Agreement have been
      paid;

            


    

     

    
      	
              (b)  

            	
              no
      amount is owing or has accrued (without yet having become due for payment)
      under any Finance Document or the Master
  Agreement;

            


    

     

    
      	
              (c)  

            	
              neither
      any Borrower nor any Security Party has any future or contingent liability
      under Clause 19, 20, or 21 or any other provision of this Agreement or
      another Finance Document or the Master Agreement;
  and

            


    

     

    
      	
              (d)  

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

            


    

     

    “Seller”  means
Oldendorff Carriers GmbH & Co. KG, a German Kommanditgesellschaft
incorporated in Germany whose registered office is Willy-Brandt-Allee
6, 23554 Lubeck,
Germany;

     

    “Shareholder”  means
Westbrook Holdings Ltd., incorporated in the Marshall Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH 96960;

     

    “Shares
Pledge”  means, in relation to the share capital of each
Borrower, a shares pledge in the Agreed Form;

     

    “Ships”  means
together Ship A and Ship B and in the singular means either of
them:

     

    “Ship A” means the German
registered bulk carrier of 24,021 dwt currently named “ELSA OLDENDORFF” and
registered in the name of the Seller under Liberian flag which is to be
purchased by Borrower A and registered in the name of Borrower A with the
Panamanian registry and bareboat registered in the name of the Bareboat
Charterer under the Philippines flag with the name  “ARAPAHO
BELLE”;

     

    “Ship A MOA”  means
the Memorandum of Agreement dated 5 July 2007 entered into between the Seller
and Borrower A in respect of the sale of Ship A;

     

    “Ship B” means the German
registered bulk carrier of 24,251 dwt currently named “GEBE OLDENDORFF” and
registered in the name of the Seller under Liberian flag, which is to be
purchased by Borrower B and registered in the name of Borrower B with the
Panamanian registry and bareboat registered in the name of the Bareboat
Charterer under the Philippines flag with the name “ONEIDA PRINCESS”
;

     

    “Ship B MOA”  means
the Memorandum of Agreement dated 11 September 2007  entered into
between the Seller and Borrower B in respect of the sale of Ship B;

     

    “Swap Bank” means Credit Suisse
of Paradeplatz 8, CH-8070, Zurich, Switzerland;

     

     “TBS
Worldwide”  means TBS Worldwide Services Inc being a
corporation organised and existing under the laws of the Marshall Islands having
its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH 96960;

     

    “TBS Worldwide Time
Charters”  means, in relation to each Ship, the time charters
entered or to be entered into between TBS Worldwide and other subsidiaries of
the Guarantor pursuant to which TBS Worldwide has agreed or shall agree to let,
and such charterers have agreed or shall agree to hire, such Ship on time
charter;

     

    “Time Charter” means, in relation to
each Ship, the time charter made or to be made between the Bareboat Charterer
and the Time Charterer in respect of such Ship;

     

    “Time
Charterer”  means Pacific Rim Shipping Corp., a company
incorporated in the Marshall Islands whose principal office is at Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH
96960;

     

    “Total Loss”  means
in relation to a Ship:

     

    
      	
              (a)  

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

            


    

     

    
      	
              (b)  

            	
              any
      expropriation, confiscation, requisition or acquisition of the Ship,
      whether for full consideration, a consideration less than its proper
      value, a nominal consideration or without any consideration, which is
      effected by any government or official authority or by any person or
      persons claiming to be or to represent a government or official authority
      (excluding a requisition for hire for a fixed period not exceeding 1 year
      without any right to an extension) unless it is within 1 month redelivered
      to the full control of the Borrower owning the
  Ship;

            


    

     

    
      	
              (c)  

            	
              any
      arrest, capture, seizure or detention of the Ship (including any hijacking
      or theft) unless it is within 30 days redelivered to the full control of
      the Borrower owning the Ship;

            


    

     

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

     

    
      	
              (a)  

            	
              in
      the case of an actual loss of the Ship, the date on which it occurred or,
      if that is unknown, the date when the Ship was last heard
    of;

            


    

     

    
      	
              (b)  

            	
              in
      the case of a constructive, compromised, agreed or arranged total loss of
      the Ship, the earliest of:

            


    

     

    
      	
              (i)  

            	
              the
      date on which a notice of abandonment is given to the insurers;
      and

            


    

     

    
      	
              (ii)  

            	
              the
      date of any compromise, arrangement or agreement made by or on behalf of
      the Borrower owning the Ship with the Ship's insurers in which the
      insurers agree to treat the Ship as a total loss;
  and

            


    

     

    
      	
              (c)  

            	
              in
      the case of any other type of total loss, on the date (or the most likely
      date) on which it appears to the Lender that the event constituting the
      total loss occurred; and

            


    

     

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

     

    
      	
              1.2  

            	
              Construction of certain
      terms.  In this
Agreement:

            


    

     

    “approved” means, for the
purposes of Clause 12, approved in writing by the Lender;

     

    “asset” includes every kind of
property, asset, interest or right, including any present, future or contingent
right to any revenues or other payment;

     

    “company” includes any
partnership, joint venture and unincorporated association;

     

    “consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;

     

    “contingent liability” means a
liability which is not certain to arise and/or the amount of which remains
unascertained;

     

    “document” includes a deed;
also a letter, fax or telex;

     

    “excess risks” means, in
relation to a Ship, the proportion of claims for general average, salvage and
salvage charges not recoverable under the hull and machinery policies in respect
of the Ship in consequence of its insured value being less than the value at
which the Ship is assessed for the purpose of such claims;

     

    “expense” means any kind of
cost, charge or expense (including all legal costs, charges and expenses) and
any applicable value added or other tax;

     

    “law” includes any order or
decree, any form of delegated legislation, any treaty or international
convention and any regulation or resolution of the Council of the European
Union, the European Commission, the United Nations or its Security
Council;

     

    “legal or administrative
action” means any legal proceeding or arbitration and any administrative
or regulatory action or investigation;

     

    “liability” includes every kind
of debt or liability (present or future, certain or contingent), whether
incurred as principal or surety or otherwise;

     

    “months” shall be construed in
accordance with Clause 1.3;

     

    “obligatory insurances” means,
in relation to a Ship, all insurances effected, or which the Borrower owning the
Ship is obliged to effect, under Clause 12 or any other provision of this
Agreement or another Finance Document;

     

    “parent company” has the
meaning given in Clause 1.4;

     

    “person” includes any company;
any state, political sub-division of a state and local or municipal authority;
and any international organisation;

     

    “policy”, in relation to any
insurance, includes a slip, cover note, certificate of entry or other document
evidencing the contract of insurance or its terms;

     

    “protection and indemnity
risks” means the usual risks covered by a protection and indemnity
association managed in London, including pollution risks and the proportion (if
any) of any sums payable to any other person or persons in case of collision
which are not recoverable under the hull and machinery policies by reason of the
incorporation in them of clause 1 of the Institute Time Clauses (Hulls)(1/10/83)
or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;

     

    “regulation” includes any
regulation, rule, official directive, request or guideline whether or not having
the force of law of any governmental, intergovernmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organisation;

     

    “subsidiary” has the meaning
given in Clause 1.4;

     

    “tax” includes any present or
future tax, duty, impost, levy or charge of any kind which is imposed by any
state, any political sub-division of a state or any local or municipal authority
(including any such imposed in connection with exchange controls), and any
connected penalty, interest or fine; and

     

    “war risks” includes the risk
of mines and all risks excluded by clause 23 of the Institute Time Clauses
(Hulls)(1/10/83) or clause 23 of the Institute Time Clauses
(Hulls)(1/11/1995).

     

    
      	
              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;

            


    

     

    and
“month” and “monthly” shall be construed
accordingly.

     

    
      	
              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

            


    

     

    
      	
              (c)  

            	
              P
      has the direct or indirect power to appoint or remove a majority of the
      directors 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;

            


    

     

    and any
company of which S is a subsidiary is a parent company of S.

     

    
      	
              1.5  

            	
              General
      Interpretation.  In this
  Agreement:

            


    

     

    
      	
              (a)  

            	
              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;

            


    

     

    
      	
              (b)  

            	
              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;

            


    

     

    
      	
              (c)  

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

            


    

     

    
      	
              (d)  

            	
              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 entirely
disregarded.

            


    

     

    
      	
              2  

            	
              FACILITY

            


    

     

    
      	
              2.1  

            	
              Amount of
      facility.  Subject to the other provisions of this
      Agreement, the Lender shall make a loan facility not exceeding $40,000,000
      available to the Borrowers, which shall be available in the following
      Advances:

            


    

     

    
      	
              (a)  

            	
              up
      to $20,000,000 to enable Borrower A to finance the acquisition of Ship A;
      and

            


    

     

    
      	
              (b)  

            	
              up
      to $20,000,000 to enable Borrower B to finance the acquisition of Ship
      B.

            


    

     

    
      	
              2.2  

            	
              Purpose of
      Advances.  The Borrowers undertake with the Lender to use
      each Advance only for the purpose stated in the preamble to this
      Agreement.

            


    

     

    
      	
              3  

            	
              DRAWDOWN

            


    

     

    
      	
              3.1  

            	
              Request for
      Advance.  Subject to the following conditions, the
      Borrowers may request an Advance to be made by ensuring that the Lender
      receives a completed Drawdown Notice not later than 11.00 a.m. (London
      time) 5 Business Days prior to the intended Drawdown
  Date.

            


    

     

    
      	
              3.2  

            	
              Availability.  The
      conditions referred to in Clause 3.1 are
that:

            


    

     

    
      	
              (a)  

            	
              a
      Drawdown Date has to be a Business Day during the Availability
      Period;

            


    

     

    
      	
              (b)  

            	
              an
      Advance shall not exceed $20,000,000 or if lower 65% of the average of the
      two valuations of the relevant Ship to be provided pursuant to item 6 of
      Schedule 2 Part B and if such test is not met, the Advance shall be
      reduced accordingly; and

            


    

     

    
      	
              (c)  

            	
              the
      aggregate amount of the Advances shall not exceed the
      Commitment.

            


    

     

    
      	
              3.3  

            	
              Drawdown Notice
      irrevocable.  A Drawdown Notice must be signed by a
      director officer or, if agreed by the Lender, a duly authorised
      attorney-in-fact of a Borrower; and once served, a Drawdown Notice cannot
      be revoked without the prior consent of the
  Lender.

            


    

     

    
      	
              3.4  

            	
              Disbursement of
      Advance.  Subject to the provisions of this Agreement,
      the Lender shall on each Drawdown Date make the relevant Advance to the
      Borrowers; and payment to the Borrowers shall be made to the account which
      the Borrowers specify in the relevant Drawdown
  Notice.

            


    

     

    
      	
              3.5  

            	
              Disbursement of Advance to
      third party.  The payment by the Lender under
      Clause 3.4 shall constitute the making of the Advance and the
      Borrowers shall at that time become indebted, as principal and direct
      obligors, to the Lender in an amount equal to that
  Advance.

            


    

     

    
      	
              4  

            	
              INTEREST

            


    

     

    
      	
              4.1  

            	
              Payment of normal
      interest.  Subject to the provisions of this Agreement,
      interest on the Loan in respect of each Interest Period shall be paid by
      the Borrowers on the last day of that Interest
  Period.

            


    

     

    
      	
              4.2  

            	
              Normal rate of
      interest.  Subject to the provisions of this Agreement,
      the rate of interest on the Loan in respect of an Interest Period shall be
      the aggregate of the Margin and LIBOR for that Interest
      Period.

            


    

     

    
      	
              4.3  

            	
              Payment of accrued
      interest.  In the case of an Interest Period longer than
      3 months, accrued interest shall be paid every 3 months during that
      Interest Period and on the last day of that Interest
    Period.

            


    

     

    
      	
              4.4  

            	
              Notification of market
      disruption.  The Lender shall promptly notify the
      Borrowers if no rate is quoted on Telerate Page 3750 or if for any reason
      the Lender is unable to obtain Dollars in the London Interbank Market in
      order to fund the Loan (or any part of it) during any Interest Period,
      stating the circumstances which have caused such notice to be
      given.

            


    

     

    
      	
              4.5  

            	
              Suspension of
      drawdown.  If the Lender's notice under Clause 4.4
      is served before an Advance is made, the Lender's obligation to make the
      Advance shall be suspended while the circumstances referred to in the
      Lender's notice continue.

            


    

     

    
      	
              4.6  

            	
              Negotiation of alternative rate
      of interest.  If the Lender’s notice under
      Clause 4.4 is served after an Advance is made, the Borrowers and the
      Lender shall use reasonable endeavours to agree, within the 30 days after
      the date on which the Lender serves its notice under Clause 4.4 (the
      “Negotiation
      Period”), an alternative interest rate or (as the case may be) an
      alternative basis for the Lender to fund or continue to fund the Loan
      during the Interest Period
concerned.

            


    

     

    
      	
              4.7  

            	
              Application of agreed
      alternative rate of interest.  Any alternative interest
      rate or an alternative basis which is agreed during the Negotiation Period
      shall take effect in accordance with the terms
  agreed.

            


    

     

    
      	
              4.8  

            	
              Alternative rate of interest in
      absence of agreement.  If an alternative interest rate or
      alternative basis is not agreed within the Negotiation Period, and the
      relevant circumstances are continuing at the end of the Negotiation
      Period, then the Lender shall set an interest period and interest rate
      representing the cost of funding of the Lender in Dollars or in any
      available currency of the Loan plus the Margin; and the procedure provided
      for by this Clause 4.8 shall be repeated if the relevant
      circumstances are continuing at the end of the interest period so set by
      the Lender.

            


    

     

    
      	
              4.9  

            	
              Notice of
      prepayment.  If the Borrowers do not agree with an
      interest rate set by the Lender under Clause 4.8, the Borrowers may
      give the Lender not less than 15 Business Days' notice of their intention
      to prepay at the end of the interest period set by the
    Lender.

            


    

     

    
      	
              4.10  

            	
              Prepayment.  A
      notice under Clause 4.9 shall be irrevocable; and on the last
      Business Day of the interest period set by the Lender, the Borrowers shall
      prepay (without premium or penalty) the Loan, together with accrued
      interest thereon at the applicable rate plus the
  Margin.

            


    

     

    
      	
              4.11  

            	
              Application of
      prepayment.  The provisions of Clause 7 shall apply
      in relation to the prepayment.

            


    

     

    
      	
              4.12  

            	
              Calculation of
      Margin.  The rate of Margin that shall apply for each
      period where the Loan to Value Ratio is less than or equal to 0.65:1 shall
      be 1.05 per cent. per annum.  The rate of Margin that shall
      apply for each period where the Loan to Value Ratio is greater than 0.65:1
      shall be 1.2 per cent. per annum.  The Loan to Value Ratio shall
      be calculated on the first Drawdown Date and at six monthly intervals
      thereafter.  The Lender shall notify to the Borrowers the
      applicable Margin for the period following the first Drawdown Date and
      shall thereafter only notify the Borrowers in relation to subsequent
      periods if there is a change to the relevant applicable Margin that shall
      apply due to a change in the Loan to Value Ratio.  For the
      purposes of this Clause 4.12 the Loan to Value Ratio shall mean the ratio
      of the Loan to the aggregate of the market value (determined as provided
      in Clause 14.3) of the Ships plus the net realisable value of any
      additional security provided under Clause
14.

            


    

     

    
      	
              5  

            	
              INTEREST
      PERIODS

            


    

     

    
      	
              5.1  

            	
              Commencement of Interest
      Periods.  The first Interest Period applicable to an
      Advance shall commence on the Drawdown Date and each subsequent Interest
      Period shall commence on the expiry of the preceding Interest
      Period.

            


    

     

    
      	
              5.2  

            	
              Duration of normal Interest
      Periods.  Subject to Clauses 5.3 and 5.4, each Interest
      Period shall be:

            


    

     

    
      	
              (a)  

            	
              3,
      6, 9 or 12 months as notified by the Borrowers to the Lender not later
      than 11.00 a.m. (London time) 5 Business Days before the commencement of
      the Interest Period; or

            


    

     

    
      	
              (b)  

            	
              3
      months, if the Borrowers fail to notify the Lender by the time specified
      in paragraph (a); or

            


    

     

    
      	
              (c)  

            	
              such
      other period as the Lender may agree with the
  Borrowers.

            


    

     

    
      	
              5.3  

            	
              Duration of Interest Periods
      for repayment instalments.  In respect of an amount due
      to be repaid under Clause 7 on a particular Repayment Date, an Interest
      Period shall end on that Repayment
Date.

            


    

     

    
      	
              5.4  

            	
              Non-availability of matching
      deposits for Interest Period selected.  If, after the
      Borrowers have selected and the Lender has agreed an Interest Period
      longer than 6 months, the Lender notifies the Borrowers by 11.00 a.m.
      (London time) on the third Business Day before the commencement of the
      Interest Period that it is not satisfied that deposits in Dollars for a
      period equal to the Interest Period will be available to it in the London
      Interbank Market when the Interest Period commences, the Interest Period
      shall be of 6 months.

            


    

     

    
      	
              6  

            	
              DEFAULT
      INTEREST

            


    

     

    
      	
              6.1  

            	
              Payment of default interest on
      overdue amounts.  The Borrowers shall pay interest in
      accordance with the following provisions of this Clause 6 on any amount
      payable by the Borrowers under any Finance Document which the Lender 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;
or

            


    

     

    
      	
              (c)  

            	
              if
      such amount has become immediately due and payable under Clause 18.4, 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
      Lender to be 1.5 per cent. above:

            


    

     

    
      	
              (a)  

            	
              in
      the case of an overdue amount of principal, the higher of the rates set
      out at Clauses 6.3(a) and (b); or

            


    

     

    
      	
              (b)  

            	
              in
      the case of any other overdue amount, the rate set out at Clause
      6.3(b).

            


    

     

    
      	
              6.3  

            	
              Calculation of default rate of
      interest.  The rates referred to in Clause 6.2
      are:

            


    

     

    
      	
              (a)  

            	
              the
      rate applicable to the overdue principal amount immediately prior to the
      relevant date (but only for any unexpired part of any then current
      Interest Period applicable to it);

            


    

     

    
      	
              (b)  

            	
              the
      Margin plus, in respect of successive periods of any duration (including
      at call) up to 3 months which the Lender may select from time to
      time:

            


    

     

    
      	
              (i)  

            	
              LIBOR;
      or

            


    

     

    
      	
              (ii)  

            	
              if
      the Lender 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 Lender by reference to the cost of funds to it from such other sources
      as the Lender may from time to time
determine.

            


    

     

    
      	
              6.4  

            	
              Notification of interest
      periods and default rates.  The Lender shall promptly
      notify the Borrowers of each interest rate determined by it under Clause
      6.3 and of each period selected by it for the purposes of paragraph (b) of
      that Clause; but this shall not be taken to imply that the Borrowers are
      liable to pay such interest only with effect from the date of the Lender'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.

            


    

     

    
      	
              6.7  

            	
              Application to Master
      Agreement.  For the avoidance of doubt, this Clause 6
      does not apply to any amount payable under the Master Agreement in respect
      of any continuing Transaction as to which section 2(e) (Default Interest;
      Other Amounts) of the Master Agreement shall
  apply.

            


    

     

    
      	
              7  

            	
              REPAYMENT
      AND PREPAYMENT

            


    

     

    
      	
              7.1  

            	
              Amount of repayment
      instalments.  The Borrowers shall repay each Advance in
      40 consecutive quarterly instalments being (i) eight consecutive quarterly
      instalments of Seven hundred and fifty thousand Dollars ($750,000) each
      followed by (ii) thirty one consecutive quarterly instalments of Four
      hundred and thirty seven thousand Dollars ($437,000) each and followed by
      (iii) a final instalment of Four hundred and fifty three thousand Dollars
      ($453,000) provided however that if an Advance is not drawndown in full
      such instalments shall be reduced pro
rata.

            


    

     

    
      	
              7.2  

            	
              Repayment
      Dates.  The first instalment for each Advance shall be
      repaid on the date falling three months after the Drawdown Date of that
      Advance and the last instalment on the date falling 120 months after the
      Drawdown Date of that Advance and in either case no later than 31 March
      2018.

            


    

     

    
      	
              7.3  

            	
              Final Repayment
      Date.  On the final Repayment Date, the Borrowers shall
      additionally pay to the Lender all other sums then accrued or owing under
      any Finance Document.

            


    

     

    
      	
              7.4  

            	
              Voluntary
      prepayment.  Subject to the following conditions, the
      Borrowers may prepay the whole or any part of the Loan on the last day of
      an Interest Period.

            


    

     

    
      	
              7.5  

            	
              Conditions for voluntary
      prepayment.  The conditions referred to in Clause 7.4 are
      that:

            


    

     

    
      	
              (a)  

            	
              a
      partial prepayment shall be $100,000 or a multiple of
      $100,000;

            


    

     

    
      	
              (b)  

            	
              the
      Lender has received from the Borrowers at least 15 days’ prior written
      notice specifying the amount to be prepaid and the date on which the
      prepayment is to be made;

            


    

     

    
      	
              (c)  

            	
              the
      Borrowers have provided evidence satisfactory to the Lender that any
      consent required by any Borrower or any Security Party in connection with
      the prepayment has been obtained and remains in force, and that any
      regulation relevant to this Agreement which affects any Borrower or any
      Security Party has been complied
with.

            


    

     

    
      	
              7.6  

            	
              Effect of notice of
      prepayment.  A prepayment notice may not be withdrawn or
      amended without the consent of the Lender and the amount specified in the
      prepayment notice shall become due and payable by the Borrowers on the
      date for prepayment specified in the prepayment
  notice.

            


    

     

    
      	
              7.7  

            	
              Mandatory
      prepayment.  Without prejudice to the provisions of
      Clause 14, the Borrowers shall be obliged to make a prepayment in the
      relevant amount if a Ship is sold or becomes a Total
  Loss:

            


    

     

    
      	
              (a)  

            	
              in
      the case of a sale, on or before the date on which the sale is completed
      by delivery of the Ship to the buyer;
or

            


    

     

    
      	
              (b)  

            	
              in
      the case of a Total Loss, on the earlier of the date falling 120 days
      after the Total Loss Date and the date of receipt by the Security Trustee
      of the proceeds of insurance relating to such Total
  Loss;

            


    

     

    and in
this Clause 7.7 “relevant
amount” shall be the outstanding amount of the Advance used to finance
the Ship which is the subject of the sale or Total Loss and the higher of (x)
such additional amount of the Loan (if any) required to ensure that the
Borrowers are in compliance with the security maintenance covenant in Clause 14
or (y) such additional amount of the Loan (if any) required to ensure that the
ratio of the Loan to the market value (determined as provided in Clause 14.3) of
the remaining Ship immediately after such prepayment is no higher than the ratio
of the Loan to the aggregate of the market values (determined as provided in
Clause 14.3) of the Ships (including the Ship the subject of such sale or Total
Loss) immediately prior to such prepayment (which in the case of the Total Loss
of a Ship shall be determined using a valuation of such Ship determined under
Clause 14.3 as at a date no more than 7 days prior to such Total Loss) and
provided that if the Ship is the second to be sold and/or to become a Total Loss
the amount to be prepaid shall be the amount of the Loan in full.

     

    Any
payment made under this Clause 7.7 shall be applied first against repayment of
the Advance relating to the Ship the subject of the sale or the Total Loss and
secondly against the repayment instalments of the other Advance in inverse order
of maturity.

     

    
      	
              7.8  

            	
              Amounts payable on
      prepayment.  A prepayment shall be made together with
      accrued interest (and any other amount payable under Clause 20 or
      otherwise) in respect of the amount prepaid and, if the prepayment is not
      made on the last day of an Interest Period together with any sums payable
      under Clause 20.1(b) but without premium or
  penalty.

            


    

     

    
      	
              7.9  

            	
              Application of partial
      prepayment.  Other than in the case of mandatory
      prepayment pursuant to Clause 7.7 which shall be applied in the manner
      described in Clause 7.7 each partial prepayment shall be applied against
      the repayment instalments specified in Clause 7.1 in inverse order of
      maturity and pro rata each Advance.

            


    

     

    
      	
              7.10  

            	
              No
      reborrowing.  No amount prepaid may be
      reborrowed.

            


    

     

    
      	
              8  

            	
              CONDITIONS
      PRECEDENT

            


    

     

    
      	
              8.1  

            	
              Documents, fees and no
      default.  The Lender's obligation to make an Advance is
      subject to the following conditions
precedent:

            


    

     

    
      	
              (a)  

            	
              that,
      on or before the service of the first Drawdown Notice, the Lender receives
      the documents described in Part A of Schedule 2 in form and substance
      satisfactory to it and its lawyers;

            


    

     

    
      	
              (b)  

            	
              that,
      on a Drawdown Date but prior to making the Advance, the Lender receives or
      is satisfied that it will receive the documents described in Part B of
      Schedule 2 in form and substance satisfactory to it and its
      lawyers;

            


    

     

    
      	
              (c)  

            	
              that,
      on before the relevant Drawdown Date the Lender has received the
      arrangement fee referred to in Clause 19.1 and all accrued commitment fee
      payable pursuant to Clause 19.1;
and

            


    

     

    
      	
              (d)  

            	
              that
      both at the date of the Drawdown Notice and at the Drawdown
      Date:

            


    

     

    
      	
              (i)  

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or would result from the borrowing of the
    Advance;

            


    

     

    
      	
              (ii)  

            	
              the
      representations and warranties in Clause 9.1 and those of any Borrower 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;
  and

            


    

     

    
      	
              (iii)  

            	
              none
      of the circumstances contemplated by Clause 4.4 has occurred and is
      continuing; and

            


    

     

    
      	
              (e)  

            	
              that,
      if the ratio set out in Clause 14.1 were applied immediately following the
      making of the Advance, the Borrowers would not be obliged to provide
      additional security or prepay part of the Loan under that
      Clause;

            


    

     

    
      	
              (f)  

            	
              that
      the Lender has received, and found to be acceptable to it, any further
      opinions, consents, agreements and documents in connection with the
      Finance Documents which the Lender may request by notice to the Borrowers
      prior to the Drawdown Date.

            


    

     

    
      	
              8.2  

            	
              Waivers of conditions
      precedent.  If the Lender, at its discretion, permits an
      Advance to be borrowed before certain of the conditions referred to in
      Clause 8.1 are satisfied, the Borrowers shall ensure that those conditions
      are satisfied within 5 Business days after the Drawdown Date (or such
      longer period as the Lender may
specify).

            


    

     

    
      	
              9  

            	
              REPRESENTATIONS
      AND WARRANTIES

            


    

     

    
      	
              9.1  

            	
              General.  Each
      Borrower represents and warrants to the Lender as
  follows.

            


    

     

    
      	
              9.2  

            	
              Status.  Each
      Borrower is duly incorporated and validly existing and in good standing
      under the laws of the Marshall
Islands.

            


    

     

    
      	
              9.3  

            	
              Share capital and
      ownership.  Each Borrower 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
      the Shareholder.

            


    

     

    
      	
              9.4  

            	
              Corporate
      power.  Each Borrower has the corporate capacity, and has
      taken all corporate action and obtained all consents necessary for
      it:

            


    

     

    
      	
              (a)  

            	
              to
      execute the MOAs, to purchase and pay for each Ship under the relevant MOA
      and register each Ship in its name in the Panamanian Ship
      Registry;

            


    

     

    
      	
              (b)  

            	
              to
      execute the Finance Documents to which that Borrower is a party and the
      Master Agreement; and

            


    

     

    
      	
              (c)  

            	
              to
      borrow under this Agreement, to enter into Transactions under the Master
      Agreement and to make all the payments contemplated by, and to comply
      with, those Finance Documents and the Master
  Agreement.

            


    

     

    
      	
              9.5  

            	
              Consents in
      force.  All the consents referred to in Clause 9.4 remain
      in force and nothing has occurred which makes any of them liable to
      revocation.

            


    

     

    
      	
              9.6  

            	
              Legal validity; effective
      Security Interests.  The Finance Documents to which each
      Borrower is a party and the Master Agreement, 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
      that Borrower's legal, valid and binding obligations enforceable against
      that Borrower 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;

            


    

     

    subject
to any relevant insolvency laws affecting creditors' rights generally and
subject to any qualifications as to matters of law which are specifically
referred to in any legal opinion delivered to the Lender pursuant to Schedule
2.

     

    
      	
              9.7  

            	
              No third party Security
      Interests.  Without limiting the generality of Clause
      9.6, at the time of the execution and delivery of each Finance
      Document:

            


    

     

    
      	
              (a)  

            	
              each
      Borrower which is 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 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 any such Security Interest, by its terms,
      relates.

            


    

     

    
      	
              9.8  

            	
              No
      conflicts.  The execution by each Borrower of each
      Finance Document to which it is a party and the Master Agreement, and the
      borrowing by that Borrower of the Loan, and its compliance with each
      Finance Document and the Master Agreement to which it is a party will not
      involve or lead to a contravention
of:

            


    

     

    
      	
              (a)  

            	
              any
      law or regulation; or

            


    

     

    
      	
              (b)  

            	
              the
      constitutional documents of that Borrower;
or

            


    

     

    
      	
              (c)  

            	
              any
      contractual or other obligation or restriction which is binding on that
      Borrower or any of its assets.

            


    

     

    
      	
              9.9  

            	
              No withholding
      taxes.  No tax is imposed in any jurisdiction in which
      that Borrower is ordinarily resident for tax by way of withholding or
      deduction or otherwise on any payment to be made under this
      Agreement.

            


    

     

    
      	
              9.10  

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

            


    

     

    
      	
              9.11  

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Borrowers or any Security Party to the Lender in connection with any
      Finance Document satisfied the requirements of Clause 10.5; all audited
      and unaudited accounts which have been so provided satisfied the
      requirements of Clause 10.7; and there has been no material adverse change
      in the financial position or state of affairs of any Borrower from that
      disclosed in the latest of those
accounts.

            


    

     

    
      	
              9.12  

            	
              No
      litigation.  No legal or administrative action involving
      any Borrower (including action relating to any alleged or actual breach of
      the ISM Code or the ISPS Code) has been commenced or taken or, to any
      Borrower's knowledge, is likely to be commenced or taken which, in either
      case, would be likely to have a material adverse effect on any Borrower's
      financial position or
profitability.

            


    

     

    
      	
              9.13  

            	
              Validity and completeness of
      MOAs. The MOAs constitute valid, binding and enforceable
      obligations of the Seller and the Borrower respectively in accordance with
      its terms subject to any relevant insolvency laws affecting creditors’
      rights generally; and:

            


    

     

    
      	
              (a)  

            	
              the
      copy of each MOA delivered to the Lender before the date of this Agreement
      is a true and complete copy; and

            


    

     

    
      	
              (b)  

            	
              no
      amendments or additions to either MOA have been agreed nor have either
      Borrower or the Seller waived any of their respective rights under the
      relevant MOA.

            


    

     

    
      	
              9.14  

            	
              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 either Borrower, the Seller or a third party in
      connection with the purchase by either Borrower of either Ship, other than
      as disclosed to the Lender in writing on or prior to the date of this
      Agreement.

            


    

     

    
      	
              9.15  

            	
              Compliance with certain
      undertakings.  At the date of this Agreement, the
      Borrowers are in compliance with Clauses 10.2, 10.4, 10.9 and
      10.13.

            


    

     

    
      	
              9.16  

            	
              Taxes
      paid.  Each Borrower has paid all taxes applicable to, or
      imposed on or in relation to that Borrower, its business or the Ship owned
      by it.

            


    

     

    
      	
              9.17  

            	
              ISM Code and ISPS Code
      compliance.  All requirements of the ISM Code and ISPS
      Code as they relate to the Borrowers, the Approved Manager and each Ship
      have been complied with.

            


    

     

    
      	
              10  

            	
              GENERAL
      UNDERTAKINGS

            


    

     

    
      	
              10.1  

            	
              General.  Each
      Borrower undertakes with the Lender to comply with the following
      provisions of this Clause 10 at all times during the Security Period,
      except as the Lender may otherwise
permit.

            


    

     

    
      	
              10.2  

            	
              Title; negative
      pledge.  Each Borrower
will:

            


    

     

    
      	
              (a)  

            	
              hold
      the legal title to, and own the entire beneficial interest in the Ship
      owned by it, her Insurances and Earnings, free from all Security Interests
      and other interests and rights of every kind, except for those created by
      the Finance Documents and the effect of assignments contained in the
      Finance Documents and except for Permitted Security Interests;
      and

            


    

     

    
      	
              (b)  

            	
              not
      create or permit to arise any Security Interest (except for Permitted
      Security Interests) over any other asset, present or future (including,
      but not limited to, that Borrower’s rights against the Swap Bank under the
      Master Agreement or all or any part of that Borrower’s interest in any
      amount payable to that Borrower by the Swap Bank under the Master
      Agreement);

            


    

     

    but
paragraph (a) does not apply to any charter of the ship as to which Clause 13.13
applies.

    


    
      	
              10.3  

            	
              No disposal of
      assets.  Save pursuant to the relevant Bareboat Charter
      or in the case of a disposal of a Ship where the provisions of Clause 7.7
      are complied with, no Borrower will transfer, lease or otherwise dispose
      of:

            


    

     

    
      	
              (a)  

            	
              all
      or a substantial part of its assets, whether by one transaction or a
      number of transactions, whether related or not;
  or

            


    

     

    
      	
              (b)  

            	
              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.

            


    

     

    
      	
              10.4  

            	
              No other liabilities or
      obligations to be incurred.  No Borrower will incur any
      liability or obligation except:

            


    

     

    
      	
              (a)  

            	
              liabilities
      and obligations under the MOA, the Master Agreement, the Bareboat Charter,
      the First Sub-Time Charter, the Second Sub-Time Charter and the Finance
      Documents to which it is a party;

            


    

     

    
      	
              (b)  

            	
              liabilities
      or obligations reasonably incurred in the ordinary course of operating and
      chartering the Ship owned by it;
and

            


    

     

    
      	
              (c)  

            	
              provided
      that the terms of Clause 11.3(d) are complied with, inter-company
      Indebtedness from other companies which are in the same ultimate
      beneficial ownership as the
Borrowers.

            


    

     

    
      	
              10.5  

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of a Borrower under or in connection
      with any Finance Document will be true and not misleading and will not
      omit any material fact or
consideration.

            


    

     

    
      	
              10.6  

            	
              Provision of financial
      statements.  Each Borrower will procure that there is
      sent to the Lender:

            


    

     

    
      	
              (a)  

            	
              as
      soon as possible, but in no event later than 30 June following the end of
      each financial year of the Guarantor and of each Borrower, the annual
      audited accounts of the Guarantor and of each Borrower;
  and

            


    

     

    
      	
              (b)  

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

            


    

     

    
      	
              10.7  

            	
              Form of financial
      statements.  All accounts (audited and unaudited)
      delivered under Clause 10.6 will:

            


    

     

    
      	
              (a)  

            	
              be
      prepared in accordance with all applicable laws and GAAP consistently
      applied;

            


    

     

    
      	
              (b)  

            	
              give
      a true and fair view of the financial condition of the Guarantor and
      relevant Borrower 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 Guarantor and
      the relevant Borrower.

            


    

     

    
      	
              10.8  

            	
              Shareholder and creditor
      notices.  Each Borrower will send the Lender, at the same
      time as they are despatched, copies of all communications which are
      despatched to that Borrower's shareholders or creditors or any class of
      them.

            


    

     

    
      	
              10.9  

            	
              Consents.  Each
      Borrower will maintain in force and promptly obtain or renew, and will
      promptly send certified copies to the Lender of, all consents
      required:

            


    

     

    
      	
              (a)  

            	
              for
      that Borrower to perform its obligations under any Finance Document to
      which it is a party or the Master
Agreement;

            


    

     

    
      	
              (b)  

            	
              for
      the validity or enforceability of any Finance Document to which it is a
      party or the Master Agreement;

            


    

     

    
      	
              (c)  

            	
              for
      that Borrower to continue to own charter, and operate the Ship owned by
      it;

            


    

     

    and that
Borrower will comply with the terms of all such consents.

     

    
      	
              10.10  

            	
              Maintenance of Security
      Interests.  Each Borrower
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 may be 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.

            


    

     

    
      	
              10.11  

            	
              Notification of
      litigation.  Each Borrower will provide the Lender with
      details of any legal or administrative action involving either Borrower,
      any Security Party, the Approved Manager or the Ships, their Earnings or
      Insurances promptly upon becoming aware of the same where such as legal or
      administrative action might, if adversely determined, have a material
      adverse effect on the ability of that Borrower to perform its obligations
      under any Finance Document to which it is a
  party.

            


    

     

    
      	
              10.12  

            	
              No amendment to the
      MOAs.  The Borrowers will not agree to any amendment or
      supplement to, or waive or fail to enforce, the MOAs or any of their
      provisions.

            


    

     

    
      	
              10.13  

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

            


    

     

    
      	
              10.14  

            	
              Confirmation of no
      default.  Each Borrower will, within 2 Business Days
      after service by the Lender of a written request, serve on the Lender a
      notice which is signed by 2 directors of that Borrower and
      which:

            


    

     

    
      	
              (a)  

            	
              states
      that no Event of Default or Potential Event of Default has occurred;
      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.

            


    

     

    
      	
              10.15  

            	
              Notification of
      default.  Each Borrower will notify the Lender as soon as
      that Borrower 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 will
keep the Lender fully up-to-date with all developments.

     

    
      	
              10.16  

            	
              Provision of further
      information.  Each Borrower will, as soon as practicable
      after receiving the request, provide the Lender with any additional
      financial or other information
relating:

            


    

     

    
      	
              (a)  

            	
              to
      that Borrower, the Ship owned by it, the Earnings or the Insurances;
      or

            


    

     

    
      	
              (b)  

            	
              to
      any other matter relevant to, or to any provision of, a Finance
      Document;

            


    

     

    which may
be requested by the Lender at any time.

     

    
      	
              10.17  

            	
              “Know your customer”
      checks.  If:

            


    

     

    
      	
              (a)  

            	
              the
      introduction of or any change in (or in the interpretation, administration
      or application of) any law or regulation made after the date of this
      Agreement;

            


    

     

    
      	
              (b)  

            	
              any
      change in the status of any Borrower or any Security Party after the date
      of this Agreement;

            


    

     

    
      	
              (c)  

            	
              a
      proposed assignment or transfer by a Lender of any of its rights and
      obligations under this Agreement to a party that is not a Lender prior to
      such assignment or transfer,

            


    

     

    obliges
the Lender (or, in the case of paragraph (iii), any prospective new Lender) to
comply with "know your customer" or similar identification procedures in
circumstances where the necessary information is not already available to it,
any Borrower shall promptly upon the request of the Lender supply, or procure
the supply of, such documentation and other evidence as is reasonably requested
by the Lender in order for the Lender concerned or, in the case of the event
described in paragraph (iii), any prospective new Lender to carry out and be
satisfied it has complied with all necessary "know your customer" or other
similar checks under all applicable laws and regulations pursuant to the
transactions contemplated in the Finance Documents.

     

    
      	
              10.18  

            	
              Financial
      Covenants.

            


    

     

    
      	
              (i)  

            	
              The
      Borrowers undertake to comply at all times with the financial covenants
      set out in Schedule 3;

            


    

     

    
      	
              (ii)  

            	
              The
      Borrowers shall provide to the Lender within 60 days after the end of each
      financial quarter of the Guarantor’s financial year a compliance
      certificate in the form set out in Schedule 4 executed by the chief
      financial officer of the Guarantor and confirming that the financial
      covenants set out in Schedule 3 have been complied with during each
      financial quarter.

            


    

     

    
      	
              10.19  

            	
              Fixing of Interest
      Rates.  The Borrowers undertake that at all times
      throughout the Security Period they shall hedge against fluctuations in
      the interest rate on the Loan which hedging shall be in respect of at
      least 50 per cent of the Loan and shall be effected either by way of
      interest rate swap transactions, hedging instalments or fixed rate
      funding.

            


    

     

    
      	
              10.20  

            	
              Minimum Free
      Liquidity.  The Borrowers undertake to procure that they
      shall maintain on accounts with the Lender a minimum aggregate balance of
      $200,000 free of Security Interests other than those in favour of the
      Lender.

            


    

     

    
      	
              11  

            	
              CORPORATE
      UNDERTAKINGS

            


    

     

    
      	
              11.1  

            	
              General.  Each
      Borrower also undertakes with the Lender to comply with the following
      provisions of this Clause 11 at all times during the Security Period
      except as the Lender may otherwise
permit.

            


    

     

    
      	
              11.2  

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

            


    

     

    
      	
              11.3  

            	
              Negative
      undertakings.  No Borrower
  will:

            


    

     

    
      	
              (a)  

            	
              carry
      on any business other than the ownership, chartering and operation of the
      Ship owned by it; or

            


    

     

    
      	
              (b)  

            	
              pay
      any dividend or make any other form of distribution if an Event of Default
      has occurred and is continuing; or

            


    

     

    
      	
              (c)  

            	
              effect
      any form of redemption, purchase or return of share capital;
      or

            


    

     

    
      	
              (d)  

            	
              provide
      any form of credit or financial assistance
to:

            


    

     

    
      	
              (i)  

            	
              a
      person who is directly or indirectly interested in that Borrower's share
      or loan capital; or

            


    

     

    
      	
              (ii)  

            	
              any
      company in or with which such a person is directly or indirectly
      interested or connected;

            


    

     

    or enter
into any transaction with or involving such a person or company on terms which
are, in any respect, less favourable to that Borrower than those which it could
obtain in a bargain made at arms' length provided however that prior to an Event
of Default which is continuing that Borrower may provide loans to or incur
inter-company Indebtedness from other subsidiaries of the Guarantor and may
service such inter-company Indebtedness provided that in the case of any such
inter-company Indebtedness the relevant lending company has first executed an
agreement in favour of the Lender fully subordinating the rights of such lending
company in respect of such Indebtedness to those of the Lender under the Finance
Documents;

     

    
      	
              (e)  

            	
              open
      or maintain any account with any bank or financial institution except
      accounts with the Lender for the purposes of the Finance
      Documents;

            


    

     

    
      	
              (f)  

            	
              issue,
      allot or grant any person a right to any shares in its capital or
      repurchase or reduce its issued share
capital;

            


    

     

    
      	
              (g)  

            	
              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

            


    

     

    
      	
              (h)  

            	
              enter
      into any form of amalgamation, merger or de-merger or any form of
      reconstruction or reorganisation.

            


    

     

    
      	
              12  

            	
              INSURANCE

            


    

     

    
      	
              12.1  

            	
              General.  Each
      Borrower also undertakes with the Lender to comply with the following
      provisions of this Clause 12 in respect of each Ship at all times during
      the Security Period after that Ship has been delivered to it under the
      relevant MOA  except as the Lender may otherwise
      permit.

            


    

     

    
      	
              12.2  

            	
              Maintenance of obligatory
      insurances.  Each Borrower shall keep the Ship owned by
      it insured at the expense of that Borrower
  against:

            


    

     

    
      	
              (a)  

            	
              fire
      and usual marine risks (including hull and machinery and excess
      risks);

            


    

     

    
      	
              (b)  

            	
              war
      risks;

            


    

     

    
      	
              (c)  

            	
              protection
      and indemnity risks; and

            


    

     

    
      	
              (d)  

            	
              any
      other risks against which the Lender considers, having regard to practices
      and other circumstances prevailing at the relevant time, it would in the
      reasonable opinion of the Lender be reasonable for a prudent owner to
      insure and which are specified by the Lender by notice to that
      Borrower.

            


    

     

    
      	
              12.3  

            	
              Terms of obligatory
      insurances.   Such insurances in relation to a Ship
      shall be effected by the Borrowers:

            


    

     

    
      	
              (a)  

            	
              in
      Dollars;

            


    

     

    
      	
              (b)  

            	
              in
      the case of fire and usual marine risks and war risks, in an amount on an
      agreed value basis at least the greater of (i) 120 per cent of the Advance
      in respect of such Ship and (ii) the market value of such Ship;
      and

            


    

     

    
      	
              (c)  

            	
              in
      the case of oil pollution liability risks, for an aggregate amount equal
      to the highest level of cover from time to time available under basic
      protection and indemnity club entry and in the international marine
      insurance market;

            


    

     

    
      	
              (d)  

            	
              in
      relation to protection and indemnity risks in respect of the full tonnage
      of such Ship;

            


    

     

    
      	
              (e)  

            	
              on
      approved terms; and

            


    

     

    
      	
              (f)  

            	
              through
      approved brokers and with approved insurance companies and/or underwriters
      or, in the case of war risks and protection and indemnity risks, in
      approved war risks and protection and indemnity risks associations and,
      without prejudice to the Borrowers’ obligation to obtain the prior
      approval of the Lender such approval not to be unreasonably withheld, at
      all times with reputable international brokers, companies, underwriters
      and mutual insurance associations.

            


    

     

    
      	
              12.4  

            	
              Further protections for the
      Lender.  In addition to the terms set out in Clause 12.3,
      each Borrower shall use its best endeavours to procure that the obligatory
      insurances shall:

            


    

     

    
      	
              (a)  

            	
              whenever
      the Lender requires name (or be amended to name) the Lender as additional
      named assured for its rights and interests, warranted no operational
      interest and with full waiver of rights of subrogation against the Lender,
      but without the Lender thereby being liable to pay (but having the right
      to pay) premiums, calls or other assessments in respect of such
      insurance;

            


    

     

    
      	
              (b)  

            	
              name
      the Lender as loss payee with such directions for payment as the Lender
      may specify;

            


    

     

    
      	
              (c)  

            	
              provide
      that all payments by or on behalf of the insurers under the obligatory
      insurances to the Lender shall be made without set-off, counterclaim or
      deductions or condition whatsoever;

            


    

     

    
      	
              (d)  

            	
              provide
      that such obligatory insurances shall be primary without right of
      contribution from other insurances which may be carried by the Lender;
      and

            


    

     

    
      	
              (e)  

            	
              provide
      that the Lender may make proof of loss if any of the Borrowers fail to do
      so.

            


    

     

    
      	
              12.5  

            	
              Renewal of obligatory
      insurances.  Each Borrower
  shall:

            


    

     

    
      	
              (a)  

            	
              at
      least 14 days before the expiry of any obligatory insurance effected by
      it:

            


    

     

    
      	
              (i)  

            	
              notify
      the Lender of the brokers (or other insurers) and any protection and
      indemnity or war risks association through or with whom that Borrower
      proposes to renew that obligatory insurance and of the proposed terms of
      renewal; and

            


    

     

    
      	
              (ii)  

            	
              obtain
      the Lender's approval to the matters referred to in paragraph
      (i);

            


    

     

    
      	
              (b)  

            	
              at
      least 7 days before the expiry of any obligatory insurance effected by it,
      renew that obligatory insurance in accordance with the Lender's approval
      pursuant to paragraph (a); and

            


    

     

    
      	
              (c)  

            	
              use
      its best endeavours to procure that the approved brokers and/or the war
      risks and protection and indemnity associations with which such a renewal
      is effected shall promptly after the renewal notify the Lender in writing
      of the terms and conditions of the
renewal.

            


    

     

    
      	
              12.6  

            	
              Copies of policies; letters of
      undertaking.  Each Borrower shall ensure that all
      approved brokers provide the Lender with pro forma copies of all policies
      relating to the obligatory insurances which they are to effect or renew
      and of a letter or letters or undertaking in a form required by the Lender
      and including undertakings by the approved brokers
  that:

            


    

     

    
      	
              (a)  

            	
              they
      will have endorsed on each policy, immediately upon issue, a loss payable
      clause and a notice of assignment complying with the provisions of Clause
      12.4;

            


    

     

    
      	
              (b)  

            	
              they
      will hold such policies, and the benefit of such insurances, to the order
      of the Lender in accordance with the said loss payable
    clause;

            


    

     

    
      	
              (c)  

            	
              they
      will advise the Lender immediately of any material change to the terms of
      the obligatory insurances;

            


    

     

    
      	
              (d)  

            	
              they
      will notify the Lender, not less than 10 days before the expiry of the
      obligatory insurances, in the event of their not having received notice of
      renewal instructions from that Borrower or its agents and, in the event of
      their receiving instructions to renew, they will promptly notify the
      Lender of the terms of the instructions;
and

            


    

     

    
      	
              (e)  

            	
              they
      will not set off against any sum recoverable in respect of a claim
      relating to the Ship owned by that Borrower under such obligatory
      insurances any premiums or other amounts due to them or any other person
      whether in respect of that Ship or otherwise, they waive any lien on the
      policies, or any sums received under them, which they might have in
      respect of such premiums or other amounts, and they will not cancel such
      obligatory insurances by reason of non-payment of such premiums or other
      amounts, and will arrange for a separate policy to be issued in respect of
      that Ship forthwith upon being so requested by the
  Lender.

            


    

     

    
      	
              12.7  

            	
              Copies of certificates of
      entry.  Each Borrower shall ensure that any protection
      and indemnity and/or war risks associations in which the Ship owned by it
      is entered provides the Lender
with:

            


    

     

    
      	
              (a)  

            	
              a
      certified copy of the certificate of entry for that
  Ship;

            


    

     

    
      	
              (b)  

            	
              a
      letter or letters of undertaking in such form as may be required by the
      Lender; and

            


    

     

    
      	
              (c)  

            	
              a
      certified copy of each certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority in relation to that
  Ship.

            


    

     

    
      	
              12.8  

            	
              Deposit of original
      policies.  Each Borrower shall ensure that all policies
      relating to obligatory insurances effected by it are deposited with the
      approved brokers through which the insurances are effected or
      renewed.

            


    

     

    
      	
              12.9  

            	
              Payment of
      premiums.  Each Borrower shall punctually pay all
      premiums or other sums payable in respect of the obligatory insurances
      effected by it and produce all relevant receipts when so required by the
      Lender.

            


    

     

    
      	
              12.10  

            	
              Guarantees.  Each
      Borrower shall ensure that any guarantees required by a protection and
      indemnity or war risks association are promptly issued and remain in full
      force and effect.

            


    

     

    
      	
              12.11  

            	
              Compliance with terms of
      insurances.  No Borrower shall do nor omit to do (nor
      permit to be done or not to be done) any act or thing which would or might
      render any obligatory insurance invalid, void, voidable or unenforceable
      or render any sum payable under an obligatory insurance repayable in whole
      or in part; and, in particular:

            


    

     

    
      	
              (a)  

            	
              each
      Borrower shall take all necessary action and comply with all requirements
      which may from time to time be applicable to the obligatory insurances,
      and (without limiting the obligation contained in Clause 12.7(c)) ensure
      that the obligatory insurances are not made subject to any exclusions or
      qualifications to which the Lender has not given its prior
      approval;

            


    

     

    
      	
              (b)  

            	
              no
      Borrower shall make any changes relating to the classification or
      classification society or manager or operator of the Ship owned by it
      approved by the underwriters of the obligatory
  insurances;

            


    

     

    
      	
              (c)  

            	
              each
      Borrower shall make (and promptly supply copies to the Lender of) all
      quarterly or other voyage declarations which may be required by the
      protection and indemnity risks association in which the Ship owned by it
      is entered to maintain cover for trading to the United States of America
      and Exclusive Economic Zone (as defined in the United States Oil Pollution
      Act 1990 or any other applicable legislation);
  and

            


    

     

    
      	
              (d)  

            	
              no
      Borrower shall employ the Ship owned by it, nor allow it to be employed,
      otherwise than in conformity with the terms and conditions of the
      obligatory insurances, without first obtaining the consent of the insurers
      and complying with any requirements (as to extra premium or otherwise)
      which the insurers specify.

            


    

     

    
      	
              12.12  

            	
              Alteration to terms of
      insurances.  No Borrower shall either make or agree to
      any alteration to the terms of any obligatory insurance nor waive any
      right relating to any obligatory
insurance.

            


    

     

    
      	
              12.13  

            	
              Settlement of
      claims.  No Borrower shall settle, compromise or abandon
      any claim under any obligatory insurance for Total Loss or for a Major
      Casualty, and shall do all things necessary and provide all documents,
      evidence and information to enable the Lender to collect or recover any
      moneys which at any time become payable in respect of the obligatory
      insurances.

            


    

     

    
      	
              12.14  

            	
              Provision of copies of
      communications.  Each Borrower shall provide the Lender,
      at the time of each such communication, copies of all written
      communications between that Borrower
and:

            


    

     

    
      	
              (a)  

            	
              the
      approved brokers; and

            


    

     

    
      	
              (b)  

            	
              the
      approved protection and indemnity and/or war risks associations;
      and

            


    

     

    
      	
              (c)  

            	
              the
      approved insurance companies and/or underwriters, which relate directly or
      indirectly to:

            


    

     

    
      	
              (i)  

            	
              that
      Borrower's obligations relating to the obligatory insurances including,
      without limitation, all requisite declarations and payments of additional
      premiums or calls; and

            


    

     

    
      	
              (ii)  

            	
              any
      credit arrangements made between that Borrower and any of the persons
      referred to in paragraphs (a) or (b) relating wholly or partly to the
      effecting or maintenance of the obligatory
  insurances.

            


    

     

    
      	
              12.15  

            	
              Provision of
      information.  In addition, each Borrower shall promptly
      provide the Lender (or any persons which it may designate) with any
      information which the Lender (or any such designated person) reasonably
      requests for the purpose of:

            


    

     

    
      	
              (a)  

            	
              obtaining
      or preparing any report from an independent marine insurance broker as to
      the adequacy of the obligatory insurances effected or proposed to be
      effected; and/or

            


    

     

    
      	
              (b)  

            	
              effecting,
      maintaining or renewing any such insurances as are referred to in Clause
      12.16 below or dealing with or considering any matters relating to any
      such insurances;

            


    

     

    and the
Borrowers shall, forthwith upon demand, indemnify the Lender in respect of all
fees and other expenses incurred by or for the account of the Lender in
connection with any such report as is referred to in paragraph (a).

     

    
      	
              12.16  

            	
              Mortgagee's interest and
      additional perils insurances.  The Lender shall be
      entitled from time to time to effect, maintain and renew a mortgagee’s
      interest additional perils insurance in respect of any Ship and a
      mortgagee’s interest marine insurance in such amounts, on such terms,
      through such insurers and generally in such manner as the Lender may from
      time to time consider appropriate and the Borrowers shall upon demand
      fully indemnify the Lender in respect of all premiums and other expenses
      which are incurred in connection with or with a view to effecting,
      maintaining or renewing any such insurance or dealing with, or
      considering, any matter arising out of any such
  insurance.

            


    

     

    
      	
              12.17  

            	
              Review of insurance
      requirements.  The Lender shall at the Borrowers’ costs
      and expense appoint an independent insurance consultant to review the
      requirements of this Clause 12 annually in
      order to take account of any changes in circumstances after the date of
      this Agreement which are, in the reasonable opinion of the Lender
      significant and capable of affecting the Borrowers or the Ships and their
      insurance (including, without limitation, changes in the availability or
      the cost of insurance coverage or the risks to which the Borrowers may be
      subject).

            


    

     

    
      	
              12.18  

            	
              Modification of insurance
      requirements.  The Lender shall notify the Borrowers of
      any proposed modification under Clause 12.17 to the requirements of this
      Clause 12 which the Lender or its Consultant
      shall reasonably consider appropriate, in the circumstances and, after
      consultation and taking full account of the Borrowers’ opinions, such
      modification shall take effect on and from the date it is notified in
      writing to the Borrowers as an amendment to this Clause 12 and shall bind the Borrowers
      accordingly.

            


    

     

    
      	
              13  

            	
              SHIP
      COVENANTS

            


    

     

    
      	
              13.1  

            	
              General.  Each
      Borrower also undertakes with the Lender to comply with the following
      provisions of this Clause 13 in respect of each Ship at all times during
      the Security Period after that Ship has been delivered to it under the
      relevant MOA except as the Lender may otherwise
  permit.

            


    

     

    
      	
              13.2  

            	
              Ship's name and
      registration.  Each Borrower shall keep the Ship owned by
      it registered in the Panamanian Ship Registry; shall not do or omit to do
      or allow to be done anything as a result of which such registration might
      be cancelled or imperilled; and shall not change the name or port of
      registry of the Ship owned by it.

            


    

     

    
      	
              13.3  

            	
              Repair and
      classification.  Each Borrower shall keep the Ship owned
      by it in a good and safe condition and state of
  repair:

            


    

     

    
      	
              (a)  

            	
              consistent
      with first-class ship ownership and management
  practice;

            


    

     

    
      	
              (b)  

            	
              so
      as to maintain that Ship's class at the highest notation for that type of
      ship free of recommendations and conditions affecting the Ship’s class;
      and

            


    

     

    
      	
              (c)  

            	
              so
      as to comply with all laws and regulations applicable to vessels
      registered at ports in the Republic of Panama or to vessels trading to any
      jurisdiction to which that Ship may trade from time to time, including but
      not limited to the ISM Code and the ISPS
Code.

            


    

     

    
      	
              13.4  

            	
              Modification.  No
      Borrower shall make any modification or repairs to, or replacement of, any
      Ship or equipment installed on the Ship which would or might materially
      alter the structure, type or performance characteristics of any Ship or
      materially reduce its value.

            


    

     

    
      	
              13.5  

            	
              Removal of
      parts.  No Borrower shall remove any material part of any
      Ship, or any item of equipment installed on any Ship, unless the part or
      item so removed is forthwith replaced by a suitable part or item which is
      in the same condition as or better condition than the part or item
      removed, is free from any Security Interest or any right in favour of any
      person other than the Lender and becomes on installation on the relevant
      Ship the property of the relevant Borrower and subject to the security
      constituted by the relevant Mortgage Provided that a Borrower
      may install equipment owned by a third party if the equipment can be
      removed without any risk of damage to the Ship owned by
  it.

            


    

     

    
      	
              13.6  

            	
              Surveys.  Each
      Borrower shall submit the Ship owned by it regularly to all periodical or
      other surveys which may be required for classification purposes and, if so
      required by the Lender provide the Lender, with copies of all survey
      reports.

            


    

     

    
      	
              13.7  

            	
              Inspection.  Each
      Borrower shall permit the Lender (by surveyors or other persons appointed
      by it for that purpose at the Borrowers’ expense) to board the Ship owned
      by it at all reasonable times to inspect its condition or to satisfy
      themselves about proposed or executed repairs and shall afford all proper
      facilities for such inspections.  The Lender shall also have the
      right to inspect class records of the Ships from time to
    time.

            


    

     

    
      	
              13.8  

            	
              Prevention of and release from
      arrest.  Each Borrower shall promptly
      discharge:

            


    

     

    
      	
              (a)  

            	
              all
      liabilities which give or may give rise to maritime or possessory liens on
      or claims enforceable against the Ship owned by it, the Earnings or the
      Insurances;

            


    

     

    
      	
              (b)  

            	
              all
      taxes, dues and other amounts charged in respect of the Ship owned by it,
      the Earnings or the Insurances; and

            


    

     

    
      	
              (c)  

            	
              all
      other outgoings whatsoever in respect of the Ship owned by it, the
      Earnings or the Insurances;

            


    

     

    and,
forthwith upon receiving notice of the arrest of the Ship owned by it, or of its
detention in exercise or purported exercise of any lien or claim, that Borrower
shall procure its release by providing bail or otherwise as the circumstances
may require as soon as practicable and in any event within 14 days.

     

    
      	
              13.9  

            	
              Compliance with laws
      etc.  Each Borrower
shall:

            


    

     

    
      	
              (a)  

            	
              comply,
      or procure compliance with the ISM Code, the ISPS Code, all Environmental
      Laws and all other laws or regulations relating to the Ship owned by it,
      its ownership, operation and management or to the business of that
      Borrower;

            


    

     

    
      	
              (b)  

            	
              not
      employ the Ship owned by it nor allow its employment in any manner
      contrary to any law or regulation in any relevant jurisdiction including
      but not limited to the ISM Code and the ISPS Code;
  and

            


    

     

    
      	
              (c)  

            	
              in
      the event of hostilities in any part of the world (whether war is declared
      or not), not cause or permit the Ship owned by it to enter or trade to any
      zone which is declared a war zone by any government or by the Ship's war
      risks insurers unless the prior written consent of the Lender has been
      given and that Borrower has (at its expense) effected any special,
      additional or modified insurance cover which the Lender may
      require.

            


    

     

    
      	
              13.10  

            	
              Provision of
      information.  Each Borrower shall promptly provide the
      Lender with any information which it reasonably requests
      regarding:

            


    

     

    
      	
              (a)  

            	
              the
      Ship owned by it, its employment, position and
  engagements;

            


    

     

    
      	
              (b)  

            	
              the
      Earnings and payments and amounts due to the master and crew of the Ship
      owned by it;

            


    

     

    
      	
              (c)  

            	
              any
      expenses incurred, or likely to be incurred, in connection with the
      operation, maintenance or repair of the Ship owned by it and any payments
      made in respect of that Ship;

            


    

     

    
      	
              (d)  

            	
              any
      towages and salvages;

            


    

     

    
      	
              (e)  

            	
              its
      compliance, the Approved Manager’s compliance or the compliance of the
      Ship owned by it with the ISM Code and the ISPS
  Code;

            


    

     

    and, upon
the Lender's request, provide copies of any current charter relating to the Ship
owned by it, of any current charter guarantee and copies of the Borrower’s or
the Approved Manager’s Document of Compliance.

     

    
      	
              13.11  

            	
              Notification of certain
      events.  Each Borrower shall immediately notify the
      Lender by fax, confirmed forthwith, by letter
  of:

            


    

     

    
      	
              (a)  

            	
              any
      casualty which is or is likely to be or to become a Major
      Casualty;

            


    

     

    
      	
              (b)  

            	
              any
      occurrence as a result of which the Ship owned by it has become or is, by
      the passing of time or otherwise, likely to become a Total
      Loss;

            


    

     

    
      	
              (c)  

            	
              any
      requirement or recommendation made by any insurer or classification
      society or by any competent authority which is not immediately complied
      with;

            


    

     

    
      	
              (d)  

            	
              any
      arrest or detention of the Ship owned by it, any exercise or purported
      exercise of any lien on that Ship or its Earnings or any requisition of
      that Ship for hire;

            


    

     

    
      	
              (e)  

            	
              any
      intended dry docking of the Ship owned by
it;

            


    

     

    
      	
              (f)  

            	
              any
      Environmental Claim made against that Borrower or in connection with the
      Ship owned by it, or any Environmental
Incident;

            


    

     

    
      	
              (g)  

            	
              any
      claim for breach of the ISM Code or the ISPS Code being made against that
      Borrower, the Approved Manager or otherwise in connection with the Ship
      owned by it; or

            


    

     

    
      	
              (h)  

            	
              any
      other matter, event or incident, actual or threatened, the effect of which
      will or could lead to the ISM Code or ISPS Code not being complied
      with,

            


    

     

    and that
Borrower shall keep the Lender advised in writing on a regular basis and in such
detail as the Lender shall require of that Borrower's, the Approved Manager’s or
any other person's response to any of those events or matters.

     

    
      	
              13.12  

            	
              Restrictions on chartering,
      appointment of managers etc.  No Borrower shall, in
      relation to the Ship owned by it:

            


    

     

    
      	
              (a)  

            	
              (other
      than pursuant to a Related Party Charter) let or allow any charterer to
      let that Ship on demise charter for any
period;

            


    

     

    
      	
              (b)  

            	
              (other
      than pursuant to a Related Party Charter) enter or allow any charterer to
      enter into any time or consecutive voyage charter in respect of that Ship
      for a term which exceeds, or which by virtue of any optional extensions
      may exceed, 13 months;

            


    

     

    
      	
              (c)  

            	
              enter
      into any charter in relation to that Ship under which more than 2 months'
      hire (or the equivalent) is payable in
advance;

            


    

     

    
      	
              (d)  

            	
              (other
      than pursuant to a Related Charter) charter or allow any charterer to
      charter that Ship otherwise than on bona fide arm's length terms at the
      time when that Ship is fixed;

            


    

     

    
      	
              (e)  

            	
              appoint
      a manager of that Ship other than the Approved Manager or agree to any
      alteration to the terms of the Approved Manager's
    appointment;

            


    

     

    
      	
              (f)  

            	
              de-activate
      or lay up or allow any charterer to deactivate or lay up that Ship;
      or

            


    

     

    
      	
              (g)  

            	
              put
      that Ship into the possession of any person for the purpose of work being
      done upon her in an amount exceeding or likely to exceed $500,000 (or the
      equivalent in any other currency)
unless:

            


    

     

    
      	
              (i)  

            	
              that
      person has first given to the Lender and in terms satisfactory to it a
      written undertaking not to exercise any lien on that Ship or the Earnings
      for the cost of such work or any other reason;
  or

            


    

     

    
      	
              (ii)  

            	
              the
      cost of the work to be done on that Ship is covered by insurances and the
      underwriters have agreed to make payment direct to the person who is to
      carry out the work; or

            


    

     

    
      	
              (iii)  

            	
              the
      Lender is otherwise satisfied that the amounts payable in respect of the
      cost of the work will be paid on their relevant due date for
      payment.

            


    

     

    
      	
              13.13  

            	
              Notice of
      Mortgage.  Each Borrower shall keep the relevant Mortgage
      registered against the Ship owned by it as a valid first priority
      mortgage, carry on board that Ship a certified copy of the relevant
      Mortgage and place and maintain in a conspicuous place in the navigation
      room and the Master's cabin of that Ship a framed printed notice stating
      that that Ship is mortgaged by that Borrower to the
  Lender.

            


    

     

    
      	
              13.14  

            	
              Sharing of
      Earnings.   Save as disclosed to the Mortgagee, no
      Borrower shall enter into any agreement or arrangement for the sharing of
      any Earnings.

            


    

     

    
      	
              14  

            	
              SECURITY
      COVER

            


    

     

    
      	
              14.1  

            	
              Minimum required security
      cover.  Clause 14.2 applies if the Lender notifies the
      Borrowers that:

            


    

     

    
      	
              (a)  

            	
              the
      aggregate of the market values (determined as provided in Clause 14.3) of
      the Ships; plus

            


    

     

    
      	
              (b)  

            	
              the
      net realisable value of any additional security previously provided under
      this Clause 14;

            


    

     

    is below
one hundred and twenty five per cent. (125%) of the Loan.

    


    
      	
              14.2  

            	
              Provision of additional
      security; prepayment.  If the Lender serves a notice on
      the Borrowers under Clause 14.1, the Borrowers shall, within 1 month after
      the date on which the Lender's notice is served,
  either:

            


    

     

    
      	
              (a)  

            	
              provide,
      or ensure that a third party provides, additional security which is
      acceptable to the Lender in its absolute discretion and which, in the
      opinion of the Lender, has a net realisable value at least equal to the
      shortfall and is documented in such terms as the Lender may approve or
      require; or

            


    

     

    
      	
              (b)  

            	
              prepay
      such part (at least) of the Loan as will eliminate the
      shortfall.

            


    

     

    
      	
              14.3  

            	
              Valuation of
      Ships.  The market value of a Ship at any date is that
      shown by a valuation prepared:

            


    

     

    
      	
              (a)  

            	
              as
      at a date not more than 14 days
previously;

            


    

     

    
      	
              (b)  

            	
              by
      an independent sale and purchase shipbroker which the Lender has approved
      or appointed for the purpose;

            


    

     

    
      	
              (c)  

            	
              with
      or without physical inspection of the Ship (as the Lender may
      require);

            


    

     

    
      	
              (d)  

            	
              on
      the basis of a sale for prompt delivery for cash on normal arm's length
      commercial terms as between a willing seller and a willing buyer, free of
      any existing charter or other contract of
  employment;

            


    

     

    
      	
              (e)  

            	
              after
      deducting the estimated amount of the usual and reasonable expenses which
      would be incurred in connection with the
sale.

            


    

     

    
      	
              14.4  

            	
              Value of additional vessel
      security.  The net realisable value of any additional
      security which is provided under Clause 14.2 and which consists of a
      Security Interest over a vessel shall be that shown by a valuation
      complying with the requirements of Clause
14.3.

            


    

     

    
      	
              14.5  

            	
              Valuations
      binding.  Any valuation under Clause 14.2, 14.3 or 14.4
      shall be binding and conclusive as regards the Borrowers, as shall be any
      valuation which the Lender makes of any additional security which does not
      consist of or include a Security
Interest.

            


    

     

    
      	
              14.6  

            	
              Provision of
      information.  The Borrowers shall promptly provide the
      Lender and any shipbroker or expert acting under Clause 14.3 or 14.4 with
      any information which the Lender or the shipbroker or expert may request
      for the purposes of the valuation; and, if the Borrowers fail to provide
      the information by the date specified in the request, the valuation may be
      made on any basis and assumptions which the shipbroker or the Lender (or
      the expert appointed by it) considers
prudent.

            


    

     

    
      	
              14.7  

            	
              Payment of valuation
      expenses.  Without prejudice to the generality of the
      Borrowers' obligations under Clauses 19.2, 19.3 and 20.3, the Borrowers
      shall, on demand, pay the Lender the amount of the fees and expenses of
      any shipbroker or expert instructed by the Lender under this Clause and
      all legal and other expenses incurred by the Lender in connection with any
      matter arising out of this Clause.

            


    

     

    
      	
              14.8  

            	
              Application of
      prepayment.  Clause 7 shall apply in relation to any
      prepayment pursuant to Clause
14.2(b).

            


    

     

    
      	
              15  

            	
              PAYMENTS
      AND CALCULATIONS

            


    

     

    
      	
              15.1  

            	
              Currency and method of
      payments.  All payments to be made by any Borrower to the
      Lender under a Finance Document shall be made to the
    Lender:

            


    

     

    
      	
              (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 Lender shall specify as being customary at the
      time for the settlement of international transactions of the type
      contemplated by this Agreement);
and

            


    

     

    
      	
              (c)  

            	
              to
      such account as the Lender may from time to time notify to the
      Borrowers.

            


    

     

    
      	
              15.2  

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

            


    

     

    
      	
              (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;

            


    

     

    and
interest shall be payable during any extension under paragraph (a) at the rate
payable on the original due date.

     

    
      	
              15.3  

            	
              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.

            


    

     

    
      	
              15.4  

            	
              Lender
      accounts.  The Lender shall maintain an account showing
      the amounts advanced by the Lender and all other sums owing to the Lender
      from the Borrowers and each Security Party under the Finance Documents and
      all payments in respect of those amounts made by the Borrowers and any
      Security Party.

            


    

     

    
      	
              15.5  

            	
              Accounts prima facie
      evidence.  If the account maintained under Clauses 15.4
      shows an amount to be owing by a Borrower or a Security Party to the
      Lender, that account shall be prima facie evidence that that amount is
      owing to the Lender.

            


    

     

    
      	
              16  

            	
              APPLICATION
      OF RECEIPTS

            


    

     

    
      	
              16.1  

            	
              Normal order of
      application.  Except as any Finance Document may
      otherwise provide, any sums which are received or recovered by any
      Creditor Party under or by virtue of any Finance Document shall be
      applied:

            


    

     

    
      	
              (a)  

            	
              FIRST:
      in or towards payment pro rata of any unpaid fees, costs and expenses of
      the Lender under the Finance Documents and the Master
      Agreement;

            


    

     

    
      	
              (b)  

            	
              SECONDLY:
      in or towards payment pro rata of any accrued interest or commission due
      but unpaid under this Agreement;

            


    

     

    
      	
              (c)  

            	
              THIRDLY:
      in or towards payment pro rata of any principal due but unpaid under this
      Agreement;

            


    

     

    
      	
              (d)  

            	
              FOURTHLY:
      in or towards payment pro rata of any other amounts due but unpaid under
      any Finance Document;

            


    

     

    
      	
              (e)  

            	
              FIFTHLY:
      in retention of an amount equal to any amount not then due and payable
      under any Finance Document or the Master Agreement but which the Lender,
      by notice to the Borrowers 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 Clause 16.1(a), 16.1(b), 16.1(c) and 16.1(d);
      and

            


    

     

    
      	
              (f)  

            	
              SIXTHLY:
      any surplus shall be paid to the Borrowers or to any other person
      appearing to be entitled to it

            


    

     

    
      	
              16.2  

            	
              Variation of order of
      application.  The Lender may, by notice to the Borrowers
      and the Security Parties, provide for a different manner of application
      from that set out in Clause 16.1 either as regards a specified sum or
      sums or as regards sums in a specified category or
    categories.

            


    

     

    
      	
              16.3  

            	
              Notice of variation of order of
      application.  The Lender may give notices under
      Clause 16.1 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.

            


    

     

    
      	
              16.4  

            	
              Appropriation rights
      overridden.  This Clause 16 and any notice which the
      Lender gives under Clause 16.1 shall override any right of
      appropriation possessed, and any appropriation made, by any Borrower or
      any Security Party.

            


    

     

    
      	
              17  

            	
              EARNINGS
      ACCOUNTS

            


    

     

    
      	
              17.1  

            	
              Payment of
      Earnings.  Following the occurrence of an Event of
      Default which is continuing and a direction from the Lender to do so, the
      Borrowers shall procure that the Earning of the Ships are paid to the
      Earnings Accounts.

            


    

     

    
      	
              17.2  

            	
              Interest accrued on the
      Earnings Account.  Any credit balance on the Earnings
      Accounts shall bear interest at the rate from time to time offered by the
      Lender to its customers for Dollar deposits of similar amounts and for
      periods similar to those for which such balances appear to the Lender
      likely to remain on the Earnings
Accounts.

            


    

     

    
      	
              17.3  

            	
              Monies on the Earnings
      Accounts.  Following the occurrence of an Event of
      Default which is continuing and a direction from the Lender under Clause
      17.1 above any amounts standing to the credit of the Earnings Accounts
      shall only be released with the approval of the
  Lender.

            


    

     

    
      	
              17.4  

            	
              Location of
      accounts.  The Borrowers shall promptly
  :

            


    

     

    
      	
              (a)  

            	
              comply
      with any requirement of the Lender as to the location or re-location of
      the Earnings Accounts;

            


    

     

    
      	
              (b)  

            	
              execute
      any documents which the Lender specifies to create or maintain in favour
      of the Lender a Security Interest over (and/or rights of set-off,
      consolidation or other rights in relation to) the Earnings
      Accounts.

            


    

     

    
      	
              17.5  

            	
              Debits for expenses
      etc.  Following the occurrence of an Event of Default
      which is continuing and a direction from the Lender under Clause 17.1 above, the Lender shall be entitled (but
      not obliged) from time to time to debit the Earnings Accounts without
      prior notice in order to discharge any amount due and payable under Clause
      19 or 20 or payment of which it has become entitled to demand under Clause
      19 or 20.

            


    

     

    
      	
              18  

            	
              EVENTS
      OF DEFAULT

            


    

     

    
      	
              18.1  

            	
              Events of
      Default.  An Event of Default occurs
  if:

            


    

     

    
      	
              (a)  

            	
              any
      Borrower or any Security Party fails to pay when due any sum payable under
      a Finance Document or under any document relating to a Finance Document;
      or

            


    

     

    
      	
              (b)  

            	
              any
      breach occurs of Clause 8.2, 10.2, 10.3, 11.2, 11.3 or 14.1;
      or

            


    

     

    
      	
              (c)  

            	
              any
      breach occurs of Clause 10.18(i), 10.19 or 10.20;
  or

            


    

     

    
      	
              (d)  

            	
              any
      breach by any Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraph (a) or (b) or
      (c)) and if, in the opinion of the Lender, such default is capable of
      remedy (and for these purposes any breach by either Borrower of its
      obligations under Clause 12 in relation to insurances will be a default
      not capable of remedy), such default continues unremedied 10 Business Days
      after written notice from the Lender requesting action to remedy the same;
      or

            


    

     

    
      	
              (e)  

            	
              any
      representation, warranty or statement made or repeated by, or by an
      officer of, a Borrower or a Security Party in a Finance Document or in the
      Drawdown Notice or any other notice or document relating to a Finance
      Document is untrue or misleading in any material respect when it is made
      or repeated; 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

            


    

     

    
      	
              (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;

            


    

     

    provided
that no Event of Default will occur under this Clause 18.1(f) in relation to the
Guarantor if the amount of Financial Indebtedness falling within paragraph (i)
to (v) above is less than $2,500,000 (or its equivalent in any other currency or
currencies); or

     

    
      	
              (g)  

            	
              any
      of the following occurs in relation to a Relevant
  Person:

            


    

     

    
      	
              (i)  

            	
              a
      Relevant Person becomes, in the opinion of the Lender, unable to pay its
      debts as they fall due; or

            


    

     

    
      	
              (ii)  

            	
              any
      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;
      or

            


    

     

    
      	
              (iii)  

            	
              any
      administrative or other receiver is appointed over any asset of a Relevant
      Person; or

            


    

     

    
      	
              (iv)  

            	
              a
      Relevant Person makes any formal declaration of bankruptcy or any formal
      statement to the effect that it is insolvent or likely to become
      insolvent, or a winding up or administration order is made in relation to
      a Relevant Person, or the members or directors of a Relevant Person pass a
      resolution to the effect that it should be wound up, placed in
      administration or cease to carry on business, save that this paragraph
      does not apply to a fully solvent winding up of a Relevant Person other
      than a Borrower or the Guarantor which is, or is to be, effected for the
      purposes of an amalgamation or reconstruction previously approved by the
      Lender and effected not later than 3 months after the commencement of the
      winding up; or

            


    

     

    
      	
              (v)  

            	
              a
      petition is presented in any Pertinent Jurisdiction for the winding up or
      administration, or the appointment of a provisional liquidator, of a
      Relevant Person unless the petition is being contested in good faith and
      on substantial grounds and is dismissed or withdrawn within 30 days of the
      presentation of the petition; or

            


    

     

    
      	
              (vi)  

            	
              a
      Relevant Person petitions a court, or presents any proposal for, any form
      of judicial or non-judicial suspension or deferral of payments,
      reorganisation of its debt (or certain of its debt) or arrangement with
      all or a substantial proportion (by number or value) of its creditors or
      of any class of them or any such suspension or deferral of payments,
      reorganisation or arrangement is effected by court order, contract or
      otherwise; or

            


    

     

    
      	
              (vii)  

            	
              any
      meeting of the members or directors of a Relevant Person is summoned for
      the purpose of considering a resolution or proposal to authorise or take
      any action of a type described in paragraphs (iii), (iv), (v) or (vi);
      or

            


    

     

    
      	
              (viii)  

            	
              in
      a Pertinent Jurisdiction other than England, any event occurs or any
      procedure is commenced which, in the opinion of the Lender, is similar to
      any of the foregoing; or

            


    

     

    
      	
              (h)  

            	
              any
      Borrower ceases or suspends carrying on its business or a part of its
      business which, in the opinion of the Lender, is material in the context
      of this Agreement; or

            


    

     

    
      	
              (i)  

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            


    

     

    
      	
              (i)  

            	
              for
      any Borrower or any Security Party to discharge any liability under a
      Finance Document or to comply with any other obligation which the Lender
      considers material under a Finance Document unless provided that none of
      the interests of the Lender 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 Lender to exercise or enforce any right under, or to enforce any
      Security Interest created by, a Finance Document;
  or

            


    

     

    
      	
              (j)  

            	
              any
      consent necessary to enable any Borrower to own, operate or charter the
      Ship owned by it or to enable any Borrower or any Security Party to comply
      with any provision which the Lender considers material of a Finance
      Document or the relevant MOA 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)  

            	 


    

    
      	
              (i)  

            	
              any
      Bareboat Charter is terminated or cancelled for whatever reason and, if
      the Ship the subject of such Bareboat Charter is to remain parallel
      registered under the Philippines flag, such Bareboat Charter is not
      replaced with a similar bareboat charter on terms acceptable to the Lender
      within a period of 15 days; or

            


    

     

    
      	
              (ii)  

            	
              any
      of the circumstances described in Clause 18.1(g) or (h) occurs (mutatis
      mutandis) in relation to the Bareboat Charterer or the Bareboat Charterer
      breaches any provision of the Multiparty Deeds which the Lender considers
      material and the Borrowers fail within a period of 15 days of them
      becoming aware of the occurrence of such circumstances or breach or of the
      receipt of a written notification from the Lender requesting the Borrowers
      to remedy such circumstances or breach either to remedy such circumstances
      or breach or to substitute the Bareboat Charterer with another bareboat
      charterer acceptable to the Lender and which accedes to the terms of the
      Multiparty Deeds;

            


    

     

    
      	
              (l)  

            	
              any
      Time Charter or First Sub-Time Charter or Second Sub-Time Charter or TBS
      Worldwide Time Charter is terminated or cancelled for whatever reason or
      any of the circumstances described in Clause 18.1(g) or (h) occurs
      (mutatis mutandis) in relation to the Time Charterer or TBS Worldwide or
      the Time Charterer or TBS Worldwide breaches any provision of the
      Multiparty Deeds which the Lender considers material and either such
      breach is not remedied or the Ship the subject of such Time Charter or
      First Sub-Time Charter or Second Sub-Time Charter or TBS Worldwide Time
      Charter is not employed on alternative terms acceptable to the Lender
      within a period of 15 days of the Borrowers becoming aware of the
      occurrence of such breach or the receipt of a written notification from
      the Lender requesting the Borrowers to remedy such breach;
    or

            


    

     

    
      	
              (m)  

            	
              any
      of the Ships ceases to be employed by the Approved Manager on terms
      acceptable to the Lender or any of the circumstances described in Clause
      18.1(g) or (h) occurs (mutatis mutandis) in relation to the Approved
      Manager or the Approved Manager’s breach any provisions of the letters of
      undertaking given to the Lender pursuant to Schedule 2 Part B, 5 which the
      Lender considers material and the Borrowers fails within a period of 15
      days of them becoming aware of the occurrence of such circumstances or
      breach or of the receipt of a written notification from the Lender
      requesting the Borrowers to remedy such circumstances or breach either to
      remedy such circumstances or breach or to substitute the Approved Manager
      with other Approved Manager which execute and deliver to the Lender
      letters of undertaking similar to those referred to in Schedule 2 Part B,
      5; or

            


    

     

    
      	
              (n)  

            	
              it
      appears to the Lender that, without its prior consent, a change has
      occurred or probably has occurred after the date of this Agreement in the
      ultimate beneficial ownership of any of the shares in any Borrower or in
      the ultimate control of the voting rights attaching to any of those
      shares; or

            


    

     

    
      	
              (o)  

            	
              any
      provision which the Lender considers 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

            


    

     

    
      	
              (p)  

            	
              the
      security constituted by a Finance Document is in any way imperilled or in
      jeopardy; or

            


    

     

    
      	
              (q)  

            	
              an
      Event of Default (as defined in section 14 of the Master Agreement)
      occurs; or

            


    

     

    
      	
              (r)  

            	
              the
      Master Agreement is terminated, cancelled, suspended, rescinded or revoked
      or otherwise ceases to remain in full force and effect for any reason
      except with the consent of the Lender;
or

            


    

     

    
      	
              (s)  

            	
              any
      other event occurs or any other circumstances arise or develop including,
      without limitation:

            


    

     

    
      	
              (i)  

            	
              a
      change in the financial position, state of affairs or prospects of any
      Borrower; or

            


    

     

    
      	
              (ii)  

            	
              any
      accident or other event involving any Ship or another vessel owned,
      chartered or operated by a Relevant
Person;

            


    

     

    in the
light of which the Lender reasonably considers that there is a significant risk
that any Borrower is or will later become, unable to discharge its liabilities
under the Finance Documents as they fall due.

     

    
      	
              18.2  

            	
              Actions following an Event of
      Default.  On, or at any time after, the occurrence of an
      Event of Default the Lender may:

            


    

     

    
      	
              (a)  

            	
              serve
      on the Borrowers a notice stating that all obligations of the Lender to
      the Borrowers under this Agreement are cancelled;
  and/or

            


    

     

    
      	
              (b)  

            	
              serve
      on the Borrowers a notice stating that the Loan, all accrued interest and
      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 Lender is entitled to take under
      any Finance Document or any applicable
law.

            


    

     

    
      	
              18.3  

            	
              Termination of
      Commitment.  On the service of a notice under
      Clause 18.2(a) the Commitment, and all other obligations of the
      Lender to the Borrowers under this Agreement, shall be
      cancelled.

            


    

     

    
      	
              18.4  

            	
              Acceleration of
      Loan.  On the service of a notice under
      Clause 18.2(b), the Loan, all accrued interest and all other amounts
      accrued or owing from the Borrowers 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.

            


    

     

    
      	
              18.5  

            	
              Multiple notices; action
      without notice.  The Lender may serve notices Clauses
      18.2(a) and (b) simultaneously or on different dates and it may take any
      action referred to in Clause 18.2 if no such notice is served or
      simultaneously with or at any time after the service of both or either of
      such notices.

            


    

     

    
      	
              18.6  

            	
              Exclusion of Lender
      liability.  Neither the Lender nor any receiver or
      manager appointed by the Lender, shall have any liability to a Borrower 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 Lender 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 Lender's own officers and employees or (as the case may
be) such receiver's or manager's own partners or employees.

     

    
      	
              18.7  

            	
              Relevant
      Persons.  In this Clause 18 a “Relevant Person” means
      any Borrower and any Security
Party.

            


    

     

    
      	
              18.8  

            	
              Interpretation.  In
      Clause 18.1(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 18.1(g) “petition” includes an
      application.

            


    

     

    
      	
              19  

            	
              FEES
      AND EXPENSES

            


    

     

    
      	
              19.1  

            	
              Arrangement and commitment
      fees.  The Borrowers shall pay to the
    Lender:

            


    

     

    
      	
              (a)  

            	
              an
      arrangement fee of $240,000 which to the extent not already paid prior to
      the date of this Agreement shall be payable on 2 January 2008 or if later
      on the date of this Agreement; and

            


    

     

    
      	
              (b)  

            	
              quarterly
      in arrears during the period from (and including) 1 November 2007 to the
      earlier of (i) the second Drawdown Date and (ii) 31 March 2008 and on the
      last day of that period a commitment fee at the rate of zero point two
      five per cent. (0.25%) per annum on the undrawn amount of the
      Loan.

            


    

     

    
      	
              19.2  

            	
              Costs of negotiation,
      preparation etc.  The Borrowers shall pay to the Lender
      on its demand the amount of all expenses incurred by the Lender 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.

            


    

     

    
      	
              19.3  

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrowers shall pay to
      the Lender, on the Lender's demand, the amount of all expenses incurred by
      the Lender 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 Lender concerned under or in connection with a
      Finance Document, or any request for such a consent or
    waiver;

            


    

     

    
      	
              (c)  

            	
              the
      valuation of any security provided or offered under Clause 14 or any
      other matter relating to such security;
or

            


    

     

    
      	
              (d)  

            	
              any
      step taken by the Lender with a view to the protection, exercise or
      enforcement of any right or Security Interest created by a Finance
      Document or for any similar
purpose.

            


    

     

    There
shall be recoverable under paragraph (d) 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.

     

    
      	
              19.4  

            	
              Documentary
      taxes.  The Borrowers shall promptly pay any tax payable
      on or by reference to any Finance Document, and shall, on the Lender's
      demand, fully indemnify the Lender against any claims, expenses,
      liabilities and losses resulting from any failure or delay by the
      Borrowers to pay such a tax.

            


    

     

    
      	
              19.5  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of the
      Lender, which states that a specified amount, or aggregate amount, is due
      to the Lender under this Clause 19 and which indicates (without
      necessarily specifying a detailed breakdown) the matters in respect of
      which the amount, or aggregate amount, is due shall be prima facie
      evidence that the amount, or aggregate amount, is
  due.

            


    

     

    
      	
              20  

            	
              INDEMNITIES

            


    

     

    
      	
              20.1  

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrowers shall fully
      indemnify made or brought against the Lender on its demand in respect of
      all claims, expenses, liabilities and losses which are incurred by the
      Lender, or which the Lender reasonably and with due diligence estimates
      that it will incur, as a result of or in connection
  with:

            


    

     

    
      	
              (a)  

            	
              an
      Advance not being borrowed on the date specified in the Drawdown Notice
      for any reason other than a default by the
  Lender;

            


    

     

    
      	
              (b)  

            	
              the
      receipt or recovery of all or any part of the Loan or an overdue sum
      otherwise than on the last day of an Interest Period or other relevant
      period;

            


    

     

    
      	
              (c)  

            	
              any
      failure (for whatever reason) by the Borrowers 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 Borrowers
      on the amount concerned under
Clause 6);

            


    

     

    
      	
              (d)  

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under
      Clause 18;

            


    

     

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

     

    
      	
              20.2  

            	
              Breakage
      costs.  Without limiting its generality, Clause 20.1
      covers any claim, expense, liability or loss, including a loss of a
      prospective profit, incurred by the
Lender:

            


    

     

    
      	
              (a)  

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of the Loan and/or any overdue amount
      (or an aggregate amount which includes the Loan or any overdue amount);
      and

            


    

     

    
      	
              (b)  

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of the Lender) to hedge any
      exposure arising under this Agreement or a number of transactions of which
      this Agreement is one.

            


    

     

    
      	
              20.3  

            	
              Miscellaneous
      indemnities.  The Borrowers shall fully indemnify the
      Lender on its demand in respect of all claims, expenses, liabilities and
      losses which may be made or brought against or incurred by the Lender, 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 Lender 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 of the officers or employees of the
  Lender.

            


    

     

    


    Without
prejudice to its generality, this Clause 20.3 covers any claims, expenses,
liabilities and losses which arise, or are asserted, under or in connection with
any law relating to safety at sea, the ISM Code, the ISPS Code or any
Environmental Law.

    


    
      	
              20.4  

            	
              Currency
      indemnity.  If any sum due from any Borrower or any
      Security Party to the Lender 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 any Borrower 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
Borrowers shall indemnify the Lender against the loss arising when the amount of
the payment actually received by the Lender is converted at the available rate
of exchange into the Contractual Currency.

     

    In this
Clause 20.4, the “available rate of exchange”
means the rate at which the Lender 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 20.4 creates a separate liability of the Borrowers 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.

     

    
      	
              20.5  

            	
              Application to Master
      Agreement.  For the avoidance of doubt, Clause 20.4 does
      not apply in respect of sums due from the Borrowers to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 8 (Contractual Currency) of the Master Agreement shall
      apply.

            


    

     

    
      	
              20.6  

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of the
      Lender, which states that a specified amount, or aggregate amount, is due
      to the Lender under this Clause 20 and which indicates (without
      necessarily specifying a detailed breakdown) the matters in respect of
      which the amount, or aggregate amount, is due shall be prima facie
      evidence that the amount, or aggregate amount, is
  due.

            


    

     

    
      	
              21  

            	
              NO
      SET-OFF OR TAX DEDUCTION

            


    

     

    
      	
              21.1  

            	
              No
      deductions.  All amounts due from the Borrowers 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 a Borrower is
      required by law to make.

            


    

     

    
      	
              21.2  

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

            


    

     

    
      	
              (a)  

            	
              that
      Borrower shall notify the Lender as soon as it becomes aware of the
      requirement;

            


    

     

    
      	
              (b)  

            	
              that
      Borrower 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 Lender 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.

            


    

     

    No
Borrower shall be obliged to pay any additional amount pursuant to paragraph (c)
above in respect of any deduction which would not have been required if the
Lender had completed a declaration claim, exemption or other form which it has
been requested by the Borrowers or an applicable taxation authority to complete
and which it is able to complete.

     

    
      	
              21.3  

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

            


    

     

    
      	
              21.4  

            	
              Tax
      Credits.  If the Lender receives for its own account a
      repayment or credit in respect of tax on account of which a Borrower has
      made an increased payment under Clause 21.2, it shall pay to that Borrower
      a sum equal to the proportion of the repayment or credit which it
      allocates to the amount due from that Borrower in respect of which that
      Borrower made the increased
payment:

            


    

     

    
      	
              (a)  

            	
              the
      Lender shall not be obliged to allocate to this transaction any part of a
      tax repayment or credit which is referable to a class or number of
      transactions;

            


    

     

    
      	
              (b)  

            	
              nothing
      in this Clause 21.4 shall oblige the Lender 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 21.4 shall oblige the Lender to make a payment which would
      leave it in a worse position than it would have been in if the Borrower
      had not been required to make a tax deduction from a payment;
      and

            


    

     

    
      	
              (d)  

            	
              any
      allocation or determination made by the Lender under or in connection with
      this Clause 21.4 shall be conclusive and binding on
      that Borrower.

            


    

     

    
      	
              21.5  

            	
              Exclusion of tax on overall net
      income.  In this Clause 21 “tax deduction” means any
      deduction or withholding for or on account of any present or future tax
      except tax on the Lender's overall net
income.

            


    

     

    
      	
              21.6  

            	
              Application to Master
      Agreement.  For the avoidance of doubt, Clause 21 does
      not apply in respect of sums due from the Borrowers to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement
      shall apply.

            


    

     

    
      	
              22  

            	
              ILLEGALITY,
      ETC

            


    

     

    
      	
              22.1  

            	
              Illegality.  This
      Clause 22 applies if the Lender notifies the Borrowers 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, any
regulation,

            


    

     

    for the
Lender to maintain or give effect to any of its obligations under this Agreement
in the manner contemplated by this Agreement.

     

    
      	
              22.2  

            	
              Notification and effect of
      illegality.  On the Lender notifying the Borrowers under
      Clause 22.1, the Commitment shall terminate; and thereupon or, if
      later, on the date specified in the Lender's notice under Clause 22.1
      as the date on which the notified event would become effective the
      Borrowers shall prepay the Loan in full in accordance with
      Clause 7.

            


    

     

    
      	
              22.3  

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 22.1 then, without in any way limiting the rights of the
      Lender under Clause 22.3, the Lender shall use reasonable endeavours
      to transfer its obligations, liabilities and rights under this Agreement
      and the Finance Documents to another office or financial institution not
      affected by the circumstances but the Lender shall not be under any
      obligation to take any such action if, in its opinion, to do 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 regulation;
  or

            


    

     

    
      	
              (c)  

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

            


    

     

    
      	
              23  

            	
              INCREASED
      COSTS

            


    

     

    
      	
              23.1  

            	
              Increased
      costs.  This Clause 23 applies if the Lender
      notifies the Borrowers 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 Lender'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 Lender
      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 this
Agreement,

            


    

     

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

     

    
      	
              23.2  

            	
              Meaning of “increased
      cost”.  In this Clause 23, “increased cost”
      means:

            


    

     

    
      	
              (a)  

            	
              an
      additional or increased cost incurred as a result of, or in connection
      with, the Lender 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 Commitment or performing its obligations under this
      Agreement, or of having outstanding all or any part of the Loan or other
      unpaid sums; or

            


    

     

    
      	
              (b)  

            	
              a
      reduction in the amount of any payment to the Lender under this Agreement
      or in the effective return which such a payment represents to the Lender
      or on its capital;

            


    

     

    
      	
              (c)  

            	
              an
      additional or increased cost of funding all or maintaining all or any of
      the advances comprised in a class of advances formed by or including the
      Loan or (as the case may require) the proportion of that cost attributable
      to the Loan; 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 Lender under this
      Agreement;

            


    

     

    but not
an item attributable to a change in the rate of tax on the overall net income of
the Lender (or a parent company of it) or an item covered by the indemnity for
tax in Clause 21.1 or by Clause 22 or an item arising directly out of the
implementation or application of or compliance with the “International
Convergence of Capital Measurement and Capital Standards, a Revised Framework”
published by the Basel Committee on Banking Supervision in June 2004, in the
form existing on the date of this Agreement (“Basel II”) or any other law or
regulation which implements Basel II (whether such implementation, application
or compliance is by a government, regulator, Lender or any of its
affiliates)

     

    Standards”,
to the extent and according to the timetable provided for in the
statement.

     

    For the
purposes of this Clause 23.2 the Lender 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.

     

    
      	
              23.3  

            	
              Payment of increased
      costs.  The Borrowers shall pay to the Lender, on its
      demand, the amounts which the Lender from time to time notifies the
      Borrowers that it has specified to be necessary to compensate it for the
      increased cost.

            


    

     

    
      	
              23.4  

            	
              Notice of
      prepayment.  If the Borrowers are not willing to continue
      to compensate the Lender for the increased cost under Clause 23.3,
      the Borrowers may give the Lender not less than 14 days' notice of their
      intention to prepay the Loan at the end of an Interest
    Period.

            


    

     

    
      	
              23.5  

            	
              Prepayment.  A
      notice under Clause 23.4 shall be irrevocable; and on the date
      specified in the Borrowers' notice of intended prepayment, the Commitment
      shall terminate and the Borrowers shall prepay (without premium or
      penalty) the Loan, together with accrued interest thereon at the
      applicable rate plus the Margin.

            


    

     

    
      	
              23.6  

            	
              Application of
      prepayment.  Clause 7 shall apply in relation to the
      prepayment.

            


    

     

    
      	
              24  

            	
              SET-OFF

            


    

     

    
      	
              24.1  

            	
              Application of credit
      balances.  The Lender 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 a Borrower at any office in any
      country of the Lender in or towards satisfaction of any sum then due from
      that Borrower to the Lender 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 that
      Borrower;

            


    

     

    
      	
              (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 Lender considers
appropriate.

            


    

     

    
      	
              24.2  

            	
              Existing rights
      unaffected.  The Lender shall not be obliged to exercise
      any of its rights under Clause 24.1; 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 Lender is
      entitled (whether under the general law or any
  document).

            


    

     

    
      	
              24.3  

            	
              No Security
      Interest.  This Clause 24 gives the Lender a contractual
      right of set-off only, and does not create any equitable charge or other
      Security Interest over any credit balance of the
  Borrower.

            


    

     

    
      	
              25  

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICE

            


    

     

    
      	
              25.1  

            	
              Transfer by
      Borrowers.  No Borrower may, without the consent of the
      Lender transfer any of its rights or obligations under any Finance
      Document.

            


    

     

    
      	
              25.2  

            	
              Assignment by
      Lender.  The Lender may assign all or any of the rights
      and interests which it has under or by virtue of the Finance Documents
      without the consent of any
Borrower.

            


    

     

    
      	
              25.3  

            	
              Rights of
      assignee.  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
      direct or indirect assignee of any of the Lender'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 assignee as a result of
      the breach or misrepresentation irrespective of whether the Lender would
      have incurred a loss of that kind or
amount.

            


    

     

    
      	
              25.4  

            	
              Sub-participation; subrogation
      assignment.  The Lender 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, any Borrower;
      and the Lender 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.

            


    

     

    
      	
              25.5  

            	
              Disclosure of
      information.  The Lender may disclose to a potential
      assignee or sub-participant any information which the Lender has received
      in relation to any Borrower, any Security Party or their affairs under or
      in connection with any Finance Document, unless the information is clearly
      of a confidential nature.

            


    

     

    
      	
              25.6  

            	
              Change of lending
      office.  The Lender may change its lending office by
      giving notice to the Borrowers and the change shall become effective on
      the later of:

            


    

     

    
      	
              (a)  

            	
              the
      date on which the Borrowers receive the notice;
  and

            


    

     

    
      	
              (b)  

            	
              the
      date, if any, specified in the notice as the date on which the change will
      come into effect.

            


    

     

    
      	
              26  

            	
              VARIATIONS
      AND WAIVERS

            


    

     

    
      	
              26.1  

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

            


    

     

    
      	
              26.2  

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clause 26.1, no document, and no act, course of
      conduct, failure or neglect to act, delay or acquiescence on the part of
      the Lender (or any person acting on its behalf) shall result in the Lender
      (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 a Borrower 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 reasonable time.

     

    
      	
              27  

            	
              NOTICES

            


    

     

    
      	
              27.1  

            	
              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.

            


    

     

    
      	
              27.2  

            	
              Addresses for
      communications.  A notice shall be
  sent:

            


    

     

    
      	
              (a)  

            	
              to
      the Borrowers:Suite 306

            


    

    
      	
               
      

            	
              Commerce
      Building

            


    

    
      	
               
      

            	
              One
      Chancery Lane

            


    

    
      	
               
      

            	
              Hamilton
      HM12

            


    

    
      	
               
      

            	
              Bermuda

            


    

    


    
      	
               
      

            	
              Mailing
      Address:

            


    

    
      	
               
      

            	
              P.O.
      Box HM 2522

            


    

    
      	
               
      

            	
              Hamilton
      HMGX

            


    

    
      	
               
      

            	
              Bermuda

            


    

    


    Attention:                                            William
J. Carr

    Fax:                                +1-441-295-4957

    


    With a copy
to:

    TBS
Shipping Services Inc.

    612 East
Grassy Sprain Road

    Yonkers,
NY  10710 U.S.A.

    Attention:  Ferdinand
V. Lepere

    


    Fax
:                                           +1-914-961-5121

    


     

    
      	
              (b)  

            	
              to
      the
      Lender:                                           Credit
      Suisse

            


    

     

    
      	
               
      

            	
              St
      Alban-Graben 1-3

            


    

     

    
      	
               
      

            	
              PO
      Box CH-4002

            


    

     

    
      	
               
      

            	
              Basel

            


    

     

    
      	
               
      

            	
              Switzerland

            


    

     

    Attention:                                Nadja
Gautschi

    


                 Fax
Number:                                           +
41 61 266 7939

     

    or to
such other address as the relevant party may notify the other.

     

    
      	
              27.3  

            	
              Effective date of
      notices.  Subject to Clauses 27.4
      and 27.5:

            


    

     

    
      	
              (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.

            


    

     

    
      	
              27.4  

            	
              Service outside business
      hours.  However, if under Clause 27.3 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 27.5) be deemed to be served, and shall
take effect, at 9 a.m. on the next day which is such a business
day.

     

    
      	
              27.5  

            	
              Illegible
      notices.  Clauses 27.3 and 27.4 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 material
      respect.

            


    

     

    
      	
              27.6  

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

            


    

     

    
      	
              27.7  

            	
              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 served
      if:

            


    

     

    
      	
              (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 have
been.

            


    

     

    
      	
              27.8  

            	
              Meaning of
      “notice”.  In this Clause 27 “notice” includes any
      demand, consent, authorisation, approval, instruction, waiver or other
      communication.

            


    

     

    
      	
              28  

            	
              JOINT
      AND SEVERAL LIABILITY

            


    

     

    
      	
              28.1  

            	
              General.  All
      liabilities and obligations of the Borrowers under this Agreement shall,
      whether expressed to be so or not, be several and, if and to the extent
      consistent with Clause 28.2,
joint.

            


    

     

    
      	
              28.2  

            	
              No impairment of Borrower's
      obligations.  The liabilities and obligations of a
      Borrower shall not be impaired by:

            


    

     

    
      	
              (a)  

            	
              this
      Agreement being or later becoming void, unenforceable or illegal as
      regards any other Borrower;

            


    

     

    
      	
              (b)  

            	
              the
      Lender entering into any rescheduling, refinancing or other arrangement of
      any kind with any other Borrower;

            


    

     

    
      	
              (c)  

            	
              the
      Lender releasing any other Borrower or any Security Interest created by a
      Finance Document; or

            


    

     

    
      	
              (d)  

            	
              any
      combination of the foregoing.

            


    

     

    
      	
              28.3  

            	
              Principal
      debtors.  Each Borrower 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 Borrower shall
      in any circumstances be construed to be a surety for the obligations of
      any other Borrower under this
Agreement.

            


    

     

    
      	
              28.4  

            	
              Subordination.  Subject
      to Clause 28.5, during the Security Period, no Borrower
      shall:

            


    

     

    
      	
              (a)  

            	
              claim
      any amount which may be due to it from any other Borrower 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 Borrower 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 Borrower;
  or

            


    

     

    
      	
              (c)  

            	
              set
      off such an amount against any sum due from it to any other Borrower;
      or

            


    

     

    
      	
              (d)  

            	
              prove
      or claim for such an amount in any liquidation, administration,
      arrangement or similar procedure involving any other Borrower or other
      Security Party; or

            


    

     

    
      	
              (e)  

            	
              exercise
      or assert any combination of the
foregoing.

            


    

     

    
      	
              28.5  

            	
              Borrower's required
      action.  If during the Security Period, the Lender, by
      notice to a Borrower, requires it to take any action referred to in
      paragraphs (a) to (d) of Clause 28.4, in relation to any other
      Borrower, that Borrower shall take that action as soon as practicable
      after receiving the Lender's
notice.

            


    

     

    
      	
              29  

            	
              SUPPLEMENTAL

            


    

     

    
      	
              29.1  

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to the Lender 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.

            


    

     

    
      	
              29.2  

            	
              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.

            


    

     

    
      	
              29.3  

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

            


    

     

    
      	
              29.4  

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

            


    

     

    
      	
              30  

            	
              LAW
      AND JURISDICTION

            


    

     

    
      	
              30.1  

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

            


    

     

    
      	
              30.2  

            	
              Exclusive English
      jurisdiction.  Subject to Clause 30.3, the courts of
      England shall have exclusive jurisdiction to settle any disputes which may
      arise out of or in connection with this
  Agreement.

            


    

     

    
      	
              30.3  

            	
              Choice of forum for the
      exclusive benefit of the Lender.  Clause 30.2 is for
      the exclusive benefit of the Lender, 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.  Neither Borrower shall
      commence any proceedings in any country other than England in relation to
      a matter which arises out of or in connection with this
      Agreement.

            


    

     

    
      	
              30.4  

            	
              Process
      agent.  Each Borrower irrevocably appoints Globe Maritime
      Limited its registered office for the time being, presently at 5th Floor,
      St. Magnus House, 3 Lower Thames  Street, London EC3R 6HE, 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.

            


    

     

    
      	
              30.5  

            	
              Lender's rights
      unaffected.  Nothing in this Clause 30 shall exclude
      or limit any right which the Lender 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 any
      jurisdiction.

            


    

     

    
      	
              30.6  

            	
              Meaning of
      “proceedings”.  In this Clause 30, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            


    

     

    THIS AGREEMENT has been
entered into on the date stated at the beginning of this Agreement.

    


    SCHEDULE
1

     

    


     

    DRAWDOWN
NOTICE

     

    


    


    


    To:           Credit
Suisse

    St Alban-Graben 1-3

    PO Box CH-4002

    Basel

    Switzerland

    


    Attention:
Nadja
Gautschi                                                                                                                                [l]

    


    DRAWDOWN
NOTICE

    


    
      	
              1  

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      [l] 2007 and
      made between ourselves, as Borrowers, and yourselves, as Lender, in
      connection with a facility of up to US$40,000,000.  Terms
      defined in the Loan Agreement have their defined meanings when used in
      this Drawdown Notice.

            


    

     

    
      	
              2  

            	
              We
      request to borrow an Advance in respect of Ship [A][B] as
      follows:-

            


    

     

    
      	
              (a)  

            	
              Amount:
      US$[l];

            


    

     

    
      	
              (b)  

            	
              Drawdown
      Date:  [l];

            


    

     

    
      	
              (c)  

            	
              [Duration
      of the first Interest Period shall be [l]
      months;]

            


    

     

    
      	
              (d)  

            	
              Payment
      instructions : account in our name and numbered [l] with [l] of [l].

            


    

     

    
      	
              3  

            	
              We
      represent and warrant that:

            


    

     

    
      	
              (a)  

            	
              the
      representations and warranties in Clause 9 of the Loan Agreement
      would remain true and not misleading if repeated on the date of this
      notice with reference to the circumstances now
  existing;

            


    

     

    
      	
              (b)  

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            


    

     

    
      	
              4  

            	
              This
      notice cannot be revoked without the prior consent of the
      Lender.

            


    

     

    
      	
              5  

            	
              We
      authorise you to deduct the arrangement fee referred to in Clause 19
      from the amount of the Advance.

            


    

     

    


    


    


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

    for and
on behalf of

    [CLAREMONT
SHIPPING CORP]

    [YORKSHIRE
SHIPPING CORP]

    SCHEDULE
2

     

    


     

    CONDITION
PRECEDENT DOCUMENTS

     

    


    PART
A

    


    


    The
following are the documents referred to in Clause 8.1(a).

    


    
      	
              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 of each
      Borrower and each Security Party.

            


    

     

    
      	
              3  

            	
              Copies
      of resolutions of the directors of each Borrower and each Security Party
      and copies of the resolutions of the shareholders of each Borrower in each
      case authorising the execution of each of the Finance Documents and the
      Master Agreement to which that Borrower or that Security Party is a party
      and, in the case of a Borrower, authorising named officers to give the
      Drawdown Notices and other notices under this Agreement and ratifying the
      execution of the MOAs.

            


    

     

    
      	
              4  

            	
              The
      original of any power of attorney under which any Finance Document or the
      Master Agreement is executed on behalf of the Borrower or a Security
      Party.

            


    

     

    
      	
              5  

            	
              Copies
      of all consents which any Borrower or any Security Party requires to enter
      into, or make any payment under, any Finance Document or the MOAs or the
      Master Agreement.

            


    

     

    
      	
              6  

            	
              The
      originals of any mandates or other documents required in connection with
      the opening or operation of the Earnings
  Accounts.

            


    

     

    
      	
              7  

            	
              Documentary
      evidence that the agent for service of process named in Clause 30 has
      accepted its appointment.

            


    

     

    
      	
              8  

            	
              Evidence
      satisfactory to the Lender of the persons holding the ultimate beneficial
      ownership of the shares in each Borrower and of the identity of the person
      or persons controlling the voting rights attached to those
      shares.

            


    

     

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

     

    PART
B

    


    


    The
following are the documents referred to in Clause 8.1(b) required before the
drawdown of an Advance in respect of a Ship to be acquired using the proceeds of
such Advance:

    


    
      	
              1  

            	
              A
      copy of the relevant MOA.

            


    

     

    
      	
              2  

            	
              A
      duly executed original of the Mortgage and Multiparty Deed relating to the
      Ship (and of each document to be delivered by each of
    them).

            


    

     

    
      	
              3  

            	
              Documentary
      evidence that:

            


    

     

    
      	
              (a)  

            	
              the
      Ship has been or on the relevant Drawdown Date will be unconditionally
      delivered by the Seller to, and accepted by, the relevant Borrower under
      the relevant MOA and the full purchase price payable under the relevant
      MOA has been duly paid;

            


    

     

    
      	
              (b)  

            	
              the
      Ship is or on the relevant Drawdown Date will be registered in the name of
      the relevant Borrower with the Panamanian ship
  registry;

            


    

     

    
      	
              (c)  

            	
              the
      Ship is or on the relevant Drawdown Date will be in the absolute and
      unencumbered ownership of the relevant Borrower save as contemplated by
      the Finance Documents;

            


    

     

    
      	
              (d)  

            	
              the
      Ship maintains or on the relevant Drawdown Date will maintain its
      classification with its classification society, free of all
      recommendations and qualifications of such classification
      society;

            


    

     

    
      	
              (e)  

            	
              the
      relevant Mortgage has been or on the Drawdown Date will be duly registered
      against the Ship as a valid first preferred Panamanian ship mortgage in
      accordance with the laws of Panama;

            


    

     

    
      	
              (f)  

            	
              the
      Ship is insured in accordance with the provisions of this Agreement and
      all requirements therein in respect of insurances have been complied with
      and a certified copy of the certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority in relation to that
  Ship;

            


    

     

    
      	
              (g)  

            	
              the
      Ship has been or on the relevant Drawdown Date will be unconditionally
      delivered by the relevant Borrower to, and accepted by, the Bareboat
      Charterer under the relevant Bareboat Charter and the Ship has been
      bareboat registered under the Philippine’s flag (with details of the
      Mortgage duly noted on the Ship’s bareboat
  register);

            


    

     

    
      	
              (h)  

            	
              the
      Ship has been or on the relevant Drawdown Date will be unconditionally
      delivered by the Bareboat Charter to, and accepted by, the Time Charterer
      under the relevant Time Charter;

            


    

     

    
      	
              4  

            	
              Documents
      establishing that the Ship will, as from the relevant Drawdown Date, be
      managed by the Approved Manager on terms acceptable to the Lender,
      together with:

            


    

     

    
      	
              (a)  

            	
              a
      letter or letters of undertaking executed by the Approved Manager in
      favour of the Lender in the terms required by the Lender agreeing certain
      matters in relation to the management of that Ship and subordinating the
      rights of the Approved Manager against the Borrowers and that Ship to the
      rights of the Lender under the Finance Documents;
  and

            


    

     

    
      	
              (b)  

            	
              copies
      of the Approved Manager’s Document of Compliance and of the Ship Safety
      Management Certificate (together with any other details of the applicable
      safety management system which the Lender
  requires).

            


    

     

    
      	
              5  

            	
              Documentary
      evidence that the existing bareboat charter over the Ship has been
      cancelled or discharged and that the Ship has been deleted from the
      existing flag free from all registered encumbrances or, in the
      alternative, evidence that it will be so deleted within 28 days after the
      Drawdown Date or any such longer period as the Lender shall require and
      that, in any event, there are no encumbrances registered against it on the
      flag from which the Ship is being
deleted.

            


    

     

    
      	
              6  

            	
              Two
      valuations of the Ship the subject of the said Advance each addressed to
      the Lender stated to be for the purpose of this Agreement and dated not
      earlier than 10 days before the relevant Drawdown Date from an independent
      London sale and purchase shipbroker which the Lender has approved or
      appointed (such valuations to be at the expense of the
      Borrowers).

            


    

     

    
      	
              7  

            	
              Favourable
      legal opinions from lawyers appointed by the Lender on such matters
      concerning the law of Marshall Islands, Panama, Philippines, Switzerland
      and such other relevant jurisdictions as the Lender may
      require.

            


    

     

    
      	
              8  

            	
              A
      favourable opinion from an independent insurance consultant acceptable to
      the Lender on such matters relating to the insurances for the Ship as the
      Lender may require.

            


    

     

    
      	
              9  

            	
              Documents
      of the kind referred to in Schedule 2 Part A 2, 3 and 4 in relation to the
      Bareboat Charterer, the Time Charterer, the Approved Manager and TBS
      Worldwide and their execution of the Finance Documents to which they are a
      party.

            


    

     

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

     

    SCHEDULE
3

     

    


     

    FINANCIAL
COVENANTS

     

    


     

     

    Pursuant
to Clause 10.18 of this Agreement the Borrowers undertake that at all times they
shall not:

     

    
      	
              (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 2007 (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 Equity
Interests.

            


    

     

    
      	
              (b)  

            	
              Minimum Cash
      Liquidity.  For each calendar month ending on or after
      the date hereof, permit Qualified Cash, plus Availability in an average
      daily amount during such calendar month to be 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 than
2.50:1.00.

            


    

     

    
      	
              (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

            
	
              First
      Drawdown Date until 31 December 2007

            	
              1.4
      : 1.0

            
	
              31
      December 2007 and each

              fixed
      quarter thereafter

            	
              1.5
      : 1.0

            


    

    


    
      	
              (e)  

            	
              Overall leverage
      ratio.  Permit the Total Debt to exceed 75% of Total
      Assets as adjusted at Fair Market Values.

            


    

     

     

    For the
purposes of this Schedule 3 the following terms shall have the following
meanings.

     

    “Attributable
Indebtedness”  means, on any date, (a) in respect of any
Capitalised Lease of any Person, the capitalised amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalised
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease or
other agreement or instrument were accounted for as a Capitalised Lease and (c)
all Synthetic Debt of such Person;

     

    “Availability”  means
the amount available for drawing under the Bank of America
Facilities;

     

    “Capitalised
Leases”  means all leases that have been or should be, in
accordance with GAAP, recorded as capitalised leases;

     

    “Cash
Equivalents”  means any of the following types of Investments,
to the extent owned by the Borrowers or any of their Subsidiaries free and clear
of all Security Interests (other than (i) a Security Interest in favour of the
Bank of America, N.A. in respect of the obligations arising under the Bank of
America Facilities and/or (ii)  Permitted Security Interests and/or
(iii) a Security Interest in favour of The Royal Bank of Scotland plc in respect
of the obligations arising under the RBS Facilities):

     

    
      	
              (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 support
thereof;

            


    

     

    
      	
              (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 organised 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 organised 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 Borrowers 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 this
definition;

            


    

     

    “Consolidated
EBITDA”  means, at any date of determination, an amount equal
to Consolidated Net Income of Holdings and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period, plus:

     

    
      	
              (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 (as defined in the Bank of
      America Facilities), (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 the Bank of
      America Facilities (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 the
      Bank of America Facilities (in each case of or by Holdings and its
      Subsidiaries for such Measurement
Period);

            


    

     

    “Consolidated Fixed Charge Coverage
Ratio”  means, at any date of determination, the ratio
of:

     

    
      	
              (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 (as defined in the Bank of America
  Facilities);

            


    

     

    “Consolidated Funded
Indebtedness”  means, as of any date of determination, for
Holdings and its Subsidiaries on a consolidated basis, the sum of:

     

    
      	
              (a)  

            	
              the
      outstanding principal amount of all obligations, whether current or
      long-term, for borrowed money (including Obligations under and as defined
      in the Bank of America Facilities) 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 Borrowers 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 Borrower or
      a Subsidiary is a general partner or joint venturer, unless such
      Indebtedness is expressly made non-recourse to such Borrower 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);

            


    

     

    “Consolidated Interest
Charges”  means, for any Measurement Period, the sum
of:

     

    
      	
              (a)  

            	
              all
      interest, premium payments, debt discount, fees, charges and related
      expenses in connection with borrowed money (including capitalised interest
      but excluding capitalised 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 Capitalised 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;

            


    

     

    “Consolidated Leverage
Ratio”  means, as of any date of determination, the ratio
of:

     

    
      	
              (a)  

            	
              Consolidated
      Funded Indebtedness as of such date
to,

            


    

     

    
      	
              (b)  

            	
              Consolidated
      EBITDA of Holdings and its Subsidiaries on a consolidated basis for the
      most recently completed Measurement
Period;

            


    

     

    “Consolidated Net
Income”  means, at any date of determination, the net income
(or loss) of Holdings and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period; provided that Consolidated Net Income
shall exclude:

     

    
      	
              (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 Measurement 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);

            


    

     

    “Consolidated Tangible Net
Worth”  means, as of any date of determination, for Holdings
and its Subsidiaries on a consolidated basis, Shareholders’ Equity of Holdings
and its Subsidiaries on that date minus the Intangible Assets of Holdings and
its Subsidiaries on that date;

     

    “Debtor Relief
Laws”  means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganisation,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally;

     

    “Equity
Interests”  means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase of
acquisition from such Person of shares of capital stock of (or ownership or
profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination;

     

     “Fair Market Value” means, with
respect to any asset or property, the sale value which would be obtained at
arm’s-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer;

     

    “GAAP”  means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied;

     

    “Guarantee”  means,
as to any Person:

     

    
      	
              (a)  

            	
              any
      obligation, contingent or otherwise, of such Person guaranteeing or having
      the economic effect of guaranteeing any Indebtedness or other obligation
      payable or performable by another Person (the “primary obligor”) in any
      manner, whether directly or indirectly, and including any obligation of
      such Person, direct or indirect,_ (i) to purchase or pay (or advance or
      supply funds the purchase or payment of) such Indebtedness or other
      obligation, (ii) to purchase or lease property, securities or services for
      the purpose of assuring the obligee in respect of such Indebtedness or
      other obligation of the payment or performance of such Indebtedness or
      other obligation, (iii) to maintain working capital, equity capital or any
      other financial statement condition or liquidity or level of income or
      cash flow of the primary obligor so as to enable the primary obligor to
      pay such Indebtedness or other obligation, or (iv) entered into for the
      purpose of assuring in any other manner the obligee in respect of such
      Indebtedness or other obligation of the payment or performance thereof or
      to protect such obligee against loss in respect thereof (in whole or in
      part), or

            


    

     

    
      	
              (b)  

            	
              any
      Security Interest on any assets of such Person securing any Indebtedness
      or other obligation of any other Person, whether or not such Indebtedness
      or other obligation is assumed by such Person (or any right, contingent or
      otherwise, of any holder of such Indebtedness to obtain any such Security
      Interest).  The amount of any Guarantee shall be deemed to be an
      amount equal to the stated or determinable amount of the related primary
      obligation, or portion thereof, in respect of which such Guarantee is made
      or, if not stated or determinable, the maximum reasonably anticipated
      liability in respect thereof as determined by the guaranteeing Person in
      good faith.  The term “Guarantee” as a verb has
      a corresponding meaning;

            


    

     

    “Holdings”  means the
Guarantor;

     

    “Indebtedness”  means,
as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

     

    
      	
              (a)  

            	
              all
      obligations of such Person for borrowed money and all obligations of such
      Person evidenced by bonds, debentures, notes, loan agreements or other
      similar instruments;

            


    

     

    
      	
              (b)  

            	
              the
      maximum amount of all direct or contingent obligations of such Person
      arising under letters of credit (including standby and commercial),
      bankers’ acceptances, bank guaranties, surety bonds and similar
      instruments;

            


    

     

    
      	
              (c)  

            	
              net
      obligations of such Person under any Swap
  Contract;

            


    

     

    
      	
              (d)  

            	
              all
      obligations of such Person to pay the deferred purchase price of property
      or services (other than trade accounts payable in the ordinary course of
      business and not past due for more than 60 days after the date on which
      such trade account was created);

            


    

     

    
      	
              (e)  

            	
              indebtedness
      (excluding prepaid interest thereon) secured by a Security Interest on
      property owned or being purchased by such Person (including indebtedness
      arising under conditional sales or other title retention agreements),
      whether or not such indebtedness shall have been assumed by such Person or
      is limited in recourse;

            


    

     

    
      	
              (f)  

            	
              all
      Attributable Indebtedness in respect of Capitalised Lease and Synthetic
      Lease Obligations of such Person and all Synthetic Debt of such
      Person;

            


    

     

    
      	
              (g)  

            	
              all
      obligations of such Person to purchase, redeem, retire, defease or
      otherwise make any payment in respect of any Equity Interest in such
      Person or any other Person or any warrant, right or option to acquire such
      Equity Interest, valued, in the case of a redeemable preferred interest,
      at the greater of its voluntary or involuntary liquidation preference plus
      accrued and unpaid dividends; and

            


    

     

    
      	
              (h)  

            	
              all
      Guarantees of such Person in respect of any of the
    foregoing.

            


    

     

    For all
purposes hereof, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.  The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date;

     

    “Intangible
Assets”  means assets that are considered to be intangible
assets under GAAP, including customer lists, goodwill, computer software,
copyrights, trade names, trademarks, patents, franchises, licenses, unamortised
deferred charges, unamortised debt discount and capitalised research and
development costs;

     

    “Investment”  means,
as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of:

     

    
      (a)  the
purchase or other acquisition of Equity Interests of another
Person;

    

     

    
      	
              (b)  

            	
              a
      loan, advance or capital contribution to, Guarantee or assumption of debt
      of, or purchase or other acquisition of any other debt or interest in,
      another Person;

            


    

     

    
      	
              (c)  

            	
              the
      purchase or other acquisition (in one transaction or a series of
      transactions) of assets of another Person that constitute a business unit
      or all or a substantial part of the business of, such Person;
      or

            


    

     

    
      	
              (d)  

            	
              the
      acquisition or construction of a vessel. For purposes of covenant
      compliance, the amount of any Investment shall be the amount actually
      invested, without adjustment for subsequent increases or decreases in the
      value of such Investment;

            


    

     

    “Measurement
Period”  means, at any date of determination, the most recently
completed four fiscal quarters of Holdings;

     

    “Moody’s”  means
Moody’s Investors Service Inc., and any successor thereto;

     

    “Organisation
Documents”  means:

     

    
      	
              (a)  

            	
              with
      respect to any corporation, the certificate or articles of incorporation
      and the bylaws (or equivalent or comparable constitutive documents with
      respect to any non-U.S.
jurisdiction);

            


    

     

    
      	
              (b)  

            	
              with
      respect to any limited liability company, the certificate or articles of
      formation or organisation and operating agreement;
  and

            


    

     

    
      	
              (c)  

            	
              with
      respect to any partnership, joint venture, trust or other form of business
      entity, the partnership, joint venture or other applicable agreement of
      formation or organisation and any agreement, instrument, filing or notice
      with respect thereto filed in connection with its formation or
      organisation with the applicable governmental authority in the
      jurisdiction of its formation or organisation and, if applicable, any
      certificate or articles of formation or organisation of such
      entity;

            


    

     

    “Permitted New Vessel Construction
Indebtedness”  means Indebtedness incurred after the date when
all the conditions precedent in Section 4.01 of the Bank of America Credit
Facilities are satisfied or waived by Subsidiaries of Holdings that are not
borrowers or guarantors under the Bank of America Credit Facilities in
connection with the construction of up to twelve (12) multipurpose tweendecks or
bulkcarrier shipping vessels;

     

    “Person”  means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, governmental authority or other
entity;

     

    “Qualified
Cash”  means, as of any date of determination, the amount of
cash and Cash Equivalents which is freely transferable and not subject to a
Security Interest (other than (i) a Security Interest in favour of the Bank of
America, N.A. in respect of the obligations arising under the Bank of America
Facilities and/or (ii) a Permitted Security Interest and/or (iii) a Security
Interest in favour of The Royal Bank of Scotland plc in respect of the
obligations arising under the RBS Facilities) pledge, security interest,
encumbrance, escrow or cash collateral arrangement or any other restriction on
its use;

     

    “Restricted
Payment”  means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of any Person or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment;

     

    “Shareholders’
Equity”  means, as of any date of determination, consolidated
shareholders’ equity of Holdings and its Subsidiaries as of that date determined
in accordance with GAAP;

     

    “S&P”  means
Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies
Inc., and any successor thereto;

     

    “Subsidiary”  of a
Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors or
other governing body (other than securities or interests having such power only
by reason of the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.  Unless
otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of Holdings;

     

    “Swap
Contract”  means:

     

    
      	
              (a)  

            	
              any
      and all rate swap transactions, basis swaps, credit derivative
      transactions, forward rate transactions, commodity swaps, commodity
      options, forward commodity contracts, equity or equity index swaps or
      options, bond or bond price or bond index swaps or options or forward bond
      or forward bond price or forward bond index transactions, interest rate
      options, forward foreign exchange transactions, cap transactions, floor
      transactions, collar transactions, currency swap transactions,
      cross-currency rate swap transactions, currency options, spot contracts,
      or any other similar transactions or any combination of any of the
      foregoing (including any options to enter into any of the foregoing),
      whether or not any such transaction is governed by or subject to any
      master agreement; and

            


    

     

    
      	
              (b)  

            	
              any
      and all transactions of any kind, and the related confirmations, which are
      subject to the terms and conditions of, or governed by, any form of master
      agreement published by the International Swaps and Derivatives
      Association, Inc., any International Foreign Exchange Master Agreement, or
      any other master agreement (any such master agreement, together with any
      related schedules, a “Master Agreement”), including any such obligations
      or liabilities under any Master
Agreement;

            


    

     

    “Swap Termination
Value”  means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts:

     

    
      	
              (a)  

            	
              for
      any date on or after the date such Swap Contracts have been closed out and
      termination value(s) determined in accordance therewith, such termination
      value(s); and

            


    

     

    
      	
              (b)  

            	
              for
      any date prior to the date referenced in clause (a), the amount(s)
      determined as the mark-to-market value(s) for such Swap Contracts, as
      determined based upon one or more mid-market or other readily available
      quotations provided by any recognised dealer in such Swap
      Contracts;

            


    

     

    “Synthetic
Debt”  means, with respect to any Person as of any date of
determination thereof, obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds (including any minority interest transactions that function
primarily as a borrowing) but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP;

     

    “Synthetic Lease
Obligation”  means the monetary obligation of a Person
under:

     

    
      	
              (a)  

            	
              a
      so-called synthetic, off-balance sheet or tax retention lease;
      or

            


    

     

    
      	
              (b)  

            	
              an
      agreement for the use or possession of property (including sale and
      leaseback transactions), in each case, creating obligations that do not
      appear on the balance sheet of such Person but which, upon the application
      of any Debtor Relief Laws to such Person, would be characterised as the
      indebtedness of such Person (without regard to accounting
      treatment);

            


    

     

    “Total Assets” means all assets
of Holdings and its Subsidiaries on a consolidated basis which would, in
accordance with GAAP consistently applied, be classified as assets;
and

     

    “Total Debt” means all
liabilities of Holdings and its Subsidiaries on a consolidated basis which
would, in accordance with GAAP consistently applied, be classified as
debt.

     

    


    SCHEDULE
4

     

    


     

    FORM
OF COMPLIANCE CERTIFICATE

     

    


     

    To:           Credit
Suisse

    St Alban-Graben 1-3

    PO Box CH-4002

    Basel

    Switzerland

    


    Attention:
Nadja Gautschi

    


    From:                      TBS
International Limited

    


    


    OFFICER’S
CERTIFICATE

    


    This
Certificate is rendered pursuant to clause 10.18(ii) of the loan agreement dated
[l]2007 (the “Loan Agreement”) and entered
into between (i) Claremont Shipping Corp., and Yorkshire Shipping Corp., as
joint and several Borrowers, and (ii) Credit Suisse as Lender relating to a loan
facility of US$40,000,000.  Words and expressions defined in the Loan
Agreement shall have the same meanings when used herein.

    


    I, the
Chief Financial Officer of the Corporate Guarantor, hereby certify
that:

    


    
      	
              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]

            
	
              Total
      Debt

            	
              [l]

            
	
              Total
      Assets as adjusted at Fair Market Values

            	
              [l]

            


    

    


    


    
      	
              3  

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

            


    

     

    
      	
              (a)  

            	
              Minimum
      Consolidated Tangible Net
      Worth                                                                                     US$[l];

            


    

     

    
      	
              (b)  

            	
              Minimum
      Cash
      Liquidity                                                                                US$[l];

            


    

     

    
      	
              (c)  

            	
              Maximum
      Consolidated Leverage
      Ratio                                                                                [x.xx]

            


    

     

    
      	
              (d)  

            	
              Minimum
      Consolidated Fixed Charge Coverage
      Ratio                                                                                                           [x.xx]

            


    

     

    
      	
              (e)  

            	
              Overall
      Leverage
      Ratio                                                                                [x.xx]

            


    

     

    
      	
              4  

            	
              As
      at [l] no
      Event of Default has occurred and is continuing [or, specify / identify
      any Event of Default].  The Borrowers are in compliance with
      Clause 14.1 of the Loan Agreement.

            


    

     

    [If not,
specify this and what is proposed as regards Clause 14.2.]

    


    


    


    


    


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

    Chief
financial officer

    TBS
International Limited

    


    


    EXECUTION
PAGE

     

    


    BORROWERS

    


    SIGNED by Tulio R.
Prieto                     )


    /s/ Tulio Prieto              )

    for and
on behalf
of                                 )

    CLAREMONT SHIPPING
CORP        )

    in the
presence of:  Sonia D. Odom       )


    /s/ Sonia D. Odom

    


    


    


    


    


    


    SIGNED by  Tulio R.
Prieto          
)

    /s/ Tulio
R. Prieto            )

    for and
on behalf
of                                )

    YORKSHIRE SHIPPING
CORP         )

    in the
presence of: Sonia D.
Odom      )

    


    


    


    


    


    


    


    LENDER

    


    SIGNED by Amy
Sweeney                   )

    /s/ Amy
Sweeney           )

    for and
on behalf
of                               )

    CREDIT
SUISSE                                   )

    in the
presence of: Sonia D. Odom     )

    /s/ Sonia D.
Odom