**Exhibit10.1**

 

ExecutionVersion

 

 

Upto

 

$200,000,000

 

SENIORSECURED REVOLVING CREDIT FACILITY AGREEMENT

 

AMONG

 

OSG AMERICA OPERATING COMPANY LLC,

as Borrower

 

AND

 

The banks and financial institutions

identified on Schedule II,

as Lenders

 

AND

 

ING BANK N.V., London Branch

as Facility Agent, Security Trustee and Issuing Lender

 

AND

 

ING BANK N.V., London Branch and DNB NOR BANK ASA,

as Mandated Lead Arrangers and Bookrunners

 

AND

 

OSG AMERICA L.P. and the Vessel-Owning Guarantors identified onSchedule III,

as Joint and Several Guarantors

 

Dated as of November 15, 2007

 

 

----

 

**TABLE OF CONTENTS**

 
| ** ** | ** ** | ** **   | ** **                                                 | **Page**                                  |
|------------|------------|--------------|------------------------------------------------------------|-------------------------------------------|
|       |       |         |                                                       |                                      |
| 1.         |       | DEFINITIONS  |                                                       | 1                                         |
|       |       |         |                                                       |                                      |
|       |       | 1.1          | Defined Terms                                              |                                      | 1 |
|       |       | 1.2          | Computation of Time Periods; Other Definitional Provisions |                                      | 20 |
|       |       | 1.3          | Accounting Terms                                           |                                      | 20 |
|       |       | 1.4          | Certain Matters Regarding Materiality                      |                                      | 21 |
|       |       | 1.5          | Forms of Documents                                         |                                      | 21 |
|       |       |         |                                                       |                                      |
| 2.         |       | THE FACILITY |                                                       | 21                                        |
|       |       |         |                                                       |                                      |
|       |       | 2.1          | Purposes                                                   |                                      | 21 |
|       |       | 2.2          | Extension Option                                           |                                      | 21 |
|       |       | 2.3          | Making of the Advances                                     |                                      | 22 |
|       |       | 2.4          | Advance Availability Period                                |                                      | 22 |
|       |       | 2.5          | Drawdown Notice                                            |                                      | 22 |
|       |       | 2.6          | Effect of Drawdown Notice                                  |                                      | 22 |
|       |       | 2.7          | Notation of Advances                                       |                                      | 22 |
|       |       | 2.8          | Several Obligations                                        |                                      | 23 |
|       |       | 2.9          | Pro Rata Treatment                                         |                                      | 23 |
|       |       | 2.10         | Letters of Credit                                          |                                      | 23 |
|       |       | 2.11         | Letter of Credit Request                                   |                                      | 23 |
|       |       | 2.12         | Letter of Credit Participation                             |                                      | 24 |
|       |       | 2.13         | Letter of Credit Payments Deemed Advances                  |                                      | 25 |
|       |       |         |                                                       |                                      |
| 3.         |       | CONDITIONS   |                                                       | 25                                        |
|       |       |         |                                                       |                                      |
|       |       | 3.1          | Conditions Precedent to the Availability of the Facility   |                                      | 25 |
|       |       |         |                                                       |                                      |   |
|       |       |         | (a)                                                        | Authority                                 |   | 26 |
|       |       |         | (b)                                                        | This Agreement                            |   | 26 |
|       |       |         | (c)                                                        | The Note                                  |   | 26 |
|       |       |         | (d)                                                        | Fees                                      |   | 26 |
|       |       |         | (e)                                                        | Environmental Claims                      |   | 26 |
|       |       |         | (f)                                                        | Legal Opinions                            |   | 26 |
|       |       |         | (g)                                                        | Registration Statement                    |   | 27 |
|       |       |         | (h)                                                        | Vessel Documents                          |   | 27 |
|       |       |         | (i)                                                        | Security Documents                        |   | 27 |
|       |       |         | (j)                                                        | IAPPC, ISM and ISPS Code                  |   | 28 |
|       |       |         | (k)                                                        | Know Your Customer Information            |   | 28 |
|       |       |         | (l)                                                        | Vessel Appraisals                         |   | 28 |
|       |       |         | (m)                                                        | Loan to Value Ratio                       |   | 28 |
|       |       |         |                                                       |                                      |
|       |       | 3.2          | Further Conditions Precedent                               |                                      | 28 |
|       |       |         |                                                       |                                      |   |
|       |       |         | (a)                                                        | Drawdown Notice; Letter of Credit Request |   | 28 |
|       |       |         | (b)                                                        | Representations and Warranties            |   | 28 |

 

i

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| ** ** | ** ** | ** **                     | ** **                               | **Page**                         |
|------------|------------|--------------------------------|------------------------------------------|----------------------------------|
|       |       |                           |                                     |                             |
|       |       |                           | (c)                                      | No Default                       |   | 28 |
|       |       |                           | (d)                                      | No Material Adverse Change       |   | 28 |
|       |       |                           | (e)                                      | NYSE Listing; IPO Proceeds       |   | 29 |
|       |       |                           | (f)                                      | Maritime Administration Approval |   | 29 |
|       |       |                           |                                     |                             |
|       |       | 3.3                            | Breakfunding Costs                       |                             | 29 |
|       |       | 3.4                            | Satisfaction after Drawdown              |                             | 29 |
|       |       |                           |                                     |                             |
| 4.         |       | REPAYMENT AND PREPAYMENT       |                                     | 29                               |
|       |       |                           |                                     |                             |
|       |       | 4.1                            | Mandatory Repayment                      |                             | 29 |
|       |       | 4.2                            | Voluntary Prepayment                     |                             | 30 |
|       |       | 4.3                            | Optional Permanent Reduction of Facility |                             | 30 |
|       |       | 4.4                            | Borrower’s Obligations Absolute     |                             | 30 |
|       |       |                           |                                     |                             |
| 5.         |       | INTEREST AND RATE              |                                     | 30                               |
|       |       |                           |                                     |                             |
|       |       | 5.1                            | Payment of Interest; Interest Rate       |                             | 30 |
|       |       | 5.2                            | Calculation of Interest                  |                             | 31 |
|       |       | 5.3                            | Maximum Interest                         |                             | 31 |
|       |       | 5.4                            | Interest Elections                       |                             | 31 |
|       |       |                           |                                     |                             |
| 6.         |       | PAYMENTS                       |                                     | 32                               |
|       |       |                           |                                     |                             |
|       |       | 6.1                            | Place of Payments; No Set Off            |                             | 32 |
|       |       | 6.2                            | Federal Income Tax Credits               |                             | 32 |
|       |       |                           |                                     |                             |
| 7.         |       | GUARANTEE                      |                                     | 33                               |
|       |       |                           |                                     |                             |
|       |       | 7.1                            | The Guarantee                            |                             | 33 |
|       |       | 7.2                            | Obligations Unconditional                |                             | 34 |
|       |       | 7.3                            | Reinstatement                            |                             | 34 |
|       |       | 7.4                            | Subrogation                              |                             | 35 |
|       |       | 7.5                            | Subordination                            |                             | 35 |
|       |       | 7.6                            | Remedies                                 |                             | 35 |
|       |       | 7.7                            | Instrument for the Payment of Money      |                             | 35 |
|       |       | 7.8                            | Continuing Guarantee                     |                             | 36 |
|       |       |                           |                                     |                             |
| 8.         |       | REPRESENTATIONS AND WARRANTIES |                                     | 36                               |
|       |       |                           |                                     |                             |
|       |       |                           | (a)                                      | Due Organization and Power       |   | 36 |
|       |       |                           | (b)                                      | Authorization and Consents       |   | 36 |
|       |       |                           | (c)                                      | Binding Obligations              |   | 36 |
|       |       |                           | (d)                                      | No Violation                     |   | 36 |
|       |       |                           | (e)                                      | Filings; Stamp Taxes             |   | 37 |
|       |       |                           | (f)                                      | Approvals; Consents              |   | 37 |
|       |       |                           | (g)                                      | Litigation                       |   | 37 |

 

ii

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| ** ** | ** ** | ** ** | ** **            | **Page**                                                       |
|------------|------------|------------|-----------------------|----------------------------------------------------------------|
|       |       |       |                  |                                                           |
|       |       |       | (h)                   | No Default                                                     |   | 37 |
|       |       |       | (i)                   | ERISA                                                          |   | 37 |
|       |       |       | (j)                   | Vessels                                                        |   | 37 |
|       |       |       | (k)                   | Tax Returns and Payments                                       |   | 38 |
|       |       |       | (l)                   | Chief Executive Office                                         |   | 38 |
|       |       |       | (m)                   | Insurance                                                      |   | 38 |
|       |       |       | (n)                   | Foreign Trade Control Regulations                              |   | 38 |
|       |       |       | (o)                   | Investment Company Act                                         |   | 39 |
|       |       |       | (p)                   | Equity Ownership                                               |   | 39 |
|       |       |       | (q)                   | Environmental Matters and Claims                               |   | 39 |
|       |       |       | (r)                   | Compliance with ISM Code, the ISPS Code, the MTSA and Annex VI |   | 40 |
|       |       |       | (s)                   | Threatened Withdrawal of DOC, SMC, ISSC or IAPPC               |   | 40 |
|       |       |       | (t)                   | Liens                                                          |   | 40 |
|       |       |       | (u)                   | Indebtedness                                                   |   | 40 |
|       |       |       | (v)                   | No Material Adverse Change                                     |   | 40 |
|       |       |       | (w)                   | No Proceedings to Dissolve                                     |   | 40 |
|       |       |       | (x)                   | Compliance with Laws                                           |   | 40 |
|       |       |       | (y)                   | Survival                                                       |   | 40 |
|       |       |       |                  |                                                           |
| 9.         |       | COVENANTS  |                  | 41                                                             |
|       |       |       |                  |                                                           |
|       |       | 9.1        | Affirmative Covenants |                                                           | 41 |
|       |       |       |                  |                                                           |   |
|       |       |       | (a)                   | Performance of Agreements                                      |   | 41 |
|       |       |       | (b)                   | Notice of Default                                              |   | 41 |
|       |       |       | (c)                   | Consents                                                       |   | 41 |
|       |       |       | (d)                   | Preservation of Existence, Etc                                 |   | 41 |
|       |       |       | (e)                   | Books and Records                                              |   | 41 |
|       |       |       | (f)                   | Inspection                                                     |   | 41 |
|       |       |       | (g)                   | Payment of Obligations                                         |   | 41 |
|       |       |       | (h)                   | Compliance with Agreements, Statutes, etc                      |   | 42 |
|       |       |       | (i)                   | Environmental Matters                                          |   | 42 |
|       |       |       | (j)                   | Maintenance of Assets                                          |   | 42 |
|       |       |       | (k)                   | Book Value                                                     |   | 43 |
|       |       |       | (l)                   | Pari Passu                                                     |   | 43 |
|       |       |       | (m)                   | Brokerage Commissions, etc                                     |   | 43 |
|       |       |       | (n)                   | IPO Proceeds                                                   |   | 43 |
|       |       |       | (a)                   | Minimum Consolidated Tangible Net Worth                        |   | 43 |
|       |       |       | (b)                   | Maximum Leverage                                               |   | 43 |
|       |       |       | (c)                   | Net Debt to EBITDA                                             |   | 43 |
|       |       |       | (d)                   | EBITDA to Net Interest Expense                                 |   | 43 |
|       |       |       | (e)                   | Exchange Listing                                               |   | 43 |

 

iii

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| ** ** | ** ** | ** **        | ** **                    | **Page**                                                           |
|------------|------------|-------------------|-------------------------------|--------------------------------------------------------------------|
|       |       |              |                          |                                                               |
|       |       |              | (f)                           | Ownership of the Borrower and each of the Vessel-Owning Guarantors |   | 43 |
|       |       |              | (g)                           | Agent for Service of Process                                       |   | 43 |
|       |       |              | (h)                           | Financial Statements                                               |   | 44 |
|       |       |              | (a)                           | ISM Code, ISPS Code, MTSA and Annex VI Matters                     |   | 45 |
|       |       |              | (b)                           | Insurance Matters                                                  |   | 45 |
|       |       |              | (c)                           | Earnings                                                           |   | 46 |
|       |       |              | (d)                           | Vessel Management                                                  |   | 46 |
|       |       |              | (e)                           | Vessel Appraisals                                                  |   | 46 |
|       |       |              | (f)                           | Assignment of Earnings, Assignment of Insurances and Mortgage      |   | 46 |
|       |       |              |                          |                                                               |
|       |       | 9.2               | Negative Covenants            |                                                               | 46 |
|       |       |              |                          |                                                               |   |
|       |       |              | (a)                           | Liens                                                              |   | 47 |
|       |       |              | (b)                           | Change of Flag, Class, Management or Ownership                     |   | 48 |
|       |       |              | (c)                           | Chartering                                                         |   | 48 |
|       |       |              | (d)                           | Change in Business                                                 |   | 48 |
|       |       |              | (e)                           | Sale of Assets                                                     |   | 48 |
|       |       |              | (f)                           | Changes in Offices                                                 |   | 48 |
|       |       |              | (g)                           | Loans and Advances                                                 |   | 48 |
|       |       |              | (h)                           | Contingent Obligations, etc                                        |   | 48 |
|       |       |              | (i)                           | Use of Corporate Funds                                             |   | 48 |
|       |       |              | (j)                           | Indebtedness                                                       |   | 48 |
|       |       |              | (k)                           | Use of Proceeds                                                    |   | 48 |
|       |       |              | (a)                           | Mergers, Consolidations and Sales of Assets                        |   | 49 |
|       |       |              | (b)                           | No Money Laundering                                                |   | 49 |
|       |       |              | (c)                           | Indebtedness                                                       |   | 49 |
|       |       |              | (d)                           | Distributions                                                      |   | 49 |
|       |       |              |                          |                                                               |
|       |       | 9.3               | Substitution of Vessels       |                                                               | 49 |
|       |       | 9.4               | Inspection and Survey Reports |                                                               | 50 |
|       |       | 9.5               | Inspection of Vessels         |                                                               | 50 |
|       |       |              |                          |                                                               |
| 10.        |       | EVENTS OF DEFAULT |                          | 50                                                                 |
|       |       |              |                          |                                                               |
|       |       | 10.1              | Events of Default             |                                                               | 50 |
|       |       |              |                          |                                                               |   |
|       |       |              | (a)                           | Principal Payments                                                 |   | 50 |
|       |       |              | (b)                           | Interest and other Payments                                        |   | 50 |
|       |       |              | (c)                           | Representations, etc                                               |   | 50 |
|       |       |              | (d)                           | Impossibility, Illegality                                          |   | 50 |
|       |       |              | (e)                           | Certain Covenants                                                  |   | 50 |
|       |       |              | (f)                           | Covenants                                                          |   | 50 |
|       |       |              | (g)                           | Indebtedness and Other Obligations                                 |   | 51 |
|       |       |              | (h)                           | Bankruptcy                                                         |   | 51 |
|            |            |                   |                               |                                                                    |  |  |  |  |

 

iv

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| ** ** | ** ** | ** **                                        | ** **                                     | **Page**                                   |
|------------|------------|---------------------------------------------------|------------------------------------------------|--------------------------------------------|
|       |       |                                              |                                           |                                       |
|       |       |                                              | (i)                                            | Judgments                                  |   | 51 |
|       |       |                                              | (j)                                            | Inability to Pay Debts                     |   | 51 |
|       |       |                                              | (k)                                            | Cessation of Business                      |   | 51 |
|       |       |                                              | (l)                                            | Change of Ownership or Control             |   | 51 |
|       |       |                                              | (m)                                            | Change of Commercial and Technical Manager |   | 52 |
|       |       |                                              | (n)                                            | ERISA Debt                                 |   | 52 |
|       |       |                                              |                                           |                                       |
|       |       | 10.2                                              | Indemnification                                |                                       | 53 |
|       |       | 10.3                                              | Application of Moneys                          |                                       | 53 |
|       |       |                                              |                                           |                                       |
| 11.        |       | ASSIGNMENTS; PARTICIPATIONS;                      |                                           | 54                                         |
|       |       |                                              |                                           |                                       |
|       |       | 11.1                                              | Assignments                                    |                                       | 54 |
|       |       | 11.2                                              | Participations                                 |                                       | 54 |
|       |       | 11.3                                              | Security Interest                              |                                       | 55 |
|       |       | 11.4                                              | Register                                       |                                       | 55 |
|       |       |                                              |                                           |                                       |
| 12.        |       | ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC |                                           | 55                                         |
|       |       |                                              |                                           |                                       |
|       |       | 12.1                                              | Illegality                                     |                                       | 55 |
|       |       | 12.2                                              | Increased Cost                                 |                                       | 55 |
|       |       | 12.3                                              | Nonavailability of Funds                       |                                       | 56 |
|       |       | 12.4                                              | Determination of Losses                        |                                       | 57 |
|       |       | 12.5                                              | Compensation for Losses                        |                                       | 57 |
|       |       | 12.6                                              | Compensation for Breakage Costs                |                                       | 57 |
|       |       | 12.7                                              | Mitigation Obligations; Replacement of Lenders |                                       | 57 |
|       |       | 12.8                                              | Currency Indemnity                             |                                       | 58 |
|       |       |                                              |                                           |                                       |
| 13.        |       | FEES, EXPENSES AND INDEMNIFICATION                |                                           | 59                                         |
|       |       |                                              |                                           |                                       |
|       |       | 13.2                                              | Expenses                                       |                                       | 59 |
|       |       | 13.3                                              | Indemnification                                |                                       | 60 |
|       |       | 13.4                                              | Time of Payment                                |                                       | 60 |
|       |       |                                              |                                           |                                       |
| 14.        |       | APPLICABLE LAW, JURISDICTION AND WAIVER           |                                           | 60                                         |
|       |       |                                              |                                           |                                       |
|       |       | 14.1                                              | Applicable Law                                 |                                       | 60 |
|       |       | 14.2                                              | Jurisdiction                                   |                                       | 60 |
|       |       | 14.3                                              | WAIVER OF JURY TRIAL                           |                                       | 61 |
|       |       |                                              |                                           |                                       |
| 15.        |       | THE FACILITY AGENT AND THE SECURITY TRUSTEE       |                                           | 61                                         |
|       |       |                                              |                                           |                                       |
|       |       | 15.1                                              | Appointment and Authorization                  |                                       | 61 |
|       |       | 15.2                                              | Agents and Affiliates                          |                                       | 62 |
|       |       | 15.3                                              | Action by Agents                               |                                       | 62 |
|       |       | 15.4                                              | Consultation with Experts                      |                                       | 62 |
|       |       | 15.5                                              | Liability of the Agents                        |                                       | 62 |

 

v

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| ** ** | ** ** | ** **                                                           | ** **                            | **Page** |
|------------|------------|----------------------------------------------------------------------|---------------------------------------|----------|
|       |       |                                                                 |                                  |     |
|       |       | 15.6                                                                 | Indemnification                       |     | 62 |
|       |       | 15.7                                                                 | Credit Decision                       |     | 63 |
|       |       | 15.8                                                                 | Successor Agents                      |     | 63 |
|       |       | 15.9                                                                 | Distribution of Payments              |     | 64 |
|       |       | 15.10                                                                | Holder of Interest in Note            |     | 64 |
|       |       | 15.11                                                                | Assumption re Event of Default        |     | 64 |
|       |       | 15.12                                                                | Notification of Event of Default      |     | 64 |
|       |       | 15.13                                                                | Limitations of Liability of Creditors |     | 64 |
|       |       |                                                                 |                                  |     |
| 16.        |       | NOTICES AND DEMANDS                                                  |                                  | 65       |
|       |       |                                                                 |                                  |     |
| 17.        |       | LIMITATION OF LIABILITY/SURVIVAL OF LIABILITY/CONTINUING INDEMNITIES |                                  | 66       |
|       |       |                                                                 |                                  |     |
| 18.        |       | MISCELLANEOUS                                                        |                                  | 67       |
|       |       |                                                                 |                                  |     |
|       |       | 18.1                                                                 | Time of Essence                       |     | 67 |
|       |       | 18.2                                                                 | Severability                          |     | 67 |
|       |       | 18.3                                                                 | References                            |     | 67 |
|       |       | 18.4                                                                 | Further Assurances                    |     | 67 |
|       |       | 18.5                                                                 | Prior Agreements, Merger              |     | 67 |
|       |       | 18.6                                                                 | Entire Agreement, Amendments          |     | 67 |
|       |       | 18.7                                                                 | Headings                              |     | 68 |
|       |       | 18.8                                                                 | Survival                              |     | 68 |
|       |       | 18.9                                                                 | Confidentiality                       |     | 68 |
|       |       | 18.10                                                                | Counterparts                          |     | 69 |
|       |       | 18.11                                                                | WAIVER OF IMMUNITY                    |     | 69 |

 

vi

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| SCHEDULE I   |   | VESSELS                                          |
|--------------|--------|--------------------------------------------------|
| SCHEDULE II  |   | LENDERS                                          |
| SCHEDULE III |   | VESSEL-OWNING GUARANTORS                         |
| SCHEDULE IV  |   | ACCEPTABLE BROKERS                               |
| SCHEDULE V   |   | CLASSIFICATION SOCIETY                           |
| SCHEDULE VI  |   | LIENS & INDEBTEDNESS                    |
|         |   |                                             |
| EXHIBIT A    |   | FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT |
| EXHIBIT B    |   | FORM OF PROMISSORY NOTE                     |
| EXHIBIT C    |   | FORM OF DRAWDOWN NOTICE                     |
| EXHIBIT D    |   | FORM OF LETTER OF CREDIT REQUEST            |
| EXHIBIT E    |   | FORM OF COMPLIANCE CERTIFICATE              |
| EXHIBIT F    |   | FORM OF EARNINGS ASSIGNMENT                 |
| EXHIBIT G    |   | FORM OF INSURANCES ASSIGNMENT               |
| EXHIBIT H    |   | FORM OF SHIPBUILDING CONTRACT ASSIGNMENT    |
| EXHIBIT I    |   | FORM OF UNITED STATES MORTGAGE              |

 

vii

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**SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT**

 

THIS SENIORSECURED REVOLVING CREDIT FACILITY AGREEMENT (this “**Agreement**”)is made as of the 15th day of November, 2007 by and among (1) OSGAMERICA OPERATING COMPANY LLC, a limited liability company organized andexisting under the laws of the State of Delaware, as borrower (the “**Borrower**”), (2) OSG AMERICAL.P., a limited partnership organized and existing under the laws of the Stateof Delaware (the “**Parent**”),as guarantor, (3) the Parent and each of the companies listed on ScheduleIII (the “**Vessel-Owning Guarantors**”), asjoint and several guarantors (the Vessel Owning Guarantors together with theParent, the “**Guarantors**” and each a “**Guarantor**”), (4) the banks andfinancial institutions listed on Schedule II, as lenders (together with theIssuing Lender and any assignee pursuant to Section 11, the “**Lenders**” and each a “**Lender**”), (5) ING BANK N.V.,London Branch (“**ING**”), asagent for the Lenders (in such capacity, the “**FacilityAgent**”), as security trustee for the Lenders (in such capacity,the “**Security Trustee**”) and as issuinglender (in such capacity, the “**Issuing Lender**”),and (6) ING and DNB NOR BANK ASA (“**DnB NOR**”),as mandated lead arrangers (in such capacity, each a “**MLA**”and, collectively the “**MLAs**”) andas bookrunners (in such capacity, each a “**Bookrunner**”and, collectively, the “**Bookrunners**”).

 

WITNESSETH THAT:

 

WHEREAS, (1) theParent is a limited partnership formed by Overseas Shipholding Group, Inc.(“**OSG**”), (2) the Borrower is awholly-owned subsidiary of the Parent and (3) the Vessel-Owning Guarantorsare each a wholly-owned subsidiary of the Borrower; and

 

WHEREAS, eachof the Guarantors have agreed to provide a joint and several guarantee of theobligations of the Borrower with respect to the transactions contemplated bythis Agreement;

 

WHEREAS, atthe request of the Borrower, the Agent, the Security Trustee, the MLAs and theBookrunners have agreed to act in their respective capacities as set forthherein and the Lenders have agreed to provide to the Borrower a senior securedrevolving credit facility in an amount of up to $200,000,000 with a $25,000,000sub limit for the issuance of Letters of Credit on the terms and subject to theconditions set forth herein for the purposes of (1) refinancing in wholeor in part the Parent’s outstanding debt to OSG, (2) financing thepre-delivery and post-delivery costs of Hull 8015 and Hull 8016, and the costof retrofitting Barge OSG 243 (each as defined herein) and (3) providingfunds for general corporate purposes;

 

NOW,THEREFORE, in consideration of the premises set forth above, the covenants andagreements hereinafter set forth, and other good and valuable consideration,the receipt and adequacy of which are hereby acknowledged, the parties heretoagree as set forth below:

 

1.                                       DEFINITIONS

 

1.1           DefinedTerms.  In this Agreement the wordsand expressions specified below shall, except where the context otherwise requires,have the meanings attributed to them below:

 

----

 
| “Adjusted Net Worth”                     | shall have  the meaning ascribed thereto in Section 17;                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Advance(s)”                             | shall mean,  as the context may require, (i) any amount advanced to the Borrower with  respect to the Facility pursuant to Section 2, or (ii) the  aggregate amount of all Advances outstanding at the applicable time;                                                                                                                                                                                                                         |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Advance Availability Period”            | shall mean  the period commencing the date hereof and ending the earlier of (i) the  date that is one (1) month prior to the Payment Date, or (ii) the  date on which the Facility is permanently reduced to zero and the Lenders are  no longer required to made Advances hereunder;                                                                                                                                                           |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Affiliate”                              | shall mean,  with respect to any Person, (i) any Person that directly, or indirectly through  one or more intermediaries, Controls such Person or (ii) any Person  (other than such Person or a subsidiary of such Person) which is Controlled  by or is under common Control with a Controlling Person;                                                                                                                                             |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Agents”                                 | shall mean  the Facility Agent and the Security Trustee;                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Agreement”                              | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Annex VI”                               | shall mean  the Regulations for the Prevention of Air Pollution from Ships to the  International Convention for the Prevention of Pollution from Ships 1973 (as  modified in 1978 and 1997);                                                                                                                                                                                                                                                                   |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Applicable Law”                         | shall mean  any Law of any Authority, including, without limitation, all national,  Federal, state and local banking or securities laws, to which the Person in  question is subject or by which it or any of its material property is bound;                                                                                                                                                                                                                  |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Applicable Rate”                        | shall mean,  in respect of any Advance, the rate of interest on such Advance from time to  time pursuant to Section 5.1;                                                                                                                                                                                                                                                                                                                                  |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Assignment and Assumption Agreement(s)” | shall mean  the Assignment and Assumption Agreement(s) executed pursuant to Section 11.1  substantially in the form of Exhibit A;                                                                                                                                                                                                                                                                                                               |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Assignment Notices”                     | shall mean (i) notices  with respect to the Earnings Assignments substantially in the form set out in  Exhibit 1 to Exhibit F hereto, (ii) notices with respect to  the Insurances Assignments substantially in the form set out in Exhibit 3  to Exhibit G hereto, and (iii) notices with respect to the  Shipbuilding Contract Assignments substantially in the form set out in Exhibit 1  to Exhibit H hereto; |

 

2

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| “Assignments”         | shall mean  the Earnings Assignments, the Insurances Assignments and the Shipbuilding  Contracts Assignments;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Authority”           | shall mean  any governmental or quasi-governmental authority, whether executive,  legislative, judicial, administrative or other, or any combination thereof,  including, without limitation, any national, Federal, state, local,  territorial, county, municipal or other government or governmental or  quasi-governmental agency, arbitrator, board, body, branch, bureau,  commission, corporation, court, department, instrumentality, master,  mediator, panel, referee, system or other political unit or subdivision or  other entity of any of the foregoing, whether domestic or foreign; |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Banking Day(s)”      | shall mean  day(s) on which banks are open for the transaction of business in  London, England and New York, United States of America;                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Barge OSG 243”       | shall mean  that certain Vessel currently being retrofitted, the details of which are set  forth on Schedule I hereto;                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Book Value”          | shall mean,  as of the date of any determination thereof, for any asset of the Parent, the  value net of depreciation at which the asset of the Parent and its  Subsidiaries is recorded and reported by the Parent in its consolidated  financial statements in accordance with GAAP, consistently applied;                                                                                                                                                                                                                                                                                         |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Bookrunners”         | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Borrower”            | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Capitalized Lease”   | of any  Person shall mean any lease or other arrangement conveying the right to use  real or personal property where the obligations for Rentals are required to  be capitalized on a balance sheet of the lessee in accordance with GAAP;                                                                                                                                                                                                                                                                                                                                                           |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Capitalized Rentals” | of any  Person shall mean, as of the date of any determination thereof, the  capitalized amount of all Rentals due and to become due under all Capitalized  Leases of such Person, as lessee, reflected as a liability on the balance  sheet of such Person;                                                                                                                                                                                                                                                                                                                                         |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Cash”                | shall mean  as of the date of any determination thereof, the total amount of all cash and  Cash Equivalents of a Person as determined in accordance with GAAP;                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| “Cash Equivalents”    | shall mean (i) securities  issued or directly and fully guaranteed or insured by the United States of  America or any agency or instrumentality thereof (provided that the full  faith and credit of the United States of America is pledged in support  thereof), and                                                                                                                                                                                                                                                                                                                          |

 

3

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|                                        | (ii) time  deposits, certificates of deposit or deposits in the interbank market of any  commercial bank of recognized standing organized under the laws of the United  States of America, any state thereof or any foreign jurisdiction having  capital and surplus in excess of $500,000,000, and rated at least A or the  equivalent thereof by S&P in respect of (ii) above, in each case  having maturities of less than three months from the date of acquisition;                                              |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Classification Society”          | shall mean a  classification society listed on Schedule V;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Closing Date”                    | shall mean  the date on which each of the conditions precedent to the availability of the  Facility set forth in Section 3.1 shall have been met or waived,  provided that the Closing Date shall, in any event, occur no later than 30 November 2007,  unless otherwise agreed by the Lenders;                                                                                                                                                                                                                           |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Code”                            | shall mean  the Internal Revenue Code of 1986, as amended, and any successor statute and  regulations promulgated thereunder;                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Commitment”                      | shall mean,  in relation to a Lender, the portion of the Facility set out opposite its  name in Schedule II hereto, or as the case may be, in any Assignment and  Assumption Agreement, as changed from time to time pursuant to the terms of  this Agreement;                                                                                                                                                                                                                                                                      |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Commitment Fee”                  | shall have  the meaning ascribed thereto in Section 13.1(a);                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Compliance Certificate”          | shall mean a  certificate in the form set out in Exhibit E, or in such other form as  the Facility Agent may agree, certifying the compliance by each of the  Security Parties with all of its financial covenants contained herein and  showing the calculations thereof, which certificate shall be executed and  delivered by the chief executive officer, the chief operating officer, the  chief financial officer or the controller of the general partner of the  Parent or the designee thereof to the Facility Agent; |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Consolidated Net Worth”          | shall mean,  as of the date of any determination thereof, the total of stockholders’  equity (as shown on the most recent consolidated balance sheet of such Person)  of such Person and its subsidiaries;                                                                                                                                                                                                                                                                                                                     |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| “Consolidated Tangible Net Worth” | shall mean,  as of the date of any determination thereof, the total of stockholders’  equity (as shown on the most recent consolidated balance sheet of such  Person) less Intangible Assets of such Person and its subsidiaries;                                                                                                                                                                                                                                                                                              |

 

4

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| “Contingent Obligations” | shall mean,  as to any Person, without duplication, any obligation of such Person  guaranteeing or intending to guarantee any Indebtedness of any other Person  (the “primary obligor”) in any manner, whether directly or indirectly,  including, without limitation, any obligation of such Person, whether or not  contingent, (a) to purchase any such Indebtedness or any property  constituting direct or indirect security therefor, (b) to advance or  supply funds (i) for the purchase or payment of any such Indebtedness or  (ii) to maintain working capital or equity capital of the primary  obligor or otherwise to maintain the net worth or solvency of the primary  obligor, (c) to purchase property, securities or services primarily for  the purpose of assuring the owner of any such Indebtedness or the ability or  the primary obligor to make payment of such Indebtedness or (d) otherwise  to assure or hold harmless the owner of such Indebtedness against loss in  respect thereof, provided, however, that the term Contingent  Obligation shall not include endorsements of instruments for deposit or  collection in the ordinary course of business.  The amount of any Contingent Obligation  shall be deemed to be an amount equal to the stated or determinable amount of  the Indebtedness in respect of which such Contingent Obligation is made or,  if not stated or determinable, the maximum reasonably anticipated liability  in respect thereof (assuming such Person is required to perform thereunder)  as determined by such Person in good faith; |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| “Control”                | shall mean,  for purposes of the definition of “Affiliate,” with respect to any Person,  possession, directly or indirectly, of the power to direct or cause the  direction of the management or policies of such Person, whether through the  ownership of voting securities, by contract or otherwise (for purposes of the  aforesaid definition, the term “Control” used as a verb has a  corresponding meaning);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| “Conversion Date”        | shall have  the meaning ascribed thereto in Section 12.7(a);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| “Creditor(s)”            | shall mean  the Facility Agent, the Security Trustee and the Lenders (each, a “Creditor”  and, collectively, the “Creditors”);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| “Debt”                   | shall mean,  as to any Person, without duplication, (i) all indebtedness of such  Person for borrowed money or for the deferred purchase price of property or  services, (ii) the maximum amount available to be drawn under all  letters of credit, bankers’ acceptances and similar obligations issued for  the account of such Person and all unpaid drawings in respect of such letters  of credit, bankers’ acceptances and similar obligations, (iii) all  indebtedness of the types described in clause (i), (ii), (iv), (v), or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

5

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|                                 | (vi) of  this definition secured by any Lien on any property owned by such Person,  whether or not such indebtedness has been assumed by such Person (provided  that, if the Person has not assumed or otherwise become liable in respect of  such indebtedness, such indebtedness shall be deemed to be in an amount equal  to the lesser of (i) the amount of such indebtedness and (ii) the  fair market value of the property to which such Lien relates as determined in  good faith by such Person), (iv) the aggregate amount of all Capitalized  Rentals of such Persons, (v) all Contingent Obligations of such Person,  and (vi) all obligations under any interest rate protection agreement,  any other hedging agreement or under any similar type of agreement which, in  accordance with GAAP, are required to be reflected as liabilities on the  balance sheet of such Person. Notwithstanding the foregoing, Debt shall not  include trade payables and accrued expenses incurred by any Person in  accordance with customary practices and in the ordinary course of business of  such Person; |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “Default”                  | shall mean  any event that would, with the giving of notice or passage of time, or both,  be an Event of Default;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “Default Rate”             | shall mean a  rate per annum equal to the aggregate of (i) two percent (2%) plus (ii) the  Applicable Rate then in effect;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “Derivatives Obligations”  | of any  Person shall mean all obligations of such Person in respect of any rate swap  transaction, basis swap, forward rate transaction, commodity swap, commodity  option, equity or equity index swap, equity or equity index option, bond  option, interest rate option, foreign exchange transaction, cap transaction,  floor transaction, collar transaction, currency swap transaction,  cross-currency rate swap transaction, currency option or any other similar  transaction (including any option with respect to any of the foregoing  transactions) or any combination of the foregoing transactions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “Determination Date”       | shall have  the meaning ascribed thereto in Section 17;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “DOC”                      | shall mean a  document of compliance issued to an Operator in accordance with rule 13  of the ISM Code;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| “Dollars” or “$” | shall mean  the legal currency, at any relevant time hereunder, of the United States of  America and, in relation to all payments hereunder, in same day funds settled  through the New York Clearing House Interbank Payments System (or such other  Dollar funds as may be determined by the Facility Agent to be customary for  the settlement in New York City of banking                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

6

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|                                 | transactions  of the type herein involved);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Drawdown Date(s)”         | shall mean  the date(s), each being a Banking Day, upon which the Borrower has requested  that (i) an Advance be made available to the Borrower and such Advance  is made, or (ii) an Advance is deemed to have been made due to a drawing  under any Letter of Credit, as provided in Section 2.13;                                                                                                                                                                                                                                      |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Drawdown Notice”          | shall have  the meaning ascribed thereto in Section 2.5;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Earnings Assignments”     | shall mean  the assignments of earnings and charterparties in respect of (i) the  earnings of each Vessel from any and all sources (including requisition  compensation), (ii) any charter or other contract relating to each  Vessel and (iii) the prorated portion of any pooled monies which are  attributable to (i) and (ii) above, to be executed by the relevant  Vessel-Owning Guarantor in favor of the Facility Agent pursuant to Section 3.1(j)(iii) substantially  in the form set out in Exhibit F; |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “EBITDA”                   | shall mean,  in respect of a Person, consolidated net income, plus Interest Charges,  taxes, depreciation, amortization and other non-cash charges, to the extent  deducted in calculating net income, in each case as determined in accordance  with GAAP;                                                                                                                                                                                                                                                                                              |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Environmental Affiliate”  | shall have  the meaning ascribed thereto in Section 9.1(A)(i);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Environmental Approvals”  | shall have  the meaning ascribed thereto in Section 8(r);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Environmental Claim”      | shall have  the meaning ascribed thereto in Section 8(r);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Environmental Laws”       | shall have  the meaning ascribed thereto in Section 8(r);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “ERISA”                    | shall mean  the Employee Retirement Income Security Act of 1974, as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “ERISA Affiliate”          | shall mean a  trade or business (whether or not incorporated) which is under common control  with the Borrower within the meaning of Sections 414(b),(c),(m) or (o) of  the Code;                                                                                                                                                                                                                                                                                                                                                              |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “ERISA Group”              | shall mean  the Parent and its subsidiaries within the meaning of Section 424(f) of  the Code;                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Event(s) of Default” | shall mean  any of the events set out in Section 10.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Exchange Act”             | shall mean  the Securities Exchange Act of 1934, as amended;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Excluded Taxes”           | shall mean  with respect to the Facility Agent, any Lender or any other recipient of any  payment to be made by or on account of                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

7

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|                            | any  obligation of the Borrower hereunder, (a)  income or franchise taxes  imposed on (or measured by) its net income by (i) the United States of  America, or by the jurisdiction under the laws of which such recipient is  organized or in which its principal office is located or, in the case of any  Lender, in which its applicable lending office is located, (ii) reason  of a present or former connection between the recipient and the jurisdiction  of the Borrower (other than such connection arising solely from such  recipient having executed, delivered, or performed its obligations under, or  enforced, this Agreement)  (b) any  branch profits taxes imposed by the United States of America or any similar  tax imposed by any other jurisdiction in which such recipient is located and (c) any  withholding tax that is imposed on amounts payable to such Lender at the time  such Lender becomes a party to this Agreement (or designates a new lending  office). |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Extending Lender(s)” | shall have  the meaning ascribed thereto in Section 2.2;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Extension Option”    | shall have  the meaning ascribed thereto in Section 2.2;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Facility”            | shall mean  the senior secured revolving credit facility to be made available by the  Lenders to the Borrower hereunder in multiple Advances and Letters of Credit (i) in  the maximum aggregate principal amount of Two Hundred Million Dollars  ($200,000,000) if the Parent receives gross proceeds from the IPO in an  amount equal to or greater than $125,000,000, (ii) in the maximum  aggregate principal amount of One Hundred Fifty Million Dollars  ($150,000,000) if the Parent receives gross proceeds from the IPO in an  amount equal to or greater than $100,000,000 but less than $125,000,000 or (iii) if  the Parent receives gross proceeds from the IPO in an amount less than  $100,000,000 the Facility and the total Commitments will be nil; provided,  however, that the Facility may also be reduced from time to time pursuant to  the terms of this Agreement and the Facility, in respect of Letters of  Credit, shall not exceed Twenty Five Million Dollars ($25,000,000);      |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Facility Agent”      | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Facility Amount”     | shall mean,  as of the date of determination, the aggregate amount of the Commitments on  such date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Facility Balance”    | shall mean,  as of the date of determination, the Dollar amount of the Facility  outstanding at such time;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Facility Period”     | shall mean  the period from the date hereof to the date which is                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

 

8

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|                                | five (5) years  from the date hereof, unless otherwise extended pursuant to the Extension  Option;                                                                                                                                                                                                                                                                                                                                        |
|-------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Fair Market Value”       | shall mean,  in respect of any Vessel, the appraised value of such Vessel as determined by  any two (2) brokers chosen by the Borrower from the list set forth on  Schedule IV , such Vessel to be valued on a “as is”, “where is”, “willing  buyer, willing seller”, stand alone basis, free and clear of any liens,  charters or other encumbrances and with no value given to any pooling  arrangements; |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Fee Letters”             | shall mean  those certain fee letters dated October 18, 2007 and November 15,  2007, each entered into by the Borrower and the MLAs in respect of the  Facility;                                                                                                                                                                                                                                                                     |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Final Availability Date” | shall mean  the Drawdown Date in relation to the final Advance, which shall not fall  later than the day occurring one (1) month prior to the Payment Date;                                                                                                                                                                                                                                                                               |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Fronting Fee”            | shall have  the meaning ascribed thereto in Section 13.1(b);                                                                                                                                                                                                                                                                                                                                                                              |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Funded Indebtedness”     | shall mean,  as at any date of determination, the aggregate stated balance sheet amount of  all Debt of a Person and its subsidiaries on a consolidated basis; and with  respect to the Parent and the Subsidiaries (including the Facility);                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “GAAP”                    | shall mean,  at any time, generally accepted accounting principles at the time in the  United States of America;                                                                                                                                                                                                                                                                                                                               |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Guaranteed Obligations”  | shall have  the meaning ascribed thereto in Section 7.1;                                                                                                                                                                                                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Guarantors”              | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                      |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Hull 8015”               | shall mean  that certain Vessel under construction, the details of which are set forth on  Schedule I hereto;                                                                                                                                                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Hull 8016”               | shall mean  that certain Vessel under construction, the details of which are set forth on  Schedule I hereto;                                                                                                                                                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “IAPPC”                   | shall mean a  valid international air pollution prevention certificate for a Vessel issued  under Annex VI;                                                                                                                                                                                                                                                                                                                                    |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Indebtedness”            | of any  Person shall mean and include all obligations of such Person which in  accordance with GAAP shall be classified upon a balance sheet of such Person  as liabilities of such Person, and in any event shall include all Debt of  such Person;                                                                                                                                                                                           |

 

9

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| “Indemnified Taxes”         | shall mean Taxes other than Excluded Taxes;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Initial Advance”           | shall mean  the first Advance to be made under the Facility pursuant to Section 2;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Initial Payment Date”      | means November 15, 2012;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Insurances Assignments”    | shall mean  the assignments in respect of the insurances of each Vessel to be executed by  the relevant Vessel-Owning Guarantor in favor of the Facility Agent pursuant  to Section 3.1(j)(ii) substantially in the form set out in Exhibit G;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Intangible Assets”         | shall mean,  as of the date of any determination thereof, goodwill, patents, trade names,  trademarks, copyrights, franchises and such other assets as are properly  classified as “intangible assets” in accordance with GAAP plus unamortized  debt issuance costs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Interest Charges”          | for any  period shall mean all interest and all amortization of debt discount and  expense on any particular Indebtedness;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Interest Election Request” | shall have  the meaning ascribed thereto in Section 5.4;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| “Interest Period”           | shall mean  with respect to any Advance (a) each one (1), three (3) or six (6) month  period, commencing on the date such Advance is made or the last day of the  next preceding Interest Period with respect to such Advance and ending on the  same day in the first, third or sixth calendar month thereafter, in each  case, as selected by the Borrowers or (b) in the Lenders’ discretion,  such other period(s) for which interest rates are quoted by the British  Bankers’ Association as may be agreed; provided, however, (x) in  each case, that each such Interest Period (if such Interest Period is a whole  number of months) which commences on the last Banking Day of a calendar month  (or on any day for which there is no numerically corresponding day in the  appropriate subsequent calendar month) shall end on the last Banking Day of  the appropriate subsequent calendar month, (y) that the Borrower may not  choose more than ten (10) one month interest periods in any twelve month  period and (z) that the Borrower may not choose more than three (3) interest  periods with a duration of less than one month in any twelve month period and  at no time shall more than one (1) such interest period be outstanding; |
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                  | Notwithstanding  the foregoing, (i) each Interest Period which would otherwise end on a  day which is not a Banking Day shall end on the next succeeding Banking Day  (or, if such next succeeding Banking Day falls in the next succeeding  calendar month, on the next preceding Banking Day), and (ii) each                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

10

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|                                 | Interest  Period which would otherwise end after the Payment Date shall end on the  Payment Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Interest Rate Agreements” | shall mean  any interest rate protection agreement, interest rate future agreement,  interest rate option agreement, interest rate swap agreement, interest rate  cap agreement, interest rate collar agreement, interest rate hedge agreement  or other similar agreement or arrangement entered into by the Borrower which  is designed to protect the Borrower, the Guarantors or any of the  Subsidiaries against fluctuations in interest rates applicable under this  Agreement, to or under which the Borrower, the Guarantors or any of the  Subsidiaries is a party or a beneficiary on the date of this Agreement or  becomes a party or a beneficiary hereafter; |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Investments”              | shall mean  all investments in any Person, regardless of the form of consideration paid  therefor, directly or indirectly, whether by acquisition of shares of capital  stock, indebtedness or other obligations or Securities or by loan, advance,  capital contribution or otherwise; provided, however, that “Investments”  shall not mean or include routine investments in property to be used or  consumed in the ordinary course of business;                                                                                                                                                                                                              |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “IPO”                      | shall mean the initial public offering of the Parent’s limited  partnership interests;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “ISM Code”                 | shall mean  the International Safety Management Code for the Safe Operating of Ships and  for Pollution Prevention constituted pursuant to Resolution A.741(18) of the  International Maritime Organization and incorporated into the Safety of Life  at Sea Convention and shall include any amendments or extensions thereto and  any regulation issued pursuant thereto;                                                                                                                                                                                                                                                                                                 |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “ISPS Code”                | shall mean  the International Ship and Port Facility Code adopted by the International  Maritime Organization at a conference in December 2002 and incorporated  into the Safety of Life at Sea Convention and shall include any amendments or  extensions thereto and any regulation issued pursuant thereto;                                                                                                                                                                                                                                                                                                                                                         |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “ISSC”                     | shall mean  the International Ship Security Certificate issued pursuant to the ISPS Code;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Issuing Lender”           | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Judgment Currency”        | shall have  the meaning ascribed thereto in Section 12.7(a);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Law”                      | shall mean  any law, rule, regulation or official code, consent decree, constitution,  decree, directive, enactment, guideline, injunction, interpretation,  judgment, order, ordinance, policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

 

11

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|                                             | statement,  proclamation, promulgation, requirement, rule of law, rule of  public policy, settlement agreement, statute, or writ, of any Authority;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “L/C Supportable Obligation(s)”        | means such  obligations of any Security Party as are not inconsistent with the issuance  policies of the Issuing Lender; no Letter of Credit may be payable (1) to  any entity or person who is subject to sanctions issued by the United States  Department of Commerce or to whom payment is prohibited by the Foreign Asset  Control Regulations of the Department of the Treasury or (2) which  otherwise is in contravention of applicable laws and regulations;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Lender(s)”                            | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter(s) of Credit”             | shall have  the meaning ascribed thereto in Section 2.10;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter of Credit Availability Period” | the period  from the Closing Date until the date that is 30 days prior to the Payment  Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter of Credit Fee”                 | shall have  the meaning ascribed thereto in Section 13.1(b);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter of Credit Outstandings”        | means, at  any time, the aggregate stated amount of all Letters of Credit issued that have  not expired or otherwise been terminated, less any drawings previously made  thereunder;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter of Credit Participant”         | shall have  the meaning ascribed thereto in Section 2.12;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “Letter of Credit Request”             | shall have  the meaning ascribed thereto in Section 2.11;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| “LIBOR Rate”                           | shall mean,  with respect to any Interest Period for any Advance, the rate per annum  determined by the Facility Agent to be (i) the rate of interest as  published on page 3750 of the Telerate Service (or such other service as  may be elected by the British Bankers’ Association as the information vendor  for purposes of displaying British Bankers’ Association Interest Settlement  Dates) as the rate per annum at which deposits are being quoted to prime  banks in Dollars for the relevant Interest Period at the London Interbank  Market as of 11:00 A.M. London time, on the day that is two Banking Days  prior to the first day of such Interest Period, or (ii) if such rate  does not appear on such page or such service for the purposes of paragraph  (i) or the Facility Agent determines that no rate for the relevant  period of time appears on such page or service, the annual rate of  interest which is the arithmetic mean (rounded upwards, if necessary, to four  decimal places) of the rates of interest supplied by the Reference Banks to  the Facility Agent, at its request, as being the rates quoted by the |

 

12

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|                                | Reference  Banks to leading banks in the London Interbank Market in the ordinary course  of business as of 11:00 A.M. London time, on the day that is two Banking  Days prior to the first day of such Interest Period;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “Lien”                    | shall mean,  with respect to any asset, any interest in such asset securing an obligation  owed to, or a claim by, a Person other than the owner of the asset, whether  such interest is based on the common law, statute or contract, and including  but not limited to the security interest or lien arising from a mortgage,  encumbrance, pledge, conditional sale, title retention agreement or trust  receipt or a lease, consignment or bailment for security purposes or any  arrangement having substantially the same economic effect as any of the  foregoing.  The term “Lien”  shall include reservations, exceptions, encroachments, easements, rights-of-way,  covenants, conditions, restrictions, leases and other title exceptions and  encumbrances (including, with respect to stock, any purchase options or  calls, stockholder agreements, voting trust agreements, buy-back agreements  and all similar arrangements) affecting property.  For the purposes of this Agreement, a  Person shall be deemed to be the owner of any property which it has acquired  or holds subject to a conditional sale agreement, Capitalized Lease or other  arrangement pursuant to which title to the property has been retained by or  vested in some other Person for security purposes and such retention or  vesting shall constitute a Lien; |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “Majority Lenders”        | shall mean  Lenders whose aggregate Commitments exceed fifty percent (50%) of the total  Commitments or if the Commitments have terminated, Lenders holding in the  aggregate in excess of fifty percent (50%) of the Facility Balance;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “Mandatory Costs”         | means the  cost of complying with any applicable regulatory requirements of any relevant  regulatory authority;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “Margin”                  | shall mean  during the period from the date hereof up to the fifth (5th)  anniversary hereof seventy hundredths of one percent (0.70%) per annum and,  if the Extension Option is exercised, seventy-five hundredths of one percent  (0.75%) per annum thereafter;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| “Material Adverse Change” | shall mean  the occurrence of an event or condition which (a) materially impairs the  ability of the Borrower and/or the Guarantors to meet or perform any of their  obligations with regard to (i) this Agreement and the financing  arrangements established in connection herewith or therewith or (ii) any  of their respective other obligations that are material to the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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|                                           | Borrower and  the Guarantors considered as a whole or (b) materially impairs the  rights of or benefits or remedies available to the Lenders under the  Facility;                                                                                                                                                                                                                                                                                                                                                      |
|------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Material FinancialObligation”       | means with  respect to any Security Party a principal or face amount of Debt (in the case  of Derivatives Obligations, determined in respect of any counterparty on a  net basis), and arising in one or more related or unrelated transactions,  exceeding in the aggregate $20,000,000 (or its equivalent in any other  currency);                                                                                                                                                                                   |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Materials of Environmental Concern” | shall have the meaning ascribed thereto in Section 8(r);                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Maximum Liability Amount”           | shall have  the meaning ascribed thereto in Section 17;                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “MLA(s)”                             | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Moody’s”                       | shall mean  Moody’s Investors Service, Inc.;                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Mortgages”                          | shall mean,  collectively, the first preferred United States ship mortgages on the Vessels  to be executed by the respective Vessel-Owning Guarantor which is the  registered owner of such Vessel in favor of the Security Trustee pursuant to Section 3.1(j)(i) substantially  in the forms set out in Exhibit I;                                                                                                                                                                                          |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “MTSA”                               | shall mean  the Maritime and Transportation Security Act, 2002, as amended, inter alia,  by Public Law 107-295;                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Multiemployer Plan”                 | shall mean a  “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) to  which the Borrower or any ERISA Affiliate is making or accruing an obligation  to make contributions or has within any of the preceding five plan years made  or accrued an obligation to make contributions;                                                                                                                                                                                                        |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Multiple Employer Plan”             | shall mean  an employee benefit plan, other than a Multiemployer Plan, subject to Title  IV of ERISA to which the Borrower or ERISA Affiliate, and one or more  employers other than the Borrower or ERISA Affiliate, is making or accruing  an obligation to make contributions or, in the event that any such plan has  been terminated, to which the Borrower or ERISA Affiliate made or accrued an  obligation to make contributions during any of the five plan years preceding  the date of termination of such plan; |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| “Net Debt”                           | shall mean  Debt minus Cash and Cash Equivalents;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

 

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| “Net Interest Expense”   | shall mean  for any period, all cash interest and cash commitment fees incurred by the a  Person less all interest and other financing income received by such Person;                                                                                                                                                                                                 |
|------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Non-Extending Lenders”  | any Lender(s) who  does not extend its respective Commitment(s) at the Borrower’s exercise  of the Extension Option;                                                                                                                                                                                                                                    |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Note”                   | shall mean  the promissory note, to be executed by the Borrower to the order of the  Facility Agent pursuant to Section 3.1(c), to evidence the Facility,  substantially in the form set out in Exhibit B or in such other form as  the Facility Agent may agree;                                                                                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Operator”               | shall mean,  in respect of any Vessel, the Person who is concerned with the operation of  such Vessel and falls within the definition of “Company” set out in rule 1.1.2  of the ISM Code;                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “OSG”                    | shall have  the meaning ascribed thereto in the Recitals;                                                                                                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “OSG Ship Management”    | shall mean  OSG Ship Management, Inc., a Delaware corporation;                                                                                                                                                                                                                                                                                                    |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Other  Taxes”           | shall mean  any and all present or future stamp or documentary Taxes or any other excise  or property Taxes, charges or similar levies arising from any payment made  hereunder or from the execution, delivery or enforcement of, or otherwise  with respect to, this Agreement.                                                                                 |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Parent”                 | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Participant”            | shall have  the meaning ascribed thereto in Section 11.2;                                                                                                                                                                                                                                                                                                         |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Payment Date”           | shall mean (i) the  date which falls on the fifth anniversary of the date hereof, or (ii) if  the Extension Option is exercised by the Borrower pursuant to Section 2.2,  the date which falls on the seventh anniversary of the date hereof.  If such day is not a Banking Day, the  Payment Date shall be the immediately preceding Banking Day; |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Permitted Country(ies)” | shall mean  any or all of the following:  United  States of America, United Kingdom, Ireland, France, Belgium, the Netherlands,  Germany, Sweden, Denmark, Norway, Switzerland, Finland, Austria, Spain,  Portugal, Italy, Luxembourg, Greece, Canada, the Cayman Islands, Republic of  Barbados, Japan, China, Hong Kong and Bermuda;                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
| “Permitted Debt”         | shall mean,  without duplication,                                                                                                                                                                                                                                                                                                                                      |
|                               |                                                                                                                                                                                                                                                                                                                                                                   |
|                               | (a)   Capital  Leases;                                                                                                                                                                                                                                                                                                                                  |

 

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|                              | (b)   Indebtedness  owing to any Creditor                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                              | (c)   existing  Indebtedness described in Schedule VI and any refinancing thereof which do  not have the effect of increasing the principal amount thereof or changing  the amortization thereof (other than to extend the same) and which are  otherwise on terms and conditions no less favorable to any Security Party,  the Facility Agent or any Lender, as determined by the Facility Agent, than  the terms of the Debt being refinanced, amended or modified; and |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                              | (d)   Debt  consisting of intercompany loans and advances made by any Security Party to  any other Security Party.                                                                                                                                                                                                                                                                                                                                                        |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Permitted Lien”        | has the  meaning ascribed thereto in Section 9.2(A)(a)                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| “Permitted Investments” | shall mean with respect to any  Person any of the following:                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                              | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Investments in commercial paper maturing in 270 days or less from the  date of issuance which, at the time of acquisition, is rated one of the two  highest ratings by S&P or by Moody’s or any substantially similar  commercial paper or short-term ratings by any other nationally recognized  credit rating agency domiciled in the United States of America or the United  Kingdom which in the reasonable opinion of the Majority Lenders is of similar  standing and with comparable rating categories and methodologies (a “Substitute  Rating Agency”); |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|                              | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Investments in obligations directly issued by or fully and  unconditionally guaranteed as to principal and interest by the United States  of America or any agency or instrumentality of the United States of America,  in either case, maturing in three (3) years or less from the date of  acquisition thereof; |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|                              | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Investments in certificates of deposit, time deposits or bankers’  acceptances issued by a Lender or any other bank or trust company organized  under the laws of any Permitted Country or any state thereof, having capital,  surplus and undivided profits aggregating at least $500,000,000 maturing in  270 days or less from the date of acquisition thereof; |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|                              | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Investments in indebtedness of any governmental body of the United  States of America or any State or political subdivision thereof, which  indebtedness is at all times |

 

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|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | accorded one of the two highest ratings by S&P, Moody’s, or a  Substitute Rating Agency maturing not later than three (3) years from  the date of acquisition thereof (or, if maturing more than three (3) years  after the date of acquisition, which is subject to a put at par by the holder  thereof on a weekly or more frequent basis); |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                             |
|                               | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Investments in money market investment programs which are classified  as a current asset in accordance with GAAP and which are administered by  reputable financial institutions having capital, surplus and undivided  profits of at least $500,000,000 and which are registered under the  Investment Company Act of 1940, as amended; and                     |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                             |
|                               | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | investments in money market and auction rate preferred stocks rated  “A” or better by S&P or Moody’s or a similar category by a Substitute  Rating Agency;                                                                                                                                                                                    |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Person”                 | shall mean  an individual, partnership, corporation, limited liability company, business  trust, bank, trust company, joint venture, association, joint stock company,  trust or other unincorporated organization, whether or not a legal entity, or  any government or agency or political subdivision thereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Plan”                   | shall mean  any employee benefit plan (other than a Multiemployer Plan or a Multiple  Employer Plan) covered by Title IV of ERISA or Section 302 of  ERISA;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Reference Banks”        | shall mean  DnB NOR and ING;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Register”               | shall have  the meaning ascribed thereto in Section 11.4;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Registration Statement” | shall mean  the Registration Statement on Form S-1 (Registration No. 333-145341),  and all amendments thereto as filed by the Parent prior to the Closing Date;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| “Rentals”                | shall mean  and include as of the date of any determination thereof all fixed payments  (including as such all payments which the lessee is obligated to make to the  lessor on termination of the lease or surrender of the property) payable by a  Person, as lessee or sublessee under a lease of real or personal property  (excluding (i) fixed payments on any item of personal property involving  rentals of less than $1,000 per month each and $10,000 per month in the  aggregate and (ii) hire and other amounts payable under any time charter  of a vessel for a remaining period less than twelve (12) months, including  any optional extensions or renewals) but shall be exclusive of any amounts  required to be paid by such Person, directly or indirectly (whether or not |

 

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|                                            | designated  as rents or additional rents), on account of maintenance, repairs, insurance,  taxes and similar charges incurred by such lessee or sublessee.  Fixed rents under any so-called “percentage  leases” shall be computed solely on the basis of the minimum rents, if any,  required to be paid by the lessee regardless of sales volume or gross  revenues;                                                          |
|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Revised Facility Amount”             | shall have  the meaning ascribed thereto in Section 2.2;                                                                                                                                                                                                                                                                                                                                                                                  |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “S&P”                             | shall mean  Standard & Poor’s Ratings Services, a division of McGraw-Hill Inc.;                                                                                                                                                                                                                                                                                                                                                  |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Sale and Leaseback Transaction”      | shall mean any arrangement with any Person providing for the leasing by  the Parent or a Subsidiary for a period, including renewals, in excess of  three years of any asset which has been or is to be sold or transferred more  than 180 days after the acquisition or occupancy thereof or the completion or  construction and commencement of full operation thereof, whichever is later,  by the Parent or any Subsidiary to such Person; |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Securities”                          | shall have  the same meaning as in Section 2(1) of the Securities Act of 1933,  as amended;                                                                                                                                                                                                                                                                                                                                          |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Securities and ExchangeCommission”   | shall mean  the United States Securities and Exchange Commission or any other  governmental authority of the United States of America at the time  administrating the Securities Act of 1933, as amended, the Investment Company  Act of 1940, as amended, or the Exchange Act;                                                                                                                                                                |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Security Documents”                  | shall mean  the Mortgages, the Assignments and any other documents that may be executed  as security for the Facility and the Borrower’s and each of the Guarantors’  obligations in connection therewith;                                                                                                                                                                                                                           |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Security Party”                      | shall mean  each of the Borrower and the Guarantors;                                                                                                                                                                                                                                                                                                                                                                                           |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Security Trustee”                    | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                                                                                                                                                                                      |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Shipbuilding Contract Assignment(s)” | shall mean  the first priority assignments over the shipbuilding contracts for Hull 8015  and Hull 8016;                                                                                                                                                                                                                                                                                                                                       |
|                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| “Shipping and Related Businesses”     | shall mean  any one or all of the following: owning, chartering, leasing, crewing,  navigating, managing, supplying or operating or repairing commercial vessels  of all kinds, including but not limited to cargo ships, liners, container  ships, passenger vessels, tugs, barges and ferries; owning, operating or  managing transportation assets ancillary to or in furtherance of the                                                    |

 

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|                          | transportation  of freight and passengers by water; owning, operating or managing terminals  and other facilities of any kind incidental or ancillary to or in furtherance  of the transportation of freight and passengers by water; and owning,  managing or operating terminals, docks, piers, quays, wharves, dry docks,  storage facilities and port facilities incidental or ancillary to or in  furtherance of the transportation of freight and passengers by water;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “SMC”               | means the  safety management certificate issued in respect of any of the Vessel in  accordance with rule 13 of the ISM Code;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “Stated Amount”     | means with  respect to each Letter of Credit, the maximum amount available to be drawn  thereunder (regardless of whether any conditions for drawing could then be  met);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “subsidiary”        | shall mean  as to any particular Person, at any date, any corporation, limited liability  company, partnership or other entity of which more than 50% (by number of  votes of the Voting Stock or other ownership interests having ordinary voting  power) are beneficially owned or controlled, directly or indirectly, by such  Person and/or one or more other subsidiaries of such Person;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “Subsidiary(ies)”   | shall mean  a/the subsidiary(ies) of the Parent;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “Taxes”             | shall mean  any present or future income or other taxes, levies, duties, charges, fees,  deductions or withholdings of any nature now or hereafter imposed, levied,  collected, withheld or assessed by any taxing authority;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| “Termination Event” | shall mean (i) a  “reportable event,” as such term is defined in Section 4043 of ERISA, (ii) the  withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer  Plan during a plan year in which it was a “substantial employer,” as such  term is defined in Section 4001(a)(2) of ERISA, or the incurrence  of liability by the Borrower or any ERISA Affiliate under Section 4064  of ERISA upon the termination of a Multiple Employer Plan, (iii) the  filing of a notice of intent to terminate a Plan under Section 4041 of  ERISA or the termination or the treatment of a Multiemployer Plan amendment  as a termination under Section 4041A of ERISA, (iv) the institution  of proceedings to terminate a Plan or a Multiemployer Plan or (v) any  other event or condition which might constitute grounds under Section 4042  of ERISA for the termination of, or the appointment of a trustee to  administer, any Plan or Multiemployer Plan; |

 

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| “Total Capitalization”       | shall mean  the sum of (i) Funded Indebtedness plus (ii) Consolidated Net  Worth;                                                                                                                                                                                 |
|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                                                                                                                                                        |
| “Transaction Documents”      | shall mean  each of this Agreement, the Note, the Security Documents and any other  instrument, document or other agreement delivered in connection herewith or  therewith,;                                                                                                |
|                                   |                                                                                                                                                                                                                                                                        |
| “Vessels”                    | shall mean  the Vessels listed in Schedule I hereto, registered in the name of the  relevant Vessel-Owning Guarantor or any vessel acquired by the Borrower or a  Vessel-Owning Guarantor in accordance with Section 9.3;                                              |
|                                   |                                                                                                                                                                                                                                                                        |
| “Vessel-Owning Guarantor(s)” | shall have  the meaning ascribed thereto in the preamble;                                                                                                                                                                                                                   |
|                                   |                                                                                                                                                                                                                                                                        |
| “Voting Stock”               | shall mean,  with respect to any Person, Securities of any class or classes, the holders  of which are ordinarily, in the absence of contingencies, entitled to elect a  majority of the corporate directors (or Persons performing similar functions)  of such Person; and |
|                                   |                                                                                                                                                                                                                                                                        |
| “Withdrawal Liability”       | shall have  the meaning given to such term under Part 1 of Subtitle E of Title IV of  ERISA.                                                                                                                                                                      |

 

1.2           Computationof Time Periods; Other Definitional Provisions.  In this Agreement and the other TransactionDocuments, in the computation of periods of time from a specified date to alater specified date, the word “from” means “from and including” and the words “to”and “until” each mean “to but excluding”; words importing either gender includethe other gender; references to “writing” include printing, typing, lithographyand other means of reproducing words in a tangible visible form; the words “including,”“includes” and “include” shall be deemed to be followed by the words “withoutlimitation”; references to agreements and other contractual instruments(including this Agreement and the other Transaction Documents) shall be deemedto include all subsequent amendments, amendments and restatements, supplements,extensions, replacements and other modifications to such instruments (without,however, limiting any prohibition on any such amendments, extensions and othermodifications by the terms of this Agreement or the other TransactionDocuments); references to any matter that is “approved” or requires “approval”of a party shall mean approval given in the sole and absolute discretion ofsuch party unless otherwise specified; words importing the singular number onlyshall include the plural and vice versa (except as indicated), as may beappropriate; references to any Person shall include such Person, its successorsand permitted assigns and transferees.

 

1.3           AccountingTerms.  Unless otherwise specifiedherein, all accounting terms used in this Agreement, the Note and in theSecurity Documents shall be interpreted, and all financial statements andcertificates and reports as to financial matters required to be delivered tothe Facility Agent or to the Lenders under this Agreement shall be prepared, inaccordance with GAAP; provided that, if the Borrower notifies the FacilityAgent that the

 

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Borrower requests an amendment to any provision hereofto eliminate the effect of any change occurring after the Closing Date in GAAPor in the application thereof on the operation of such provision (or if theFacility Agent notifies the Borrower that the Majority Lenders request anamendment to any provision hereof for such purpose), regardless of whether anysuch notice is given before or after such change in GAAP or in the applicationthereof, then such provision shall be interpreted on the basis of GAAP as ineffect and applied immediately before such change shall have become effectiveuntil such notice shall have been withdrawn or such provision amended inaccordance herewith.

 

1.4           CertainMatters Regarding Materiality.  Tothe extent that any representation, warranty, covenant or other undertaking ofthe Borrowers in this Agreement is qualified by reference to those which arenot reasonably expected to result in a “Material Adverse Change” or language ofsimilar import, no inference shall be drawn therefrom that the Facility Agent,the Security Trustee or any Lender has knowledge or approves of anynoncompliance by such Borrower with any governmental rule.

 

1.5           Formsof Documents.  Except as otherwiseexpressly provided in this Agreement, references to documents or certificates “substantiallyin the form” of exhibits to another document shall mean that such documents orcertificates are duly completed in the form of the related exhibits withsubstantive changes subject to the provisions of Section 18.6 of thisAgreement, as the case may be, or the correlative provisions of the TransactionDocuments.

 

2.             THE FACILITY

 

2.1           Purposes.  The Lenders shall make the Facility availableto the Borrower for the purposes of (1) refinancing in whole or in partthe Parent’s outstanding debt to OSG, (2) financing the pre-delivery andpost-delivery costs of Hull 8015 and Hull 8016, and the cost of retrofittingBarge OSG 243, (3) providing funds for general company and working capitalpurposes of the Borrower and its subsidiaries and (4) at the request ofthe Borrower, to issue Letter(s) of Credit as provided for in this Section 2.

 

2.2           ExtensionOption.  At any time on or after thesecond anniversary of the Closing Date until the date which is ninety (90) daysprior to the Initial Payment Date, the Borrower may request, by at least sixty(60) days written notice to the Facility Agent, that the Lenders extend theInitial Payment Date by an additional 24 months from the fifth anniversary ofthe Closing Date to the seventh anniversary of the Closing Date (the “ExtensionOption”).  The Lenders who agree toextend their Commitment (the “Extending Lenders”) shall do so at theirClosing Date Commitment level.  Once aLender agrees to extend its Commitment, the request of the Borrower isirrevocable.  If less than all of theLenders agree to extend their Commitments, the Facility Agent shall notify theExtending Lenders and each Extending Lender shall inform the Facility Agentwithin 30 days of such notice of the amount, if any, of the Non-ExtendingLenders’ Commitments it is willing to accept and assume on the Initial PaymentDate and shall enter into an Assignment and Assumption Agreement with suchNon-Extending Lender(s) with respect to such Commitment or portionthereof, which shall be effective on the Initial Payment Date.  If, after giving effect to the assignmentsdescribed above all of the Lenders’ Commitments have not been extended and orassumed, the Borrower may arrange for one or more Extending Lenders or otherassignees eligible to

 

21

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become Lenders to the Facility to accept and assumethe unassigned amounts of the commitments of the Non-Extending Lenders orreduce the Facility on the Initial Payment Date to the aggregate amount of thecommitments of the Extending Lenders (the “Revised Facility Amount”).  For the avoidance of doubt the parties heretoagree that the Commitment of a Non-Extending Lender shall not terminate untilthe Initial Payment Date.  Amountsoutstanding on the Initial Payment Date in excess of the Revised FacilityAmount shall be repaid on the Initial Payment Date.

 

2.3           Makingof the Advances.  Each of theLenders, relying upon each of the representations and warranties set out in Section 8,hereby severally, and not jointly, agrees with the Borrower that, subject toand upon the terms of this Agreement, it will on each Drawdown Date make itsratable portion of the relevant Advance available through the Facility Agent,to the Borrower in an amount not to exceed its Commitment.

 

2.4           AdvanceAvailability Period.  Subject tosatisfaction of the terms and conditions set forth herein, the Facility will beavailable for drawings on a revolving basis until the earlier of (i) one (1) monthprior to the Payment Date or (ii) the date on which the Facility ispermanently reduced to zero and the Lenders are no longer required to makeAdvances hereunder.  The maximum numberof Advances that may be outstanding at any one time is ten (10).

 

2.5           DrawdownNotice.  When the Borrower seeks todraw an Advance hereunder, it shall serve a written notice (a “DrawdownNotice”) on the Facility Agent (which shall promptly furnish a copy to eachLender) no later than 11:00 A.M., New York time, at least three (3) BankingDays prior to the date of the proposed Advance except in the case of theinitial Advance in which case the Borrower shall give at least one (1) BankingDay prior notice.  Each Drawdown Noticeshall specify (a) the date of the proposed borrowing (which shall be aBanking Day), (b) the principal amount of the Advance to be made by theLenders on that date, (c) the Interest Period requested by the Borrower,which period may end no later than the Payment Date, and (d) thedisbursement instructions for the proceeds of such Advance.  Each Drawdown Notice shall be effective uponreceipt by the Facility Agent, shall be irrevocable and shall be in the formset out in Exhibit C.

 

2.6           Effectof Drawdown Notice.  Each DrawdownNotice shall be deemed to constitute a warranty by the Borrower:  (a) that the representations andwarranties stated in Section 8 are true and correct on the date of suchDrawdown Notice and will be true and correct on the applicable Drawdown Date asif made on such date except for such representations and warranties that relateto a specific earlier date, (b) that no Default or Event of Default hasoccurred and is continuing on such Drawdown Date or would result from themaking of a Advance, and (c) that the Conditions Precedent stated inSections 3.1 and 3.2 have been satisfied.

 

2.7           Notationof Advances.  Each Advance made bythe Lenders to the Borrower may be evidenced by a notation of the same made bythe Facility Agent on the grid attached to the Note, which notation, absentmanifest error, shall be prima facie evidence of the amount of the relevantAdvance.

 

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2.8           SeveralObligations.  The failure of anyLender to make its pro rata portion of the relevant Advance on the datespecified therefore shall not relieve any other Lender of its obligation tomake its prorata portion of such Advance on such date, andneither the Facility Agent nor any Lender shall be responsible for the failureof any other Lender to make its pro rata portion of an Advance.

 

2.9           ProRata Treatment.  Each borrowing fromthe Lenders hereunder shall be made from the Lenders, each payment of fees andexpenses under Section 13 shall be made for account of the Lenders, andeach termination or reduction of the amount of the Commitments shall be appliedto the Commitments of the Lenders, pro rata according to the amounts of theirrespective Commitments; each payment or prepayment of principal of any portionof the Facility Balance by the Borrower shall be made for account of theLenders pro rata in accordance with the respective unpaid principal amounts ofthe Facility Balance held by the Lenders; and each payment of interest on theFacility Balance by the Borrower shall be made for the account of the Lenderspro rata in accordance with the amounts of interest due and payable to therespective Lenders.

 

2.10         Lettersof Credit.  (a) Subject to andupon the terms and conditions herein set forth, the Borrower may request thatthe Issuing Lender at any time during the Letter of Credit Availability Period,issue for the account of the Borrower and for the purposes of the Borrower, theParent or any Subsidiary and in support of L/C Supportable Obligations, andsubject to and upon the terms and conditions herein set forth, and the IssuingLender agrees to issue from time to time, irrevocable standby letters of creditdenominated in Dollars in such form as may be approved by the Issuing Lender(singly, a “Letter of Credit” and collectively, the “Letter(s) ofCredit”).  The maximum number ofLetters of Credit that may be outstanding at any one time is ten (10).

 

(b)           Notwithstandinganything to the contrary contained in this Agreement, no Letter of Credit shallbe issued, the Stated Amount of which, (i) is greater than Twenty FiveMillion Dollars ($25,000,000), or (ii) when added to the Letter of CreditOutstandings would exceed Twenty Five Million Dollars ($25,000,000), or (iii) whenadded to the Letter of Credit Outstandings and the Facility Balance, wouldexceed the maximum principal amount available under the Facility.

 

(c)           Each Letter of Creditshall terminate within 12 months after the date of issuance but any such Letterof Credit shall be extendable upon the agreement of the Borrower and theIssuing Lender for successive periods of up to 12 months.  No Letter of Credit shall be issued, whichwould exceed the Payment Date.

 

2.11         Letterof Credit Request.  (a) At anytime during the Letter of Credit Availability Period, whenever the Borrowerwishes that a Letter of Credit be issued, the Borrower shall give the IssuingLender written notice (a “Letter of Credit Request”) substantially inthe form of Exhibit D prior to 11:00 A.M., New York time, at leastthree (3) Banking Days prior to the proposed date of issuance (which shallbe a Banking Day), which Letter of Credit Request shall include any documentsthat the Letter of Credit Issuer may reasonably require in connectiontherewith.  The Letter of Credit Requestshall be irrevocable.  The Issuing Lendershall promptly notify each Lender of each Letter of Credit Request and theIssuing Lender

 

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shall, on the date of each issuance of a Letter ofCredit by it, give each Lender and the Borrower written notice of the issuanceof such Letter of Credit.

 

(b)           The making of eachLetter of Credit Request shall be deemed to be a representation and warranty bythe Borrower to the Lenders that such Letter of Credit may be issued inaccordance with, and will not violate the requirements of, Section 2.10.  Unless the Issuing Lender has received noticefrom the Borrower, any other Security Party or the Lenders before it issues aLetter of Credit that one or more of the conditions specified in Section 3has not been satisfied, or that the issuance of such Letter of Credit would violateSection 2.10, then the Issuing Lender shall, subject to the terms andconditions of this Agreement, issue the requested Letter of Credit on behalf ofthe Borrower in accordance with the Issuing Lender’s usual and customarypractices.

 

2.12         Letterof Credit Participation.  (a) Immediatelyupon the issuance by the Issuing Lender of a Letter of Credit, the IssuingLender shall be deemed to have sold and transferred to each Lender, and eachLender (each a “Letter of Credit Participant”) shall be deemed irrevocablyand unconditionally to have purchased and received from the Issuing Lender,without recourse or warranty, an undivided interest and participation, inproportion to such Lender’s Commitment, in such Letter of Credit, eachsubstitute letter of credit, each drawing or payment made thereunder and theobligations of the Borrower under this Agreement with respect thereto (althoughthe Letter of Credit Fee shall be payable directly to the Facility Agent forthe account of the Letter of Credit Participants as provided in Section 13.1(b))and any security therefor or guaranty pertaining thereto.  Upon any change in a Lender’s Commitmentpursuant to Section 11.1 or 11.2, it is hereby agreed that, with respectto all outstanding Letters of Credits and unpaid drawings relating thereto,there shall be an automatic adjustment to the participations pursuant to this Section 2.12to reflect the adjusted obligations in respect of the Letter of Credits of theassignor and assignee Lender, as the case may be.

 

(b)           In determining whetherto pay under any Letter of Credit, the Issuing Lender shall not have anyobligation relative to the other Lenders other than to confirm that anydocuments required to be delivered under such Letter of Credit appear to havebeen delivered and that they appear to substantially comply on their face withthe requirements of such Letter of Credit. Any action taken or omitted to be taken by the Issuing Lender under orin connection with any Letter of Credit issued by it shall not create for theIssuing Lender any resulting liability to the Borrower, any other SecurityParty, any Lender or any other Person unless such action is taken or omitted tobe taken with gross negligence or willful misconduct on the part of the IssuingLender (as determined by a court of competent jurisdiction in a final andnon-appealable decision).

 

(c)           The obligations of theLetter of Credit Participants to make payments to the Issuing Lender withrespect to Letters of Credit shall be irrevocable and not subject to anyqualification or exception whatsoever and shall be made in accordance with theterms and conditions of this Agreement under all circumstances, including,without limitation, any of the following circumstances:

 

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(i)            anylack of validity or enforceability of this Agreement or any of the otherTransaction Documents;

 

(ii)           theexistence of any claim, setoff, defense or other right which the Borrower, theParent or any of the Subsidiaries may have at any time against a beneficiarynamed in a Letter of Credit, any transferee of any Letter of Credit (or anyPerson for whom any such transferee may be acting), the Facility Agent, anyLetter of Credit Participant, or any other Person, whether in connection with thisAgreement, any Letter of Credit, the transactions contemplated herein or anyunrelated transactions (including any underlying transaction between theBorrower, the Parent or any of the Subsidiaries and the beneficiary named inany such Letter of Credit);

 

(iii)          any draft, certificate or any other documentpresented under any Letter of Credit proving to be forged, fraudulent, invalidor insufficient in any respect or any statement therein being untrue orinaccurate in any respect;

 

(iv)          thesurrender or impairment of any security for the performance or observance ofany of the terms of any of the Credit Documents; or

 

(v)           theoccurrence of any Default or Event of Default.

 

2.13         Letterof Credit Payments Deemed Advances. The Borrower hereby agrees that any payment or disbursement made by theIssuing Lender under any Letter of Credit shall be deemed an Advance in Dollarsand shall bear interest for each day from the date of such payment ordisbursement at the Applicable Rate.  TheIssuing Lender shall give prompt notice to the Borrower and the Lenders of eachpayment or disbursement and the amount thereof in Dollars under a Letter ofCredit.  The Borrower’s obligation torepay any Advance deemed made under this Section 2.13 (including, in eachcase, interest thereon) shall be absolute and unconditional under any and allcircumstances and irrespective of any setoff, counterclaim or defense topayment which the Borrower may have or have had against the Issuing Lender orany Lender, including, without limitation, any defense based upon the failureof any drawing under a Letter of Credit to conform to the terms of the Letterof Credit (other than the failure of the Issuing Lender to determine that anydocuments required to be delivered under such Letter of Credit have beendelivered and that they comply on their face with the requirements of suchLetter of Credit) or any non-application or misapplication by the beneficiaryof the proceeds of such drawing; provided, however, that the Borrower shall notbe obligated to reimburse the Issuing Lender for any wrongful payment made bythe Issuing Lender with respect to a Letter of Credit as a result of acts oromissions constituting willful misconduct or gross negligence on the part ofthe Issuing Lender.

 

3.             CONDITIONS

 

3.1           ConditionsPrecedent to the Availability of the Facility.  The obligation of the Lenders to make theFacility available to the Borrower to make the initial Advance or the issuanceof any Letter of Credit on the Closing Date under this Agreement shall be expresslysubject to the following conditions precedent:

 

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(a)           Authority.  The Facility Agent shall have received thefollowing documents in form and substance satisfactory to the Facility Agentand its legal advisers no later than the Drawdown Date of the initial Advance:

 

(i)            copies,certified as true and complete by an officer of each of the Security Parties,of the resolutions of its board of directors and, with respect to the Borrowerand the Vessel-Owning Guarantors, and, if necessary, shareholders evidencingapproval of the Transaction Documents to which each is a party and authorizingan appropriate officer or officers or attorney-in-fact or attorneys-in-fact toexecute the same on its behalf;

 

(ii)           copies,certified as true and complete by an officer of each of the Security Parties,of all documents evidencing any other necessary action, approvals or consentswith respect to the Transaction Documents to which each is a party and thetransactions contemplated hereby and thereby;

 

(iii)          copies, certified as true and complete by anofficer of each of the Security Parties, of the constitutional documents ofeach Security Party and all amendments thereto;

 

(iv)          certificateof the jurisdiction or formation, as the case may be, of each Security Party asto the good standing thereof; and

 

(v)           acertificate signed by an authorized officer of each of the Security Parties tothe effect that (A) no Default or Event of Default shall have occurred andbe continuing, (B) the representations and warranties of such SecurityParty contained in this Agreement are true and correct as of the Drawdown Dateof the Initial Advance, except for such representations and warranties thatrelate to a specific earlier date and (C) sets out specimen signatures forthe officers who are authorized to be signatories to this Agreement or any ofthe other Transaction Documents or any documents related thereto.

 

(b)           This Agreement.  Each of the Security Parties shall have dulyexecuted and delivered this Agreement to the Facility Agent.

 

(c)           The Note.  The Borrower shall have duly executed anddelivered the Note to the Facility Agent.

 

(d)           Fees.  The Creditors shall have received payment infull of all other fees and expenses due to each thereof pursuant to the termshereof on the date when due including, without limitation, all fees andexpenses due under the Fee Letters and Sections 13.1 and 13.2.

 

(e)           Environmental Claims.  The Lenders shall be satisfied that none ofthe Security Parties is subject to any Environmental Claim which couldreasonably be expected to result in a Material Adverse Change.

 

(f)            Legal Opinions.  The Facility Agent shall have receivedopinions addressed to the Agents and the Lenders from James I. Edelson, Esq.,general counsel to OSG

 

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and Seward &Kissel LLP, special counsel to the Facility Agent, in such form as the FacilityAgent may agree, as well as such other legal opinions as the Lenders shall havereasonably required as to all or any matters under the laws of the State ofDelaware, the United States of America and the State of New York covering theconditions and representations and warranties which are the subjects ofSections 3 and 8, respectively.

 

(g)           RegistrationStatement.  The Facility Agent shallhave received a copy of the Registration Statement and the RegistrationStatement shall have been declared “effective” by the Securities and ExchangeCommission.

 

(h)           Vessel Documents.  The Facility Agent shall have receivedevidence satisfactory to it and its counsel that each Vessel (other than Hull8015 and Hull 8016):

 

(i)            isregistered in the name of the relevant Vessel-Owning Guarantor as set forth inSchedule III under the United States flag, free of all liens and encumbrancesof record other than the Mortgage and the other Permitted Liens, which Mortgageshall have been submitted to the NationalVessel Documentation Center for recordation on or prior to the Closing Date;

 

(ii)           isinsured in accordance with the provisions of its Mortgage and all requirementsof its Mortgage in respect of such insurance have been fulfilled (including,but not limited to, letters of undertaking from the insurance brokers,including confirmation notices of assignment, notices of cancellation and losspayable clauses acceptable to the Facility Agent);

 

(iii)          is classed in the highest classification andrating for vessels of the same age and type with its Classification Societywithout any material outstanding recommendations; and

 

(iv)          thetechnical and/or operational management for each Vessel is being provided byOSG Ship Management.

 

(i)            Security Documents.  Each of the Vessel-Owning Guarantors shallhave executed and delivered to the Security Trustee:

 

(i)            theMortgage on the Vessel owned thereby, except for Hull 8015 and Hull 8016 whichMortgages shall be executed and delivered upon delivery of the respectiveVessel to the relevant Vessel-Owning Guarantor, which shall have been recordedin accordance with the laws of the United States of America so as to constitutea first preferred mortgage lien under United States law;

 

(ii)           theInsurances Assignment in respect of the Vessel owned thereby, except for Hull8015 and Hull 8016 which Insurances Assignment shall be executed and deliveredupon delivery of the respective Vessel to the relevant Vessel-Owning Guarantor;

 

(iii)          the Earnings Assignment in respect of theVessel owned thereby, except for Hull 8015 and Hull 8016 which EarningsAssignment shall be executed

 

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and delivered upon delivery of the respective Vessel to the relevantVessel-Owning Guarantor;

 

(iv)          theAssignment of Shipbuilding Contracts in respect of the Hull 8015 and Hull 8016Shipbuilding Contracts;

 

(v)           theAssignment Notices with respect to the Vessel owned thereby; and

 

(vi)          suchUniform Commercial Code Financing Statements (Forms UCC-1) as the SecurityTrustee shall require.

 

(j)            IAPPC, ISM and ISPSCode.  The Facility Agent shall havereceived a copy of the DOC, SMC, ISSC and IAPPC for each Vessel.

 

(k)           Know Your CustomerInformation.  The Lenders shall havereceived such documentation and other evidence requested by any Lender in orderfor such Lender to carry out and be satisfied with the results of all necessary“know your customer” or other checks it is required to carry out in connectionwith the transactions contemplated by this Agreement, the Note and the SecurityDocuments.

 

(l)            Vessel Appraisals.  The Facility Agent shall have receivedvaluations of the Fair Market Value of each Vessel.

 

(m)          Loan to Value Ratio.  As of the Closing Date, the ratio of theFacility to the value of the Vessels, based on the fleet valuations deliveredpursuant to Section 3.1(m), shall be no more than .65 to 1.00.

 

3.2           FurtherConditions Precedent.  On eachDrawdown Date, the obligation of the Lenders to make any Advance available tothe Borrower or issue any Letter of Credit on behalf of the Borrower shall beexpressly conditional upon:

 

(a)           Drawdown Notice;Letter of Credit Request.  TheFacility Agent having received a Drawdown Notice in accordance with the termsof Section 2.5 or a Letter of Credit Request in accordance with the termsof Section 2.11, as applicable.

 

(b)           Representations andWarranties.  The representations statedin Section 8 being true and correct as if made on that date except forsuch representations and warranties that relate to a specific earlier date.

 

(c)           No Default.  No Default or Event of Default havingoccurred and be continuing or resulting from the making of an Advance.

 

(d)           No Material AdverseChange.  There being no MaterialAdverse Change since October 29, 2007.

 

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(e)           NYSE Listing; IPOProceeds.  The Parent being listed onthe New York Stock Exchange and following the consummation of the IPO theParent shall receive gross proceeds from its IPO in an amount equal to orgreater than $100,000,000.

 

(f)            MaritimeAdministration Approval.  LuxmarTanker, LLC and Maremar Tanker LLC having obtained, within thirty (30) days ofthe date hereof, pre-approval from the United States Maritime Administration,in form and substance satisfactory to the Administrative Agent, for thepossible transfer of its respective Vessel upon the exercise of the SecurityTrustee’s rights under the respective Mortgage to a party not qualified to ownand document a vessel under United States flag and/or the re-documentation ofsuch Vessel under foreign flag.

 

3.3           BreakfundingCosts.  In the event that, on thedate specified for the making of the Advance in the Drawdown Notice, theLenders shall not be obliged under this Agreement to make such Advanceavailable under this Agreement, the Borrower shall indemnify and hold theLenders fully harmless against any losses which the Lenders (or any thereof)may sustain as a result of borrowing or agreeing to borrow funds to meet thedrawdown requirement of such Drawdown Notice and the certificate of therelevant Lender or Lenders shall, absent manifest error, be conclusive andbinding on the Borrower as to the extent of any such losses.

 

3.4           Satisfactionafter Drawdown.  Without prejudice toany of the other terms and conditions of this Agreement, in the event all ofthe Lenders elect, in their sole discretion, to make an Advance prior to the satisfactionof all or any of the conditions referred to in Sections 3.1 and 3.2, theBorrower hereby covenants and undertakes to satisfy or procure the satisfactionof such condition or conditions within seven (7) days after theDrawdown Date (or such longer period as the Majority Lenders, in their solediscretion, may agree).

 

4.             REPAYMENT ANDPREPAYMENT

 

4.1           MandatoryRepayment.  (a)  All amountsoutstanding on the Payment Date shall be repaid in full on the Payment Date.

 

(b)           If less than all of theLenders agree to extend their Commitment and the Commitments of theNon-Extending Lenders are not assumed by another Lender or assignee, anyamounts outstanding in excess of the Revised Facility Amount shall be repaid onthe Initial Payment Date.

 

(c)           The Facility Amount orRevised Facility Amount, as applicable, will be reduced (including, ifnecessary, by the repayment of outstanding Advances) upon any of the Vesselsbeing sold, lost or declared an actual or constructive total loss in an amountequal to the then total Facility Amount or Revised Facility Amount, multipliedby a fraction, the numerator of which is the most recent Fair Market Value ofsuch Vessel in the most recent appraisal delivered to the Facility Agent andthe denominator of which is the aggregate of the Fair Market Value in the mostrecent appraisal delivered to the Facility Agent of all Vessels.  In the event of any such sale or total lossand in lieu of prepaying the Facility or a part thereof, the Borrower maysubstitute a Vessel with a vessel acceptable to the Lenders in their solediscretion pursuant to Section 9.3. Notwithstanding the foregoing, the parties hereto agree that norepayment shall be required pursuant to this Section 4.1(c) inconnection with the replacement of the

 

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SEAFARER and FREEDOM withHull 8015 and 8016, which replacements shall not require consent of the Lendersor any of them.

 

(d)           If at any time theaggregate amount outstanding under the Facility exceeds the Facility Amount orRevised Facility Amount, as applicable, an immediate repayment will be requiredequal to such excess.

 

4.2           VoluntaryPrepayment.  The Borrower may, at its option, upon three (3) BankingDays written notice, prepay any outstanding Advance or any portion of theFacility Balance, without penalty, provided that if such prepayment is made ona day other than the last day of the Interest Period of such Advance theBorrower shall compensate the Lenders and Participants or any thereof for anyloss, cost or expense incurred by them as a result of a prepayment made on anyday other than the last day of an Interest Period.  Each prepayment shall be in a minimum amountof Five Million Dollars ($5,000,000) plus any One Million Dollar ($1,000,000)multiple thereof or the full amount of the then outstanding Advances.  Subject to the limits and upon the conditionsherein provided (including the reductions of the Commitments provided in Section 4.3),the Borrower may from time to time prepay the Advances and thereafter re-borrowsuch Advances or a portion thereof.

 

4.3           OptionalPermanent Reduction of Facility.  TheBorrower shall have the right, at any time and from time to time, to, withoutpenalty, permanently reduce the Facility, provided that the Facility Agentreceives five (5) business days prior written notice of such reduction andthe Lenders are reimbursed for any breakage costs as provided in Section 12.6with respect to any Advances, or portions thereof, that are prepaid on any dayother than the last day of the applicable Interest Period(s) in the eventthat such prepayment is necessary to reduce the Facility Balance so that theaggregate amount of the Advances outstanding do not exceed the amount availableunder the Facility after giving effect to any such permanent reduction in theFacility.  Each such permanent reductionshall be in an integral multiple of One Million Dollars ($1,000,000) with aminimum amount of Five Million Dollars ($5,000,000).  Amounts permanently reduced cannot bereinstated and are not available for re-borrowing.

 

4.4           Borrower’sObligations Absolute.  The Borrower’sobligations to pay each Creditor hereunder and under the Note shall beabsolute, unconditional and irrevocable, and shall be paid strictly inaccordance with the terms hereof and thereof, under any and all circumstancesand irrespective of any setoff, counterclaim or defense to payment which theBorrowers or any of them may have or have had against the Creditors.

 

5.             INTEREST AND RATE

 

5.1           Paymentof Interest; Interest Rate.  (a) TheBorrower hereby agrees to pay to the Lenders as primary obligor interest on theunpaid principal amount of each Advance for the period commencing on theDrawdown Date of such Advance or if such Advance is a deemed Advance pursuantto Section 2.13 the date of the relevant drawing under the Letter ofCredit until but not including the stated maturity thereof (whether byacceleration or otherwise) or the date of prepayment thereof at the ApplicableRate which shall be the rate per annum which is equal to the aggregate of (i) theLIBOR Rate for the relevant Interest Period plus (ii)

 

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the Margin plus (iii) Mandatory Costs.  The Applicable Rate with respect to theAdvance shall be determined by the Facility Agent at or about 11:00 A.M.New York time two (2) Banking Days prior to the first day of the relevantInterest Period.  The Facility Agentshall promptly notify the Borrower and the Lenders in writing of the ApplicableRate and the duration of each Interest Period as and when determined.  Each such determination, absent demonstrativeerror, shall be conclusive and binding upon the Borrower.

 

(b)           Notwithstanding theforegoing, the Borrower hereby agrees that after the occurrence and during thecontinuance of an Event of Default, the Facility Balance shall bear interest ata rate per annum equal to the Default Rate. In addition, after the occurrence and during the continuance of an Eventof Default, the Borrower hereby promise to pay interest on the Facility Balanceor any installment thereof and (to the extent that the payment of such interestshall be legally enforceable) on any overdue installment of interest, and onany other amount payable by the Borrower hereunder which shall not be paid in fullwhen due (whether at stated maturity, by acceleration or otherwise), for theperiod commencing on the due date thereof until but not including the date thesame is paid in full at the Default Rate.

 

(c)           Except as provided inthe next sentence, accrued interest shall be payable on the last day of eachInterest Period, provided, however, that if the Borrower shall select anInterest Period which is longer than three months, interest shall be payablequarterly in arrears.  Interest payable at the Default Rateshall be payable from time to time on demand of the Facility Agent.  No Interest Period shall extend beyond thePayment Date.

 

5.2           Calculationof Interest.  All interest shallaccrue from day-to-day and be calculated on the actual number of days elapsedand on the basis of a three hundred sixty (360) day year.

 

5.3           MaximumInterest.  Anything in this Agreementor the Note to the contrary notwithstanding, the interest rate on any Advanceshall in no event be in excess of the maximum rate permitted by Applicable Law.

 

5.4           InterestElections.  (a) On the last dayof each Interest Period, with respect to any Advance, the Borrower may elect tocontinue such Advance for one or more new Interest Periods as provided in this Section 5.

 

(b)           To make an election pursuantto this Section 5, the Borrower shall notify the Facility Agent of suchelection in writing by hand delivery or facsimile no later than 11:00 A.M.New York time at least three (3) Banking Days prior to the expiration ofthe then current Interest Period relating to such Advance (each an “InterestElection Request”). Each Interest Election Request shall be irrevocable and ina form approved by the Facility Agent and signed by the Borrower.

 

(c)           Each written InterestElection Request shall specify the following information:

 

(i)            theAdvance to which such Interest Election Request applies and, if differentoptions are being elected with respect to different portions thereof, theportions thereof to be allocated to each resulting Advance;

 

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(ii)           theeffective date of the election made pursuant to such Interest Election Request,which shall be a Banking Day; and

 

(iii)          the Interest Period to be applicable theretoafter giving effect to such election, which shall be a period contemplated bythe definition of Interest Period. If the Borrower does not request an InterestPeriod, it shall be deemed to have selected an Interest Period of one month’sduration.

 

(d)           Promptly followingreceipt of an Interest Election Request, the Facility Agent shall advise eachLender of the details thereof and of such Lender’s portion of each resultingAdvance.

 

(e)           If the Borrower failsto deliver a timely Interest Election Request on or prior to the date that isthree (3) Banking Days prior to the end of the Interest Period applicablethereto, then, such Advance shall be repaid on the last day of such InterestPeriod as provided herein.

 

6.             PAYMENTS

 

6.1           Placeof Payments; No Set Off.  Allpayments to be made hereunder by the Borrower shall be made in Dollars on thedue dates of such payments to the account of the Facility Agent at JPMorganChase Bank, New York, BIC Code CHASUS33 (ABA No. 021 000 021), for theAccount of ING Bank, London Branch, BIC Code INGBGB2L, Account No. 001 1 938123 (Ref: OSG attn Loans Agency) for distribution to the Lenders or to suchother account of the Facility Agent as the Facility Agent may direct, withoutset-off or counterclaim and free from, clear of and without deduction for, anyIndemnified Taxes or Other Taxes; provided, however, that if theBorrower shall at any time be compelled by law to withhold or deduct anyIndemnified Taxes or Other Taxes from any amounts payable to the Facility Agentfor the account of the Lenders or the other Creditors hereunder, then, theBorrower shall pay such additional amounts as may be necessary in order thatthe net amounts received after withholding or deduction shall equal the amountswhich would have been received if such withholding or deduction were not requiredand, in the event any withholding or deduction is made.  For any Indemnified Taxes or Other Taxes, theBorrower shall promptly send to the Facility Agent any documentary evidencethey have with respect to such withholding or deduction.  No Lender shall change its lending office ifsuch change would result in the Borrower being compelled by law to withhold ordeduct any Indemnified Taxes or Other Taxes from any amounts payable to theFacility Agent for the account of the Lenders or the other Creditors hereunder.

 

6.2           FederalIncome Tax Credits.  (a) If anyLender obtains the benefit of a credit against its liability for federal incometaxes imposed by the United States of America, or any income taxes imposed byanother jurisdiction, for all or part of the Taxes as to which the Borrower haspaid additional amounts as aforesaid then such Lender shall reimburse theBorrower for the amount of the credit so obtained; (b) each of the Lendersthat is a United States Person (as such term is defined in Section 7701(a)(3) ofthe Code) shall, on or prior to the making of the Initial Advance (and in thecase of an assignee, on or prior to the effective date of the relevantassignment) and from time to time thereafter when required by applicableprovisions

 

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of the Code, provide the Borrower with two dulycompleted copies of Internal Revenue Service Form W-9, as appropriate, orany successor for prescribed by the Internal Revenue Service, certifying thatthe Lender is not subject to backup withholding, (c) each of the Lendersthat is not a United States Person (as such term is defined in Section 7701(a)(30)of the Code) shall, on or prior to the making of the Initial Advance (and inthe case of an assignee, on or prior to the effective date of the relevantassignment) and from time to time thereafter when required by applicableprovisions of the Code, provide the Borrower with two duly completed copies ofInternal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successorform prescribed by the Internal Revenue Service, certifying that such Lender isentitled to benefits under an income tax treaty to which the United States ofAmerica is a party that exempts withholding tax on payments under thisAgreement or the other Transaction Documents or certifying that the incomereceivable by it pursuant to this Agreement or the other Transaction Documentsis effectively connected with the conduct of a trade or business in the UnitedStates of America; (d) each of the Lenders that is not a United StatesPerson (as such term is defined in Section 7701(a)(3) of the Code)and is claiming the benefits of the exemption for portfolio interest under Section 881(c) ofthe Code shall, on or prior to the making of the Initial Advance (and in thecase of an assignee, on or prior to the effective date of the relevantassignment) and from time to time thereafter when required by applicableprovisions of the Code, provide (x) a certificate to the effect that theLender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) ofthe Code, (B) a “10 percent shareholder” within the meaning of Section 881(c)(3)(B) ofthe Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) ofthe Code and (y) two duly completed copies of Internal Revenue Service Form W-8BEN.(e) for any period with respect to which a Lender that is not a UnitedStates Person has failed to provide the Borrower with the appropriate formsdescribed in clause (c) or (d) above (other than if such failure isdue to a change in law occurring after the date on which such person wasoriginally required to provide such forms, or if such forms are otherwise notrequired under clause (c) or (d) above), such Lender shall not beentitled to payment of additional amounts under Section 6.1 with respectto Taxes imposed by the United States of America; provided, however,that should a Lender become subject to Taxes because of its failure to delivera form required hereunder, the Borrower at such Lender’s expense shall takesuch steps as such Lender shall reasonably request to assist such Lender torecover such Taxes.

 

7.             GUARANTEE

 

7.1           TheGuarantee.  The Guarantors herebyjointly and severally guarantee to each of the Creditors and their respectivesuccessors and assigns the prompt payment in full when due (whether at statedmaturity, by acceleration or otherwise)of the principal of and interest on the Advances (including, but not limitedto, any payment or disbursement made by the Issuing Lender under anyLetter of Credit which has been deemed an Advance pursuant to Section 2.13)made by the Lenders to the Borrower,and to the extent not deemed an Advance hereunder, all reimbursementobligations in respect of drawings made under outstanding Letters of Creditissued by the Issuing Lender on behalf of any Security Party and allother amounts from time to time owing to the Creditors by any Security Partyunder this Agreement, under the Note, under any of the Security Documents andunder any Interest Rate Agreement, in each case strictly in accordance with theterms thereof (such obligations being herein collectively called the “GuaranteedObligations”).  The Guarantors hereby

 

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further jointly and severally agree that if the anySecurity Party shall fail to pay in full when due (whether at stated maturity,by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantorswill promptly pay the same, on first demand, and that in the case of anyextension of time of payment or renewal of any of the Guaranteed Obligations,the same will be promptly paid in full when due (whether at extended maturity,by acceleration or otherwise) in accordance with the terms of such extension orrenewal.

 

7.2           ObligationsUnconditional.  The obligations ofthe Guarantors under Section 7.1 are joint and several, absolute,unconditional and irrevocable, irrespective of the value, genuineness,validity, regularity or enforceability of the obligation of the Borrower underthis Agreement, the Note or any other agreement or instrument referred toherein or therein, or any substitution, release or exchange of any otherguarantee of, or security for, any of the Guaranteed Obligations, and, to thefullest extent permitted by applicable law, irrespective of any othercircumstance whatsoever that might otherwise constitute a legal or equitabledischarge or defense of a surety or guarantor, it being the intent of this Section 7.2that the obligations of the Guarantors hereunder shall be joint and several,absolute, unconditional and irrevocable, under any and all circumstances.  Without limiting the generality of theforegoing, it is agreed that the occurrence of any one or more of the followingshall not alter or impair the liability of the Guarantors hereunder, whichshall remain absolute, unconditional and irrevocable as described above:

 

(a)           at any time or fromtime to time, without notice to the Guarantors, the time for any performance ofor compliance with any of the Guaranteed Obligations shall be extended, or suchperformance or compliance shall be waived;

 

(b)           any of the actsmentioned in any of the provisions of this Agreement, the Note or any otheragreement or instrument referred to herein or therein shall be done or omitted;

 

(c)           the maturity of any ofthe Guaranteed Obligations shall be accelerated, or any of the GuaranteedObligations shall be modified, supplemented or amended in any respect, or anyright under this Agreement, the Note or any other agreement or instrumentreferred to herein or therein shall be waived or any other guarantee of any ofthe Guaranteed Obligations or any security therefore shall be released orexchanged, in whole or in part, or otherwise dealt with; or

 

(d)           any lien or securityinterest granted to, or in favor of, the Facility Agent or any Lender orLenders as security for any of the Guaranteed Obligations shall fail to beperfected.

 

The Guarantorshereby expressly waive diligence, presentment, demand of payment, protest andany notice not provided for herein, and any requirement that the Facility Agentor any Lender exhaust any right, power or remedy or proceed against theBorrower under this Agreement, the Note or any other agreement or instrumentreferred to herein or therein, or against any other Person under any otherguarantee of, or security for, any of the Guaranteed Obligations.

 

7.3           Reinstatement.  The obligations of the Guarantors under this Section 7shall be automatically reinstated if and to the extent that for any reason anypayment by or on behalf

 

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of the Borrower in respect of the GuaranteedObligations is rescinded or must be otherwise restored by any holder of any ofthe Guaranteed Obligations, whether or not as a result of any proceedings, andthe Guarantors jointly and severally agree that they will indemnify eachCreditor on demand for all reasonable costs and expenses (including, withoutlimitation, fees of counsel) incurred by such Creditor in connection with suchrescission or restoration, including any such costs and expenses incurred indefending against any claim alleging that such payment constituted apreference, fraudulent transfer or similar payment under any bankruptcy,insolvency or similar law.

 

7.4           Subrogation.  Each Guarantor hereby irrevocably waives, butonly until all Guaranteed Obligations payable hereunder by the Guarantors tothe Creditors (or any of the them) have been paid in full, any and all rightsto which any of them may be entitled, by operation of law or otherwise, uponmaking any payment hereunder to be subrogated to the rights of the payeeagainst the Borrower with respect to such payment or otherwise to bereimbursed, indemnified or exonerated by the Borrower in respect thereof.

 

7.5           Subordination.  The Guarantors jointly and severally agreethat, so long as the Borrower remains under any actual or contingent liabilityunder this Agreement, the Note, the Security Documents and any Interest RateAgreement other than any Contingent Obligations for which no demand has been oris reasonably expected to be made, any rights which any Guarantor may have atany time by reason of the performance by such Guarantor of the GuaranteedObligations to take the benefit (in whole or in part) of any security takenpursuant to this Agreement, any of the Security Documents or any Interest RateAgreement shall be subject and subordinate to the rights of the Creditorshereunder and shall be exercised by such Guarantor in such manner and upon suchterms as the Creditors may require and further agree to hold any monies at anytime received by such Guarantor as a result of the exercise of any such rightsor otherwise for and on behalf of the Creditors for application in or towardspayment of any sums at any time owed by the Borrower under this Agreement, theSecurity Documents or any Interest Rate Agreement.

 

7.6           Remedies.  The Guarantors jointly and severally agreethat, as between the Guarantors and the Lenders, the obligations of theBorrower under this Agreement and the Note may be declared to be forthwith dueand payable as provided in Section 10 (and shall be deemed to have becomeautomatically due and payable in the circumstances provided in said Section 10)for purposes of Section 7.1 notwithstanding any stay, injunction or otherprohibition preventing such declaration (or such obligations from becomingautomatically due and payable) as against the Borrower and that, in the eventof such declaration (or such obligations being deemed to have becomeautomatically due and payable), such obligations (whether or not due andpayable by the Borrower) shall forthwith become due and payable by theGuarantors for purposes of Section 7.1.

 

7.7           Instrumentfor the Payment of Money.  Each ofthe Guarantors hereby acknowledges that the guarantee in this Section 7constitutes an instrument for the payment of money, and consents and agreesthat any Creditor, at such Creditor’s sole option, in the event of a dispute bysuch Guarantor in the payment of any moneys due hereunder, shall have the rightto bring motion-action under New York CPLR Section 3213.

 

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7.8           ContinuingGuarantee.  The guarantee in this Section 7is a continuing guarantee, and shall apply to all Guaranteed Obligationswhenever arising.

 

8.             REPRESENTATIONSAND WARRANTIES

 

In order toinduce the Creditors to enter into this Agreement and to make the Facilityavailable, each of the Security Parties hereby represents and warrants, to theCreditors (which representations and warranties shall survive the execution anddelivery of this Agreement and the other Transaction Documents and eachdrawdown of the Facility) that:

 

(a)           Due Organization andPower.  Each of the Security Partiesis a limited partnership or limited liability company duly formed and isvalidly existing in good standing under the laws of its jurisdiction offormation or, if redomiciled, under the laws of such new domicile and is dulyqualified to do business as a foreign Person in each jurisdiction wherein thenature of the business transacted thereby makes such qualification necessary,except where failure to so qualify would not result in a Material AdverseChange, has full power and authority and, to the best of its knowledge afterdue investigation, all material governmental licenses, authorizations, consentsand approvals required to carry on its business as now being conducted and toown its properties and has full power and authority to enter into and performits obligations under the Transaction Documents to which it is a party, and hascomplied with all statutory, regulatory and other requirements relative to suchbusiness, property and instruments to which it is a party, or to which itsproperty is subject, failures that, either singly or in the aggregate, wouldnot reasonably be expected to result in a Material Adverse Change;

 

(b)           Authorization andConsents.  All necessary limitedpartnership or limited liability company action has been taken to authorize,and all necessary consents and authorities have been obtained and remain infull force and effect to permit, each Security Party to enter into and performits obligations under this Agreement, the Note, the Security Documents and anyInterest Rate Agreement and, in the case of the Borrower, to borrow, serviceand repay the Facility and, as of the date of this Agreement, no furtherconsents or authorities are necessary for the service and repayment of theFacility or any part thereof;

 

(c)           Binding Obligations.  This Agreement, the Note, the SecurityDocuments and, if applicable, the Interest Rate Agreements(s) constituteor will, when executed and delivered, constitute the legal, valid and bindingobligations of each Security Party as is a party thereto enforceable againstsuch Security Party in accordance with their respective terms, except to theextent that such enforcement may be limited by equitable principles, principlesof public policy or applicable bankruptcy, insolvency, reorganization,moratorium or other laws affecting generally the enforcement of creditors’ rights;

 

(d)           No Violation.  The execution and delivery of, and theperformance of the provisions of, this Agreement, the Note and those of theSecurity Documents and any Interest Rate Agreement to which it is to be a partyby each Security Party do not contravene, in any material respect, anyApplicable Law or regulation existing at the date hereof or any contractualrestriction binding on such Security Party or the certificate of limitedpartnership, certificate of formation or limited partnership agreement (orequivalent instruments) thereof;

 

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(e)           Filings; Stamp Taxes.  Otherthan the recording of the Mortgages in the National Vessel Documentation Centerand the filing of Uniform Commercial Code Financing Statements in the State ofDelaware in respect of the Assignments, and the payment and filing or recordingfees consequent thereto, it is not necessary for the legality, validity,enforceability or admissibility into evidence of this Agreement, the Notes orthe Security Documents that any of them or any document relating thereto beregistered, filed recorded or enrolled with any court or authority in anyrelevant jurisdiction or that any stamp, registration or similar Taxes be paidon or in relation to this Agreement, the Note or any of the Security Documents;

 

(f)            Approvals; Consents.  As of the date hereof, all consents,licenses, approvals and authorizations required, whether by statute orotherwise, in connection with the entry into and performance by the SecurityParties, and the validity and enforceability against the Security Parties, ofthis Agreement, the Note, the Security Documents and, if applicable, theInterest Rate Agreement(s) have been obtained and are in full force andeffect;

 

(g)           Litigation.  As of the date hereof, no action, suit orproceeding is pending or threatened against any Security Party or anysubsidiary thereof before any court, board of arbitration or administrativeagency which would be reasonably likely to result in any Material AdverseChange;

 

(h)           No Default.  As of the date hereof, no Security Party orany subsidiary thereof is in default under any material agreement by which itis bound which default might lead to a Material Adverse Change, or is indefault of any Material Financial Obligation;

 

(i)            ERISA.  The execution and delivery of this Agreementand the consummation of the transactions hereunder will not involve anyprohibited transaction within the meaning of ERISA or Section 4975 of theCode and no condition exists or event or transaction has occurred in connectionwith any Plan maintained or contributed to by any member of the ERISA Group orany ERISA Affiliate resulting from the failure of any thereof to comply withERISA which is reasonably likely to result in any member of the ERISA Group orany ERISA Affiliate incurring any liability, fine or penalty which individuallyor in the aggregate could result in a Material Adverse Change. No member of theERISA Group nor any ERISA Affiliate, individually or collectively, hasincurred, or reasonably expects to incur, Withdrawal Liabilities or liabilitiesupon the happening of a Termination Event. With respect to any Multiemployer Plan, Multiple Employer Plan or Plan,to the knowledge of the Borrower, no member of the ERISA Group nor any ERISAAffiliate is aware of or has been notified that any “variance” from the “minimumfunding standard” has been requested (each such term as defined in Part 3,Subtitle B, of Title 1 of ERISA). To the knowledge of the Borrower, no member of the ERISA Group nor anyERISA Affiliate has received any notice that any Multiemployer Plan is inreorganization, within the meaning of Title IV of ERISA, whichreorganization could result in a Material Adverse Change;

 

(j)            Vessels.  Upon the Initial Advance and, after thedelivery of Hull 8015 or Hull 8016, as applicable, upon each Advancethereafter, each Vessel:

 

(i)            willbe in the sole and absolute ownership of the relevant Vessel-Owning Guarantorand duly registered in such Vessel-Owning Guarantor’s name

 

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under United States flag unencumbered, save and except for the Mortgagewith respect thereto and as permitted thereby;

 

(ii)           willbe classed in the highest classification and rating for vessels of the same ageand type with its Classification Society without any material outstandingrecommendations;

 

(iii)          will be operationally seaworthy and in everyway fit for its existing and intended service;

 

(iv)          willbe insured in accordance with the provisions of the Mortgage thereon and therequirements thereof in respect of such insurances will have been compliedwith; and

 

(v)           willcomply with all relevant laws, regulations and requirements (includingenvironmental laws, regulations and requirements), statutory or otherwise, asare applicable to (A) vessels documented under United States flag and (B) vesselsengaged in a trade similar to that performed or to be performed by the Vessel,except where the failure to so comply would not materially and adversely affectthe operation of such Vessel in its existing or intended trade or the financialcondition of any Security Party.

 

(k)           Tax Returns andPayments.  The Borrower and theSubsidiaries have filed all Tax returns required to be filed by them and havepaid all material Taxes payable by them which have become due, other than thosenot yet delinquent and except for those Taxes being contested in good faith andby appropriate proceedings or other acts and for which adequate reserves asdetermined in accordance with GAAP shall have been set aside on its books;

 

(l)            Chief ExecutiveOffice.  The chief executive officeand chief place of business of the Borrower is located at c/o OSG America L.P.,Two Harbour Place, 302 Knights Run Avenue, Suite 1200, Tampa, Florida33602.  The offices in which the recordsrelating to the earnings and other receivables for the Vessels are kept is thatof (i) the Borrower at Two Harbour Place, 302 Knights Run Avenue, Suite 1200,Tampa, Florida 33602 and (ii) OSG Ship Management at 666 Third Avenue, NewYork, New York 10017;

 

(m)          Insurance.  Each of the Security Parties and theSubsidiaries has insured its properties and assets against such risks and insuch amounts as are customary for companies engaged in similar businesses.

 

(n)           Foreign TradeControl Regulations.  None of thetransactions contemplated herein will violate any of the provisions of theForeign Assets Control Regulations of the United States of America(Title 31, Code of Federal Regulations, Chapter V, Part 500, asamended), any of the provisions of the Cuban Assets Control Regulations of theUnited States of America (Title 31, Code of Federal Regulations,Chapter V, Part 515, as amended), any of the provisions of theIranian Transaction Regulations of the United States of America (Title 31, Codeof Federal Regulations, Chapter V, Part 560, as amended) or any of theprovisions of the Regulations of the United States of America GoverningTransactions in Foreign Shipping of Merchandise (Title 31, Code of FederalRegulations, Chapter V, Part 505, as amended);

 

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(o)           Investment CompanyAct.  Neither the Parent nor any of the Subsidiaries is an “investmentcompany” or an “affiliated person” of, or a “promoter” or “principal underwriter”for or a company “controlled” by an “investment company” as such terms aredefined in the Investment Company Act of 1940, as amended; neither the makingof an Advance nor the application of the proceeds or repayment thereof by theBorrower, nor the consummation of the other transactions contemplated hereby,will violate any provision of such act or any rule, regulation or order of theSecurities and Exchange Commission thereunder;

 

(p)           Equity Ownership.  The Borrower is a wholly-owned subsidiary ofthe Parent and each of theVessel-Owning Guarantors is a wholly-owned subsidiary of the Borrower.  As of the date hereof, other than aspreviously disclosed to the Facility Agent, including the information disclosedin the immediately preceding sentence, on each Drawdown Date, the Borrower doesnot own any shares of capital stock, limited liability company interest,partnership interest or any other direct or indirect equity interest in anycorporation, limited liability company, partnership or other entity;

 

(q)           EnvironmentalMatters and Claims.  (A) Each ofthe Security Parties and each Subsidiary, when required, will be in compliancewith all applicable United States federal and state, local, foreign andinternational laws, regulations, conventions and agreements relating topollution, pollution prevention or protection of human health or theenvironment (including, without limitation, ambient air, surface water, groundwater, navigable waters, waters of the contiguous zone, ocean waters andinternational waters), including, without limitation, laws, regulations,conventions and agreements relating to (1) emissions, discharges, releasesor threatened releases of chemicals, pollutants, contaminants, wastes, toxicsubstances, hazardous materials, oil, hazardous substances, petroleum andpetroleum products and by-products (“Materials of Environmental Concern”),or (2) the manufacture, processing, distribution, use, treatment, storage,disposal, transport or handling of Materials of Environmental Concern (“EnvironmentalLaws”) (except as to all of the above, where the failure to do so would notbe reasonably likely to result in a Material Adverse Change); (B) each ofthe Security Parties and each Subsidiary will, when required, have all permits,licenses, approvals, rulings, variances, exemptions, clearances, consents orother authorizations required under applicable Environmental Laws (“EnvironmentalApprovals”) and will, when required, be in compliance with allEnvironmental Approvals required to operate their respective businesses as thenbeing conducted (except where the failure to comply with, obtain or renew suchpermits, licenses, rulings, variances, exemptions, clearances, consents orother authorizations would not be reasonably likely to result in a MaterialAdverse Change); (C) none of the Security Parties nor any Subsidiary hasreceived any notice of any claim, action, cause of action, investigation ordemand by any Person, entity, enterprise or government, or any politicalsubdivision, intergovernmental body or agency, department or instrumentalitythereof, alleging potential liability which would be reasonably likely toresult in a Material Adverse Change or a requirement to incur investigatorycosts, cleanup costs, response and/or remedial costs (whether incurred by agovernmental entity or otherwise), natural resources damages, property damages,personal injuries, attorneys’ fees and expenses, or fines or penalties whichwould be reasonably likely to result in a Material Adverse Change, in each casearising out of, based on or resulting from (1) the presence, or release,or threat of release, of any Materials of Environmental Concern at anylocation, whether or not owned by such person, or (2) circumstancesforming the basis of any violation, or alleged violation, of any EnvironmentalLaw or Environmental Approval

 

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(“Environmental Claim”)(other than Environmental Claims that have been fully and finally adjudicatedor otherwise determined and all fines, penalties and other costs (includingpermitted deductibles), if any, payable by any of the Security Parties or anyof the Subsidiaries in respect thereof have been paid in full or which arefully covered by insurance); (D) to the best of the Borrowers’ knowledge,after due investigation, there are no circumstances that would be reasonablylikely to prevent or interfere with such full compliance in the future; and (E) thereis no Environmental Claim pending or, to the best of the Borrower’s knowledge,threatened against the Parent or any Subsidiary and to the best of the Borrower’sknowledge, there are no past or present actions, activities, circumstances,conditions, events or incidents, including, without limitation, the release,emission, discharge or disposal of any Materials of Environmental Concern, thatcould reasonably be expected to form the basis of any Environmental Claimagainst such persons the adverse disposition of which could reasonably beexpected to result in a Material Adverse Change;

 

(r)            Compliance with ISMCode, the ISPS Code, the MTSA and Annex VI. Each of the Vessels and OSG Ship Management complies with therequirements of the ISM Code, the ISPS Code, the MTSA and Annex VI, including(but not limited to) the maintenance and renewal of valid certificates pursuantthereto;

 

(s)           ThreatenedWithdrawal of DOC, SMC, ISSC or IAPPC. There is no threatened or actual withdrawal of OSG Ship Management’s DOCor SMC or of the ISSC or IAPPC in respect of the Vessels or other certificationof documentation related to the ISM Code, Annex VI or otherwise required forthe operation of the Vessels;

 

(t)            Liens.  There are no liens of any kind on anyproperty owned by the Borrower or Guarantors other than those liens createdpursuant to this Agreement or the Security Documents or other than PermittedLiens;

 

(u)           Indebtedness.  The Borrower does not have any FundedIndebtedness except to the Lenders or as listed in Schedule VI;

 

(v)           No Material AdverseChange.  Since October 29, 2007with respect to any of the Security Parties, there has been no Material AdverseChange;

 

(w)          No Proceedings toDissolve.  There are no proceedingsor actions pending or contemplated by the Borrower or, to the best of theBorrower’s knowledge, contemplated by any third party, to dissolve or terminatethe Borrower;

 

(x)            Compliance withLaws.  The Borrower is in compliancewith all Applicable Laws, except where any failure to comply with any suchApplicable Laws would not, alone or in the aggregate, result in a MaterialAdverse Change; and

 

(y)           Survival.  All representations, covenants and warrantiesmade herein and in any certificate or other document delivered pursuant heretoor in connection herewith shall survive the making of the Facility or anyportion thereof and the issuance of the Note.

 

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9.             COVENANTS

 

9.1           AffirmativeCovenants.  Each of the SecurityParties jointly and severally hereby covenants and undertakes with each of theLenders that, from the date hereof and so long as the Commitments are in effector any principal, interest or other moneys are owing in respect of the Facilityor otherwise owing under this Agreement, the Note or any Security Document:

 

(A)          Each of the SecurityParties will:

 

(a)           Performance ofAgreements.  Duly perform and observethe terms of this Agreement and the other Transaction Documents to which it isa party;

 

(b)           Notice of Default.  Inform the Facility Agent (which shallpromptly, and in any event within three (3) Banking Days, notify theLenders) of the occurrence of (i) any Default or Event of Default, (ii) anylitigation or governmental proceeding pending or threatened against anySecurity Party which in any manner draws into question the validity orenforceability of this Agreement, the Note or any Security Document or whichcould reasonably be expected to result in a Material Adverse Change and (iii) anyother event or condition of which it becomes aware which is reasonably likelyto result in a Material Adverse Change, in each case, promptly, and in anyevent within three (3) Banking Days after becoming aware of the occurrencethereof;

 

(c)           Consents.  Without prejudice to Section 8 and this Section 9.1,obtain every consent applicable to it and do all other acts and things whichmay from time to time be necessary for the continued due performance of all itsobligations under this Agreement and under any other Transaction Document;

 

(d)           Preservation ofExistence, Etc.  Except as otherwisepermitted herein, preserve and maintain, and shall cause each of theSubsidiaries to preserve and maintain, its existence, rights (charter andstatutory) and franchises;

 

(e)           Books and Records.  Keep proper books and record in accordancewith GAAP of all transactions relating to the business activities of the SecurityParties made until all obligations under this Agreement have been satisfied infull;

 

(f)            Inspection.  Allow any representative or representativesdesignated by any Lender, at the risk and expense of such Lender and duringnormal business hours, subject to applicable laws and regulations, uponreasonable prior notice to visit and inspect any properties of the SecurityParties or the Subsidiaries, and, on request, to examine the Security Parties’or the Subsidiaries’ books of account, records, reports and other papers (andto make copies thereof and to take extracts therefrom) and to discuss theiraffairs, finances and accounts with the Security Parties’ and the Subsidiaries’officers and executive employees all at such reasonable times and as often as suchLender reasonably requests but in no event more than twice for all the Lendersduring any calendar year except during the continuance of an Event of Defaultin which event there shall be no limit;

 

(g)           Payment ofObligations.  Pay and discharge, orcause to be paid and discharged, or will cause each Subsidiary to pay anddischarge, at or before maturity, all their

 

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respective obligationsand liabilities, including, without limitation, all taxes, assessments andgovernmental charges or levies imposed upon them, the Subsidiaries or theirrespective income or property prior to the date upon which penalties attachthereto which, if not paid, could reasonably be expected to result, eithersingularly or in the aggregate, in a Material Adverse Change; provided, however,that the Security Parties shall not be required to pay and discharge, or causeto be paid and discharged, any such obligation, liability, tax, assessment,charge or levy so long as the legality thereof shall be contested in good faithand by appropriate proceedings and they or the relevant Subsidiary orSubsidiaries shall maintain in accordance with GAAP appropriate reserves withrespect thereto.

 

(h)           Compliance withAgreements, Statutes, etc.  Do orcause to be done all things necessary to comply with all material contracts oragreements to which any of the Security Parties is a party, and all laws andthe rules and regulations thereunder, applicable to the Security Partiesor any of the Subsidiaries or their conduct of their business including,without limitation, those laws, rules and regulations relating to employeebenefit plans and environmental matters except where the failure to do so wouldnot be reasonably likely to result in a Material Adverse Change;

 

(i)            EnvironmentalMatters.  Promptly upon theoccurrence of any of the following conditions, provide to the Facility Agent(which shall promptly furnish a copy thereof to each Lender) a certificate ofan executive officer of Borrower, specifying in detail the nature of suchcondition and its proposed response or the response of its EnvironmentalAffiliates (as hereinafter defined): (i) its receipt or the receipt by anyof the Subsidiaries or any of their Environmental Affiliates of any communicationwhatsoever that alleges that such Person is not in compliance with anyapplicable Environmental Law or Environmental Approval, if such noncompliancecould reasonably be expected to result in a Material Adverse Change, (ii) knowledgeby it, any of the Subsidiaries or any of their Environmental Affiliates thatthere exists any Environmental Claim pending or threatened against any suchPerson, which could reasonably be expected to result in a Material AdverseChange, or (iii) any release, emission, discharge or disposal of anymaterial that could form the basis of any Environmental Claim against it, anyof the Subsidiaries or any of their Environmental Affiliates if suchEnvironmental Claim could reasonably be expected to result in a Material AdverseChange.  Upon the written request by theFacility Agent, the Borrowers will submit to the Lenders at reasonableintervals, a report providing an update of the status of any issue or claimidentified in any notice or certificate required pursuant to this subsection.  For the purposes of this subsection, “EnvironmentalAffiliate” with respect to a Security Party shall mean any Person or entitythe liability of which for Environmental Claims such Security Party may haveassumed by contract or operation of law;

 

(j)            Maintenance ofAssets.  Except as provided herein,maintain and keep, and procure that each of the Subsidiaries shall maintain andkeep, all properties used or useful in the conduct of their respective businessin good condition, repair and working order (ordinary wear and tear excepted)and supplied with all necessary equipment and will make, or cause to be made,all necessary repairs, renewals and replacements thereof so that the businesscarried on in connection therewith and every material portion thereof may beproperly conducted at all times except where the failure to do so would not bereasonably likely to result in a Material Adverse Change;

 

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(k)           Book Value.  At all times use valuation procedures todetermine Book Value which are consistent with GAAP consistently applied;

 

(l)            Pari Passu.  Ensure that their respective obligationsunder this Agreement, the Notes, and the Security Documents shall at all timesrank at least pari passu with all its other present and future unsecured andunsubordinated indebtedness with the exception of any obligations which aremandatorily preferred by any applicable laws to companies generally and not bycontract;

 

(m)          BrokerageCommissions, etc.  Indemnify and holdeach of the Creditors harmless from any claim for any brokerage commission,fee, or compensation from any broker or third party resulting from thetransactions contemplated hereby; provided, however that theBorrower has been informed by the relevant Creditor of any such agreement withany broker or third party prior to the date of this Agreement; and

 

(n)           IPO Proceeds.  Permanently reduce the Facility and the totalCommitments to (i) $150,000,000 if the gross proceeds received from theIPO are less than $125,000,000 but at least $100,000,000 or (ii) nil ifthe gross proceeds received from the IPO are less than $100,000,000.

 

(B)           The Parent will:

 

(a)           Minimum ConsolidatedTangible Net Worth.  Maintain aConsolidated Tangible Net Worth on the last day of each fiscal quarter at anamount not less than $200,000,000;

 

(b)           Maximum Leverage.  Maintain a ratio of Net Debt to TotalCapitalization on the last day of each fiscal quarter of less than 1.0 to 2.0(in respect of the Parent and the Subsidiaries on a consolidated basis);

 

(c)           Net Debt to EBITDA.  Maintain a ratio of Net Debt to EBITDA forthe four fiscal quarters most recently ended for which financial information isavailable of less than 4.0 to 1.0 (in respect of the Parent and theSubsidiaries on a consolidated basis);

 

(d)           EBITDA to NetInterest Expense.  Maintain a ratioof EBITDA to Net Interest Expense on the last day of each fiscal quarter ofmore than 4.5 to 1.0, measured not less than quarterly, in each instance basedon the four most recent fiscal quarters for which financial information isavailable (in respect of the Parent and the Subsidiaries on a consolidatedbasis);

 

(e)           Exchange Listing.  Remain listed on the New York Stock Exchange;

 

(f)            Ownership of theBorrower and each of the Vessel-Owning Guarantors.  Own the Borrower and the Vessel-OwningGuarantors directly or indirectly;

 

(g)           Agent for Service ofProcess.  Cause each of the Borrowerand the Vessel-Owning Guarantors to maintain at all times OSG Ship Management,or another agent acceptable to the Majority Lenders, as its agent for serviceof process in the State of New York and shall cause any other such agent toexecute and deliver to the Parent and the Facility Agent a letter in

 

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form and substancereasonably satisfactory to the Facility Agent, accepting such agency, prior toor concurrently with such other agent’s acceptance of its appointment as agentfor service of process for the Borrower or such Vessel-Owning Guarantor, as thecase may be; and

 

(h)           Financial Statements.  Deliver to the Facility Agent with sufficientcopies for the Lenders to be distributed to the Lenders by the Facility Agentpromptly upon receipt thereof:

 

(i)            assoon as available and in any event within ninety (90) days after the end ofeach fiscal year of the Parent, aconsolidated balance sheet of the Parentand the Subsidiaries as of the end of such fiscal year and the relatedconsolidated statements of income and retained earnings and cash flows for suchfiscal year, setting forth in each case in comparative form the figures as ofthe end of and for the previous fiscal year, complying in all material respectswith all applicable rules and regulations promulgated by the Securitiesand Exchange Commission, in each case accompanied by an unqualified opinion ofErnst & Young LLP or other independent public accountants ofnationally recognized standing;

 

(ii)           assoon as available and in any event within sixty (60) days after the end of eachof the first three fiscal quarters of each fiscal year of the Parent, an unaudited consolidated balancesheet of the Parent and theSubsidiaries as of the end of such fiscal quarter and the related unauditedconsolidated statements of income and retained earnings and cash flows for suchfiscal quarter and for the portion of the Parent’sfiscal year ended at the end of such fiscal quarter, setting forth in each casein comparative form the figures as of the end of and for the correspondingfiscal quarter and the corresponding portion of the Parent’s previous fiscal year, all certified (subject to normalyear-end adjustments) as to fairness of presentation and compliance in allmaterial respects with all applicable rules and regulations of theSecurities and Exchange Commission with respect to interim financial statementsand consistency by the chief financial officer or the chief accounting officerof the Parent; provided, however, withrespect to the fiscal quarter ended September 30, 2007, the Parent shallbe required to deliver its unaudited consolidated balance sheet no later than December 31,2007;

 

(iii)          simultaneously with the delivery of each setof financial statements referred to in clauses (i) and (ii) above, aCompliance Certificate of the Parent(A) setting forth in reasonable detail the calculations required toestablish whether the covenants set forth in Sections 9.1(B) (a), (b), (c) and(d) are complied with as of the last day of the fiscal period covered bysuch financial statements, and (B) stating whether any Default or Event ofDefault exists on the date of such Certificate and, if any Default or Event ofDefault then exists, setting forth the details thereof and the action which theSecurity Parties are taking or propose to take with respect thereto;

 

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(iv)          promptlyupon the mailing thereof to the limited partners of the Parent, electroniccopies of all financial statements, reports and proxy statements and othercommunications provided to the Parent’s limited partners; and

 

(v)           fromtime to time such additional financial information of the Parent and the Subsidiaries as theFacility Agent, at the request of any Lender, may reasonably request.

 

(C)           The Borrower and eachof the Vessel-Owning Guarantors will:

 

(a)           ISM Code, ISPS Code,MTSA and Annex VI Matters.

 

(i)            Procurethat OSG Ship Management will comply with and ensure that their respectiveVessel will comply with the requirements of the ISM Code, the ISPS Code, MTSAand Annex VI in accordance with the respective implementation schedulesthereof, including (but not limited to) the maintenance and renewal of validcertificates pursuant thereto throughout the Facility Period;

 

(ii)           andwill procure that OSG Ship Management will promptly inform the Facility Agentif there is any threatened or actual withdrawal of its DOC, SMC, ISSC or IAPPCin respect of the applicable Vessel;

 

(iii)          and will procure that OSG Ship Managementwill promptly inform the Facility Agent upon the issue to the Borrower, therelevant Vessel-Owning Guarantor or OSG Ship Management and to any Vessel of anSMC, ISSC or IAPPC;

 

(b)           Insurance Matters.

 

(i)            Maintain,with financially sound and reputable insurance companies, any and allinsurances required pursuant to the terms and conditions of the Mortgage,including (a) hull and machinery insurance, (b) war risks insurance,and (c) protection and indemnity insurance (including the maximum coveragefor oil pollution liability risks).  Inthe cases of the insurances referred to in sub-sections (i) (a) through(c) above, each Security Party shall maintain or cause the respectiveVessel-Owning Guarantor to maintain such insurances in such amounts as shall beat least equivalent to One Hundred Ten percent (110%) of the outstanding amountof the Facility multiplied by a fraction, the numerator of which is the FairMarket Value of the Vessel and the denominator of which is the aggregate of theFair Market Value of all the Vessels then mortgaged to the Security Trustee inconnection with this Agreement, and all such insurance shall be payable inlawful money of the United States of America and upon such terms (includingprovisions as to named insureds and loss payees and prior notice ofcancellation) and with such deductibles as shall from time to time be approvedby the Security Trustee;

 

(ii)           Mortgagee’sInterest Insurance including Additional Perils-Pollution Insurance, provided,however, that the Mortgagee’s Interest Insurance

 

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may, with the consent of the Borrower, which consent shall not beunreasonably withheld or delayed, be arranged by the Facility Agent at theexpense of the Borrower; and

 

(iii)          such other insurance on all their respectiveproperties and against all such risks in at least such amounts as are usuallyinsured against by companies of established repute engaged in the same orsimilar business from time to time;

 

(c)           Earnings.  Do all acts, take all steps and obtain anyand all consents which may from time to time be necessary or advisable for thepayment of any and all Earnings (as such terms is defined in the EarningsAssignment) with respect to each of the Vessels into the Earnings Accounts;

 

(d)           Vessel Management.  Cause the Vessels to be managed technicallyand commercially by OSG Ship Management (or an entity that is successor tosubstantially all of OSG Ship Management’s U.S. Flag ship management businessand is wholly owned by either OSG or the Parent);

 

(e)           Vessel Appraisals.  Cause the Fair Market Value of the Vessels tobe determined annually by any two (2) brokers listed on Schedule IV andselected by the Borrower, such appraisals to be addressed and delivered to theFacility Agent along with the annual financial statements to be deliveredpursuant to Section 9.1.(B)(h);.and

 

(f)            Assignment ofEarnings, Assignment of Insurances and Mortgage.  On the date of delivery of Hull 8015 or Hull8016, respectively, the respective Vessel-Owning Guarantor will duly authorize,execute and deliver to the Security Trustee, (a) the Mortgage on the Vesselowned thereby, which shall have been recorded in accordance with the laws ofthe United States of America so as to constitute a first preferred mortgagelien under United States law, (b) the Insurances Assignment in respect ofthe Vessel owned thereby, and (c) the Earnings Assignment in respect ofthe Vessel owned thereby a Mortgage, in respect of the Vessel owned thereby,together with:

 

(i)            properUniform Commercial Code Financing Statements;

 

(ii)           certifiedcopies of Requests for Information or Copies, or equivalent reports, and

 

(iii)          evidence that all other actions necessary or,in the reasonable opinion of the Security Agent, desirable to perfect andprotect the security interests purported to be created by the Assignment ofEarnings, the Assignment of Insurances and the Mortgage have been taken.

 

9.2           NegativeCovenants.  Each of the SecurityParties hereby jointly and severally covenants and undertakes with each of theLenders that, from the date hereof and so long as the Commitments are in effector any principal, interest or other moneys are owing in respect of the Facilityor otherwise owing under this Agreement, the Note or any other TransactionDocument:

 

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(A)          The Security Partieswill not, without the prior written consent of the Majority Lenders:

 

(a)           Liens.  Create, assume or permit to exist, any Lienswhatsoever upon any Vessel or other collateral provided as security under thisAgreement or the other Transaction Documents except for the following (each a “PermittedLien”):

 

(i)            liensfor taxes not yet payable for which adequate reserves have been maintained;

 

(ii)           liensin connection with any Security Document and other liens in favor of theSecurity Trustee;

 

(iii)          liens, charges and encumbrances against theirrespective Vessel permitted to exist under the terms of the Mortgages; and

 

(iv)          otherliens, charges and encumbrances incidental to the conduct of the business ofeach such party, the ownership of any such party’s property and assets andwhich do not in the aggregate materially detract from the value of each suchparty’s property or assets or materially impair the use thereof in theoperation of its business;

 

(v)           pledgesand deposits made in the ordinary course of business in compliance with workers’compensation, unemployment insurance and other social security laws orregulations;

 

(vi)          depositsto secure the performance of bids, trade contracts, leases, statutoryobligations, surety and appeal bonds, performance bonds and other obligationsof a like nature, in each case in the ordinary course of business;

 

(vii)         judgment liens in respect of judgments that donot constitute an Event of Default under Section 10.1(i) hereto;

 

(viii)        easements, zoning restrictions, rights-of-wayand similar encumbrances on real property imposed by law or arising in theordinary course of business that do not materially detract from the value ofthe affected property or interfere with the ordinary conduct of business ofsuch Security Party;

 

(ix)           leases,subleases, licenses and sublicenses granted to others in the ordinary course ofbusiness;

 

(x)            Liensin existence on the Closing Date which are listed, and the property subjectthereto described, in Schedule VI hereto, provided that the aggregate principalamount of the Indebtedness, if any, secured by such Liens does not increasefrom that amount outstanding on the Closing Date, less any repayments ofprincipal thereof; and

 

(xi)           Anytime charter entered into with respect to a Vessel;

 

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(b)           Change of Flag,Class, Management or Ownership. Change the flag of any of the Vessels, change the class orClassification Society of any of the Vessels other than to anotherClassification Society, change the technical management of any Vessel or theimmediate or ultimate ownership of any Vessel except as permitted hereby;

 

(c)           Chartering.  Enter into any demise or bareboat charterwith respect to any Vessel without the prior consent of the Facility Agent;

 

(d)           Change in Business.  Materially change the nature of its businessor commence any business materially different from its current business;

 

(e)           Sale of Assets.  Sell, or otherwise dispose of, any Vessel(unless otherwise in accordance with this Agreement) or any other asset (by wayof spin-off, installment sale or otherwise) which is substantial in relation toits assets taken as a whole;

 

(f)            Changes in Offices.  Change the location of its chief executiveoffice or, its chief place of business, or the office of the Security Party inwhich the records relating to the earnings or insurances of the Vessels arekept unless the Facility Agent shall have received thirty (30) days priorwritten notice of such change;

 

(g)           Loans and Advances.  No Vessel-Owning Guarantor shall make anyloans or advances to, or any investments (other than Permitted Investments andas otherwise permitted herein) in, any person, firm, corporation, joint ventureor other entity (including, without limitation, any loan or advance to anyofficer, director, employee or customer of any company affiliated with anySecurity Party) except for loans, advances and investments in the ordinarycourse of its business;

 

(h)           ContingentObligations, etc.  No Vessel-OwningGuarantor shall assume, guarantee or (other than in the ordinary course of itsbusiness) endorse or otherwise become liable, in connection with any obligationof any person, firm, company or other entity except for guaranties in favor ofthe Lenders or the Facility Agent on behalf of the Lenders or guaranties ofPermitted Debt;

 

(i)            Use of CorporateFunds.  No Vessel-Owning Guarantorshall pay out any funds to any company or person except in the ordinary courseof business in connection with the management of its business;

 

(j)            Indebtedness.  No Vessel-Owning Guarantor shall create,assume, incur or become or be or remain liable, directly or indirectly, or makeany repayment in respect of any indebtedness except for Permitted Debt or makeany repayment in respect of any Debt except for (a) Debt owing to anyCreditor and (b) Debt secured by a Permitted Lien if the asset secured bysuch Permitted Lien is disposed of as otherwise permitted herein;

 

(k)           Use of Proceeds.  Will not use the proceeds of the Advances inviolation of the Foreign Assets Control Regulations of the United States ofAmerica (Title 31, Code of Federal Regulations, Chapter V, Part 500 asamended) or for any hostile acquisition; and

 

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(B)           The Parent will not,without the prior written consent of the Majority Lenders:

 

(a)           Mergers,Consolidations and Sales of Assets.  (A) Permitany Security Party to, consolidate with or be a party to a merger with anyother Person or (B) sell, lease (other than chartering in the ordinarycourse of business, which shall not include bareboat chartering for periods inexcess of ten (10) years) or otherwise dispose of all or substantially allof the assets of the Parent and the Subsidiaries, taken as a whole; provided,however, that the Parent or any other Security Party may consolidate ormerge with any other Person if (A) at the time of such transaction andafter giving effect thereto, no Default or Event of Default shall have occurredand be continuing, and (B) the surviving entity in such consolidation ormerger shall be the Parent, or the respective Security Party, or, if anotherentity, the surviving entity would have a net worth greater or equal to the networth of the Parent, or the respective Security Party, prior to the merger and,in any case the survivor shall have assumed all liabilities and obligations ofthe parties thereto.

 

(b)           No Money Laundering.  Will not, and will not permit any Subsidiaryto, contravene any law, official requirement or other regulatory measure orprocedure implemented to combat “money laundering” (as defined in Article 1of the Directive (91/308/EEC) of the Council of European Communities) andcomparable United States Federal and state laws.

 

(c)           Indebtedness.  Create, assume, incur or become or be orremain liable, directly or indirectly, or make any repayment in respect of, anyindebtedness to shareholders or Affiliates except Permitted Debt.

 

(d)           Distributions.  Pay or declare any dividend on any class ofstock if at the time any such proposed payment is to be made, or after givingeffect to any such proposed payment, an Event of Default exists or would resultfrom the making of such payment or a breach of a Financial Covenant containedin Section 9.1(B) exists at the time or would result from the makingof such payment.

 

9.3           Substitutionof Vessels.  In the event that aVessel (other than the Vessels to be replaced by Hull 8015 and Hull 8016) issold, lost or declared an actual or constructive total loss, the Borrower maysubstitute a Vessel with a similar vessel to such Vessel within 180 dayssubject to the consent of the Lenders, such consent not to be unduly withheldor delayed, and so long as no Event of Default or potential Event of Defaulthas occurred and is continuing (or would result from such disposition).  Such substitute vessel shall meet all of thefollowing characteristics, and the owner of such vessel meets all of thefollowing conditions, as the case may be:

 

(a)           a vessel of acomparable age and tonnage as the Vessel sold or released to the Lenders or a vesselof another size and tonnage acceptable to the Lenders;

 

(b)           complies withrequirements of Section 3.1(i);

 

(c)           has, at the time ofsubstitution, a Fair Market Value greater than or equal to the Fair MarketValue of the Vessel for which it is substituted or a Fair Market Valueacceptable to the Lenders; and

 

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(d)           the owner of thesubstitute Vessel has met the conditions, updated mutatismutandis,of Sections 3.1(a), (b), (e), (i), (j) and (k) and Sections 3.2 (c) and(d).

 

9.4           Inspectionand Survey Reports.  If the Lendersshall so request, the Borrower shall provide the Lenders with copies ofinternally generated inspection or survey reports on the Vessel.

 

9.5           Inspectionof Vessels.  The Lenders shall beentitled to inspect each of the Vessels at any time upon reasonable priornotice provided such inspection may not unduly interfere with the operation ofthe Vessels no more than twice during any calendar year except during thecontinuance of an Event of Default in which event there shall be no limit. Onesuch inspection per year shall be at the cost of the Borrower.

 

10.           EVENTS OF DEFAULT

 

10.1         Eventsof Default.  In the event that any ofthe following events shall occur and be continuing:

 

(a)           Principal Payments.  Any principal of the Facility Balance is notpaid on the due date therefore; or

 

(b)           Interest and otherPayments.  Any interest on theFacility Balance or any other amount becoming payable under this Agreement andunder any Transaction Document or under any of them, is not paid within three (3) BankingDays from the date when due; or

 

(c)           Representations, etc.  Any representation, warranty or otherstatement made by the Security Parties in this Agreement or in any otherinstrument, document or other agreement delivered in connection herewith provesto have been untrue or misleading in any material respect as at the date as ofwhich it was made, unless circumstances giving rise to such misrepresentationare capable of remedy and are remedied within 15 days after the earlier of theFacility Agent giving notice to the Borrower requiring such remedy and theBorrower becoming aware of such representation; or

 

(d)           Impossibility,Illegality.  It becomes impossible orunlawful for the Security Parties to fulfill any of the covenants andobligations contained herein or in any Transaction Document, or for any of theLenders to exercise any of the rights vested in any of them hereunder or underthe other Transaction Documents and such impossibility or illegality, in thereasonable opinion of such Lender, will have a Material Adverse Change on anyof its rights hereunder or under the other Transaction Documents or on any ofits rights to enforce any thereof; or

 

(e)           Certain Covenants.  The Borrower defaults in the performance orobservance of any covenant contained in Section 9.1(A)(b), 9.1(B)(a) through(d), 9.1(C)(b), 9.2(B)(a), and 9.3; or

 

(f)            Covenants.  One or more of the Security Parties defaultin the performance of any term, covenant or agreement contained in thisAgreement or in the other Transaction Documents, in each case other than anEvent of Default referred to elsewhere in this

 

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Section 10.1, andsuch default continues unremedied for a period of fifteen (15) days afterwritten notice thereof has been given to the Security Party by the FacilityAgent at the request of any Lender unless such Security Party is diligentlypursuing a remedy of such Default provided such Default is, in thedetermination of the Facility Agent, capable of being remedied within areasonable period of time (and in any event within thirty (30) days) withoutadversely affecting the Lender’s rights hereunder, under the Note or under theSecurity Documents or any thereof and such Default is in fact so remedied; or

 

(g)           Indebtedness andOther Obligations.  Any SecurityParty defaults under (i) any Material Financial Obligation or (ii) anyother material contract or agreement to which it is a party or by which it isbound and, in the case of this (ii), such default could reasonably be expectedto result in a Material Adverse Change; or

 

(h)           Bankruptcy.  Any Security Party commences any proceedingsrelating to any substantial portion of its property under any reorganization,arrangement or readjustment of debt, dissolution, winding up, adjustment,composition, bankruptcy or liquidation law or statute of any jurisdiction,whether now or hereafter in effect (a “Proceeding”), or there iscommenced against any thereof any Proceeding and such Proceeding remainsundismissed or unstayed for a period of sixty (60) days; or any receiver,trustee, liquidator or sequestrator of, or for, any thereof or any substantialportion of the property of any thereof is appointed and is not dischargedwithin a period of sixty (60) days; or any thereof by any act indicatesconsent to or approval of or acquiescence in any Proceeding or to theappointment of any receiver, trustee, liquidator or sequestrator of, or for,itself or any substantial portion of its property; or

 

(i)            Judgments.  Any judgment or order is made the effectwhereof would be to render invalid this Agreement or any other TransactionDocument or any material provision thereof or any Security Party asserts thatany such agreement or provision thereof is invalid; or judgments or orders forthe payment of money in excess of $20,000,000 in the aggregate for anyGuarantor or the Subsidiaries (or its equivalent in any other currency) shallbe rendered against any Guarantor and/orany of the Subsidiaries and such judgments or orders shall continue unsatisfiedand unstayed for a period of thirty (30) consecutive days and action shalllegally be taken by the judgment creditor to attach or levy upon assets of theParent or any of the Subsidiaries to enforce such judgment; or

 

(j)            Inability to PayDebts.  Any Security Party isgenerally unable to pay or admits its inability to pay its debts as they falldue or a moratorium shall be declared in respect of any Indebtedness of anythereof; or

 

(k)           Cessation ofBusiness.  Any Security Party ceasesto do business other than as permitted herein; or

 

(l)            Change of Ownershipor Control.  A change of ownership orcontrol which results in any of the following not being true:

 

(i)            OSGowns at least 50.1% of membership interests (directly or indirectly) in theParent;

 

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(ii)           OSGowns more than 50.1% of membership interests in OSG America LLC, which is thegeneral partner of the Parent;

 

(iii)          OSG America LLC is the general partner of andhas a 2% general partnership interest in the Parent;

 

(iv)          TheParent wholly-owns the Borrower;

 

(v)           Borrowerwholly-owns (directly or indirectly) the Vessel-Owning Guarantors; or

 

(m)          Change of Commercialand Technical Manager.  OSG ShipManagement (or any entity that is successor to substantially all of OSG ShipManagement’s U.S. Flag ship management business and is wholly owned by eitherOSG or the Parent) ceasing to be both the commercial and technical manager ofany Vessel either directly or indirectly owned by the Borrower; or

 

(n)           ERISADebt.  Any member of the ERISA Groupor any ERISA Affiliate shall (i) fail to pay when due an amount or amountsaggregating in excess of $5,000,000 which it or they shall have become liableto pay under Title IV of ERISA or (ii) any member of the ERISA Groupor any ERISA Affiliate, individually or collectively, shall incur, or shallreasonably expect to incur, any Withdrawal Liability or liability upon thehappening of a Termination Event and the aggregate of all such WithdrawalLiabilities and such other liabilities shall be in excess of $10,000,000;

 

then, the Lenders’ obligation to make the Facility available shallcease and the Facility Agent on behalf of the Lenders may, with the MajorityLenders’ consent and shall, upon the Majority Lenders’ instruction, by noticeto the Borrower, (i) declare the entire Facility Balance, accrued interestand any other sums payable by the Borrower hereunder and under the Note, theother Transaction Documents and any Interest Rate Agreement due and payablewhereupon the same shall forthwith be due and payable without presentment,demand, protest or notice of any kind, all of which are hereby expresslywaived; provided that upon the happening of an event specified insubclauses (h) or (j) of this Section 10.1, the FacilityBalance, accrued interest and any other sums payable by the Borrower hereunderand under the Note, the other Transaction Documents and any Interest RateAgreement shall be immediately due and payable without declaration,presentment, demand, protest or other notice to the Borrower all of which areexpressly waived.  In such event, theCreditors may proceed to protect and enforce their rights by action at law,suit in equity or in admiralty or other appropriate proceeding, whether forspecific performance of any covenant contained in this Agreement, the Note, anyother Transaction Document or any Interest Rate Agreement or in aid of theexercise of any power granted herein or therein, or the Lenders or the FacilityAgent may proceed to enforce the payment of the Note when due or to enforce anyother legal or equitable right of the Lenders, or proceed to take any actionauthorized or permitted by Applicable Law for the collection of all sums due,or so declared due, including, without limitation, the right to appropriate andhold or apply (directly, by way of set-off or otherwise) to the payment of theobligations of the Borrower to any of the Creditors hereunder and/or under theNote and the other Transaction Documents (whether or not then due) all moneysand other amounts of the Borrower then or thereafter in possession of anyCreditor, the

 

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balance of any deposit account (demand or time, matured or unmatured)of the Borrower then or thereafter with any Creditor and every other claim ofthe Borrower then or thereafter against any of the Creditors, (ii) terminateany Letter of Credit which may be terminated in accordance with its terms and (iii) directthe Borrower to pay (and the Borrower hereby agrees upon receipt of suchnotice, or upon the occurrence of an Event of Default specified in subsection (h) or(j) of this Section 10.1, it will pay) to the Facility Agent at theoffice set forth in Section 7.1 such additional amounts, to be held assecurity in respect of Letters of Credit then outstanding (if any), equal tothe aggregate of the then Letter of Credit Outstandings, such amounts to berepaid to the Borrower to the extent not utilized to cover Letter of Creditdrawings.

 

10.2         Indemnification.  The Borrower agrees to, and shall, indemnifyand hold harmless each of the Creditors against any loss or reasonable costs orexpenses (including legal fees and expenses) which any of the Creditorssustains or incurs as a consequence of any default in payment of the principalamount of the Facility Balance or interest accrued thereon or any other amountpayable hereunder, under the Note or under the other Transaction Documents,including, but not limited to, costs for which the Borrower is required tocompensate the Lenders pursuant to Section 12.6 or funds acquired toeffect or maintain the Advances or any part thereof.  The Borrower also agrees to reimburse andindemnify the Issuing Lender for and against any and all losses, costs orexpenses of whatever nature which may be incurred by the Issuing Lender inperforming its respective duties in any way relating to or arising out of itsissuance of Letters of Credit; provided that the Borrower shall not be liablefor the portion of such losses, costs or expenses resulting from the IssuingLender’s gross negligence or willful misconduct.  A Creditor’s certification of such costs andexpenses shall, absent any manifest error, be conclusive and binding on theBorrower.

 

10.3         Applicationof Moneys.  All moneys received byany of the Creditors under or pursuant to this Agreement, the Note or the otherTransaction Documents after the happening of any Event of Default shall beapplied by the Facility Agent in the following manner:

 

(i)            firstly,in or towards the payment or reimbursement of any expenses or liabilitiesincurred by any of the Creditors in connection with the ascertainment,protection or enforcement of its rights and remedies hereunder and under theNote and the other Transaction Documents;

 

(ii)           secondly,in or towards payment of any interest owing in respect of the Advances orLetters of Credit;

 

(iii)          thirdly, in or towards repayment of the Advances;

 

(iv)          fourthly,as security in respect of Letters of Credit then outstanding, in the aggregateamount of the then Letter of Credit Outstandings,

 

(v)           fifthly,in or towards payment of all other sums which may be owing to any of theCreditors under this Agreement or under the Note or the other TransactionDocuments;

 

(vi)          sixthly,in or towards payments of any amounts then owed under any Interest RateAgreement, and

 

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(vii)         seventhly, after all Letters of Credit haveexpired or are terminated and returned to the Issuing Lender, the surplus (ifany), as well as any moneys held as security for Letters of Credit to theextent not utilized to cover Letters of Credit the surplus (if any), shall bepaid to the Borrower or to whomsoever else may be entitled thereto.

 

11.           ASSIGNMENTS;PARTICIPATIONS;

 

11.1         Assignments.  This Agreement shall be binding upon, andinure to the benefit of, the Borrower and each of the Creditors and theirrespective successors and permitted assigns, except that the Borrower may notassign any of their rights or obligations hereunder without the prior writtenconsent of the Lenders.  Any Lender mayassign its rights and obligations under this Agreement to any one or morefinancial institutions approved by the Facility Agent and the Borrower, whichapproval shall not be unreasonably withheld; provided, however,that no such consent shall be required if the assignee is, immediately prior tosuch assignment, another Lender or an Affiliate of the assigning Lender (theexpenses of any Lender in connection with any such assignment shall be for itsown account); provided, further that no Borrower shall berequired to pay any amount under Sections 6.1 or 11 that is greater than theamount which it would have been required to pay had no such assignment beenmade; provided, further that any assignment shall be madepursuant to an Assignment and Assumption Agreement substantially in the form ofExhibit A hereto; and provided, finally, that the minimumamount which may be assigned shall be $10,000,000 unless otherwise agreed bythe Borrower and the Facility Agent.  TheBorrowers will take all reasonable actions requested by the Lenders to effectany such permitted assignment, including, without limitation, the execution ofa written consent to such Assignment and Assumption Agreement.

 

11.2         Participations.  Any Lender may at any time sell to one ormore commercial banks or other financial institutions (each of such commercialbanks and other financial institutions being herein called a “Participant”)participating interests in the Advances, its Commitment or other interests ofsuch Lender hereunder; provided, however, that

 

(a)           no participationcontemplated in this Section 11.2 shall relieve such Lender from itsCommitment or its other obligations hereunder;

 

(b)           such Lender shallremain solely responsible for the performance of its Commitment and such otherobligations;

 

(c)           no Participant, unlesssuch Participant is an Affiliate of such Lender, shall be entitled to requiresuch Lender to take or refrain from taking any action hereunder, except thatsuch Lender may agree with any Participant that such Lender will not, withoutsuch Participant’s consent, approve any amendment or waiver of any provision ofthis Agreement or the Note or consent to any departure by the Borrowertherefrom, if any such amendment, waiver or consent would require theaffirmative consent of such Lender pursuant to Section 18.6 hereof; and

 

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(d)           the Borrower shall notbe required to pay any amount under Sections 6.1 or 11 that is greater than theamount which it would have been required to pay had no participating interestbeen sold.

 

11.3         SecurityInterest.  Notwithstanding any otherprovision set forth in this Agreement, any Lender may at any time grant asecurity interest in all or any portion of its rights under this Agreement andthe other Transaction Documents.

 

11.4         Register.  TheFacility Agent, acting solely for this purpose as an agent of the Borrower,shall maintain at its office in London, a copy of each Assignment andAssumption Agreement delivered to it and a register for the recordation of thenames and addresses of the Lenders, and the Commitment of, and principal amountof the Advances owing to, each Lender pursuant to the terms hereof from time totime (the “Register”).  The entries inthe Register shall be conclusive, and the Borrower, the Facility Agent and theLender may treat each Person whose name is recorded in the Register pursuant tothe terms hereof as a Lender hereunder for all purposes of this Agreement,notwithstanding notice to the contrary. The register shall be available for inspection by the Borrower and any Lender,at any reasonable time and from time to time upon reasonable prior notice.

 

12.           ILLEGALITY,INCREASED COST, NON-AVAILABILITY, ETC.

 

12.1         Illegality.  In the event that by reason of any change inany applicable law, regulation or regulatory requirement or in theinterpretation or application thereof by any authority after the Closing Date,a Lender or Participant has a reasonable basis to conclude that it has becomeunlawful for such Lender or Participant to maintain or give effect to itsobligations as contemplated by this Agreement, such Lender or Participant shallinform the Borrower and the Facility Agent to that effect, whereafter theliability of such Lender or Participant to make its Commitment available shallforthwith cease and the Borrower shall be required to repay to such Lender orParticipant that portion of the Facility Balance advanced by such Lender orParticipant immediately and to provide the Facility Agent with sufficientamounts of Cash or Cash Equivalents equal to such Lender’s proportionate amountof Letter of Credit Outstandings, such amounts to be repaid to the Borrower tothe extent not utilized to cover Letter of Credit drawings.  In any such event, but without prejudice tothe aforesaid obligations of the Borrower to prepay the relevant portion of theFacility Balance or part thereof and fund any possible drawings under Lettersof Credit then in existence, the Borrower and such Lender or Participant shallnegotiate in good faith with a view to agreeing on terms for making theCommitment available from another jurisdiction or otherwise restructuring theCommitment on a basis which is not unlawful.

 

12.2         IncreasedCost.  If after the Closing Date anychange in applicable law, regulation or regulatory requirement or in theinterpretation or application thereof by any Authority shall:

 

(a)           subject any Lender orParticipant to any Indemnified Taxes or Other Taxes; or

 

(b)           change the basis oftaxation to any Lender or Participant of payments of principal or interest orany other payment due or to become due pursuant to this Agreement

 

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(other than a change inthe basis effected by the United States of America, the State or the City ofNew York or any governmental subdivision or other taxing authority havingjurisdiction over such Lender or Participant (unless such jurisdiction isasserted solely by reason of the activities of any Security Party) or suchother jurisdiction where the Advances may be payable); or

 

(c)           impose, modify or deemapplicable any reserve or capital adequacy requirements or require the makingof any special deposits against or in respect of any assets or liabilities of,deposits with or for the account of, or loans by, any Lender or Participant; or

 

(d)           impose on any Lender orParticipant any other condition affecting the Facility or any part thereof;

 

and the resultof the foregoing is either to increase the cost to such Lender or Participantof making available or maintaining the Facility or any part thereof or toreduce the rate of return on assets or equity of such Lender or Participant orthe amount of any payment received by such Lender or Participant, then and inany such case if such increase or reduction in the opinion of such Lender orParticipant materially affects the interests of such Lender or Participantunder or in connection with this Agreement:

 

(i)            suchLender or Participant shall notify the Borrower and the Facility Agent inwriting of the happening of such event;

 

(ii)           theBorrowers agree forthwith upon receipt of notice from such Lender orParticipant as aforesaid to pay to such Lender or Participant such amount assuch Lender or Participant certifies to be necessary to compensate such Lenderor Participant for such additional cost or such reduction.

 

(e)           Any such noticereferred to in subsections (i) and (ii) of this Section 12.2 maybe made by a Lender or Participant which notice shall set forth in reasonabledetail the amount or amount necessary to compensate such Lender or Participantat any time before or within one (1) year after any repayment of theoutstanding Facility Amount; provided, however, that beforemaking any such demand, such Lender agrees to use its best efforts (consistentwith its internal policy and legal and regulatory restrictions) to designate adifferent lending office if the making of such designation would avoid the needfor, or reduce the amount of, such increased cost or such reduction and wouldnot, in the judgment of such Lender, be otherwise disadvantageous to suchLenders.

 

12.3         Nonavailabilityof Funds.  If the Facility Agentshall determine that, by reason of circumstances affecting the London InterbankMarket generally, adequate and reasonable means do not or will not exist forascertaining the Applicable Rate for any Advance for any Interest Period, the FacilityAgent shall give notice of such determination to the Borrower and theLenders.  The Borrower and the FacilityAgent, acting in accordance with the instruction of the Lenders, shall thennegotiate in good faith in order to agree upon a mutually satisfactory interestrate and/or Interest Period to be substituted for those which would otherwisehave applied under this Agreement.  Ifthe Borrower and the Facility Agent are unable to agree upon such a substitutedinterest rate and/or Interest Period within thirty (30) days of the givingof such determination notice, the Facility Agent shall set an

 

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interest rate and Interest Period to take effect fromthe expiration of the Interest Period in effect at the date of determination,which rate shall be equal to the Margin plus the cost to the Lenders andParticipants (as certified by each Lender and Participant) of funding suchAdvance.  In the event the state ofaffairs referred to in this Section 12.3 shall extend beyond the end ofany Interest Period, the foregoing procedure shall continue to apply untilcircumstances are such that the Applicable Rate may be determined pursuant to Section 5.1.

 

12.4         Determinationof Losses.  A certificate ordetermination notice of the Facility Agent or any affected Lender orParticipant, as the case may be, as to any of the matters referred to in this Section 12shall, absent demonstrative error, be conclusive and binding on the Borrower.

 

12.5         Compensationfor Losses.  Where any portion of theFacility Balance is to be prepaid by the Borrower pursuant to Section 12.1the Borrower agrees simultaneously with such prepayment to pay to the affectedLender or Participant all accrued interest to the date of actual payment andall other sums payable by the Borrower to such Lender or Participant pursuantto this Agreement together with such amounts as may be certified by such Lenderor Participant to be necessary to compensate such Lender or Participant for anyactual loss, premium or penalties incurred or to be incurred by it on accountof funds borrowed to make, fund or maintain its portion of the outstandingFacility Amount for the remainder (if any) of the then current Interest Periodor Periods, but otherwise without penalty or premium.

 

12.6         Compensationfor Breakage Costs.  The Borrowershall pay to the Lenders, Participants or any thereof, upon the request of anythereof such amount or amounts as shall be sufficient (in the reasonableopinion of the relevant Lenders and/or Participants) to compensate them for anyloss, cost or expense incurred by them as a result of:

 

(a)           any payment orprepayment (including any such prepayment made pursuant to Sections 4.1, 4.2and 12.1) of an Advance on a date other than the last day of the relevantInterest Period; or

 

(b)           any failure by theBorrower to borrow (including without limitation any such failure resultingfrom a condition precedent set forth in Section 3) or prepay the FacilityBalance held by any Lenders and/or Participants on the date for such borrowingor prepayment specified in the relevant request for such Advance or notice ofprepayment delivered under Sections 2.2 or 4.1, respectively;

 

Anycertification of a relevant Lender or Participant shall, absent demonstrativeerror, be conclusive and binding on the Borrower as to the extent of any suchlosses.

 

12.7         MitigationObligations; Replacement of Lenders. (a) If any Lender requests compensation under Sections 12.1 or12.2, or if the Borrower is required to pay any additional amount to any Lenderor any Authority for the account of any Lender pursuant to Section 6.1,then such Lender shall use reasonable efforts to designate a different lendingoffice for funding or booking its Advances hereunder or to assign its rightsand obligations hereunder to another of its offices, branches or affiliates,if, in the judgment of such Lender, such designation or assignment (i) wouldeliminate or reduce amounts payable pursuant to

 

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Section 12.1, 12.2 or 6.1, as the case may be, inthe future and (ii) would not subject such Lender to any unreimbursed costor expense and would not otherwise be disadvantageous to such Lender. TheBorrower hereby agrees to pay all reasonable costs and expenses incurred by anyLender in connection with any such designation or assignment.

 

(b)           If (i) any Lenderrequests compensation under Sections 12.1 or 12.2, (ii) the Borrower isrequired to pay any additional amount to any Lender or any GovernmentalAuthority for the account of any Lender pursuant to Section 6.1 or (iii) ifany Lender defaults in its obligation to fund Loans hereunder, then, in eachsuch case, the Borrower may, at its sole expense and effort, upon notice tosuch Lender and the Facility Agent, require such Lender to assign and delegate,without recourse (in accordance with and subject to the restrictions containedin Section 11.1), all its interests, rights and obligations under theTransaction Documents to an assignee that shall assume such obligations (whichassignee may be another Lender, if a Lender accepts such assignment); providedthat (A) the Borrower shall have received the prior written consent of theFacility Agent, which consent shall not be unreasonably withheld, (B) suchLender shall have received payment of an amount equal to the outstandingprincipal of its Advances, accrued interest thereon and all other amountspayable to it hereunder (including amounts payable pursuant to Sections 6.1,12.1 or 12.2), from the assignee (to the extent of such outstanding principaland accrued interest) or the Borrower (in the case of all other amounts) and (C) inthe case of any such assignment resulting from a claim for compensation under Section 12.1or 12.2 or payments required to be made pursuant to Section 6.1, suchassignment will result in a reduction in such compensation or payments. ALender shall not be required to make any such assignment and delegation if,prior thereto, as a result of a waiver by such Lender or otherwise, thecircumstances entitling the Borrower to require such assignment and delegationcease to apply.

 

12.8         CurrencyIndemnity.  (a) If for thepurpose of obtaining or enforcing a judgment in any court in any country itbecomes necessary to convert into any other currency (the “Judgment Currency”)an amount due in Dollars under this Agreement or the other TransactionDocuments, then the conversion shall be made, in the discretion of the FacilityAgent, at the rate of exchange prevailing either on the date of default or onthe day before the day on which the judgment is given or the order forenforcement is made, as the case may be (the “Conversion Date”);provided that the Facility Agent shall not be entitled to recover under thisclause any amount in the judgment currency which exceeds at the Conversion Datethe amount in Dollars due under this Agreement and/or the other TransactionDocuments.

 

(b)           If there is a change inthe rate of exchange prevailing between the Conversion Date and the date ofactual payment of the amount due, the Borrower shall pay such additionalamounts (if any, but in any event not a lesser amount) as may be necessary toensure that the amount paid in the judgment currency when converted at the rateof exchange prevailing on the date of payment will produce the amount then dueunder this Agreement and/or the other Transaction Documents, in Dollars; anyexcess over the amount due received or collected by the Creditors andParticipants shall be remitted to the Borrower.

 

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(c)           Any amount due from theBorrower under Section 12.7(b) shall be due as a separate debt andshall not be affected by judgment being obtained for any other sums due underor in respect of this Agreement and/or the other Transaction Documents.

 

(d)           The term “rate ofexchange” in this Section 12.7 means the rate at which the Facility Agentin accordance with its normal practices is able on the relevant date topurchase Dollars with the judgment currency and includes any premium and costsof exchange payable in connection with such purchase.

 

13.           FEES, EXPENSES ANDINDEMNIFICATION

 

(a)           Fees.  The Borrower shall pay to the Facility Agent(for the account of the Lenders) a commitment fee (the “Commitment Fee”)equal to twenty-five hundredths of one percent (.25%) on the daily undrawnbalance of the Facility for the period commencing on the Closing Date andending on the Final Availability Date. Such commitment fee shall accrue fromday to day and be calculated on the basis of actual days elapsed over a 365 dayyear and such commitment fee shall be payable quarterly in arrears.  The Borrower shall also pay to the FacilityAgent each of the fees set forth in the Fee Letters.

 

(b)           In addition, theBorrower shall pay to the Facility Agent, for distribution to the Letter ofCredit Participants, a fee in Dollars in respect of each Letter of Credit (the “Letterof Credit Fee”) computed at a rate per annum equal to (i) the Marginin effect from time to time plus (ii) Mandatory Costs on the daily StatedAmount of such Letter of Credit as reduced by any drawings thereunder.  The Borrower further agrees to pay to theIssuing Lender, commencing at such time, a fee in Dollars in respect of eachLetter of Credit (the “Fronting Fee”) computed at a rate per annum equalto one-eighth of one percent (1/8%) (but in no event less than $500 per annumfor each Letter of Credit) on the daily Stated Amount of such Letter of Creditas reduced by any drawings thereunder. Accrued Letter of Credit Fees and Fronting Fees shall be calculated onthe basis of actual days elapsed over a 360 day year and shall be due andpayable quarterly in arrears on the first day of November, February, May andAugust of each year the Facility remains outstanding and on the PaymentDate.  The Borrower also agrees to pay tothe Issuing Lender, upon the issuance of any Letter of Credit, an issuance feeequal to the greater of (i) $2,500 or (ii) one-eighth of one percentof the amount of each issued Letter of Credit.

 

13.2         Expenses.  The Borrower agrees, whether or not thetransactions hereby contemplated are consummated, on demand to pay, orreimburse the Facility Agent for the payment of the reasonable, documentedexpenses of the Facility Agent and (after the occurrence and during thecontinuance of an Event of Default) the Lenders incident to said transactions(and in connection with any supplements, amendments, waivers or consentsrelating thereto or incurred in connection with the enforcement or defense ofany of the Facility Agent’s and the Lenders’ rights or remedies with respectthereto or in the preservation of the Facility Agent’s and Lenders’ prioritiesunder documentation executed and delivered in connection therewith) including,without limitation, all reasonable costs and expenses of preparation,negotiation, execution and administration of this Agreement and the documentsreferred to herein, fees for the registration of mortgages and any other filingfees for the filing of any other Transaction Document, the reasonable fees anddisbursements of the Facility Agent’s counsel in connection therewith, as wellas reasonable traveling expenses of the Facility

 

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Agent, the reasonable fees and expenses of anyindependent appraisers, surveyors, engineers and other consultants retained bythe Facility Agent in connection with this transaction including one (but notmore than one) annual valuation of the Vessel, all reasonable costs andexpenses, if any, in connection with the enforcement of this Agreement and theother Transaction Documents and stamp and other similar taxes, if any, incidentto the execution and delivery of the documents (including, without limitation,the other Transaction Documents) herein contemplated and to hold the Creditorsfree and harmless in connection with any liability arising from the nonpaymentof any such stamp or other similar taxes. Such taxes and, if any, interest and penalties related thereto as maybecome payable after the date hereof shall be paid immediately by the Borrowerto the Facility Agent or the Lenders, as the case may be, when liabilitytherefor is no longer contested by such party or parties or reimbursedimmediately by the Borrowers to such party or parties after payment thereof (ifthe Facility Agent or the Lenders, in their sole discretion, choose to makesuch payment).

 

13.3         Indemnification.  Neither any Creditor nor any of itsdirectors, officers, agents or employees shall be liable to the Borrower forany action taken or not taken by it in connection herewith in the absence ofits own gross negligence or willful misconduct. The Borrower hereby agrees to indemnify the Creditors, their respectiveaffiliates and the respective directors, officers, agents and employees of theforegoing (each an “Indemnitee”) and hold each Indemnitee harmless fromand against any and all liabilities, losses, damages, costs and expenses of anykind, including, without limitation, the reasonable fees and disbursements ofcounsel, which may be incurred by such Indemnitee in connection with anyinvestigative, administrative or judicial proceeding (whether or not suchIndemnitee shall be designated a party thereto) brought or threatened relatingto or arising out of this Agreement, any actual or proposed use of proceeds ofany Advance hereunder, or any related transaction or claim; providedthat (i) no Indemnitee shall have the right to be indemnified hereunderfor such Indemnitee’s own gross negligence or willful misconduct as determinedby a court of competent jurisdiction and (ii) to the extent permitted bylaw, the Indemnitee shall provide the Borrower with prompt notice of any suchinvestigative, administrative or judicial proceeding after the Indemniteebecomes aware of such proceeding; provided, however, that theIndemnitee’s failure to provide such notice in a timely manner shall notrelieve the Borrower of its obligations hereunder.

 

13.4         Time of Payment.  Allamounts due under this Section 13 (unless otherwise provided in thisAgreement) shall be payable no later than twenty (20) Banking Days afterwritten demand therefor.

 

14.           APPLICABLE LAW,JURISDICTION AND WAIVER

 

14.1         ApplicableLaw.  THIS AGREEMENT SHALL BEGOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEWYORK.

 

14.2         Jurisdiction.  The Borrower and each of the Guarantorshereby irrevocably submits, to the jurisdiction of the courts of the State ofNew York located in New York County and of the United States District Court forthe Southern District of New York in any action or proceeding brought againstit by any Creditor under this Agreement or any instrument delivered hereunderand hereby agree that service of summons or other legal process thereon

 

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may be made by serving a copy of the summons or otherlegal process in any such action or proceeding on any Security Party by mailingor delivering the same by hand at the address indicated for notices in Section 16of such summons or other legal process in any such action or proceeding shallbe deemed personal service and accepted by the Security Parties as such, andshall be legal and binding upon the Security Parties for all purposes of anysuch action or proceeding.  Finaljudgment (a certified or exemplified copy of which shall be conclusive evidenceof the fact and of the amount of any indebtedness of the Borrower to any of theCreditors) against the Security Parties in any such legal action or proceedingshall be conclusive and may be enforced in other jurisdictions by suit on thejudgment.  In the event that any of theSecurity Parties shall not be conveniently available for such service, eachSecurity Party hereby irrevocably appoints the Person who then is the Secretaryof State of the State of New York as its attorney-in-fact and agent.  The Borrower will advise the Facility Agentpromptly of any change of address for the purpose of service of process.  Notwithstanding anything herein to thecontrary, a Creditor may bring any legal action or proceeding in any otherappropriate jurisdiction.

 

14.3         WAIVEROF JURY TRIAL.  IT IS MUTUALLY AGREEDBY AND AMONG EACH OF THE SECURITY PARTIES AND EACH OF THE CREDITORS THAT EACHOF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIMBROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON ANY MATTERWHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THEOTHER TRANSACTION DOCUMENTS.

 

15.           THE FACILITY AGENTAND THE SECURITY TRUSTEE

 

15.1         Appointmentand Authorization.  (a) EachLender irrevocably appoints and authorizes the Facility Agent and the SecurityTrustee severally each to take such action as agent on its behalf and toexercise such powers under this Agreement and the other Transaction Documentsas are delegated to such Facility Agent or Security Trustee by the terms hereofor thereof, together with all such powers as are reasonably incidentalthereto.  Each of the Facility Agent andthe Security Trustee hereby accepts such appointment.

 

(b)           Each of the Creditorsirrevocably appoints the Security Trustee as trustee on its behalf with regardto (i) the security, powers, rights, titles, benefits and interests (bothpresent and future) constituted by and conferred on the Creditors or any ofthem or for the benefit thereof under or pursuant to this Agreement or any ofthe other Transaction Documents (including, without limitation, the benefit ofall covenants, undertakings, representations, warranties and obligations given,made or undertaken to any Creditor in this Agreement or any of the otherTransaction Documents), (ii) all moneys, property and other assets paid ortransferred to or vested in any Creditor or any agent of any Creditor orreceived or recovered by any Creditor or any agent of any Creditor pursuant to,or in connection with, this Agreement or the other Transaction Documentswhether from any Security Party or any other person and (iii) all money,investments, property and other assets at any time representing or derivingfrom any of the foregoing, including all interest, income and other sums at anytime received or receivable by any Creditor or any agent of any Creditor inrespect of the same (or any part thereof). The Security Trustee hereby accepts such appointment.

 

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15.2         Agentsand Affiliates.  With respect to thatportion of the Facility made by it, the Facility Agent and the Security Trusteeshall have the same rights and powers under this Agreement as any other Lenderand may exercise or refrain from exercising the same as though they were not aFacility Agent or Security Trustee and the terms “Lender” and “Lenders” shallinclude each Agent in its capacity as a Lender. Each Agent and its Affiliates may accept deposits from, lend money to,and generally engage in any kind of business with, the Borrowers and the otherSecurity Parties thereof as if it were not an Agent hereunder.

 

15.3         Actionby Agents.  The obligations of theFacility Agent and the Security Trustee hereunder are only those expressly setforth herein.  Without limiting the generalityof the foregoing, no Agent shall be required to take any action with respect toany Event of Default, except, in the case of the Facility Agent, as expresslyprovided in Section 10.  The Agentsshall be entitled to use their discretion with respect to exercising orrefraining from exercising any rights which may be vested in it by, and withrespect to taking or refraining from taking any action or actions which it maybe able to take under or in respect of, this Agreement and the otherTransaction Documents, unless the Agent shall have been instructed by theMajority Lenders (or, to the extent provided herein, all of the Lenders) toexercise such rights or to take or refrain from taking such action; provided,however, that neither Agent shall not be required to take any actionwhich exposes it to personal liability or which is contrary to this Agreementor Applicable Law.

 

15.4         Consultationwith Experts.  The Agents may consultwith legal counsel (who may be counsel for the Borrower), independent publicaccountants and other experts selected by it and shall not be liable to anyLender for any action taken or omitted to be taken by it in good faith inaccordance with the advice of such counsel, accountants or experts.

 

15.5         Liabilityof the Agents.  Neither the FacilityAgent, nor the Security Trustee, nor any of their directors, officers, agentsor employees shall be liable to any Lender for any action taken or not taken byit in connection herewith (a) with the consent or at the request of theMajority Lenders or (b) in the absence of its own gross negligence orwillful misconduct.  Neither the FacilityAgent, nor the Security Trustee, nor any of their directors, officers, agentsor employees shall be responsible for or have any duty to ascertain, inquireinto or verify (i) any statement, warranty or representation made inconnection with this Agreement or any Advance hereunder; (ii) theperformance or observance of any of the covenants or agreements of theBorrower; (iii) the satisfaction of any condition specified in Section 3,except receipt of items required to be delivered to the Facility Agent orSecurity Trustee; or (iv) the validity, effectiveness or genuineness ofthis Agreement, the other Transaction Documents or any other instrument orwriting furnished in connection herewith. The Agents shall be entitled to assume that this Agreement, the otherTransaction Documents or any other instrument or writing furnished inconnection herewith are valid, effective and genuine, have been signed or sentby the proper parties and are what they purport to be.  Neither the Facility Agent nor the SecurityTrustee shall incur any liability by acting in reliance upon any notice,consent, certificate, statement or other writing (which may be a bank wire,telex or similar writing) believed by it to be genuine or to be signed by theproper party or parties.

 

15.6         Indemnification.  Each Lender shall, ratably in accordance withits Commitment, indemnify each Agent, their affiliates and their respectivedirectors, officers, agents and

 

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employees (to the extent not reimbursed by theBorrower) against any cost, expense (including reasonable counsel fees anddisbursements), claim, demand, action, judgment, suit, loss, damage,obligation, penalty, disbursement or liability of any kind whatsoever (exceptsuch as result from such Indemnitee’s gross negligence or willful misconduct)that such Indemnitees may suffer or incur in connection with or in any wayrelating to or arising out of this Agreement or the other Transaction Documentsor that such Indemnitees may suffer or incur in connection with any actiontaken or omitted by such Indemnitees hereunder or thereunder.  Without limiting the generality of theforegoing, each Lender agrees to reimburse the Facility Agent and/or theSecurity Trustee, as applicable, promptly upon demand for the ratable share ofany out-of-pocket expenses (including reasonable counsel fees anddisbursements) incurred by the Agent in connection with the preparation,execution, delivery, administration, modification, amendment or enforcement(whether through negotiations, legal proceedings or otherwise) of, or waiver ofany provision of, or legal advice in respect of rights or responsibilitiesunder, this Agreement or the other Transaction Documents, to the extent thatthe Agent is not reimbursed for such expenses by the Borrower and to the extentthe same does not result from the gross negligence or willful misconduct of theAgent.  Under no circumstances shalleither Agent be obligated to expend its own funds for the protection of theinterests of the Lenders, but the Agents shall be entitled to be indemnified toits satisfaction hereunder by the Lenders prior to taking any action orexpending any funds hereunder.

 

15.7         CreditDecision.  Each Lender acknowledgesthat it has, independently and without reliance upon the Facility Agent,Security Trustee or any other Lender, and based on such documents andinformation as it has deemed appropriate, made its own credit analysis anddecision to enter into this Agreement. Each Lender also acknowledges that it will, independently and withoutreliance upon the Facility Agent, the Security Trustee or any other Lender, andbased on such documents and information as it shall deem appropriate at thetime, continue to make its own credit decisions in taking or not taking anyaction under this Agreement.

 

15.8         SuccessorAgents.  The Facility Agent and theSecurity Trustee may resign at any time by giving written notice thereof to theLenders and the Borrowers.  Upon any suchresignation, the Lenders shall appoint a successor Facility Agent or SecurityTrustee, as applicable, subject to the consent of the Borrower, such consentnot to be unreasonably withheld.  TheBorrower hereby consents to the appointment of any successor Facility Agent orSecurity Trustee, as applicable, that is a Creditor or a first class bank.  If no successor Facility Agent or SecurityTrustee shall have been so appointed by the Lenders, and shall have acceptedsuch appointment, within thirty (30) days after the retiring Facility Agent orSecurity Trustee gives notice of resignation, then the retiring Facility Agentor Security Trustee may, on behalf of the Lenders, appoint a successor FacilityAgent or Security Trustee, as applicable, which shall be a bank or trustcompany of recognized standing having a combined capital and surplus of atleast $500,000,000.  Upon the acceptanceof its appointment as Facility Agent or Security Trustee hereunder by a successorrespective Agent, such successor Facility Agent or Security Trustee shallthereupon succeed to and become vested with all the rights and duties of therespective retiring Agent and the respective retiring Agent shall be dischargedfrom its duties and obligations hereunder. After an Agent’s resignation hereunder, the provisions of this Article shallinure to its benefit as to

 

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any actions taken or omitted to be taken by it whileit was Facility Agent or Security Trustee, as applicable.

 

15.9         Distributionof Payments.  Whenever any payment isreceived by the Facility Agent from the Borrowers for the account of theLenders, or any of them, whether of principal or interest on the Note orotherwise, it will thereafter cause like funds relating to such payment to bepromptly distributed ratably to the Lenders according to their respectiveCommitments, in each case to be applied according to the terms of thisAgreement.  Notwithstanding any otherprovision of this Agreement, the Facility Agent (a) may, before making anamount available to a Lender, deduct and withhold from that amount any sumwhich is then due and payable to the Facility Agent from that Lender under thisAgreement or any sum which the Facility Agent is then entitled under thisAgreement to require that Lender to pay on demand, and (b) shall not beobliged to make available to the Borrower or any Lender any sum which theFacility Agent is expecting to receive for remittance or distribution to theBorrower or that Lender until the Facility Agent has satisfied itself that ithas received that sum.

 

15.10       Holder of Interest in Note.  The Facility Agent and the Security Trusteemay treat each Lender as the holder of all of the interest of such Lender inthe Note unless and until the Facility Agent has received a copy of anAssignment and Assumption Agreement evidencing the transfer of all or any partof such Lender’s interest in the Facility.

 

15.11       Assumption re Event of Default.  Except as otherwise provided in Section 15.13,the Facility Agent and the Security Trustee shall be entitled to assume that noDefault or Event of Default, has occurred and is continuing, unless theFacility Agent has been notified by the Borrower of such fact or has been notifiedby a Lender that such Lender considers that a Default or Event of Default(specifying in detail the nature thereof) has occurred and is continuing.  In the event that the Facility Agent shallhave been notified by any party in the manner set forth in the precedingsentence of any Default or Event of Default, the Facility Agent shall notifythe Security Trustee and the Lenders and shall take such action and assert suchrights under this Agreement and under the other Transaction Documents as theMajority Lenders (or, to the extent provided herein, all of the Lenders) shallrequest in writing.

 

15.12       Notification of Event of Default.  The Facility Agent hereby undertakes promptlyto notify the Lenders, and each of the Lenders hereby undertakes promptly tonotify the Facility Agent and the other Lenders, of the existence of any Eventof Default which shall have occurred and be continuing of which the FacilityAgent or such Lender has actual knowledge.

 

15.13       Limitations of Liability of Creditors.  None of the Creditors shall be under anyliability or responsibility whatsoever:

 

(a)           to the Borrower or anyother person or entity as a consequence of any failure or delay in performanceby, or any breach by, any other Creditor or any other person of any of its ortheir respective obligations under this Agreement or under the otherTransaction Documents;

 

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(b)           to any other Creditoras a consequence of any failure or delay in performance by, or any breach by,the Borrower of any of its respective obligations under this Agreement or underthe other Transaction Documents; or

 

(c)           to any other Creditorfor any statements, representations or warranties contained in this Agreementor in any document or instrument delivered in connection with the transactionshereby contemplated; or for the validity, effectiveness, enforceability orsufficiency of this Agreement, the other Transaction Documents or any documentor instrument delivered in connection with the transactions herebycontemplated.

 

16.           NOTICES AND DEMANDS

 

All notices,requests, demands and other communications to any party hereunder shall be inwriting (including prepaid overnight courier, facsimile transmission or similarwriting) and shall be given to the Borrower and the Facility Agent at theirrespective addresses or facsimile numbers set forth below and to any Lender atthe address or facsimile number set forth on Schedule II or at such otheraddress or facsimile number as such party may hereafter specify for the purposeby notice to each other party hereto. Each such notice, request or other communication shall be effective (i) ifgiven by facsimile or e-mail, when such facsimile or e-mail is transmitted tothe facsimile number or e-mail address, as the case may be, specified in this Section and(telephonic, in the case of a facsimile) confirmation of receipt thereof isobtained or (ii) if given by mail, prepaid overnight courier or any othermeans, when received at the address specified in this Section or whendelivery at such address is refused.

 

If to any Security Party, addressed to it:

c/o OSG America L.P.

Two Harbour Place

302 Knights Run Avenue, Suite 1200

Tampa, Florida 33602

Attention: President

Facsimile: (813) 221-2769

 

with a copy to

 

OSG Ship Management, Inc.

666 Third Avenue

New York, New York 10017

Attention: Henry Flinter

Telephone: (212) 578-1877

Facsimile: (212) 578-1670

E-mail: hflinter@osg.com

 

If to the Facility Agent:

 

ING Bank N.V.

London Branch

60 London Wall, London

 

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EC2M 5TQ, United Kingdom

Attention:  Craig Baker

Telephone: 44 20 7767 5617

Facsimile:  44 20 7767 7324

E-mail:  craig.baker@uk.ing.com

 

17.           LIMITATION OFLIABILITY/SURVIVAL OF LIABILITY/CONTINUING INDEMNITIES

 

Notwithstandinganything to the contrary contained in this Agreement, in the event that anycourt or other judicial body of competent jurisdiction determines that legalprinciples of fraudulent conveyances, fraudulent transfers or similar conceptsare applicable in evaluating the enforceability against any Security Party orits respective assets of this Agreement and that under such principles, thisAgreement would not be enforceable against such Security Party or its assetsunless the following provisions of this Section 17 had effect, then, themaximum liability of each Security Party hereunder (the “Maximum LiabilityAmount”) shall be limited so that in no event shall such amount exceed thelesser of (i) the aggregate outstanding principal amount of the Facilityand (ii) an amount equal to the aggregate, without double counting, of (a) ninety-fivepercent (95%) of such Security Party’s Adjusted Net Worth (as hereinafterdefined) on the date hereof, or on the date enforcement of this Agreement issought (the “Determination Date”), whichever is greater and (b) the amountof any Valuable Transfer (as hereinafter defined) to such Security Party;provided that such Security Party’s liability under this Agreement shall befurther limited to the extent, if any, required so that the obligations of suchSecurity Party under this Agreement shall not be subject to being set aside orannulled under any applicable law relating to fraudulent transfers orfraudulent conveyances.  As used herein “AdjustedNet Worth” of the respective Security Party shall mean, as of any date ofdetermination thereof, an amount equal to the lesser of (a) an amountequal to the excess of (i) the amount of the present fair saleable valueof the assets of such Security Party over (ii) the amount that will berequired to pay such Security Party’s probable liability on its then existingdebts, including contingent liabilities (exclusive of its contingentliabilities hereunder), as they become absolute and matured, and (b) anamount equal to (i) the excess of the sum of such Security Party’sproperty at a fair valuation over (ii) the amount of all liabilities ofsuch Security Party, contingent or otherwise (exclusive of its contingentliabilities hereunder), as such terms are construed in accordance with applicablelaws governing determinations of the insolvency of debtors.  In determining the Adjusted Net Worth of aSecurity Party for purposes of calculating the Maximum Liability Amount forsuch Security Party, the liabilities of such Security Party to be used in suchdetermination pursuant to each clause (ii) of the preceding sentence shallin any event exclude (a) the liability of such Security Party under thisAgreement and (b) the liabilities of such Security Party subordinated inright of payment to this Agreement.  Asused herein “Valuable Transfer” shall mean, in respect of such Security Party, (a) allloans, advances or capital contributions made to such Security Party withproceeds of the Facility, (b) all debt securities or other obligations ofsuch Security Party acquired from such Security Party or retired by suchSecurity Party with proceeds of the Facility, (c) the fair market value ofall property acquired with proceeds of the Facility and transferred, absolutelyand not as collateral, to such Security Party, (d) all equity securitiesof such Security Party acquired from such Security Party with proceeds of theFacility, and (e) the value of any other economic benefits in accordance

 

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with applicable laws governing determinations of the insolvency ofdebtors, in each such case accruing to such Security Party as a result of theFacility and this Agreement.

 

18.           MISCELLANEOUS

 

18.1         Timeof Essence.  Time is of the essenceunder this Agreement, but no failure or delay on the part of any Creditor toexercise any power or right under this Agreement shall operate as a waiverthereof, nor shall any single or partial exercise by any Creditor of any poweror right hereunder preclude any other or further exercise thereof or theexercise of any other power or right. The remedies provided herein are cumulative and are not exclusive of anyremedies provided by law.

 

18.2         Severability.  In case any one or more of the provisionscontained in this Agreement or in the other Transaction Documents would, ifgiven effect, be invalid, illegal or unenforceable in any respect under any lawapplicable in any relevant jurisdiction, said provision shall not beenforceable against the Borrowers, but the validity, legality andenforceability of the remaining provisions herein or therein contained shallnot in any way be affected or impaired thereby.

 

18.3         References.  References herein to Articles, Sections (orsubdivisions of Sections), Schedules, Annexes or Exhibits are to be construedas references to articles, sections (or subdivisions of sections) of, andschedules, annexes or exhibits to, this Agreement or the other TransactionDocuments, as applicable, unless the context otherwise requires.

 

18.4         FurtherAssurances.  Each of the SecurityParties hereby agrees that if this Agreement or the other Transaction Documentsshall at any time be deemed by the Lenders for any reason insufficient in wholeor in part to carry out the true intent and spirit hereof or thereof, it will executeor cause to be executed such other and further assurances and documents as inthe opinion of the Lenders may be required in order more effectively toaccomplish the purposes of this Agreement and/or the other TransactionDocuments.

 

18.5         PriorAgreements, Merger.  Any and allprior understandings and agreements heretofore entered into between theBorrower on the one part and the Creditors on the other part, whether writtenor oral, are superseded by and merged into this Agreement and the other TransactionDocuments as to the subject matter hereof or thereof, which alone fully andcompletely express the agreements between the Borrower and the Creditors as tosuch subject matter.

 

18.6         EntireAgreement, Amendments.  ThisAgreement, the Note and the other Transaction Documents constitute the entireagreement of the parties hereto as to the subject matter hereof or thereof,including all parties added hereto pursuant to an Assignment and AssumptionAgreement.  Any provision of thisAgreement, the Note or the other Transaction Documents may be amended or waivedif, but only if, such amendment or waiver is in writing and is signed by theBorrower and the Majority Lenders (and, if the rights or duties of the FacilityAgent are affected thereby, by the Facility Agent); provided that noamendment or waiver shall, unless signed by all the Lenders, (a) increaseor decrease the Commitment of any Lender or subject any Lender to anyadditional obligation, (b) reduce the

 

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principal of or rate of interest on any Advance or anyfees hereunder or any Letter of Credit reimbursement or any fees or otheramounts hereunder, (c) postpone the date fixed for any payment ofprincipal of or interest on any Advance or any fees hereunder or for anytermination of any Commitment, (d) amend Section 10, (e) waiveany condition precedent to the making of an Advance (other than the conditionprecedent set forth in Section 3.2(a)), (f) release any collateral, (g) consentto the assignment or transfer by the Borrower of any of their rights andobligations under this Agreement or the other Transaction Documents or (h) amendor modify the definition of “Majority Lenders” or this Section 18.6.

 

18.7         Headings.  In this Agreement, section headings areinserted for convenience of reference only and shall not be taken into accountin the interpretation of this Agreement.

 

18.8         Survival.  The obligations of the Borrower underSections 6, 10.2, 12 and 13 shall survive the termination of this Agreement andthe payment in full of all obligations hereunder.

 

18.9         Confidentiality.  The Creditors shall hold all non-publicinformation (either in the form of non-public documentation relating to theFacility or which otherwise has been identified as non-public information bythe Borrower) obtained pursuant to the requirements of this Agreementconfidential for so long as such information remains non-public in accordancewith its customary procedures for handling confidential information of thisnature and in accordance with safe and sound banking practices and in any eventshall have the right to make disclosure (1) to any of their respectiveexaminers, Affiliates, outside auditors, counsel and other professionaladvisors in connection with this Agreement, (2) as reasonably required byany bonafide transferee or Participant, to a potential bonafide transferee or Participant, (3) as required or requested by anyAuthority or pursuant to legal process, (4) as required by Applicable Lawor (5) in connection with any litigation to which both a Creditor and theBorrower are parties; provided, however, that

 

(a)           unless specificallyprohibited by Applicable Law or court order, such Facility Agent or Lendershall notify the Borrower of any request by any Authority (other than any suchrequest in connection with an examination of the financial condition of suchFacility Agent or Lender by such Authority) for disclosure of any suchnon-public information as soon as possible after any such request;

 

(b)           any such bona fide transfereeor Participant by their acceptance of such assignment or participation shall bedeemed to have agreed (i) to be bound by this Section 18.9 and (ii) torequire any other Person to whom such transferee or Participant discloses suchnon-public information to be similarly bound by this Section 18.9;

 

(c)           the Creditors shallrequire any potential bona fide transferee or Participant to whom the Creditorsmay disclose such non-public information to be bound by a confidentialityagreement containing provisions substantially identical to this Section 18.9(except that such Person shall be obligated to return any materials furnishedby the Borrower if it does not become a transferee or Participant) orincorporating the same by reference;

 

68

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(d)           except as may berequired by an order of a court of competent jurisdiction and to the extent setforth therein (but in such case, the Creditors may retain any materialsfurnished by the Borrower in accordance with their customary credit or documentretention policies), the Creditors shall not be obligated or required to returnany materials furnished by the Borrower; and

 

(e)           the Creditors shall notbe bound by the terms of this Section 18.9 with respect to any informationwhich has become or becomes publicly known or available through means otherthan a breach of this Agreement.

 

18.10       Counterparts.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed an original, but all such counterpartstogether shall constitute one and the same instrument.

 

18.11       WAIVER OF IMMUNITY.  TO THE EXTENT THAT ANY SECURITY PARTY HAS ORHEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT ORANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT INAID OF EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS ORREMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH SECURITY PARTY HEREBYIRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THISAGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

 

[Signature pages to follow]

 

69

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be duly executed bytheir duly authorized representative as of the day and year first abovewritten.

 

 
|   | OSG AMERICA OPERATING COMPANY LLC, |
|--------|------------------------------------|
|   | as Borrower                        |
|   |                               |   |
|   |                               |   |
|   | By                                 |  /s/ James I. Edelson |
|   |                               |  Name: James I. Edelson |
|   |                               |  Title: Manager |
|   |                               |   |
|   |                               |   |
|   | OSG AMERICA L.P.,                  |
|   | as joint and several Guarantor     |
|   | By: OSG America LLC,               |
|   | its general partner                |
|   |                               |   |
|   |                               |   |
|   | By                                 |  /s/ Myles R. Itkin |
|   |                               |  Name: Myles R. Itkin |
|   |                               |  Title: Chief Financial Officer |
|   |                               |   |
|   |                               |   |
|   | LUXMAR TANKER LLC,                 |
|   | as joint and several Guarantor     |
|   |                               |   |
|   |                               |   |
|   | By                                 |  /s/ James I. Edelson |
|   |                               |  Name: James I Edelson |
|   |                               |  Title: Manager |
|   |                               |   |
|   |                               |   |
|   | MAREMAR TANKER LLC,                |
|   | as joint and several Guarantor     |
|   |                               |   |
|   |                               |   |
|   | By                                 |  /s/ James I. Edelson |
|   |                               |  Name: James I Edelson |
|   |                               |  Title: Manager |

 

----

 
|   | OSG 192 LLC,                   |
|--------|--------------------------------|
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG 209 LLC,                   |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ Peter Popov |
|   |                           |  Name: Peter Popov |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG 242 LLC,                   |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG 243 LLC,                   |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG 244 LLC,                   |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ Alan G. Himmelstein |
|   |                           |  Name: Alan G. Himmelstein |
|   |                           |  Title: Manager |

 

----

 
|   | OSG 252 LLC,                   |
|--------|--------------------------------|
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ Peter Popov |
|   |                           |  Name: Peter Popov |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG COLUMBIA LLC,              |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ Alan G. Himmelstein |
|   |                           |  Name: Alan G. Himmelstein |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG COURAGEOUS LLC,            |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OVERSEAS DILIGENCE LLC,        |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG ENDURANCE LLC,             |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ Janice K. Smith |
|   |                           |  Name: Janice K. Smith |
|   |                           |  Title: Manager |

 

----

 
|   | OSG ENTERPRISE LLC,            |
|--------|--------------------------------|
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG FREEDOM LLC,               |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OVERSEAS GALENA BAY LLC,       |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OVERSEAS INTEGRITY LLC,        |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |
|   |                           |   |
|   |                           |   |
|   | OSG INDEPENDENCE LLC,          |
|   | as joint and several Guarantor |
|   |                           |   |
|   |                           |   |
|   | By                             |  /s/ James I. Edelson |
|   |                           |  Name: James I. Edelson |
|   |                           |  Title: Manager |

 

----

 
|   | OVERSEAS PUGET SOUND LLC,                                                        |
|--------|----------------------------------------------------------------------------------|
|   | as joint and several Guarantor                                                   |
|   |                                                                             |   |
|   |                                                                             |   |
|   | By                                                                               |  /s/ James I. Edelson |
|   |                                                                             |  Name: James I. Edelson |
|   |                                                                             |  Title: Manager |
|   |                                                                             |   |
|   |                                                                             |   |
|   | OSG SEAFARER LLC,                                                                |
|   | as joint and several Guarantor                                                   |
|   |                                                                             |   |
|   |                                                                             |   |
|   | By                                                                               |  /s/ Alan G. Himmelstein |
|   |                                                                             |  Name: Alan G. Himmelstein |
|   |                                                                             |  Title: Manager |
|   |                                                                             |   |
|   |                                                                             |   |
|   | ING BANK N.V., London Branch                                                     |
|   | as Facility Agent, Security Trustee, MLA,  Bookrunner, Issuing Lender and Lender |
|   |                                                                             |   |
|   |                                                                             |   |
|   | By                                                                               |  /s/ S. J. Fenster |
|   |                                                                             |  Name: S. J. Fenster |
|   |                                                                             |  Title: Managing Director |
|   |                                                                             |   |
|   | By                                                                               |  /s/ Adam Byrne |
|   |                                                                             |  Name: Adam Byrne |
|   |                                                                             |  Title: Director-Asset Based |
|   |                                                                             |            Finance |
|   |                                                                             |   |
|   |                                                                             |   |
|   | DNB NOR BANK ASA,                                                                |
|   | as MLA, Bookrunner and Lender                                                    |
|   |                                                                             |   |
|   |                                                                             |   |
|   | By                                                                               |  /s/ Nikolai A. Nachamkin |
|   |                                                                             |  Name: Nikolai A. Nachamkin |
|   |                                                                             |  Title: Senior Vice President |
|   |                                                                             |   |
|   | By                                                                               |  /s/ Sanjiv Nayar |
|   |                                                                             |  Name: Sanjiv Nayar |
|   |                                                                             |  Title: Senior Vice |
|   |                                                                             |            President |

 

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