Exhibit 10.4


    
      

    

     

     

    Date:
      March 30, 2005

    


    


    
 

    MC
      IBIS SHIPPING LIMITED

    and

    MC
      EID SHIPPING LIMITED

    as
      joint
      and several borrowers

    


    -
      and
      -

    


    


    SCOTIABANK
      EUROPE PLC

    as
      Lender

     

    


    


    
      
        
          

        

      

    

    


    LOAN
      AGREEMENT

    


    
      
        

      



    


    relating
      to

    a
      loan
      facility of up to US$68,000,000

    to
      finance part of the acquisition costs of the

    LPG
      carriers “BERGE KOBE”

    and
      “BERGE FLANDERS”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    INDEX

    


    


    
      	
              Clause

            	 	
              Page

            
	 	 	 
	
              1

            	 	
              INTERPRETATION

            	
              1

            
	 	 	 	 
	
              2

            	 	
              FACILITY

            	
              12

            
	 	 	 	 
	
              3

            	 	
              DRAWDOWN

            	
              12

            
	 	 	 	 
	
              4

            	 	
              INTEREST
                AND TRANSACTIONS

            	
              13

            
	 	 	 	 
	
              5

            	 	
              INTEREST
                PERIODS

            	
              15

            
	 	 	 	 
	
              6

            	 	
              DEFAULT
                INTEREST

            	
              16

            
	 	 	 	 
	
              7

            	 	
              REPAYMENT
                AND PREPAYMENT

            	
              17

            
	 	 	 	 
	
              8

            	 	
              CONDITIONS
                PRECEDENT

            	
              19

            
	 	 	 	 
	
              9

            	 	
              REPRESENTATIONS
                AND WARRANTIES

            	
              19

            
	 	 	 	 
	
              10

            	 	
              GENERAL
                UNDERTAKINGS

            	
              21

            
	 	 	 	 
	
              11

            	 	
              CORPORATE
                UNDERTAKINGS

            	
              23

            
	 	 	 	 
	
              12

            	 	
              INSURANCE

            	
              24

            
	 	 	 	 
	
              13

            	 	
              SHIP
                COVENANTS

            	
              28

            
	 	 	 	 
	
              14

            	 	
              SECURITY
                COVER

            	
              32

            
	 	 	 	 
	
              15

            	 	
              PAYMENTS
                AND CALCULATIONS

            	
              33

            
	 	 	 	 
	
              16

            	 	
              APPLICATION
                OF RECEIPTS

            	
              34

            
	 	 	 	 
	
              17

            	 	
              APPLICATION
                OF EARNINGS

            	
              34

            
	 	 	 	 
	
              18

            	 	
              EVENTS
                OF DEFAULT

            	
              35

            
	 	 	 	 
	
              19

            	 	
              FEES
                AND EXPENSES

            	
              39

            
	 	 	 	 
	
              20

            	 	
              INDEMNITIES

            	
              40

            
	 	 	 	 
	
              21

            	 	
              NO
                SET-OFF OR TAX DEDUCTION

            	
              42

            
	 	 	 	 
	
              22

            	 	
              ILLEGALITY,
                ETC

            	
              43

            
	 	 	 	 
	
              23

            	 	
              INCREASED
                COSTS

            	
              43

            
	 	 	 	 
	
              24

            	 	
              SET
                OFF

            	
              45

            
	 	 	 	 
	
              25

            	 	
              TRANSFERS
                AND CHANGES IN LENDING OFFICE

            	
              45

            
	 	 	 	 
	
              26

            	 	
              VARIATIONS
                AND WAIVERS

            	
              46

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              27

            	 	
              NOTICES

            	
              46

            
	 	 	 	
               

            
	
              28

            	 	
              JOINT
                AND SEVERAL LIABILITY

            	
              48

            
	 	 	 	
               

            
	
              29

            	 	
              SUPPLEMENTAL

            	
              49

            
	 	 	 	
               

            
	
              30

            	 	
              LAW
                AND JURISDICTION

            	
              49

            
	 	
               

            
	
              SCHEDULE
                1  DRAWDOWN NOTICE

            	
              51

            
	 	 
	
              SCHEDULE
                2  CONDITION PRECEDENT DOCUMENTS

            	
              52

            
	 	 
	
              EXECUTION
                PAGE

            	
              54

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    THIS
      AGREEMENT is
      made
      on     March
      2005

    


    BETWEEN

    


    
      	
              (1)

            	
              MC
                IBIS SHIPPING LIMITED and
                MC EID SHIPPING LIMITED as
                joint and several borrowers; and

            


    

    


    
      	
              (2)

            	
              SCOTIABANK
                EUROPE PLC,
                acting through its office at Scotia House, 33 Finsbury Square, London
                EC2A
                1BB, England (the “Lender”).

            


    

    


    BACKGROUND 

    


    
      	
              (A)

            	
              The
                Lender has agreed to make available to the Borrowers a facility of
                up to
                $68,000,000 in 2 advances, Advance A and Advance B (each as defined
                below). Advance A shall be used for the purpose of financing the
                acquisition of the 1987 built 77,749 cu.m LPG carrier “BERGE KOBE” to be
                purchased by IBIS and Advance B shall be used for the purpose of
                financing
                the 1991 built 75,353 cu.m LPG carrier “BERGE FLANDERS” to be purchased by
                EID.

            


    

    


    
      	
              (B)

            	
              The
                Lender may enter into interest rate swap transactions with the Borrowers
                from time to time to hedge the Borrowers’ exposure under this Agreement to
                interest rate fluctuations.

            


    

    


    IT
      IS AGREED
      as
      follows:

    


    
      	
              1

            	
              INTERPRETATION

            


    

    
       

      
        	
                1.1

              	
                Definitions.  
                  Subject to Clause 1.5,
                  in this Agreement:

              


      

    

    


    “Accounts
      Security Deed”
      means a
      deed creating security in respect of the Earnings Accounts and the Retention
      Accounts in such form as the Lender may require;

    


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

    


    “Advance
      A Master Agreement”
      means
      a
      master
      agreement (on the 1992 ISDA (Multicurrency-Crossborder) form) made or to be
      made
      between the Lender and IBIS in such form as the Lender may require, and includes
      all Transactions from time to time entered into and Confirmations from time
      to
      time exchanged under that master agreement;

    


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

    


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

    


    “Advance
      B Master Agreement”means
      a
      the master agreement (on the 1992 ISDA (Multicurrency Crossborder) form) made
      or
      to be made between the Lender and EID in such form as the Lender may require,
      and includes all Transactions from time to time entered into and Confirmations
      from time to time exchanged under that master agreement;

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


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

    


    “Advances”
      means
      Advance A and Advance B;

    


    “Approved
      Manager”
      means,
      in relation to a Ship and with respect to its technical management, V
      Ships
      Group Ltd. or any
      other
      company which the Lender may approve from time to time as the technical manager
      of the Ship;

    


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

    


    
      	 	
              (a)

            	
              the
                date falling 3 months after the date of the Commitment Letter (or
                such
                later date as the Lender may agree with the Borrowers);
                or

            


    

    


    
      	 	
              (b)

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

            


    

    


    “Borrowers”
      means
      EID and IBIS;

    


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

    


    “Commitment”
      means
      $68,000,000 as that amount may be reduced, cancelled or terminated in accordance
      with this Agreement;

    


    “Commitment
      Letter”
      means
a
      letter
      dated 4 March 2005 addressed by Lender to the Borrowers and setting out the
      terms on which the Commitment is to be made available and in which such terms
      are acknowledged and agreed by the Borrowers;

    


    “Confirmation”
      has the
      meaning given in the Master Agreement to which that confirmation
      relates;

    


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

    


    “Deed
      of Covenant”
      means,
      in relation to a Ship, a deed of covenant collateral to the Mortgage on the
      Ship
      and creating charges over the Ship, its Earnings, its Insurances and any
      Requisition Compensation in such form as the Lender may require;

    


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

    


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

    


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

    


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

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (a)

            	
              all
                freight, hire and passage moneys, compensation payable to that Borrower
                in
                the event of requisition of the Ship for hire, remuneration for salvage
                and towage services, demurrage and detention moneys and damages for
                breach
                (or payments for variation or termination) of any charterparty or
                other
                contract for the employment of the
                Ship;

            


    

    


    
      	 	
              (b)

            	
              all
                moneys which are at any time payable under Insurances relating to
                the Ship
                in respect of loss of earnings; and

            


    

    


    
      	 	
              (c)

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

            


    

    


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

    


    “EID”
      means
      MC Eid Shipping Limited, a company incorporated in The Commonwealth of the
      Bahamas whose registered office is at 4 George Street, Mareva House, Nassau,
      Bahamas;

    


    “Environmental
      Claim”
      means:

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

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

            


    

    


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

    


    “Environmental
      Incident”
      means
      in relation to a Ship:

    


    
      	 	
              (a)

            	
              any
                release of Environmentally Sensitive Material from the Ship;
                or

            


    

    


    
      	 	
              (b)

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

            


    

    


    
      	 	
              (c)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    


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

    


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

    


    “Finance
      Documents”
      means:

    


    
      	 	
              (a)

            	
              this
                Agreement;

            


    

    


    
      	 	
              (b)

            	
              the
                Guarantee;

            


    

    


    
      	 	
              (c)

            	
              the
                Mortgages;

            


    

    


    
      	 	
              (d)

            	
              the
                Deeds of Covenants;

            


    

    


    
      	 	
              (e)

            	
              the
                Accounts Security Deed;

            


    

    


    
      	 	
              (f)

            	
              the
                Master Agreement Security Deeds; 

            


    

    


    
      	 	
              (g)

            	
              the
                Manager’s Letters of Undertaking;
                and

            


    

    


    
      	 	
              (h)

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

            


    

    


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

    


    
      	 	
              (a)

            	
              for
                principal, interest or any other sum payable in respect of any moneys
                borrowed or raised by the debtor; 

            


    

    


    
      	 	
              (b)

            	
              under
                any loan stock, bond, note or other security issued by the
                debtor;

            


    

    


    
      	 	
              (c)

            	
              under
                any acceptance credit, guarantee or letter of credit facility made
                available to the debtor;

            


    

    


    
      	 	
              (d)

            	
              under
                a financial lease, a deferred purchase consideration arrangement
                or any
                other agreement having the commercial effect of a borrowing or raising
                of
                money by the debtor;

            


    

    


    
      	 	
              (e)

            	
              under
                any foreign exchange transaction, any interest or currency
                swap or
                any other kind of derivative transaction entered into by the debtor;
                or
                

            


    

    


    
      	 	
              (f)

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

            


    

    


    “First
      Ship”
      means
      the Norwegian International flagged 1987 built 77,749 cu.m LPG carrier currently
      named “BERGE KOBE”
      registered in the name of the Time Charterer with IMO Number 8519966 which
      is to
      be purchased by IBIS and registered in its name under the Bahamas flag with
      the
      same name;

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    “Flanders
      Time Charter”
      means
      the time charter dated 25 February 2005 and made between EID and the Time
      Charterer pursuant to which EID has agreed to let, and the Time Charterer has
      agreed to take, the Second Ship on time charter for the period and on the terms
      and conditions specified therein; 

    


    “Guarantee”
      means
      the guarantee of the liabilities of the Borrowers under the Finance Documents
      and the Master Agreements dated the same date as this Agreement and executed
      by
      the Guarantor in favour of the Lender;

    


    “Guarantor”
      means
      MC Shipping Inc., a corporation incorporated in the Republic of Liberia whose
      registered office is at 80 Broad Street, Monrovia, Liberia;

    


    “IBIS”
      means
      MC Ibis Shipping Limited, a company incorporated in The Commonwealth of the
      Bahamas whose registered office is at 4 George Street, Mareva House, Nassau,
      Bahamas;

    


    “Insurances”
      means,
      in relation to a Ship:

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

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

            


    

    


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

    


    “ISM
      Code”
      means
      the International Safety Management Code (including the guidelines on its
      implementation), adopted by the International Maritime Organisation Assembly
      as
      Resolutions A.741 (18) and A.788 (19), as the same may be amended or
      supplemented from time to time (and the terms “safety
      management system”,
      “Safety
      Management Certificate”
      and
“Document
      of Compliance”
      have
      the same meanings as are given to them in the ISM Code);

    


    “ISPS
      Code”
      means
      the International Ship and Port Facility Security Code constituted pursuant
      to
      resolution A.924(22) of the International Maritime Organisation (“IMO”)
      adopted by a Diplomatic conference of the IMO on Maritime Security on 13
      December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea
      Convention (SOLAS) 1974 (as amended);

    


    “Kobe
      Time Charter”
      means
      the time charter dated 25 February 2005 and made between IBIS and the Time
      Charterer pursuant to which IBIS has agreed to let, and the Time Charterer
      has
      agreed to take, the First Ship on time charter for the period and on the terms
      and conditions specified therein;

    


    “Lender”
      means
      Scotiabank Europe plc, a company incorporated in England and Wales and acting
      through its office at Scotia House, 33 Finsbury Square, London EC2A 1BB, England
      (or through another office notified to the Borrowers under Clause 25.6) or
      its
      successors or assigns; or

    


    “LIBOR”
      means,
      for an Interest Period, the rate per annum determined by the Lender to be the
      rate at which deposits in Dollars are offered to the Lender by leading banks
      in
      the London Interbank Market at the Lender's request at or about 11.00 a.m.
      (London time) on the Quotation Date for that Interest Period for a period equal
      to that Interest Period and for delivery on the first Business Day of
      it;

    


    “Loan”
      means
      the principal amount of the Advances or (as the context requires) the principal
      amount thereof for the time being outstanding under this Agreement;

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    


    “Manager’s
      Letter of Undertaking”
      means,
      in relation to a Ship and the Approved Manager of it, a letter of subordination
      addressed to the Lender in such form as the Lender may require;

    


    “Margin”
      means,
      in relation to an Advance:

    


    
      	 	
              (a)

            	
              while
                the Time Charter relating to the Ship financed with that Advance
                remains
                in full force and effect (or has been replaced by a Replacement Time
                Charter), 0.85 per cent. per annum;
                or

            


    

    


    
      	
            	(b)	
              otherwise:

            


    

    


    
      	 	
              (i)

            	
              1.0
                per cent. per annum if Tangible Net Worth is at least $75,000,000;
                or
                

            


    

    


    
      	 	
              (ii)

            	
              otherwise,
                1.1 per cent. per annum;

            


    

    


    “Master
      Agreement Liabilities”
      means
      the Advance A Master Agreement Liabilities and the Advance B Master Agreement
      Liabilities;

    


    “Master
      Agreement Security Deed”
      means,
      in relation to a Master Agreement, a charge over the Master Agreement in such
      form as the Lender may require;

    


    “Master
      Agreements”
      means
      the Advance A Master Agreement and the Advance B Master Agreement;

    


    “MOA”
      means:


    


    
      	 	
              (a)

            	
              in
                relation to the First Ship, the memorandum of agreement dated 23
                February
                2005 and made by and between IBIS as purchaser and the Time Charterer
                as
                seller of the First Ship; and

            


    

    


    
      	 	
              (b)

            	
              in
                relation to the Second Ship, the memorandum of agreement dated 23
                February
                2005 and made by and between EID as purchaser and the Time Charterer
                as
                seller of the Second Ship;

            


    

    


    “Mortgage”
      means,
      in relation to a Ship, the first priority
      statutory Bahamas ship mortgage
      on the Ship in such
      form
      as the Lender may require;

    


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

    


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

    


    “Permitted
      Security Interests”
      means:

    


    
      	 	
              (a)

            	
              Security
                Interests created by the Finance
                Documents;

            


    

    


    
      	 	
              (b)

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

            


    

    


    
      	 	
              (c)

            	
              liens
                for salvage;

            


    

    


    
      	 	
              (d)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (e)

            	
              liens
                for master’s disbursements incurred in the ordinary course of trading and
                any other lien arising by operation of law or otherwise in the ordinary
                course of the operation, repair or maintenance of a Ship, provided
                such
                liens do not secure amounts more than 30 days overdue (unless the
                overdue
                amount is being contested by a Borrower in good faith by appropriate
                steps) and subject, in the case of liens for repair or maintenance,
                to
                Clause 13.13;

            


    

    


    
      	 	
              (f)

            	
              any
                Security Interest created in favour of a plaintiff or defendant in
                any
                proceedings or arbitration as security for costs and expenses where
                a
                Borrower is actively prosecuting or defending such proceedings or
                arbitration in good faith; and

            


    

    


    
      	 	
              (g)

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

            


    

    


    “Pertinent
      Document”
      means:

    


    
      	 	
              (a)

            	
              any
                Finance Document;

            


    

    


    
      	 	
              (b)

            	
              any
                policy or contract of insurance contemplated by or referred to in
                Clause
                12 or any other provision of this Agreement or another Finance
                Document;

            


    

    


    
      	 	
              (c)

            	
              any
                other document contemplated by or referred to in any Finance Document;
                and

            


    

    


    
      	 	
              (d)

            	
              any
                document which has been or is at any time sent by or to the Lender
                in
                contemplation of or in connection with any Finance Document or any
                policy,
                contract or document falling within paragraphs (b) or
                (c);

            


    

    


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

    


    
      	 	
              (a)

            	
              England
                and Wales;

            


    

    


    
      	 	
              (b)

            	
              the
                country under the laws of which the company is incorporated or
                formed;

            


    

    


    
      	 	
              (c)

            	
              a
                country in which the company’s central management and control is or has
                recently been exercised;

            


    

    


    
      	 	
              (d)

            	
              a
                country in which the overall net income of the company is subject
                to
                corporation tax, income tax or any similar
                tax;

            


    

    


    
      	 	
              (e)

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

            


    

    


    
      	 	
              (f)

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

            


    

    


    “Pertinent
      Matter”
      means:

    


    
      	 	
              (a)

            	
              any
                transaction or matter contemplated by, arising out of, or in connection
                with a Pertinent Document; or

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (b)

            	
              any
                statement relating to a Pertinent Document or to a transaction or
                matter
                falling within paragraph (a);

            


    

    


    and
      covers any such transaction, matter or statement, whether entered into, arising
      or made at any time before the signing of this Agreement or on or at any time
      after that signing;

    


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

    


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

    


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

    


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

    


    “Replacement
      Time Charter”
      means,
      in relation to a Ship, a time charter of that Ship the charterer of which,
      in
      the reasonable opinion of the Lender, is of similar credit standing and
      reputation to the Time Charterer;

    


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

    


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

    


    “Second
      Ship”
      means
      the Bahamas flagged 75,353 cu.m LPG carrier currently named “BERGE
      FLANDERS”,
      registered in the name of the Time Charterer with IMO Number 9000883 which
      is to
      be purchased by EID and registered in its name under the Bahamas flag with
      the
      same name;

    


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

    


    “Security
      Interest”
      means:

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

            	
              the
                rights of the plaintiff under an action in
                rem
                in
                which the vessel concerned has been arrested or a writ has been issued
                or
                similar step taken; and

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

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

            


    

    


    “Security
      Party”
      means
      the Guarantor, any Approved Manager and any other person (except the Lender)
      who, as a surety or mortgagor, as a party to any subordination or priorities
      arrangement, or in any similar capacity, executes a document falling within
      the
      last paragraph of the definition of “Finance Documents”;

    


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

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

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

            


    

    


    
      	 	
              (c)

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

            


    

    


    “Ships”
      means
      the First Ship and the Second Ship;

    


    “Tangible
      Net Worth”
      has the
      meaning given to it in the Guarantee;

    


    “Time
      Charterer”
      means
      Bergesen d.y. Shipping AS, a company incorporated in Norway whose registered
      office is at Drammensveien 106, 0204 Oslow, Norway;

    


    “Time
      Charters”
      means
      the Kobe Time Charter and the Flanders Time Charter;

    


    “Time
      Charter Period”
      means
      in relation to a Time Charter, that part of the Security Period which falls
      within the period commencing on the date the relevant Ship is delivered to
      the
      Time Charterer and ending on the date on which the Time Charter expires by
      effluxion of time or (if earlier) on the date on which the Time Charter is
      otherwise terminated or frustrated or the relevant Ship is withdrawn from hire
      under the Time Charter;

    


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

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

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

            


    

    


    
      	 	
              (c)

            	
              any
                arrest, capture, seizure or detention of the Ship (including any
                hijacking
                or theft) unless it is within 1 month redelivered to the relevant
                Borrower's full control;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    “Total
      Loss Date”
      means:

    


    
      	 	
              (a)

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

            


    

    


    
      	 	
              (b)

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

            


    

    


    
      	 	
              (c)

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

            


    

    


    
      	 	
              (d)

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

            


    

    


    
      	 	
              (e)

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

            


    

    


    “Transaction”has
      the
      meaning given in the Master Agreement to which it relates.

    


    
      	
              1.2

            	
              Construction
                of certain terms.
                In
                this Agreement:

            


    

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    


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

    


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

    


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

    


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

    


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

    


    “subsidiary”
      has the
      meaning given in Clause 1.4;

    


    “tax”
      includes any present or future tax, duty, impost, levy or charge of any kind
      which is imposed by any state, any political sub-division of a state or any
      local or municipal authority (including any such imposed in connection with
      exchange controls), and any connected penalty, interest or fine but does not
      include tax or the net income of the Lender; and

    


    “war
      risks”
      includes the risk of mines and all risks excluded by clause 23 of the Institute
      Time Clauses (Hulls)(1/10/83) or (with respect to Insurances commencing on
      or
      after 1/11/1995) clause 24 of the Institute Time Clauses (Hulls)
      (1/11/1995).

     

    
      	
              1.3

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


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

     

    
      	
              1.4

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

            	
              P
                has direct or indirect control over a majority of the voting rights
                attaching to the issued shares of S;
                or

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


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

     

    
      	
              1.5

            	
              General
                Interpretation.
                In
                this Agreement:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              Clauses
                1.1 to 1.5 apply unless the contrary intention
                appears.

            


    

    


    
      	
              1.6

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

            


    

    


    
      	
              2

            	
              FACILITY

            


    

    


    
      	
              2.1

            	
              Amount
                of facility.
                Subject to the other provisions of this Agreement, the Lender shall
                make a
                loan facility not exceeding $68,000,000 available to the
                Borrowers.

            


    

    


    
      	
              2.2

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

            


    

    
       

      
        	
                3

              	
                DRAWDOWN

              


      

    

    
       

      
        	
                3.1

              	
                Request
                  for Advance.
                  Subject to the following conditions, the Borrowers may request
                  an Advance
                  to be made by ensuring that the Lender receives a completed Drawdown
                  Notice not later than 11.00 a.m. (London time) 3 Business Days
                  prior to
                  the intended Drawdown Date of that
                  Advance.

              


      

    

    


    
      	
              3.2

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              the
                amount of Advance A shall not exceed
                $27,000,000;

            


    

    


    
      	
              (c)

            	
              the
                amount of Advance B shall not exceed $41,000,000;
                and

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              3.3

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


            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              3.4

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

            


    

    


    
      	
              3.5

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

            


    

    
       

      
        	
                4

              	
                INTEREST
                  AND TRANSACTIONS

              


      

    

    


    
      	
              4.1

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

            


    

    


    
      	
              4.2

            	
              Normal
                rate of interest.
                Subject to the provisions of this Agreement, the rate of interest
                on an
                Advance in respect of an Interest Period applicable to it shall be
                the
                aggregate of:

            


    

    


    
      	
              (a)

            	
              the
                applicable Margin; 

            


    

    


    
      	
              (b)

            	
              LIBOR
                for that Interest Period; and

            


    

    


    
      	
              (c)

            	
              any
                costs notified by the Lender to the Borrower under clause 19.5 as
                being
                applicable for that Interest
                Period.

            


    

    


    
      	
              4.3

            	
              Payment
                of accrued interest.
                In
                the case of an Interest Period longer than 6 months, accrued interest
                shall be paid every 6 months during that Interest Period and on the
                last
                day of that Interest Period.

            


    

    
       

      
        	
                4.4

              	
                Notification
                  of market disruption.
                  The Lender shall promptly notify the Borrowers if for any reason
                  the
                  Lender is unable to obtain Dollars in the London Interbank Market
                  in order
                  to fund an Advance (or any part of it) during any Interest Period
                  applicable to it, stating the circumstances which have caused such
                  notice
                  to be given.

              


      

    

    


    
      	
              4.5

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

            


    

    
       

      
        	
                4.6

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

              


      

    

    


    
      	
              4.7

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

            


    

    
       

      
        	
                4.8

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              4.9

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

            


    

    


    
      	
              4.10

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

            


    

    


    
      	
              4.11

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

            


    

    


    
      	
              4.12

            	
              Transactions
                under the Master Agreements.
                The Lender and the Borrowers agree
                that:

            


    

    


    
      	
              (a)

            	
              the
                Borrowers may from time to time request the Lender to conclude
                Transactions for the purpose of hedging the Borrowers’ interest payment
                obligations under Advance A and Advance B (or either of them). However,
                signature of the Master Agreements does not commit the Lender to
                conclude
                Transactions, or even to offer terms for doing so;
                

            


    

    


    
      	
              (b)

            	
              Transactions
                should only be used for the purpose of swapping the Borrowers’ interest
                payment obligations under this Clause 4 from LIBOR-based funding
                to
                longer-term fixed rate funding and not for speculative
                purposes;

            


    

    


    
      	
              (c)

            	
              floating
                rate sums derived from such Transactions should be paid to the Borrowers
                to meet the Borrowers’ interest payment obligations under this Clause 4;
                and

            


    

    


    
      	
              (d)

            	
              no
                Transactions shall be entered into which would result, at any time
                during
                the Security Period, in the notional principal amount of all Transactions
                then current exceeding the amount of the Loan, as reducing from time
                to
                time under Clause 7.1.

            


    

    
       

      
        	
                4.13

              	
                Guarantee
                  of EID’s obligations. IBIS
                  unconditionally and
                  irrevocably:

              


      

    

    


    
      	
              (a)

            	
              guarantees
                the due payment of all the Advance B Master Agreement
                Liabilities;

            


    

    


    
      	
              (b)

            	
              undertakes
                to pay to the Lender on the Lender’s first written demand, any such amount
                which is not paid by EID when such amount becomes
                due;

            


    

    


    
      	
              (c)

            	
              undertakes
                to procure that EID shall perform all its other obligations under
                the
                Advance B Master Agreement; and 

            


    

    


    
      	
              (d)

            	
              shall
                fully indemnify the Lender on its demand in respect of all claims,
                expenses, liabilities and losses which are made or brought against
                or
                incurred by the Lender as a result of or in connection with any obligation
                or liability of EID which is hereby guaranteed by IBIS being or becoming
                unenforceable, invalid, void or illegal; and the amount recoverable
                under
                this indemnity shall be equal to the amount which the Lender would
                otherwise have been entitled to
                recover.

            


    

    


    
      	
              4.14

            	
              Guarantee
                of IBIS’s obligations. EID
                unconditionally and irrevocably:

            


    

    


    
      	
              (a)

            	
              guarantees
                the due payment of all the Advance A Master Agreement
                Liabilities;

            


    

    


    
      	
              (b)

            	
              undertakes
                to pay to the Lender on the Lender’s first written demand, any such amount
                which is not paid by IBIS when such amount becomes
                due;

            


    

    


    
      	
              (c)

            	
              undertakes
                to procure that IBIS shall perform all its other obligations under
                the
                Advance B Master Agreement; and 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (d)

            	
              shall
                fully indemnify the Lender on its demand in respect of all claims,
                expenses, liabilities and losses which are made or brought against
                or
                incurred by the Lender as a result of or in connection with any obligation
                or liability of IBIS which is hereby guaranteed by EID being or becoming
                unenforceable, invalid, void or illegal; and the amount recoverable
                under
                this indemnity shall be equal to the amount which the Lender would
                otherwise have been entitled to
                recover.

            


    

    
       

      
        	
                4.15

              	
                Principal
                  and independent debtor. The
                  Borrowers shall be liable under Clause 4.13 and 4.14 as principal
                  and
                  independent debtors and accordingly they shall not have, as regards
                  their
                  guarantees contained therein, any of the rights or defences of
                  a
                  surety.

              


      

    

    
       

      
        	
                4.16

              	
                Waiver
                  of rights and defences. Without
                  limiting the generality of Clause 4.15, no Borrower shall be discharged
                  by, nor have any claim against the Lender in respect
                  of:

              


      

    

    


    
      	
              (a)

            	
              any
                Transaction being entered into under, or any amendment or supplement
                being
                made to, the Master Agreement to which it is not a
                party;

            


    

    


    
      	
              (b)

            	
              any
                arrangement or concession (including a rescheduling or acceptance
                of
                partial payments) relating to, or affecting, the Master Agreement
                to which
                it is not a party;

            


    

    


    
      	
              (c)

            	
              any
                release or loss (even though negligent) of any right created by the
                Master
                Agreement to which it is not a
                party;

            


    

    


    
      	
              (d)

            	
              any
                failure by the Lender (even though negligent) promptly or properly
                to
                exercise or enforce any such right;

            


    

    


    
      	
              (e)

            	
              the
                Master Agreement to which it is not a party now being or later becoming
                void, unenforceable, illegal or invalid or otherwise defective for
                any
                reason, including a neglect to register
                it;

            


    

    


    
      	
              (f)

            	
              any
                insolvency or similar proceedings.

            


    

    
       

      
        	
                5

              	
                INTEREST
                  PERIODS

              


      

    

    


    
      	
              5.1

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

            


    

    


    
      	
              5.2

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    
       

      
        	
                5.3

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

              


      

    

    
       

      
        	
                5.4

              	
                Non-availability
                  of matching deposits for Interest Period selected.
                  If, after the Borrowers have selected and the Lender has agreed
                  an
                  Interest Period longer than 6 months, the Lender notifies the Borrowers
                  by
                  11.00 a.m. (London time) on the second Business Day before the
                  commencement of the Interest Period that it is not satisfied that
                  deposits
                  in Dollars for a period equal to the Interest Period will be available
                  to
                  it in the London Interbank Market when the Interest Period commences,
                  the
                  Interest Period shall be of 3
                  months.

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              6

            	
              DEFAULT
                INTEREST

            


    

    


    
      	
              6.1

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

            


    

    


    
      	
              (a)

            	
              the
                date on which the Finance Documents provide that such amount is due
                for
                payment; or

            


    

    


    
      	
              (b)

            	
              if
                a Finance Document provides that such amount is payable on demand,
                the
                date falling 3 Business Days after the date on which the demand is
                served;
                or

            


    

    


    
      	
              (c)

            	
              if
                such amount has become immediately due and payable under Clause
                18.4,
                the date on which it became immediately due and
                payable.

            


    

    
       

      
        	
                6.2

              	
                Default
                  rate of interest.
                  Interest shall accrue on an overdue amount from (and including)
                  the
                  relevant date until the date of actual payment (as well after as
                  before
                  judgment) at the rate per annum determined by the Lender to be
                  2 per cent.
                  above:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    
       

      
        	
                6.3

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

              


      

    

    
       

      
        	
                (a)

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

              


      

    

    
       

      
        	
                (b)

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

              


      

    

    


    
      	 	
              (i)

            	
              LIBOR;
                or

            


    

    


    
      	 	
              (ii)

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

            


    

    


    
      	
              6.4

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

            


    

    


    
      	
              6.5

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

            


    

    


    
      	
              6.6

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              6.7

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

            


    

    
       

      
        	
                7

              	
                REPAYMENT
                  AND PREPAYMENT

              


      

    

    
       

      
        	
                7.1

              	
                Amount
                  of repayment instalments. The
                  Borrowers shall:

              


      

    

    


    
      	
              (a)

            	
              repay
                Advance A by 14 consecutive 6-monthly instalments of $1,785,500 and
                by a
                balloon instalment for the outstanding balance repayable together
                with the
                fourteenth such instalment.

            


    

    


    
      	
              (b)

            	
              repay
                Advance B by 22 consecutive 6-monthly instalments of $1,772,500 and
                by a
                balloon instalment for the outstanding balance repayable together
                with the
                twenty-second such instalment

            


    

    


    
      	
              7.2

            	
              Repayment
                Dates.
                The first instalment in respect of each Advance shall be repaid on
                the
                date falling 6 months after the Drawdown Date for that Advance. The
                last
                instalment in respect of Advance A shall be repaid on the date falling
                84
                months after the Drawdown Date in respect of Advance A and the last
                instalment in respect of Advance B shall be repaid on the date falling
                132
                months after the Drawdown Date in respect of Advance
                B.

            


    

    


    
      	
              7.3

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

            


    

    
       

      
        	
                7.4

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

              


      

    

    


    
      	
              7.5

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

            


    

    


    
      	
              (a)

            	
              a
                partial prepayment shall be $250,000 or a higher integral multiple
                of
                $250,000;

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              7.6

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

            


    

    


    
      	
              7.7

            	
              Mandatory
                prepayment.
                The Borrowers shall be obliged to make a prepayment in respect of
                the Loan
                of the amount specified in Clause
                7.8:

            


    

    


    
      	
              (a)

            	
              if
                a Ship is sold, on or before the date on which the sale is completed
                by
                delivery of that Ship to the buyer;
                or

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

            	
              if
                a Ship becomes a Total Loss, on the earlier of the date falling 120
                days
                after the Total Loss Date and the date of receipt by the Lender of
                the
                proceeds of insurance relating to such Total Loss; or
                

            


    

    


    
      	
              (c)

            	
              if
                V. Investments Limited, V. Ship Group Ltd., V Holding Limited, Greysea
                Limited, Close Securities Limited, Close Investment Partners Limited,
                Navalmar (UK) Limited, Bogazzi Fimpar SpA and Enrico Bogazzi between
                them
                cease to be the ultimate beneficial owners of at least 50.1 per cent.
                of
                the shares in the Guarantor or to have the ultimate control of at
                least
                50.1 per cent. of the voting rights attaching to any of the shares
                in the
                Guarantor and the Lender and the Borrowers have not reached mutually
                acceptable terms on which to continue this Agreement pursuant to
                Clause
                7.9. 

            


    

    


    
      	
              7.8

            	
              Mandatory
                prepayment.
                The amount of any prepayment pursuant to Clause 7.7 shall
                be:

            


    

    


    
      	
              (a)

            	
              in
                case of sale or Total Loss of a Ship, the highest
                of:

            


    

    


    
      	 	
              (i)

            	
              the
                amount of the Advance used to acquire the
                Ship;

            


    

    


    
      	 	
              (ii)

            	
              such
                sum as is necessary to ensure that, in relation to the remaining
                amount of
                the Loan and the remaining Ship or Ships immediately after such
                prepayment, the same asset cover ratio (calculated as per Clause
                14.3)
                applies as applied immediately prior to such prepayment;
                and

            


    

    


    
      	 	
              (iii)

            	
              such
                sum as shall ensure that the requirements of Clause 14.1 are complied
                with
                in relation to the remaining amount of the Loan and the remaining
                Ship
                immediately after such prepayment;
                or

            


    

    


    
      	
              (b)

            	
              in
                the case of sale or Total Loss of the second of the Ships subject
                to a
                Mortgage, the whole of the Loan; or


            


    

    


    
      	
              (c)

            	
              in
                the circumstances contemplated in Clause 7.7(c), the whole of the
                Loan.

            


    

    


    Any
      such
      prepayment pursuant to paragraph (a) shall be applied first to prepay the
      Advance used to acquire the relevant Ship and thereafter against the repayment
      instalments of the other Advancespecified in Clause 7.1 in inverse order of
      maturity.

    


    
      	
              7.9

            	
              Change
                of control of Guarantor. In
                the circumstances contemplated in Clause 7.7(c), the Borrowers and
                the
                Lender shall consult for a period not exceeding 45 days (the “Relevant
                Period”)
                with a view to agreeing and implementing terms mutually acceptable
                to both
                the Borrowers and the Lender upon which to continue to make the Loan
                available. If at the end of the Relevant Period no mutually acceptable
                agreement is reached to continue to make the Loan available, the
                Borrowers
                shall prepay the Loan in full within 5 Business Days of the end of
                the
                Relevant Period.

            


    

    


    
      	
              7.10

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

            


    

    


    
      	
              7.11

            	
              Application
                of partial prepayment.
                Unless otherwise provided in this Clause 7, each partial prepayment
                shall
                be applied against the repayment instalments of the relevant Advance
                specified in Clause 7.1
                in
                inverse order of maturity.

            


    

    


    
      	
              7.12

            	
              No
                reborrowing.
                No
                amount prepaid may be reborrowed.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              7.13

            	
              Unwinding
                of Transactions.
                On
                or prior to any repayment or prepayment of an Advance or any part
                of it
                under this Clause 7 or any other provision of this Agreement, the
                Borrowers shall wholly or partially reverse, offset, unwind or otherwise
                terminate one or more of the continuing Transactions so that the
                notional
                principal amount of the continuing Transactions thereafter remaining
                does
                not and will not in the future (taking into account the scheduled
                amortisation) exceed the amount of the Loan as reducing from time
                to time
                thereafter pursuant to Clause 7.1.

            


    

    
       

      
        	
                8

              	
                CONDITIONS
                  PRECEDENT

              


      

    

    
       

      
        	
                8.1

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

              


      

    

    
       

      
        	
                (a)

              	
                that,
                  on or before service of the Drawdown Notice for an Advance, the
                  Borrowers
                  enter into hedging arrangements with the Lender on terms in all
                  respects
                  approved by the Lender to hedge the whole of LIBOR risk under that
                  Advance
                  for a period at least equal to the Time Charter Period in respect
                  of the
                  Ship to be acquired with that
                  Advance;

              


      

    

    


    
      	
              (b)

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

            


    

    
       

      
        	
                (c)

              	
                that,
                  on or before each Drawdown Date but prior to the making of the
                  relevant
                  Advance, the Lender receives the documents described in Part B
                  of Schedule
                  2 in form and substance satisfactory to it and its
                  lawyers;

              


      

    

    


    
      	
              (d)

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

            


    

    


    
      	 	
              (i)

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

            


    

    


    
      	 	
              (ii)

            	
              the
                representations and warranties in Clause 9.1
                and those of either Borrower or any Security Party which are set
                out in
                the other Finance Documents would be true and not misleading if repeated
                on each of those dates with reference to the circumstances then existing;
                and

            


    

    


    
      	 	
              (iii)

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

            


    

    


    
      	
              (e)

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

            


    

    


    
      	
              (f)

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

            


    

    
       

      
        	
                8.2

              	
                Waivers
                  of conditions precedent.
                  If
                  the Lender, at its discretion, permits an Advance to be borrowed
                  before
                  certain of the conditions referred to in Clause 8.1
                  are satisfied, the Borrowers shall ensure that those conditions
                  are
                  satisfied within 10 Business Days after the Drawdown Date (or such
                  longer
                  period as the Lender may
                  specify).

              


      

    

    
       

      
        	
                9

              	
                REPRESENTATIONS
                  AND WARRANTIES

              


      

    

    
       

      
        	
                9.1

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              9.2

            	
              Status.
                It
                is duly incorporated and validly existing under the laws of The
                Commonwealth of Bahamas.

            


    

    


    
      	
              9.3

            	
              Share
                capital and ownership. It
                has an authorised share capital of $5,000 divided into 5000 registered
                shares of $1 each, all of which shares have been issued fully paid,
                and
                the legal title and beneficial ownership of all those shares is held,
                free
                of any Security Interest or other claim, by the
                Guarantor.

            


    

    
       

      
        	
                9.4

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

              


      

    

    


    
      	
              (a)

            	
              to
                execute the MOA to which it is a party, to purchase and pay for the
                relevant Ship under that MOA and to register that Ship in its name
                under
                the Bahamas flag;

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              9.5

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

            


    

    
       

      
        	
                9.6

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

              


      

    

    


    
      	
              (a)

            	
              constitute
                that Borrower's legal, valid and binding obligations enforceable
                against
                that Borrower in accordance with their respective terms;
                and

            


    

    


    
      	
              (b)

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

            


    

    


    subject
      to any relevant insolvency laws affecting creditors' rights
      generally.

    


    
      	
              9.7

            	
              No
                third party Security Interests.
                Without limiting the generality of Clause 9.6,
                at the time of the execution and delivery of each Finance Document
                and the
                Master Agreement to which it is a
                party:

            


    

    


    
      	
              (a)

            	
              it
                will have the right to create all the Security Interests which that
                Finance Document purports to create;
                and

            


    

    


    
      	
              (b)

            	
              no
                third party will have any Security Interest (except for Permitted
                Security
                Interests) or any other interest, right or claim over, in or in relation
                to any asset to which any such Security Interest, by its terms,
                relates.

            


    

    


    
      	
              9.8

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

            


    

    


    
      	
              (a)

            	
              any
                law or regulation; or

            


    

    


    
      	
              (b)

            	
              the
                constitutional documents of that Borrower;
                or

            


    

    


    
      	
              (c)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              9.9

            	
              No
                withholding taxes.
                All payments which it is liable to make under the Finance Documents
                to
                which it is a party may be made without deduction or withholding
                for or on
                account of any tax payable under any law of any Pertinent
                Jurisdiction.

            


    

    


    
      	
              9.10

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

            


    

    


    
      	
              9.11

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

            


    

    


    
      	
              9.12

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

            


    

    


    
      	
              9.13

            	
              No
                rebates etc.
                There is no agreement or understanding to allow or pay any rebate,
                premium, commission, discount or other benefit or payment (howsoever
                described) to it, the Time Charterer or a third party in connection
                with
                the purchase by that Borrower of the relevant Ship, other than as
                disclosed to the Lender in writing on or prior to the date of this
                Agreement.

            


    

    


    
      	
              9.14

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

            


    

    


    
      	
              9.15

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

            


    

    
       

      
        	
                9.16

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

              


      

    

    
       

      
        	
                10

              	
                GENERAL
                  UNDERTAKINGS

              


      

    

    


    
      	
              10.1

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

            


    

    
       

      
        	
                10.2

              	
                Title;
                  negative pledge.
                  It
                  will:

              


      

    

    


    
      	
              (a)

            	
              as
                from purchase of the Ship owned by that Borrower hold the legal title
                to,
                and own the entire beneficial interest in, that Ship, its Earnings
                and its
                Insurances, free from all Security Interests and other interests
                and
                rights of every kind, except for Permitted Security Interests;
                and

            


    

    


    
      	
              (b)

            	
              not
                create or permit to arise any Security Interest (except for Permitted
                Security Interests) over any other asset, present or
                future.

            


    

    
       

      
        	
                10.3

              	
                No
                  disposal of assets.
                  It
                  will not transfer, lease or otherwise dispose
                  of:

              


      

    

    


    
      	
              (a)

            	
              all
                or a substantial part of its assets, whether by one transaction or
                a
                number of transactions, whether related or not (except the Ship owned
                by
                that Borrower so long as the Borrowers comply with the provisions
                of
                Clauses 7.7(a) and 7.8(a)); or

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              (b)

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

            


    

    


    
      	
              10.4

            	
              No
                other liabilities or obligations to be incurred.
                It
                will not incur any liability or obligation except liabilities and
                obligations under the MOA, the Master Agreement and the Finance Documents
                to which it is or is to be a party and liabilities or obligations
                reasonably incurred in the ordinary course of owning and operating
                the
                Ship owned by it.

            


    

    
       

      
        	
                10.5

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

              


      

    

    
       

      
        	
                10.6

              	
                Provision
                  of financial statements.
                  It
                  will send to the Lender as
                  soon as possible, but in no event later than 90 days after the
                  end of each
                  financial year of that Borrower, unaudited financial statements
                  of that
                  Borrower certified as to their correctness by an authorised representative
                  of that Borrower.

              


      

    

    
       

      
        	
                10.7

              	
                Form
                  of financial statements.
                  All financial statements delivered under Clause 10.6
                  will:

              


      

    

    


    
      	
              (a)

            	
              be
                prepared in accordance with all applicable laws and auditing standards
                generally accepted in the United States of America consistently
                applied;

            


    

    


    
      	
              (b)

            	
              present
                fairly in all material respects the financial position of the relevant
                Borrower at the date of those financial statements and the results
                of its
                operations and cash flows for the period to which those financial
                statements relate; and

            


    

    


    
      	
              (c)

            	
              be
                free of material misstatement and fully disclose or provide for all
                significant liabilities of the relevant
                Borrower.

            


    

    


    
      	
              10.8

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

            


    

    
       

      
        	
                10.9

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

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


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

    


    
      	
              10.10

            	
              Maintenance
                of Security Interests.
                It
                will:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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


            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              10.11

            	
              Notification
                of litigation.
                It
                will provide the Lender with details of any legal or administrative
                action
                involving that Borrower, any Security Party, any Approved Manager
                or the
                Ship owned by it, its Earnings or its Insurances as soon as such
                action is
                instituted or it becomes apparent to that Borrower that it is likely
                to be
                instituted, unless it is clear that the legal or administrative action
                cannot be considered material in the context of any Finance Document.
                

            


    

    


    
      	
              10.12

            	
              No
                amendment to MOAs.
                It
                will not agree to any amendment or supplement to, or waive or fail
                to
                enforce, the MOA to which it is a party or any of its provisions
                after
                copies duly executed by both parties thereto have been submitted
                to the
                Lender.

            


    

    
       

      
        	
                10.13

              	
                Principal
                  place of business.
                  It
                  will maintain its main place of business, and keep its corporate
                  documents
                  and records, at the address stated in Clause 27.2(a); and it will
                  not
                  establish, or do anything as a result of which it would be deemed
                  to have,
                  a place of business in any country other than The
                  Commonwealth of the Bahamas.

              


      

    

    


    
      	
              10.14

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              10.15

            	
              Notification
                of default.
                It
                will notify the Lender as soon as that Borrower becomes aware
                of:

            


    

    


    
      	
              (a)

            	
              the
                occurrence of an Event of Default or a Potential Event of Default;
                or

            


    

    


    
      	
              (b)

            	
              any
                matter which indicates that an Event of Default or a Potential Event
                of
                Default may have occurred;

            


    

    


    and
      will
      keep the Lender fully up-to-date with all developments.

    


    
      	
              10.16

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              to
                any other matter relevant to, or to any provision of, a Finance Document
                to which it is a party;

            


    

    


    which
      may
      be requested by the Lender at any time. In addition, it will use its best
      endeavours to procure annual and semi-annual financial statements from the
      Time
      Charterers.

    


    
      	
              10.17

            	
              Maintenance
                of minimum balances on the Earnings Accounts.
                It will ensure that there shall always be, throughout the Security
                Period,
                a credit balance of at least $250,000 on the Earnings Account relating
                to
                the Ship owned by it (such that the aggregate credit balance on both
                Earnings Accounts is at least
                $500,000).

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              11

            	
              CORPORATE
                UNDERTAKINGS

            


    

    


    
      	
              11.1

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

            


    

    
       

      
        	
                11.2

              	
                Maintenance
                  of status.
                  It
                  will maintain its separate corporate existence and remain in existence
                  under the laws of The Commonwealth of the
                  Bahamas.

              


      

    

    
       

      
        	
                11.3

              	
                Negative
                  undertakings.
                  It
                  will not:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	(b)	(i)	
               provide
                any form of credit or financial assistance
                to:

            


    

    


    
      	 	
              (A)

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

            


    

    


    
      	 	
              (B)

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

            


    

    


    
      	 	
              (ii)

            	
              incur
                any Financial Indebtedness owing to such a person or company except
                where
                such loan or loans are fully subordinated to the rights of the Lender
                under the Finance Documents and under the Master Agreements; or
                

            


    

    


    
      	
            	(iii)	
              enter
                into any transaction with or involving such a person or
                company;

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              12

            	
              INSURANCE

            


    

    


    
      	
              12.1

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

            


    

    
       

      
        	
                12.2

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

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              war
                risks; 

            


    

    
       

      
        	
                (c)

              	
                protection
                  and indemnity risks; and

              


      

    

    


    
      	
              (d)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              12.3

            	
              Terms
                of obligatory insurances.
                It
                shall effect such insurances in respect of the Ship owned by
                it:

            


    

    


    
      	
              (a)

            	
              in
                Dollars;

            


    

    


    
      	
              (b)

            	
              in
                the case of fire and usual marine risks and war risks, in an amount
                on an
                agreed value basis at least the greater
                of:

            


    

    


    
      	 	
              (i)

            	
              when
                aggregated with the insured value of the other Ship, 110 per cent.
                of the
                Loan; and

            


    

    


    
      	 	
              (ii)

            	
              the
                market value of that Ship; and

            


    

    


    
      	
              (c)

            	
              in
                the case of oil pollution liability risks, for an aggregate amount
                equal
                to the highest level of cover from time to time available under basic
                protection and indemnity club entry with protection and indemnity
                risks
                associations belonging to the International Group of Protection and
                Indemnity Associations;

            


    

    


    
      	
              (d)

            	
              in
                relation to protection and indemnity risks in respect of that Ship's
                full
                tonnage;

            


    

    


    
      	
              (e)

            	
              on
                approved terms; and

            


    

    


    
      	
              (f)

            	
              through
                approved brokers and with approved insurance companies and/or underwriters
                or, in the case of war risks and protection and indemnity risks,
                in
                approved war risks and protection and indemnity risks
                associations.

            


    

    
       

      
        	
                12.4

              	
                Further
                  protections for the Lender.
                  In
                  addition to the terms set out in Clause 12.3,
                  it shall procure that the obligatory insurances effected by it
                  shall:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              (e)

            	
              provide
                that the Lender may make proof of loss if that Borrower fails to
                do
                so;

            


    

    


    
      	
              (f)

            	
              provide
                that if any such obligatory insurance is cancelled, or if any substantial
                change is made in the coverage which adversely affects the interest
                of the
                Lender, or if any such obligatory insurance is allowed to lapse for
                non-payment of premium, such cancellation, change or lapse shall
                not be
                effective with respect to the Lender for 15 days (or 7 days in the
                case of
                war risks) after receipt by the Lender of prior written notice from
                the
                insurers of such cancellation, change or
                lapse.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              12.5

            	
              Renewal
                of obligatory insurances.
                It
                shall:

            


    

    


    
      	
              (a)

            	
              at
                least 21 days before the expiry of any obligatory insurance effected
                by
                it:

            


    

    


    
      	 	
              (i)

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

            


    

    


    
      	 	
              (ii)

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

            


    

    


    
      	
              (b)

            	
              at
                least 14 days before the expiry of any obligatory insurance effected
                by
                it, renew that obligatory insurance in accordance with the Lender's
                approval pursuant to paragraph (a);
                and

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              12.6

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              they
                will notify the Lender, not less than 14 days before the expiry of
                the
                obligatory insurances, in the event of their not having received
                notice of
                renewal instructions from that Borrower or its agents and, in the
                event of
                their receiving instructions to renew, they will promptly notify
                the
                Lender of the terms of the instructions;
                and

            


    

    


    
      	
              (e)

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

            


    

    
       

      
        	
                12.7

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

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

            	
              if
                that Ship trades to the United States of America and where required
                to be
                issued under the terms of insurance/indemnity provided by that Borrower's
                protection and indemnity association, a certified copy of each United
                States of America voyage quarterly declaration (or other similar
                document
                or documents) made by that Borrower in relation to that Ship in accordance
                with the requirements of such protection and indemnity association;
                and
                

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (d)

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

            


    

    


    
      	
              12.8

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

            


    

    


    
      	
              12.9

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

            


    

    


    
      	
              12.10

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

            


    

    


    
      	
              12.11

            	
              Compliance
                with terms of insurances.
                It
                shall not do nor omit to do (nor permit to be done or not to be done)
                any
                act or thing which would or might render any obligatory insurance
                invalid,
                void, voidable or unenforceable or render any sum payable under an
                obligatory insurance repayable in whole or in part; and, in
                particular:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              it
                shall not make any changes relating to the classification or
                classification society or manager or operator of the Ship owned by
                it
                approved by the underwriters of the obligatory
                insurances;

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              it
                shall not employ the Ship owned by it, nor allow it to be employed,
                otherwise than in conformity with the terms and conditions of the
                obligatory insurances, without first obtaining the consent of the
                insurers
                and complying with any requirements (as to extra premium or otherwise)
                which the insurers specify.

            


    

    


    
      	
              12.12

            	
              Alteration
                to terms of insurances.
                it
                shall not make nor agree to any alteration to the terms of any obligatory
                insurance nor waive any right relating to any obligatory insurance.
                

            


    

    


    
      	
              12.13

            	
              Settlement
                of claims.
                It
                shall not settle, compromise or abandon any claim under any obligatory
                insurance for Total Loss or for a Major Casualty, and it shall do
                all
                things necessary and provide all documents, evidence and information
                to
                enable the Lender to collect or recover any moneys which at any time
                become payable in respect of the obligatory
                insurances.

            


    

    


    
      	
              12.14

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

            


    

    


    
      	
              (a)

            	
              the
                approved brokers; and

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	 	
              (i)

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

            


    

    


    
      	 	
              (ii)

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

            


    

    


    
      	
              12.15

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

            


    

    
       

      
        	
                (a)

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

              


      

    

    


    
      	
              (b)

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

            


    

    


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

    


    
      	
              12.16

            	
              Mortgagee's
                interest, additional perils insurances.
                The Lender shall be entitled from time to time to effect, maintain
                and
                renew a mortgagee’s interest marine insurance and a mortgagee’s interest
                additional perils insurance providing for the indemnification of
                the
                Lender against, among other things, any possible losses or other
                consequences of any Environmental Claim, including the risk of
                expropriation, arrest or any form of detention of any Ship, the imposition
                of any Security Interest over any Ship and/or any other matter capable
                of
                being insured against under a mortgagee's interest additional perils
                policy whether or not similar to the foregoing and otherwise for
                an amount
                equal to 110 per cent. of the Loan, on such terms, through such insurers
                and generally in such manner as the Lender may from time to time
                consider
                appropriate and the Borrowers shall upon demand fully indemnify the
                Lender
                in respect of all premiums and other expenses which are incurred
                in
                connection with or with a view to effecting, maintaining or renewing
                any
                such insurance or dealing with, or considering, any matter arising
                out of
                any such insurance.

            


    

    


    
      	
              12.17

            	
              Review
                of insurance requirements.
                The Lender shall be entitled to review the requirements of this Clause
                12
                from time to time, but not more than once in any 12 month period
                or at
                such times as the approved brokers through which, and/or the protection
                and indemnity and/or war risks associations in which, any Ship is
                insured
                or entered shall change, in order to take account of any changes
                in
                circumstances after the date of this Agreement which are, in the
                opinion
                of the Lender, significant and capable of affecting either Borrower
                or
                either Ship and its or their insurance (including, without limitation,
                changes in the availability or the cost of insurance coverage or
                the risks
                to which either Borrower may be
                subject.)

            


    

    
       

      
        	
                13

              	
                SHIP
                  COVENANTS

              


      

    

    


    
      	
              13.1

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              13.2

            	
              Ship's
                name and registration.
                It
                shall keep the Ship owned by it registered in its name as a Bahamas
                ship
                flagged at the port of Nassau; it shall not do or allow to be done
                anything as a result of which such registration might be cancelled
                or
                imperilled; and it shall not change the name or port of registry
                of the
                Ship owned by it.

            


    

    
       

      
        	
                13.3

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

              


      

    

    


    
      	
              (a)

            	
              consistent
                with first-class ship ownership and management
                practice;

            


    

    


    
      	
              (b)

            	
              so
                as to maintain that Ship's class as the highest possible class with
                a
                classification society which the Lender shall approve, free of all
                overdue
                recommendations and conditions; and

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              13.4

            	
              Classification
                society undertaking.
                If
                requested to do so by the Lender, it shall instruct the classification
                society referred to in Clause 13.3
                (and shall use its best endeavours to procure that the classification
                society undertakes with the Lender or, to the extent that the
                classification society will not give such undertakings, shall use
                its best
                endeavours itself to comply with the undertakings referred to in
                paragraphs (a) to (d) below):

            


    

    


    
      	
              (a)

            	
              to
                send to the Lender, following receipt of a written request from the
                Lender, certified true copies of all original class records held
                by the
                classification society in relation to the Ship owned by
                it;

            


    

    


    
      	
              (b)

            	
              to
                allow the Lender (or its agents), at any time and from time to time,
                to
                inspect the original class and related records of that Borrower and
                the
                Ship owned by it at the offices of the classification society and
                to take
                copies of them;

            


    

    


    
      	
              (c)

            	
              to
                notify the Lender immediately in writing if the classification
                society:

            


    

    


    
      	 	
              (i)

            	
              receives
                notification from that Borrower or any other person that that Ship's
                classification society is to be changed;
                or

            


    

    


    
      	 	
              (ii)

            	
              becomes
                aware of any facts or matters which may result in or have resulted
                in a
                change, suspension, discontinuance, withdrawal or expiry of the Ship's
                class under the rules or terms and conditions of that Borrower's
                or that
                Ship's membership of the classification
                society;

            


    

    


    
      	
              (d)

            	
              following
                receipt of a written request from the
                Lender:

            


    

    


    
      	 	
              (i)

            	
              to
                confirm that that Borrower is not in default of any of its contractual
                obligations or liabilities to the classification society and, without
                limiting the foregoing, that it has paid in full all fees or other
                charges
                due and payable to the classification society;
                or

            


    

    


    
      	 	
              (ii)

            	
              if
                that Borrower is in default of any of its contractual obligations
                or
                liabilities to the classification society, to specify to the Lender
                in
                reasonable detail the facts and circumstances of such default, the
                consequences of such default, and any remedy period agreed or allowed
                by
                the classification society.

            


    

    


    
      	
              13.5

            	
              Modification.
                It
                shall not make any modification or repairs to, or replacement of,
                the Ship
                owned by it or equipment installed on that Ship which would or might
                materially alter the structure, type or performance characteristics
                of
                that Ship or materially reduce its
                value.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              13.6

            	
              Removal
                of parts.
                It
                shall not remove any material part of the Ship owned by it, or any
                item of
                equipment installed on that Ship, unless the part or item so removed
                is
                forthwith replaced by a suitable part or item which is in the same
                condition as or better condition than the part or item removed, is
                free
                from any Security Interest or any right in favour of any person other
                than
                the Lender and becomes on installation on that Ship the property
                of that
                Borrower and subject to the security constituted by the Mortgage
                Provided
                that
                that Borrower may install equipment owned by a third party if the
                equipment can be removed without any risk of damage to that
                Ship.

            


    

    


    
      	
              13.7

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

            


    

    


    
      	
              13.8

            	
              Inspection.
                It
                shall permit the Lender (by surveyors or other persons appointed
                by it for
                that purpose) to board the Ship owned by it at all reasonable times
                to
                inspect its condition or to satisfy themselves about proposed or
                executed
                repairs and shall afford all proper facilities for such inspections.
                

            


    

    


    
      	
              13.9

            	
              Prevention
                of and release from arrest.
                It
                shall promptly discharge:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


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

    


    
      	
              13.10

            	
              Compliance
                with laws etc.
                It
                shall:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              13.11

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              any
                towages and salvages;

            


    

    


    
      	
              (e)

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

            


    

    


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

    


    
      	
              13.12

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              (e)

            	
              any
                intended dry docking of the Ship owned by
                it;

            


    

    


    
      	
              (f)

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

            


    

    


    
      	
              (g)

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

            


    

    


    
      	
              (h)

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

            


    

    


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

     

    
      	
              13.13

            	
              Restrictions
                on chartering, appointment of managers etc.
                It
                shall not, in relation to the Ship owned by
                it:

            


    

    


    
      	
              (a)

            	
              let
                that Ship on demise charter for any
                period;

            


    

    


    
      	
              (b)

            	
              enter
                into any time or consecutive voyage charter in respect of that Ship
                for a
                term which exceeds, or which by virtue of any optional extensions
                may
                exceed, 13 months (except for the relevant Time Charter or a Replacement
                Time Charter;

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              charter
                that Ship otherwise than on bona fide arm's length terms at the time
                when
                that Ship is fixed;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (e)

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

            


    

    


    
      	
              (f)

            	
              de-activate
                or lay up that Ship;

            


    

     

    In
      addition, that Borrower shall advise the Lender promptly after that Ship is
      put
      into the possession of any person for the purpose of work being done upon her
      in
      an amount exceeding or likely to exceed $500,000 (or the equivalent in any
      other
      currency) and shall also procure that at all times sums due to each such person
      are paid when due so that no such person shall exercise any lien on that Ship
      or
      its Earnings for the cost of such work or for any other reason.

    


    
      	
              13.14

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

            


    

    


    
      	
              13.15

            	
              Sharing
                of Earnings.
                It
                shall not enter into any agreement or arrangement for the sharing
                of any
                Earnings.

            


    

    


    
      	
              14

            	
              SECURITY
                COVER

            


    

    
       

      
        	
                14.1

              	
                Minimum
                  required security cover.
                  Clause 14.2 applies if (after a Ship has been delivered to a Borrower
                  under the relevant MOA) the Lender notifies the Borrowers
                  that:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    is
      below
      110 per cent. of the Loan (or 125 per cent. after the date falling 6 months
      prior to the end of the Time Charter Period for either Ship unless and until
      the
      relevant Ship has been delivered to the charterer under a Replacement Time
      Charter).

    


    
      	
              14.2

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              14.3

            	
              Valuation
                of Ships.
                The market value of a Ship at any date is that shown by the average
                of 2
                valuations each prepared:

            


    

    


    
      	
              (a)

            	
              as
                at a date not more than 14 days
                previously;

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              (d)

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

            


    

    


    
      	
              (e)

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


            


    

    


    
      	
              14.4

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

            


    

    


    
      	
              14.5

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

            


    

    


    
      	
              14.6

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

            


    

    


    
      	
              14.7

            	
              Payment
                of valuation expenses.
                Without prejudice to the generality of the Borrowers’ obligations under
                Clauses 19.2, 19.3 and 20.3, the Borrowers shall, on demand, pay
                the
                Lender the amount of the fees and expenses of any shipbroker or expert
                instructed by the Lender under this Clause 14 (but not more often
                than
                once in any period of 12 months unless an Event of Default has occurred)
                and all legal and other expenses incurred by the Lender in connection
                with
                any matter arising out of this
                Clause.

            


    

    


    
      	
              14.8

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

            


    

    
       

      
        	
                15

              	
                PAYMENTS
                  AND CALCULATIONS

              


      

    

    
       

      
        	
                15.1

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

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              15.2

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

            


    

    


    
      	
              (a)

            	
              the
                due date shall be extended to the next succeeding Business Day;
                or

            


    

    


    
      	
              (b)

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

            


    

    


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

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              15.3

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

            


    

    
       

      
        	
                15.4

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

              


      

    

    


    
      	
              15.5

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

            


    

    
       

      
        	
                16

              	
                APPLICATION
                  OF RECEIPTS

              


      

    

    
       

      
        	
                16.1

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

              


      

    

    


    
      	
              (a)

            	
              FIRST:
                in or towards satisfaction of any amounts then due and payable under
                the
                Finance Documents (or any of them) and the Master Agreements (or
                either of
                them) in such order of application and/or such proportions as the
                Lender
                may specify by notice to the Borrowers and the Security
                Parties;

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              16.2

            	
              Appropriation
                rights overridden.
                This Clause 16
                shall override any right of appropriation possessed, and any appropriation
                made, by any Borrowers or any Security
                Party.

            


    

    
       

      
        	
                17

              	
                APPLICATION
                  OF EARNINGS

              


      

    

    


    
      	
              17.1

            	
              Payment
                of Earnings.
                Each Borrower undertakes with the Lender to ensure that, throughout
                the
                Security Period (and subject only to the provisions of the Deeds
                of
                Covenant), all the Earnings of the Ship owned by it are paid to the
                relevant Earnings Account.

            


    

    
       

      
        	
                17.2

              	
                Monthly
                  retentions.
                  The Borrowers undertake with the Lender to ensure that, in each
                  calendar
                  month of the Security Period after the relevant Ship has been delivered
                  to
                  a Borrower, on such dates as the Lender may from time to time specify,
                  there is transferred to each Retention Account out of the Earnings
                  received in the relevant Earnings Account during the preceding
                  calendar
                  month:

              


      

    

    


    
      	
              (a)

            	
              one-sixth
                of the amount of the repayment instalment relating to the relevant
                Advance
                falling due under Clause 7
                on
                the next applicable Repayment Date;
                and

            


    

    


    
      	
              (b)

            	
              the
                relevant fraction of the aggregate amount of interest on the relevant
                Advance which is payable on the next due date for payment of interest
                on
                that Advance under this Agreement.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    The
      “relevant
      fraction”
      is a
      fraction of which the numerator is 1 and the denominator the number of months
      comprised in the then current Interest Period applicable to that Advance (or,
      if
      the period is shorter, the number of months from the later of the commencement
      of the current Interest Period or the last due date for payment of interest
      to
      the next due date for payment of interest on that Advance under this
      Agreement).

    


    
      	
              17.3

            	
              Shortfall
                in Earnings.
                If
                the aggregate Earnings received in the relevant Earnings Account
                are
                insufficient in any month for the required amounts to be transferred
                to a
                Retention Account under Clause 17.2,
                the Borrowers shall make up the amount of the insufficiency on demand
                from
                the Lender; but, without thereby prejudicing the Lender's right to
                make
                such demand at any time, the Lender may permit the Borrowers to make
                up
                all or part of the insufficiency by increasing the amount of any
                transfer
                under Clause 17.2
                from the Earnings received in the next or subsequent
                months.

            


    

    
       

      
        	
                17.4

              	
                Application
                  of retentions.
                  Until an Event of Default or a Potential Event of Default occurs,
                  the
                  Lender shall on each Repayment Date and on each due date for the
                  payment
                  of interest under this Agreement apply in accordance with Clause
                  15.1
                  so
                  much of the balance on the relevant Retention Account as
                  equals:

              


      

    

    
       

      
        	
                (a)

              	
                the
                  repayment instalment due on that Repayment Date; or 

              


      

    

    


    
      	
              (b)

            	
              the
                amount of interest payable on that interest payment
                date;

            


    

    


    in
      discharge of the Borrowers’ liability for that repayment instalment or that
      interest. 

     

    
      	
              17.5

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

            


    

    


    
      	
              17.6

            	
              Release
                of accrued interest.
                Interest accruing under Clause 17.5
                shall be released to the Borrowers on each Repayment Date unless
                an Event
                of Default or a Potential Event of Default has occurred or the then
                credit
                balance on the relevant Retention Account is less than what would
                have
                been the balance had the full amount required by Clause 17.2
                (and Clause 17.3,
                if applicable) been transferred in that and each previous month.
                

            


    

    


    
      	
              17.7

            	
              Location
                of accounts.
                The Borrowers shall promptly :

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              17.8

            	
              Debits
                for expenses etc.
                The Lender shall be entitled (but not obliged) from time to time
                to debit
                either Retention Account or either Earnings Account without prior
                notice
                in order to discharge any amount due and payable to it under Clause
                19
                or
                20
                or
                payment of which it has become entitled to demand under Clause
                19
                or
                20.

            


    

    


    
      	
              17.9

            	
              Borrower's
                obligations unaffected.
                The provisions of this Clause 17
                (as distinct from a distribution effected under Clause 17.4)
                do not affect:

            


    

    


    
      	
              (a)

            	
              the
                liability of either Borrower to make payments of principal and interest
                on
                the due dates; or

            


    

    


    
      	
              (b)

            	
              any
                other liability or obligation of either Borrower or any Security
                Party
                under any Finance Document. 

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              18

            	
              EVENTS
                OF DEFAULT

            


    

    
       

      
        	
                18.1

              	
                Events
                  of Default.
                  An
                  Event of Default occurs if:

              


      

    

    
       

      
        	
                (a)

              	
                either
                  Borrower or any Security Party fails to pay when due or (if payable
                  on
                  demand) within 3 Business Days of demand any sum payable under
                  a Finance
                  Document or under any document relating to a Finance Document;
                  however,
                  such failure shall not constitute an Event of Default
                  if:

              


      

    

    


    
      	 	
              (i)

            	
              such
                failure is due to a bank payment transmission error;
                and

            


    

    


    
      	 	
              (ii)

            	
              such
                failure is remedied within 2 Business Days of notice from the Lender
                requiring the relevant person to do so;
                or

            


    

    
       

      
        	
                (b)

              	
                any
                  breach occurs of Clause 8.2,
                  10.2,
                  10.3,
                  11.2,
                  11.3
                  or
                  14.2 or of clause 10.2 and 11.13 of the Guarantee;
                  or

              


      

    

    
       

      
        	
                (c)

              	
                any
                  breach by either Borrower or any Security Party occurs of any provision
                  of
                  a Finance Document (other than a breach covered by paragraph (a)
                  or
                  (b))
                  unless, in the opinion of the Lender, such default is capable of
                  remedy
                  and such default is remedied within 15 Business Days after written
                  notice
                  from the Lender requesting action to remedy the same;
                  or

              


      

    

    


    
      	
              (d)

            	
              (subject
                to any applicable grace period specified in any Finance Document)
                any
                breach by any Borrowers or any Security Party occurs of any provision
                of a
                Finance Document (other than a breach covered by paragraph (a),
                (b)
                or
                (c));
                or

            


    

    


    
      	
              (e)

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

            


    

    
       

      
        	
                (f)

              	
                any
                  of the following occurs in relation to any Financial Indebtedness
                  of a
                  Relevant Person (in respect of a sum of, or sums aggregating, $500,000
                  in
                  the case of the Guarantor):

              


      

    

    
       

      
        	 	
                (i)

              	
                any
                  Financial Indebtedness of a Relevant Person is not paid when due
                  or, if so
                  payable, on demand; or

              


      

    

    


    
      	 	
              (ii)

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

            


    

    


    
      	 	
              (iii)

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

            


    

    


    
      	 	
              (iv)

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

            


    

    


    
      	 	
              (v)

            	
              any
                Security Interest securing any Financial Indebtedness of a Relevant
                Person
                becomes enforceable; or

            


    

    
       

      
        	
                (g)

              	
                any
                  of the following occurs in relation to a Borrower or the
                  Guarantor:

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (i)

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

            


    

    


    
      	 	
              (ii)

            	
              any
                of its assets are subject to any form of execution, attachment, arrest,
                sequestration or distress and shall not have been released within
                7
                Business Days; or

            


    

    


    
      	 	
              (iii)

            	
              an
                administrator is appointed (whether by the court or otherwise) in
                respect
                of a Borrower or the Guarantor; or

            


    

    


    
      	 	
              (iv)

            	
              any
                formal declaration of bankruptcy or any formal statement to the effect
                that a Borrower or the Guarantor is insolvent or likely to become
                insolvent is made by such company or by its directors or, in any
                proceedings, by a lawyer acting for such company; or
                

            


    

    


    
      	 	
              (v)

            	
              a
                provisional liquidator is appointed in respect of a Borrower or the
                Guarantor, a winding-up order is made in relation to a Borrower or
                the
                Guarantor or a winding-up resolution is passed by a Borrower or the
                Guarantor; or 

            


    

    


    
      	 	
              (vi)

            	
              a
                resolution is passed, an administration notice is given or filed,
                an
                application or petition to a court is made or presented or any other
                step
                is taken by (aa) a Borrower or the Guarantor, (bb) the members or
                directors of a Borrower or the Guarantor, (cc) a holder of Security
                Interests which together relate to all or substantially all of the
                assets
                of a Borrower or the Guarantor, or (dd) a government minister or
                public or
                regulatory authority of a Pertinent Jurisdiction for or with a view
                to the
                winding up of a Borrower or the Guarantor or for the appointment
                of a
                provisional liquidator or administrator in respect of a Borrower
                or the
                Guarantor or a Borrower or the Guarantor ceases payments to creditors
                generally save that this paragraph does not apply to a fully solvent
                winding-up of a Borrower or the Guarantor which is, or is to be,
                effected
                for the purposes of an amalgamation or reconstruction previously
                approved
                by the Lender; or

            


    

    


    
      	 	
              (vii)

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

            


    

    


    
      	 	
              (viii)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (ix)

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

            


    

    


    
      	
              (h)

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

            


    

    


    
      	
              (i)

            	
              it
                becomes unlawful in any Pertinent Jurisdiction or
                impossible:

            


    

    


    
      	 	
              (i)

            	
              for
                a Borrower or any Security Party to discharge any liability under
                a
                Finance Document or to comply with any other obligation which the
                Lender
                considers material under a Finance Document;
                or

            


    

    


    
      	 	
              (ii)

            	
              for
                the Lender to exercise or enforce any right under, or to enforce
                any
                Security Interest created by, a Finance Document;
                or

            


    

    


    
      	
              (j)

            	
              any
                consent necessary to enable a Borrower to own, operate or charter
                the Ship
                owned by it or to enable a Borrower or any Security Party to comply
                with
                any provision which the Lender considers material of a Finance Document
                or
                an MOA to which that Borrower is a party is not granted, expires
                without
                being renewed, is revoked or becomes liable to revocation or any
                condition
                of such a consent is not fulfilled; or


            


    

    


    
      	
              (k)

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

            


    

    


    
      	
              (l)

            	
              any
                provision of a Finance Document which the Lender reasonably considers
                material proves to have been or becomes invalid or unenforceable,
                or a
                Security Interest created by a Finance Document proves to have been
                or
                becomes invalid or unenforceable or such a Security Interest proves
                to
                have ranked after, or loses its priority to, another Security Interest
                or
                any other third party claim or interest;
                or

            


    

    


    
      	
              (m)

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

            


    

    


    
      	
              (n)

            	
              an
                “Event of Default” as defined in section 14 of either Master Agreement
                occurs; or

            


    

    


    
      	
              (o)

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

            


    

    


    
      	 	
              (i)

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

            


    

    


    
      	 	
              (ii)

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

            


    

    


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

    


    
      	
              18.2

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

            


    

    
       

      
        	
                (a)

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

            	
              serve
                on the Borrowers a notice stating that the Loan, all accrued interest
                and
                all other amounts accrued or owing under this Agreement are immediately
                due and payable or are due and payable on demand;
                and/or

            


    

    
       

      
        	
                (c)

              	
                take
                  any other action which, as a result of the Event of Default or
                  any notice
                  served under paragraph (a) or (b), the Lender is entitled to take
                  under
                  any Finance Document or any applicable
                  law.

              


      

    

    


    
      	
              18.3

            	
              Termination
                of obligations.
                On
                the service of a notice under Clause 18.2(a),
                all the obligations of the Lender to the Borrowers under this Agreement
                shall terminate.

            


    

    
       

      
        	
                18.4

              	
                Acceleration
                  of Loan.
                  On
                  the service of a notice under Clause 18.2(b),
                  the Loan, all accrued interest and all other amounts accrued or
                  owing from
                  the Borrowers or any Security Party under this Agreement and every
                  other
                  Finance Document shall become immediately due and payable or, as
                  the case
                  may be, payable on demand.

              


      

    

    


    
      	
              18.5

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

            


    

    


    
      	
              18.6

            	
              Exclusion
                of Lender liability.
                Neither the Lender nor any receiver or manager appointed by the Lender,
                shall have any liability to the Borrowers or a Security
                Party:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


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

     

    
      	
              18.7

            	
              Relevant
                Persons.
                In
                this Clause 18
                a
                “Relevant
                Person”
                means a Borrower, the Guarantor and any company which is a subsidiary
                of a
                Borrower or the Guarantor or of which a Borrower or the Guarantor
                is a
                subsidiary; but excluding any company which is dormant and the value
                of
                whose gross assets is $50,000 or less.


            


    

    


    
      	
              18.8

            	
              Interpretation.
                In
                Clause 18.1(f)
                references to an event of default or a termination event include
                any
                event, howsoever described, which is similar to an event of default
                in a
                facility agreement or a termination event in a finance lease; and
                in
                Clause 18.1(g)“petition”
                includes an application.

            


    

    
       

      
        	
                19

              	
                FEES
                  AND EXPENSES

              


      

    

    
       

      
        	
                19.1

              	
                Arrangement
                  fee.
                  The Borrowers shall pay to the Lender, on the date of this Agreement,
                  the
                  arrangement fee specified in the Commitment
                  Letter.

              


      

    

    


    
      	
              19.2

            	
              Commitment
                fee.
                The Borrowers shall pay to the Lender
                ,
                quarterly in arrears during the period from (and including) the date
                of
                the Commitment Letter to the earlier of (i) the second Drawdown Date
                and
                (ii) the end of the Availability Period, a commitment fee (the
                “Commitment Fee”)
                at the rate of 0.30 per cent. per annum on the undrawn amount of
                the
                Commitment. If the Commitment is drawn or cancelled in full within
                a
                period of not more than 60 days from the date of the Commitment Letter,
                the Commitment Fee shall be waived by the Lender.
                

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              19.3

            	
              Costs
                of negotiation, preparation etc.
                The Borrowers shall pay to the Lender on its demand the amount of
                all
                expenses incurred by the Lender (including legal expenses actually
                incurred) in connection with the negotiation, preparation, execution
                or
                registration of any Finance Document or any related document or with
                any
                transaction contemplated by a Finance Document or a related
                document.

            


    

    
       

      
        	
                19.4

              	
                Costs
                  of variation, amendments, enforcement etc.
                  The Borrowers shall pay to the Lender, on the Lender's demand,
                  the amount
                  of all expenses incurred by the Lender (including legal expenses
                  actually
                  incurred) in connection with: 

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              any
                consent or waiver by the Lender concerned under or in connection
                with a
                Finance Document, or any request for such a consent or
                waiver;

            


    

    


    
      	
              (c)

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

            


    

    
       

      
        	
                (d)

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

              


      

    

    


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

    


    
      	
              19.5

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

            


    

    


    
      	
              19.6

            	
              Financial
                Services Authority fees.
                The Borrowers shall pay to the Lender, on the Lender’s demand, the amounts
                which the Lender from time to time notifies the Borrowers to be necessary
                to compensate it for the cost attributable to the Loan resulting
                from the
                imposition from time to time under or pursuant to the Bank of England
                Act
                1998 and/or by the Bank of England and/or by the Financial Services
                Authority (or other United Kingdom governmental authorities or agencies)
                of a requirement to pay fees to the Financial Services Authority
                calculated by reference to liabilities used to fund the
                Loan.

            


    

    


    
      	
              19.7

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

            


    

    
       

      
        	
                20

              	
                INDEMNITIES

              


      

    

    
       

      
        	
                20.1

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (a)

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

            


    

    
       

      
        	
                (b)

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

              


      

    

    


    
      	
              (c)

            	
              any
                failure (for whatever reason) by the Borrowers to make payment of
                any
                amount due under a Finance Document on the due date or, if so payable,
                on
                demand (after giving credit for any default interest paid by the
                Borrowers
                on the amount concerned under Clause 6);

            


    

    


    
      	
              (d)

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

            


    

    


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

    


    
      	
              20.2

            	
              Breakage
                costs.
                Without limiting its generality, Clause 20.1
                covers any claim, expense, liability or loss, including a loss of
                a
                prospective profit, incurred by the Lender in liquidating or employing
                deposits from third parties acquired or arranged to fund or maintain
                all
                or any part of the Loan and/or any overdue amount (or an aggregate
                amount
                which includes the Loan or any overdue amount).


            


    

    


    
      	
              20.3

            	
              Miscellaneous
                indemnities.
                The Borrowers shall fully indemnify the Lender on its demand in respect
                of
                all claims, expenses, liabilities and losses which may be made or
                brought
                against or incurred by the Lender, in any country, as a result of
                or in
                connection with:

            


    

    


    
      	
              (a)

            	
              any
                action taken, or omitted or neglected to be taken, under or in connection
                with any Finance Document by the Lender or by any receiver appointed
                under
                a Finance Document;

            


    

    


    
      	
              (b)

            	
              any
                other Pertinent Matter;

            


    

    


    other
      than claims, expenses, liabilities and losses which are shown to have been
      directly and mainly caused by the gross negligence or wilful misconduct of
      the
      officers or employees of the Lender.

    


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

    


    
      	
              20.4

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

            


    

    


    
      	
              (a)

            	
              making
                or lodging any claim or proof against any Borrower or any Security
                Party,
                whether in its liquidation, any arrangement involving it or otherwise;
                or

            


    

    


    
      	
              (b)

            	
              obtaining
                an order or judgment from any court or other tribunal;
                or

            


    

    


    
      	
              (c)

            	
              enforcing
                any such order or judgment;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    the
      Borrowers shall indemnify the Lender against the loss arising when the amount
      of
      the payment actually received by the Lender is converted at the available rate
      of exchange into the Contractual Currency.

    


    In
      this
      Clause 20.4, the “available
      rate of exchange”
      means
      the rate at which the Lender is able at the
      opening of business (London time) on the Business Day after it receives the
      sum
      concerned to
      purchase
      the Contractual Currency with the Payment Currency.

    


    This
      Clause 20.4 creates a separate liability of the Borrowers which is distinct
      from
      its other
      liabilities under the Finance Documents and which shall not be merged in any
      judgment or order relating to those other liabilities.

    


    
      	
              20.5

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

            


    

    


    
      	
              20.6

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

            


    

    
       

      
        	
                21

              	
                NO
                  SET-OFF OR TAX
                  DEDUCTION

              


      

    

    


    
      	
              21.1

            	
              No
                deductions.
                All amounts due from the Borrowers under a Finance Document shall
                be
                paid:

            


    

    


    
      	
              (a)

            	
              without
                any form of set-off, cross-claim or condition;
                and

            


    

    


    
      	
              (b)

            	
              free
                and clear of any tax deduction except a tax deduction which a Borrower
                is
                required by law to make.

            


    

    


    
      	
              21.2

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              that
                Borrower shall pay the tax deducted to the appropriate taxation authority
                promptly, and in any event before any fine or penalty
                arises;

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              21.3

            	
              Evidence
                of payment of taxes.
                Within 1 month after making any tax deduction, the Borrower concerned
                shall deliver to the Lender documentary evidence satisfactory to
                the
                Lender that the tax had been paid to the appropriate taxation
                authority.

            


    

    


    
      	
              21.4

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

            	
              nothing
                in this Clause 21.4 shall oblige the Lender to arrange its tax affairs
                in
                any particular manner, to claim any type of relief, credit, allowance
                or
                deduction instead of, or in priority to, another or to make any such
                claim
                within any particular time;

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              21.5

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

            


    

    


    
      	
              21.6

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

            


    

    
       

      
        	
                22

              	
                ILLEGALITY,
                  ETC

              


      

    

    
       

      
        	
                22.1

              	
                Illegality.
                  This Clause 22
                  applies if the Lender notifies the Borrowers that it has become,
                  or will
                  with effect from a specified date,
                  become:

              


      

    

    


    
      	
              (a)

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


            


    

    


    
      	
              (b)

            	
              contrary
                to, or inconsistent with, any
                regulation,

            


    

    


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

    


    
      	
              22.2

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

            


    

    
       

      
        	
                22.3

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

              


      

    

    


    
      	
              (a)

            	
              have
                an adverse effect on its business, operations or financial condition;
                or

            


    

    


    
      	
              (b)

            	
              involve
                it in any activity which is unlawful or prohibited or any activity
                that is
                contrary to, or inconsistent with, any regulation;
                or

            


    

    


    
      	
              (c)

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

            


    

    
       

      
        	
                23

              	
                INCREASED
                  COSTS

              


      

    

    
       

      
        	
                23.1

              	
                Increased
                  costs.
                  This Clause 23
                  applies if the Lender notifies the Borrowers that it considers
                  that as a
                  result of:

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


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

    


    
      	
              23.2

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              a
                liability to make a payment, or a return foregone, which is calculated
                by
                reference to any amounts received or receivable by the Lender under
                this
                Agreement;

            


    

    


    but
      not
      an item attributable to a change in the rate of tax on the overall net income
      of
      the Lender (or a
      parent
      company of it) or an item covered by the indemnity for tax in Clause
20.1
      or by
      Clause 21
      or an
      item arising directly out of the implementation by the applicable authorities
      having jurisdiction over the Lender of the matters set out in the statement
      of
      the Basle Committee on Banking Regulations and Supervisory Practices dated
      July,
      1988 and entitled “International Convergence of Capital Measurement and Capital
      Standards”, to the extent and according to the timetable provided for in the
      statement.

    


    Without
      prejudice to the generality of the foregoing any item attributable to the
      implementation by the applicable authorities having jurisdiction over the Lender
      of the matters set out in the revised framework on “International Convergence of
      Capital Measurement and Capital Standards” (also known as “The Basle II Accord”)
      shall be included within the meaning of “increased
      costs”.

    


    For
      the
      purposes of this Clause 23.2 the Lender may in good faith allocate or spread
      costs and/or losses among its assets and liabilities (or any class of its assets
      and liabilities) on such basis as it considers appropriate.

     

    
      	
              23.3

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

            


    

    
       

      
        	
                23.4

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              23.5

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

            


    

    


    
      	
              23.6

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

            


    

    
       

      
        	
                24

              	
                SET-OFF

              


      

    

    
       

      
        	
                24.1

              	
                Application
                  of credit balances.
                  Following the occurrence of and during the continuation of an Event
                  of
                  Default, the Lender may without prior
                  notice:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              for
                that purpose:

            


    

    


    
      	 	
              (i)

            	
              break,
                or alter the maturity of, all or any part of a deposit of that
                Borrower;

            


    

    


    
      	 	
              (ii)

            	
              convert
                or translate all or any part of a deposit or other credit balance
                into
                Dollars; 

            


    

    


    
      	 	
              (iii)

            	
              enter
                into any other transaction or make any entry with regard to the credit
                balance which the Lender considers appropriate.


            


    

    


    
      	
              24.2

            	
              Existing
                rights unaffected.
                The Lender shall not be obliged to exercise any of its rights under
                Clause
                24.1;
                and those rights shall be without prejudice and in addition to any
                right
                of set-off, combination of accounts, charge, lien or other right
                or remedy
                to which the Lender is entitled (whether under the general law or
                any
                document).

            


    

    


    
      	
              24.3

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

            


    

    
       

      
        	
                25

              	
                TRANSFERS
                  AND CHANGES IN LENDING
                  OFFICE

              


      

    

    


    
      	
              25.1

            	
              Transfer
                by Borrowers.
                Neither Borrower may transfer any of its rights, liabilities or
                obligations under any Finance
                Document.

            


    

    


    
      	
              25.2

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

            


    

    


    
      	
              25.3

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

            


    

    


    
      	
              25.4

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              25.5

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

            


    

    


    
      	
              25.6

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

            


    

    


    
      	
              (a)

            	
              the
                date on which the Borrowers receive the notice;
                and

            


    

    


    
      	
              (b)

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

            


    

    


    Where
      any
      change in the Lender’s lending office is made which results (or would result on
      the basis of a change to applicable law or regulation affecting the Lender
      which
      has been announced at the time of the change and of which the Lender could
      reasonably be expected to be aware) in amounts becoming due under Clauses 21
      or
      23 at that time (or, as the case may be, thereafter in accordance with the
      relevant change in law or regulation), the Lender shall be entitled to receive
      those amounts only to the extent that the Lender would have been so entitled
      had
      there been no change in its lending office.

    


    
      	
              26

            	
              VARIATIONS
                AND WAIVERS

            


    

    
       

      
        	
                26.1

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

              


      

    

    


    
      	
              26.2

            	
              Exclusion
                of other or implied variations.
                Except for a document which satisfies the requirements of Clauses
                26.1,
                no document, and no act, course of conduct, failure or neglect to
                act,
                delay or acquiescence on the part of the Lender (or any person acting
                on
                its behalf) shall result in the Lender (or any person acting on its
                behalf) being taken to have varied, waived, suspended or limited,
                or being
                precluded (permanently or temporarily) from enforcing, relying on
                or
                exercising:

            


    

    


    
      	
              (a)

            	
              a
                provision of this Agreement or another Finance Document;
                or

            


    

    


    
      	
              (b)

            	
              an
                Event of Default; or 

            


    

    


    
      	
              (c)

            	
              a
                breach by any Borrower or a Security Party of an obligation under
                a
                Finance Document or the general law;
                or

            


    

    


    
      	
              (d)

            	
              any
                right or remedy conferred by any Finance Document or by the general
                law;

            


    

    


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

    


    
      	
              27

            	
              NOTICES

            


    

    


    
      	
              27.1

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

            


    

    


    
      	
              27.2

            	
              Addresses
                for communications.
                A
                notice shall be sent:

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (a)

            	
              to
                the Borrowers:

            	 	
              c/o
                MC Shipping Inc.

            
	 	 	 	
              24
                Avenue de Fontvieille

            
	 	 	 	
              PO
                Box 658 Monaco

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              Fax
                No:
                (37) 7 92 05 94 16

            
	 	 	 	 
	 	 	 	
              Attention:
                Dominique Sergent

            
	 	 	 	 
	
              (b)

            	
              to
                the Lender:

            	 	
              Scotia
                House

            
	 	 	 	
              33
                Finsbury Square

            
	 	 	 	
              London

            
	 	 	 	
              EC2A
                1BB

            
	 	 	 	
              England

            
	 	 	 	 
	 	 	 	
              Fax
                No: (44 0) 207 454 9019

            


    

    


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

     

    
      	
              27.3

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    
       

      
        	
                27.4

              	
                Service
                  outside business hours.
                  However, if under Clause 27.3
                  a
                  notice would be deemed to be
                  served:

              


      

    

    


    
      	
              (a)

            	
              on
                a day which is not a business day in the place of receipt;
                or

            


    

    


    
      	
              (b)

            	
              on
                such a business day, but after 5 p.m. local
                time;

            


    

    


    the
      notice shall (subject to Clause 27.5)
      be
      deemed to be served, and shall take effect, at 9 a.m. on the next day which
      is
      such a business day.

    


    
      	
              27.5

            	
              Illegible
                notices.
                Clauses 27.3
                and 27.4
                do
                not apply if the recipient of a notice notifies the sender within
                1 hour
                after the time at which the notice would otherwise be deemed to be
                served
                that the notice has been received in a form which is illegible in
                a
                material respect.

            


    

    


    
      	
              27.6

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

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              27.7

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

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              27.8

            	
              Meaning
                of “notice”.
                In
                this Clause 28 “notice”
                includes any demand, consent, authorisation, approval, instruction,
                waiver
                or other communication. 

            


    

    
       

      
        	
                28

              	
                JOINT
                  AND SEVERAL
                  LIABILITY

              


      

    

    


    
      	
              28.1

            	
              General.
                Except those pursuant to Clause 4.13 and 4.14, all liabilities and
                obligations of the Borrowers under this Agreement shall, whether
                expressed
                to be so or not, be several and, if and to the extent consistent
                with
                Clause 28.2,
                joint.

            


    

    
       

      
        	
                28.2

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

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

            	
              any
                combination of the foregoing.

            


    

    


    
      	
              28.3

            	
              Principal
                debtors.
                Each Borrower declares that it is and will, throughout the Security
                Period, remain a principal debtor for all amounts owing under this
                Agreement and the Finance Documents and neither Borrower shall in
                any
                circumstances be construed to be a surety for the obligations of
                the other
                Borrower under this Agreement.

            


    

    
       

      
        	
                28.4

              	
                Subordination.
                  Subject to Clause 28.5,
                  during the Security Period, neither Borrower
                  shall:

              


      

    

    
       

      
        	
                (a)

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

              


      

    

    


    
      	
              (b)

            	
              take
                or enforce any form of security from the other Borrower for such
                an
                amount, or in any other way seek to have recourse in respect of such
                an
                amount against any asset of the other Borrower;
                or

            


    

    


    
      	
              (c)

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

            


    

    
       

      
        	
                (d)

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

              


      

    

    


    
      	
              (e)

            	
              exercise
                or assert any combination of the
                foregoing.

            


    

    
       

      
        	
                28.5

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

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              29

            	
              SUPPLEMENTAL

            


    

    


    
      	
              29.1

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

            


    

    


    
      	
              (a)

            	
              cumulative;

            


    

    


    
      	
              (b)

            	
              may
                be exercised as often as appears expedient;
                and

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              29.2

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

            


    

    


    
      	
              29.3

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

            


    

    


    
      	
              29.4

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

            


    

    
       

      
        	
                30

              	
                LAW
                  AND JURISDICTION

              


      

    

    


    
      	
              30.1

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

            


    

    
       

      
        	
                30.2

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

              


      

    

    
       

      
        	
                30.3

              	
                Choice
                  of forum for the exclusive benefit of the Lender.
                  Clause 30.2 is for the exclusive benefit of the Lender, which reserves
                  the
                  rights:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              to
                commence such proceedings in the courts of any such country or countries
                concurrently with or in addition to proceedings in England or without
                commencing proceedings in England.

            


    

    


    
      	
              30.4

            	
              Process
                agent.
                Each Borrower irrevocably appoints Marine Legal Services at its registered
                office for the time being, presently at Gate House, 1 Farringdon
                Street,
                London EC4M 7NS, to act as its agent to receive and accept on its
                behalf
                any process or other document relating to any proceedings in the
                English
                courts which are connected with this
                Agreement.

            


    

    


    
      	
              30.5

            	
              Lender's
                rights unaffected.
                Nothing in this Clause 30 shall exclude or limit any right which
                the
                Lender may have (whether under the law of any country, an international
                convention or otherwise) with regard to the bringing of proceedings,
                the
                service of process, the recognition or enforcement of a judgment
                or any
                similar or related matter in any
                jurisdiction.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              30.6

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

            


    

    


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

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      1

    


    DRAWDOWN
      NOTICE

     

    


    
      	
              To:

            	
              Scotiabank
                Europe plc

            
	 	
              33
                Finsbury Square

            
	 	
              London
                EC2A 1BB

            


    

    


    


    Attention:
      Loans Administration

     

    [l]

    


    


    DRAWDOWN
      NOTICE

    


    
      	
              1

            	
              We
                refer to the loan agreement (the “Loan
                Agreement”)
                dated [l]
                2005 and made between ourselves, as Borrowers, and yourselves, as
                Lender,
                in connection with a facility of up to US$68,000,000. Terms defined
                in the
                Loan Agreement have their defined meanings when used in this Drawdown
                Notice.

            


    

    


    
      	
              2

            	
              We
                request to borrow, in connection with the [First][Second] Ship, as
                follows:

            


    

    


    
      	
              (a)

            	
              Amount
                and details of Advance: US$[l].

            


    

    


    
      	
              (b)

            	
              Drawdown
                Date: [l].

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              3

            	
              We
                represent and warrant that:

            


    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              no
                Event of Default or Potential Event of Default has occurred or will
                result
                from the borrowing of the Advance in
                question.

            


    

    


    
      	
              4

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

            


    

    


     

    


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

    


    for
      and
      on behalf of

    [BORROWERS]

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2

    


    CONDITION
      PRECEDENT DOCUMENTS

    


    


    PART
      A

    


    


    


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

    


    
      	
              1

            	
              A
                duly executed original of each Finance Document and each Master Agreement
                other than those referred to in Part
                B.

            


    

    


    
      	
              2

            	
              Copies
                of the certificate of incorporation and constitutional documents
                of each
                Borrower and of the Guarantor.

            


    

    


    
      	
              3

            	
              Copies
                of resolutions of the directors of each Borrower and of the Guarantor
                authorising the execution of each of the Finance Documents and
                the Master Agreement to
                which it is a party.

            


    

    


    
      	
              4

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

            


    

    


    
      	
              5

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

            


    

    


    
      	
              6

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

            


    

    


    
      	
              7

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

            


    

    


    
      	
              8

            	
              A
                copy of each MOA and each Time
                Charter.

            


    

    


    
      	
              9

            	
              Favourable
                legal opinions from lawyers appointed by the Lender on such matters
                concerning the laws of The Commonwealth of the Bahamas and such other
                relevant jurisdictions as the Lender may require.
                

            


    

    


    


    PART
      B

    


    The
      following are the documents referred to in Clause 8.1(c) (where the “Ship” is
      the Ship being financed by the relevant Advance):

    


    
      	
              1

            	
              A
                valuation of the Ship by an independent shipbroker which the Lender
                has
                approved.

            


    

    


    
      	
              2

            	
              A
                duly executed original of the Mortgage and of the Deed of Covenant
                relating to the Ship (and of each notice of assignment required to
                be
                delivered under it).

            


    

    


    
      	
              3

            	
              Documentary
                evidence that:

            


    

    


    
      	
              (a)

            	
              the
                Ship has been unconditionally delivered by the Time Charterer to,
                and
                accepted by, the Borrower concerned under the relevant MOA and the
                full
                purchase price payable under the relevant MOA (in addition to the
                part to
                be financed by the Advance) has been duly
                paid;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)

            	
              the
                Ship is definitively and provisionally registered in the name of
                the
                Borrower concerned under Bahamas flag at the Port of
                Nassau;

            


    

    


    
      	
              (c)

            	
              the
                Ship is in the absolute and unencumbered ownership of the Borrower
                concerned save as contemplated by the Finance
                Documents;

            


    

    


    
      	
              (d)

            	
              the
                Ship maintains the highest class possible with a classification society
                which the Lender has approved, free of all overdue recommendations
                and
                conditions of such classification
                society;

            


    

    


    
      	
              (e)

            	
              the
                relevant Mortgage has been duly registered against the Ship as a
                valid
                first priority Bahamas ship mortgage in accordance with the laws
                of the
                Bahamas; and

            


    

    


    
      	
              (f)

            	
              the
                Ship is insured in accordance with the provisions of this Agreement
                and
                all requirements therein in respect of insurances have been complied
                with.

            


    

    


    
      	
              4

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

            


    

    


    
      	
              (a)

            	
              the
                relevant Approved Manager’s Letter of Undertaking;
                and

            


    

    


    
      	
              (b)

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

            


    

    


    
      	
              5

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

            


    

    


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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXECUTION
      PAGE

    
 

    
      	
              BORROWERS

            	 
	 	 
	
              SIGNED
                by

            	
              )

            
	 	
              )

            
	
              for
                and on behalf of

            	
              )

            
	
              MC
                IBIS SHIPPING LIMITED

            	
              )

            
	
              in
                the presence of:

            	
              )

            
	 	 
	 	 
	 	 
	 	 
	
              SIGNED
                by

            	
              )

            
	 	
              )

            
	
              for
                and on behalf of

            	
              )

            
	
              MC
                EID SHIPPING LIMITED

            	
              )

            
	
              in
                the presence of:

            	
              )

            
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	
              LENDER

            	 
	 	 
	
              SIGNED
                by

            	
              )

            
	 	
              )

            
	
              for
                and on behalf of

            	
              )

            
	
              SCOTIABANK

            	
              )

            
	
              EUROPE
                PLC

            	
              )

            
	
              in
                the presence of:

            	
              ) 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    March
      30,
      2005

    


    


    
 

    


    MC
      SHIPPING INC.

    as
      Guarantor

    


    


    -
      and
      -

    


    


    SCOTIABANK
      EUROPE PLC

    as
      Lender

    


    
 

    
      
        

      

    

     

    GUARANTEE

    


    
      
        

      



    relating
      to a Loan Agreement

    dated
      March 30, 2005

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    INDEX

    


    


    
      	
              Clause

            	 	
              Page

            
	 	 	 	 
	
              1

            	 	
              INTERPRETATION

            	
              1

            
	 	 	 	 
	
              2

            	 	
              GUARANTEE

            	
              2

            
	 	 	 	 
	
              3

            	 	
              LIABILITY
                AS PRINCIPAL AND INDEPENDENT DEBTOR

            	
              3

            
	 	 	 	
               

            
	
              4

            	 	
              EXPENSES

            	
              3

            
	 	 	 	 
	
              5

            	 	
              ADJUSTMENT
                OF TRANSACTIONS

            	
              3

            
	 	 	 	 
	
              6

            	 	
              PAYMENTS

            	
              4

            
	 	 	 	 
	
              7

            	 	
              INTEREST

            	
              4

            
	 	 	 	 
	
              8

            	 	
              SUBORDINATION

            	
              4

            
	 	 	 	 
	
              9

            	 	
              ENFORCEMENT

            	
              5

            
	 	 	 	 
	
              10

            	 	
              REPRESENTATIONS
                AND WARRANTIES

            	
              5

            
	 	 	 	 
	
              11

            	 	
              UNDERTAKINGS

            	
              6

            
	 	 	 	 
	
              12

            	 	
              JUDGMENTS
                AND CURRENCY INDEMNITY

            	
              8

            
	 	 	 	 
	
              13

            	 	
              SET
                OFF

            	
              8

            
	 	 	 	 
	
              14

            	 	
              SUPPLEMENTAL

            	
              8

            
	 	 	 	 
	
              15

            	 	
              ASSIGNMENT

            	
              9

            
	 	 	 	
               

            
	
              16

            	 	
              NOTICES

            	
              9

            
	 	 	 	 
	
              17

            	 	
              INVALIDITY
                OF LOAN AGREEMENT

            	
              10

            
	 	 	 	 
	
              18

            	 	
              GOVERNING
                LAW AND JURISDICTION

            	
              10

            
	 	 	 	 
	
              EXECUTION
                PAGE

            	
              12

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THIS
      GUARANTEE
      is made
      on March 30, 2005

    


    BETWEEN

    


    
      	
              (1)

            	
              MC
                SHIPPING INC.,
                a
                corporation incorporated in the Republic of Liberia whose registered
                office is at 80 Broad Street, Monrovia, Liberia (the “Guarantor”);
                and

            


    

    


    
      	
              (2)

            	
              SCOTIABANK
                EUROPE PLC,
                acting through its office at Scotia House, 33 Finsbury Square, London
                EC2A
                1BB, England, (the “Lender”,
                which expression includes its successors and
                assigns).

            


    

    


    BACKGROUND

    


    
      	
              (A)

            	
              By
                a loan agreement dated March 30, 2005 and made between (i) MC Ibis
                Shipping Limited and MC Eid Shipping Limited, as joint and several
                borrowers (the “Borrowers”)
                and (ii) the Lender as lender it was agreed that the Lender would
                make
                available to the Borrowers a facility of up to US$68,000,000.

            


    

    


    
      	
              (B)

            	
              By
                a master agreement (the “Advance
                A Master Agreement”)
                dated March 30, 2005 and made between (i) MC Ibis Shipping Limited
                and
                (ii) the Lender, it was agreed that the Lender might enter into
                Transactions with MC Ibis Shipping Limited from time to time to hedge
                the
                Borrowers’ exposure under the Loan Agreement to interest rate
                fluctuations.

            


    

    
       

      
        	
                (C)

              	
                By
                  a master agreement (the “Advance
                  B Master Agreement”
                  and, together with the Advance A Master Agreement, the “Master
                  Agreements”)
                  dated March 30, 2005 and made between (i) MC Eid Shipping Limited
                  and (ii)
                  the Lender, it was agreed that the Lender might enter into Transactions
                  with MC Eid Shipping Limited from time to time to hedge the Borrowers’
                  exposure under the Loan Agreement to interest rate
                  fluctuations.

              


      

    

    


    
      	
              (D)

            	
              The
                execution and delivery to the Lender of this Guarantee is one of
                the
                conditions precedent to the availability of the facility under the
                Loan
                Agreement
                and to the Lender entering into any Transactions with either Borrower
                under either Master Agreement.

            


    

    


    IT
      IS AGREED
      as
      follows:

    


    
      	
              31

            	
              INTERPRETATION

            


    

    


    
      	
              31.1

            	
              Defined
                expressions.
                Words and expressions defined in the Loan Agreement shall have the
                same
                meanings when used in this Guarantee unless the context otherwise
                requires.

            


    

    


    
      	
              31.2

            	
              Construction
                of certain terms.
                In
                this Guarantee:

            


    

    


    “bankruptcy”
      includes a liquidation, receivership or administration and any form of
      suspension of payments, arrangement with creditors or reorganisation under
      any
      corporate or insolvency law of any country;

    


    “EBITDA”
      means,
      at any date of determination under this Guarantee, charterhire and other income
      of the Guarantor and its subsidiaries for the 12-month period ending on that
      date:

    


    
      	 	
              (a)

            	
              less
                the sum for the relevant 12-month period, without duplication,
                of:

            


    

    


    
      	 	
              (i)

            	
              commission
                on charterhire;

            


    

    


    
      	 	
              (ii)

            	
              vessel
                operating expenses; and

            


    

    


    
      	 	
              (iii)

            	
              general
                and administrative expenses;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              plus
                interest income for the relevant 12-month
                period;

            


    

    


    all
      determined on a consolidated basis in accordance with GAAP and as shown in
      the
      consolidated statement of income in the Latest Financial
      Statements;

    


    “GAAP”
      means
      auditing standards generally accepted in the United States of
      America;

    


    “Interest
      Cover”
      means,
      at any date of determination under this Guarantee, the ratio of EBITDA for
      the
      12-month period ending on that date to Interest Expense for the 12-month period
      ending on that date;

    


    “Interest
      Expense”
      means,
      at any date of determination under the Guarantee, interest expense of the
      Guarantor and its subsidiaries for the 12-month period ending on that date
      determined on a consolidated basis in accordance with GAAP and as shown in
      the
      consolidated statement of income in the Latest Financial
      Statements;

    


    “Latest
      Financial Statements”
      means,
      at any date, the latest audited annual consolidated financial statements or
      interim consolidated financial statements of the Guarantor and its subsidiaries
      delivered to the Lender pursuant to Clause 11.3 and/or made publicly
      available;

    


    “Liquidity”
      means,
      at any date of determination under this Guarantee, cash and cash equivalents
      of
      the Guarantor and its subsidiaries determined on a consolidated basis in
      accordance with GAAP and as shown in the consolidated balance sheet in the
      Latest Financial Statements;

    


    “Loan
      Agreement”
      means
      the loan agreement dated March 30, 2005 referred to in Recital (A) and includes
      any existing or future amendments or supplements, whether made with the
      Guarantor's consent or otherwise;

    


    “Master
      Agreements”
      means
      the master agreements each dated March 30, 2005 referred to in Recitals (B)
      and
      (C) and includes any existing or future amendments or supplements, whether
      made
      with the Guarantor’s consent or otherwise and also includes any Transactions
      from time to time entered into and Confirmations exchanged under those master
      agreements;

    


    “Net
      Income”
      means,
      at any date of determination under this Guarantee, the net income of the
      Guarantor and its subsidiaries for the 12-month period ending on that date
      determined on a consolidated basis in accordance with GAAP and as shown in
      the
      consolidated statement of income in the Latest Financial Statements;
      and

    


    “Tangible
      Net Worth”
      means,
      at any date of determination under this Guarantee, the value of total
      shareholders’ equity of the Guarantor and its subsidiaries determined on a
      consolidated basis in accordance with GAAP and as shown in the consolidated
      balance sheet in the Latest Financial Statements.

    


    
      	
              31.3

            	
              Application
                of construction and interpretation provisions of Loan
                Agreement.
                Clause 1.2 to 1.5 of the Loan Agreement apply, with any necessary
                modifications, to this Guarantee.

            


    

    
       

      
        	
                32

              	
                GUARANTEE

              


      

    

    
       

      
        	
                32.1

              	
                Guarantee
                  and indemnity.
                  The Guarantor unconditionally and
                  irrevocably:

              


      

    

    


    
      	
              (a)

            	
              guarantees
                the due payment of all amounts payable by the Borrowers or either
                of them
                under or in connection with the Commitment Letter, the Loan Agreement,
                every other Finance Document and the Master
                Agreements;

            


    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)

            	
              undertakes
                to pay to the Lender, on the Lender's demand, any such amount which
                is not
                paid by the Borrowers or either of them when payable;
                and

            


    

    


    
      	
              (c)

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

            


    

    


    
      	
              32.2

            	
              No
                limit on number of demands.
                The Lender may serve more than 1 demand under Clause 2.1.

            


    

    
       

      
        	
                33

              	
                LIABILITY
                  AS PRINCIPAL AND INDEPENDENT
                  DEBTOR

              


      

    

    
       

      
        	
                33.1

              	
                Principal
                  and independent debtor.
                  The Guarantor shall be liable under this Guarantee as a principal
                  and
                  independent debtor and accordingly it shall not have, as regards
                  this
                  Guarantee, any of the rights or defences of a
                  surety.

              


      

    

    


    
      	
              33.2

            	
              Waiver
                of rights and defences.
                Without limiting the generality of Clause 3.1,
                the Guarantor shall neither be discharged by, nor have any claim
                against
                the Lender in respect of:

            


    

    


    
      	
              (a)

            	
              any
                amendment or supplement being made to any of the Finance Documents
                or
                either of the Master Agreements;

            


    

    


    
      	
              (b)

            	
              any
                arrangement or concession (including a rescheduling or acceptance
                of
                partial payments) relating to, or affecting, any of the Finance Documents
                or either of the Master Agreements;

            


    

    


    
      	
              (c)

            	
              any
                release or loss (even though negligent) of any right or Security
                Interest
                created by any of the Finance Documents or either of the Master
                Agreements;

            


    

    


    
      	
              (d)

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

            


    

    


    
      	
              (e)

            	
              any
                other Finance Document or either Master Agreement or any Security
                Interest
                now being or later becoming void, unenforceable, illegal or invalid
                or
                otherwise defective for any reason, including a neglect to register
                it.

            


    

    


    
      	
              34

            	
              EXPENSES

            


    

    
       

      
        	
                34.1

              	
                Costs
                  of preservation of rights, enforcement etc.
                  The Guarantor shall pay to the Lender on its demand the amount
                  of all
                  expenses incurred by the Lender (including legal expenses actually
                  incurred) in connection with any matter arising out of this Guarantee
                  or
                  any Security Interest connected with it, including any advice,
                  claim or
                  proceedings relating to this Guarantee or such a Security
                  Interest.

              


      

    

    


    
      	
              34.2

            	
              Fees
                and expenses payable under Loan Agreement.
                Clause 4.1
                is
                without prejudice to the Guarantor’s liabilities in respect of the
                Borrowers’ obligations under clause 19 of the Loan Agreement (Fees and
                Expenses) and under similar provisions of the other Finance
                Documents.

            


    

    
       

      
        	
                35

              	
                ADJUSTMENT
                  OF TRANSACTIONS

              


      

    

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              35.1

            	
              Reinstatement
                of obligation to pay.
                The Guarantor shall pay to the Lender on its demand any amount which
                the
                Lender is required, or agrees, to pay pursuant to any claim by, or
                settlement with, a trustee in bankruptcy of either Borrower or of
                another
                Security Party (or similar person) on the ground that the Loan Agreements
                or either Master Agreement or a payment by the Borrowers or either
                of them
                or by another Security Party, was invalid or on any similar
                ground.

            


    

    
       

      
        	
                36

              	
                PAYMENTS

              


      

    

    


    
      	
              36.1

            	
              Method
                of payments.
                Any amount due under this Guarantee shall be
                paid:

            


    

    


    
      	
              (a)

            	
              in
                immediately available funds;

            


    

    


    
      	
              (b)

            	
              to
                such account as the Lender may from time to time notify to the
                Guarantor;

            


    

    


    
      	
              (c)

            	
              without
                any form of set-off, cross-claim or condition;
                and

            


    

    


    
      	
              (d)

            	
              free
                and clear of any tax deduction except a tax deduction which the Guarantor
                is required by law to make.

            


    

    


    
      	
              36.2

            	
              Grossing-up
                for taxes.
                If
                the Guarantor is required by law to make a tax deduction, the amount
                due
                to the Lender shall be increased by the amount necessary to ensure
                that
                the Lender receives and retains a net amount which, after the tax
                deduction, is equal to the full amount that it would otherwise have
                received.

            


    

    
       

      
        	
                37

              	
                INTEREST

              


      

    

    


    
      	
              37.1

            	
              Accrual
                of interest.
                Any amount due under this Guarantee shall carry interest after the
                third
                Business Day following the date on which the Lender demands payment
                of it
                until it is actually paid, unless interest on that same amount also
                accrues under the Loan Agreement or a Master
                Agreement.

            


    

    


    
      	
              37.2

            	
              Calculation
                of interest.
                Interest under this Guarantee shall be calculated and accrue in the
                same
                way as interest under clause 6 of the Loan
                Agreement.

            


    

    


    
      	
              37.3

            	
              Guarantee
                extends to interest payable under Loan Agreement.
                For the avoidance of doubt, it is confirmed that this Guarantee covers
                all
                interest payable under the Loan Agreement (including that payable
                under
                clause 6 of the Loan Agreement).

            


    

    
       

      
        	
                38

              	
                SUBORDINATION

              


      

    

    


    
      	
              38.1

            	
              Subordination
                of rights of Guarantor.
                All rights which the Guarantor at any time has (whether in respect
                of this
                Guarantee or any other transaction) against the Borrowers or either
                of
                them or any Security Party or their respective assets shall be fully
                subordinated to the rights of the Lender under the Finance Documents;
                and,
                in particular, the Guarantor shall
                not:

            


    

    


    
      	
              (a)

            	
              claim,
                or in a bankruptcy of either Borrower or any Security Party prove
                for, any
                amount payable to the Guarantor by either Borrower or any Security
                Party,
                whether in respect of this Guarantee or any other
                transaction;

            


    

    


    
      	
              (b)

            	
              take
                or enforce any Security Interest for any such
                amount;

            


    

    


    
      	
              (c)

            	
              claim
                to set-off any such amount against any amount payable by the Guarantor
                to
                the Borrowers or either of them or any Security Party;
                or

            


    

    


    
      	
              (d)

            	
              claim
                any subrogation or other right in respect of any Finance Document
                or
                either Master Agreement or any sum received or recovered by the Lender
                under a Finance Document or a Master
                Agreement.

            


    

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              39

            	
              ENFORCEMENT

            


    

    


    
      	
              39.1

            	
              No
                requirement to commence proceedings against Borrower.
                The Lender will not need to commence any proceedings under, or enforce
                any
                Security Interest created by, the Loan Agreement or any other Finance
                Document or either Master Agreement before claiming or commencing
                proceedings under this Guarantee. 

            


    

    


    
      	
              39.2

            	
              Conclusive
                evidence of certain matters.
                However, as against the Guarantor:

            


    

    


    
      	
              (a)

            	
              any
                judgment or order of a court in England or any other Pertinent
                Jurisdiction in connection with the Loan Agreement or either Master
                Agreement; and

            


    

    


    
      	
              (b)

            	
              any
                statement or admission of the Borrowers or either of them in connection
                with the Loan Agreement or either Master
                Agreement,

            


    

    


    shall
      be
      binding and conclusive as to all matters of fact and law to which it
      relates.

    


    
      	
              39.3

            	
              Suspense
                account.
                The Lender may, for the purpose of claiming or proving in a bankruptcy
                of
                a Borrower or any Security Party, place any sum received or recovered
                under or by virtue of this Guarantee or any Security Interest connected
                with it on a separate suspense or other nominal account without applying
                it in satisfaction of the Borrower's obligations under the Loan Agreement
                and/or the Master Agreements.

            


    

    
       

      
        	
                40

              	
                REPRESENTATIONS
                  AND WARRANTIES

              


      

    

    


    
      	
              40.1

            	
              General.
                The Guarantor represents and warrants to the Lender as
                follows.

            


    

    


    
      	
              40.2

            	
              Status.
                The Guarantor is duly incorporated and validly existing and in good
                standing under the laws of the Republic of
                Liberia.

            


    

    
       

      
        	
                40.3

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

              


      

    

    


    
      	
              (a)

            	
              to
                execute this Guarantee; and

            


    

    


    
      	
              (b)

            	
              to
                make all the payments contemplated by, and to comply with, this
                Guarantee.

            


    

    


    
      	
              40.4

            	
              Consents
                in force.
                All the consents referred to in Clause 10.3
                remain in force and nothing has occurred which makes any of them
                liable to
                revocation.

            


    

    


    
      	
              40.5

            	
              Legal
                validity.
                This Guarantee constitutes the Guarantor’s legal, valid and binding
                obligations enforceable against the Guarantor in accordance with
                its terms
                and such obligations will rank at least pari
                passu
                with all its other present and future unsecured and unsubordinated
                obligations subject to any relevant insolvency laws affecting creditors'
                rights generally.

            


    

    


    
      	
              40.6

            	
              No
                conflicts.
                The execution by the Guarantor of this Guarantee and its compliance
                with
                this Guarantee will not involve or lead to a contravention
                of:

            


    

    


    
      	
              (a)

            	
              any
                law or regulation; or

            


    

    


    
      	
              (b)

            	
              the
                constitutional documents of the Guarantor;
                or

            


    

    


    
      	
              (c)

            	
              any
                contractual or other obligation or restriction which is binding on
                the
                Guarantor or any of its assets.

            


    

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              40.7

            	
              No
                withholding taxes.
                All payments which the Guarantor is liable to make under this Guarantee
                may be made without deduction or withholding for or on account of
                any tax
                payable under any law of any Pertinent
                Jurisdiction.

            


    

    


    
      	
              40.8

            	
              No
                default.
                To
                the knowledge of the Guarantor, no Event of Default or Potential
                Event of
                Default has occurred and is
                continuing.

            


    

    


    
      	
              40.9

            	
              Information.
                All information which has been provided in writing by or on behalf
                of the
                Guarantor to the Lender in connection with any Finance Document satisfied
                the requirements of Clause 11.2;
                all audited and unaudited financial statements which have been so
                provided
                satisfied the requirements of Clause 11.4;
                and there has been no material adverse change in the financial position
                or
                state of affairs of the Guarantor from that disclosed in the latest
                of
                those financial statements.

            


    

    


    
      	
              40.10

            	
              No
                litigation.
                No
                legal or administrative action involving the Guarantor has been commenced
                or taken or, to the Guarantor’s knowledge, is likely to be commenced or
                taken which, in either case, would be likely to have a material adverse
                effect on the Guarantor's financial position or state of
                affairs.

            


    

    
       

      
        	
                41

              	
                UNDERTAKINGS

              


      

    

    


    
      	
              41.1

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

            


    

    
       

      
        	
                41.2

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

              


      

    

    
       

      
        	
                41.3

              	
                Provision
                  of financial statements.
                  The Guarantor will send to the
                  Lender:

              


      

    

    


    
      	
              (a)

            	
              as
                soon as possible, but in no event later than 3 months after the end
                of
                each financial year of the Guarantor, the audited consolidated financial
                statements of the Guarantor and its subsidiaries containing (among
                other
                things) a consolidated balance sheet, a consolidated statement of
                income,
                a consolidated statement of cash flows and a consolidated statement
                of
                shareholders’ equity;

            


    

    


    
      	
              (b)

            	
              as
                soon as possible, but in no event later than 2 months after the end
                of
                each quarter in each financial year of the Guarantor unaudited
                consolidated financial statements of the Guarantor and its subsidiaries
                certified as to their correctness by an authorised representative
                of the
                Guarantor;

            


    

    


    
      	
              (c)

            	
              together
                with each set of financial statements, a certificate signed by the
                chief
                financial officer of the Guarantor (in such form as the Lender may
                require) certifying that the Guarantor is in compliance with the
                provisions of Clause 11.13; and

            


    

    


    
      	
              (d)

            	
              from
                time to time, and on demand, such additional financial or other
                information relating to the Guarantor or to any of its subsidiaries
                as may
                reasonably be requested by the
                Lender.

            


    

    
       

      
        	
                41.4

              	
                Form
                  of financial statements.
                  All financial statements (audited and unaudited) delivered under
                  Clause
                  11.3
                  will:

              


      

    

    


    
      	
              (a)

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

            


    

    


    
      	
              (b)

            	
              present
                fairly in all material respects the consolidated financial position
                of the
                Guarantor and its subsidiaries at the date of those financial statements
                and the consolidated results of their operations and cash flows for
                the
                period to which those financial statements relate;
                and

            


    

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)

            	
              be
                free of material misstatement and fully disclose or provide for all
                significant liabilities of the Guarantor and of each of its
                subsidiaries.

            


    

    


    
      	
              41.5

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

            


    

    


    
      	
              41.6

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

            


    

    


    
      	
              (a)

            	
              for
                the Guarantor to perform its obligations under this
                Guarantee;

            


    

    


    
      	
              (b)

            	
              for
                the validity or enforceability of this
                Guarantee;

            


    

    


    and
      the
      Guarantor will comply with the terms of all such consents.

    


    
      	
              41.7

            	
              Notification
                of litigation.
                The Guarantor will provide the Lender with details of any legal or
                administrative action involving the Guarantor as soon as such action
                is
                instituted or it becomes apparent to the Guarantor that it is likely
                to be
                instituted, unless it is clear that the legal or administrative action
                cannot be considered material in the context of this
                Guarantee.

            


    

    


    
      	
              41.8

            	
              Notification
                of default.
                The Guarantor will notify the Lender as soon as the Guarantor becomes
                aware of:

            


    

    


    
      	
              (a)

            	
              the
                occurrence of an Event of Default or Potential Event of Default;
                or

            


    

    


    
      	
              (b)

            	
              any
                matter which indicates that an Event of Default may have
                occurred;

            


    

    


    and
      will
      thereafter keep the Lender fully up-to-date with all developments.

    


    
      	
              41.9

            	
              Maintenance
                of status.
                The Guarantor will maintain its separate corporate existence and
                remain in
                good standing under the laws of the Republic of
                Liberia.

            


    

    


    
      	
              41.10

            	
              No
                change of business.
                The Guarantor will not, and shall procure that none of its subsidiaries
                will, make any material change to the nature of its business from
                that
                existing at the date of this
                Guarantee.

            


    

    


    
      	
              41.11

            	
              No
                merger etc.
                The Guarantor shall not, and shall procure that neither Borrower
                shall,
                enter into any form of merger, sub-division or amalgamation unless,
                in the
                case of the Guarantor:

            


    

    


    
      	
              (a)

            	
              it
                is the surviving entity;

            


    

    


    
      	
              (b)

            	
              clause
                7.7(c) of the Loan Agreement would not then apply;
                and

            


    

    


    
      	
              (c)

            	
              Tangible
                Net Worth of the surviving entity is equal to or greater than that
                of the
                Guarantor.

            


    

    


    
      	
              41.12

            	
              Maintenance
                of ownership of Borrowers.
                The Guarantor shall remain the direct or indirect beneficial owner
                of the
                whole of the issued share capital of each Borrower, free from any
                Security
                Interest, at all times during the Security
                Period.

            


    

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              41.13

            	
              Financial
                covenants.
                The Guarantor shall ensure that the consolidated financial position
                of the
                Guarantor and its subsidiaries (tested quarterly as at 31 March,
                30 June,
                30 September and 31 December against each set of Latest Financial
                Statements) shall be such that:

            


    

    


    
      	
              (a)

            	
              Tangible
                Net Worth shall be not less than $25,000,000
                plus:

            


    

    


    
      	 	
              (i)

            	
              50
                per cent. of cumulative Net Income for the period commencing on 1
                January
                2005 and ending on the date of determination of Tangible Net Worth;
                and

            


    

    


    
      	 	
              (ii)

            	
              the
                paid up value of any shares in the Guarantor issued after the date
                of this
                Guarantee;

            


    

    


    
      	
              (b)

            	
              Interest
                Cover shall be not less than 2:1;
                and

            


    

    


    
      	
              (c)

            	
              Liquidity
                shall be not less than $5,000,000.

            


    

    
       

      
        	
                42

              	
                JUDGMENTS
                  AND CURRENCY
                  INDEMNITY

              


      

    

    


    
      	
              42.1

            	
              Judgments
                relating to Loan Agreement and/or Master Agreements.
                This Guarantee shall cover any amount payable by the Borrower under
                or in
                connection with any judgment relating to the Loan Agreement and/or
                either
                Master Agreement.

            


    

    


    
      	
              42.2

            	
              Currency
                indemnity.
                In
                addition, clause 20.4 (Currency Indemnity) of the Loan Agreement
                shall
                apply, with any necessary adaptations, in relation to this
                Guarantee.

            


    

    
       

      
        	
                43

              	
                SET-OFF

              


      

    

    
       

      
        	
                43.1

              	
                Application
                  of credit balances.
                  Following the occurrence of and during the continuation of an Event
                  of
                  Default, the Lender may without prior
                  notice:

              


      

    

    


    
      	
              (a)

            	
              apply
                any balance (whether or not then due) which at any time stands to
                the
                credit of any account in the name of the Guarantor at any office
                in any
                country of the Lender in or towards satisfaction of any sum then
                due from
                the Guarantor to the Lender under this Guarantee;
                and

            


    

    


    
      	
              (b)

            	
              for
                that purpose:

            


    

    


    
      	 	
              (i)

            	
              break,
                or alter the maturity of, all or any part of a deposit of the
                Guarantor;

            


    

    


    
      	 	
              (ii)

            	
              convert
                or translate all or any part of a deposit or other credit balance
                into
                Dollars; 

            


    

    


    
      	 	
              (iii)

            	
              enter
                into any other transaction or make any entry with regard to the credit
                balance which the Lender considers appropriate.


            


    

    


    
      	
              43.2

            	
              Existing
                rights unaffected.
                The Lender shall not be obliged to exercise any of its rights under
                Clause
                13.1;
                and those rights shall be without prejudice and in addition to any
                right
                of set-off, combination of accounts, charge, lien or other right
                or remedy
                to which the Lender is entitled (whether under the general law or
                any
                document).

            


    

    


    
      	
              43.3

            	
              No
                Security Interest.
                This Clause 13 gives the Lender a contractual right of set-off only,
                and
                does not create any equitable charge or other Security Interest over
                any
                credit balance of the Guarantor.

            


    

    
       

      
        	
                44

              	
                SUPPLEMENTAL

              


      

    

    


    
      	
              44.1

            	
              Continuing
                guarantee.
                This Guarantee shall remain in force as a continuing security at
                all times
                during the Security Period.

            


    

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              44.2

            	
              Rights
                cumulative, non-exclusive.
                The Lender’s rights under and in connection with this Guarantee are
                cumulative, may be exercised as often as appears expedient and shall
                not
                be taken to exclude or limit any right or remedy conferred by
                law.

            


    

    


    
      	
              44.3

            	
              No
                impairment of rights under Guarantee.
                If
                the Lender omits to exercise, delays in exercising or invalidly exercises
                any of its rights under this Guarantee, that shall not impair that
                or any
                other right of the Lender under this
                Guarantee.

            


    

    


    
      	
              44.4

            	
              Severability
                of provisions.
                If
                any provision of this Guarantee is or subsequently becomes void,
                illegal,
                unenforceable or otherwise invalid, that shall not affect the validity,
                legality or enforceability of its other
                provisions.

            


    

    


    
      	
              44.5

            	
              Guarantee
                not affected by other security.
                This Guarantee shall not impair, nor be impaired by, any other guarantee,
                any Security Interest or any right of set-off or netting or to combine
                accounts which the Lender may now or later hold in connection with
                the
                Loan Agreement or either Master
                Agreement.

            


    

    


    
      	
              44.6

            	
              Guarantor
                bound by Loan Agreement and Master Agreements.
                The Guarantor agrees with the Lender to be bound by all provisions
                of the
                Loan Agreement and the Master Agreements which are applicable to
                the
                Security Parties in the same way as if those provisions had been
                set out
                (with any necessary modifications) in this Guarantee and confirms
                that it
                is fully familiar with the terms of the Loan Agreement and the other
                Finance Documents and the Master
                Agreements.

            


    

    


    
      	
              44.7

            	
              Applicability
                of provisions of Guarantee to other Security
                Interests.
                Any Security Interest which the Guarantor creates (whether at the
                time at
                which it signs this Guarantee or at any later time) to secure any
                liability under this Guarantee shall be a principal and independent
                security, and Clauses 3
                and 17
                shall, with any necessary modifications, apply to it, notwithstanding
                that
                the document creating the Security Interest neither describes it
                as a
                principal or independent security nor includes provisions similar
                to
                Clauses 3
                and 17.

            


    

    


    
      	
              44.8

            	
              Applicability
                of provisions of Guarantee to other rights.
                Clauses 3
                and 17
                shall also apply to any right of set-off or netting or to combine
                accounts
                which the Guarantor creates by an agreement entered into at the time
                of
                this Guarantee or at any later time (notwithstanding that the agreement
                does not include provisions similar to Clauses 3
                and 17),
                being an agreement referring to this
                Guarantee.

            


    

    


    
      	
              44.9

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

            


    

    
       

      
        	
                45

              	
                ASSIGNMENT

              


      

    

    


    
      	
              45.1

            	
              Assignment
                by Lender.
                The Lender may assign its rights under and in connection with this
                Guarantee to the same extent as it may assign its rights under the
                Loan
                Agreement. 

            


    

    
       

      
        	
                46

              	
                NOTICES

              


      

    

    


    
      	
              46.1

            	
              Notices
                to Guarantor.
                Any notice or demand to the Guarantor under or in connection with
                this
                Guarantee shall be given by letter or
                fax:

            


    

    


    MC
      Shipping Inc.

    24
      Avenue
      de Fontvieille

    PO
      Box
      658 

    Monaco

    Attention:
      Dominique Sergent

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Fax
      No:
      (37) 7 92 05 94 16

    


    or
      to
      such other address which the Guarantor may notify to the Lender.

    


    
      	
              46.2

            	
              Application
                of certain provisions of Loan Agreement.
                Clauses 27.3, 27.4 and 27.5 of the Loan Agreement apply to any notice
                or
                demand under or in connection with this
                Guarantee.

            


    

    


    
      	
              46.3

            	
              Validity
                of demands.
                A
                demand under this Guarantee shall be valid notwithstanding that it
                is
                served:

            


    

    


    
      	
              (a)

            	
              on
                the date on which the amount to which it relates is payable by the
                Borrower under the Loan Agreement or the relevant Master Agreement
                (as the
                case may be);

            


    

    


    
      	
              (b)

            	
              at
                the same time as the service of a notice under clause 18.2 (Events
                of
                Default) of the Loan Agreement;

            


    

    


    and
      a
      demand under this Guarantee may refer to all amounts payable under or in
      connection with the Loan Agreement and/or the
      Master Agreements (or either of them)
      without
      specifying a particular sum or aggregate sum.

    


    
      	
              46.4

            	
              Notices
                to Lender.
                Any notice to the Lender under or in connection with this Guarantee
                shall
                be sent to the same address and in the same manner as notices to
                the
                Lender under the Loan Agreement.

            


    

    
       

      
        	
                47

              	
                INVALIDITY
                  OF LOAN AGREEMENT

              


      

    

    
       

      
        	
                47.1

              	
                Invalidity
                  of Loan Agreement.
                  In
                  the event of:

              


      

    

    


    
      	
              (a)

            	
              the
                Loan Agreement now being or later becoming, with immediate or
                retrospective effect, void, illegal, unenforceable or otherwise invalid
                for any other reason whatsoever, whether of a similar kind or not;
                or

            


    

    


    
      	
              (b)

            	
              without
                limiting the scope of paragraph (a), a bankruptcy of a Borrower,
                the
                introduction of any law or any other matter resulting in a Borrower
                being
                discharged from liability under the Loan Agreement, or the Loan Agreement
                ceasing to operate (for example, by interest ceasing to
                accrue);

            


    

    


    this
      Guarantee shall cover any amount which would have been or become payable under
      or in connection with the Loan Agreement if the Loan Agreement had been and
      remained entirely valid, legal and enforceable, or the Borrower concerned had
      not suffered bankruptcy, or any combination of such events or circumstances,
      as
      the case may be, and the Borrower concerned had remained fully liable under
      it
      for liabilities whether invalidly incurred or validly incurred but subsequently
      retrospectively invalidated; and references in this Guarantee to amounts payable
      by the Borrower concerned under or in connection with the Loan Agreement shall
      include references to any amount which would have so been or become payable
      as
      aforesaid.

    


    
      	
              47.2

            	
              Invalidity
                of other Finance Documents and Master Agreements.
                Clause 17.1
                also applies to each of the other Finance Documents to which the
                Borrower
                is a party and to the Master
                Agreement.

            


    

    
       

      
        	
                48

              	
                GOVERNING
                  LAW AND JURISDICTION

              


      

    

    


    
      	
              48.1

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

            


    

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    


    
      	
              48.2

            	
              Exclusive
                English jurisdiction.
                Subject to Clause 18.3,
                the courts of England shall have exclusive jurisdiction to settle
                any
                disputes which may arise out of or in connection with this
                Guarantee.

            


    

    
       

      
        	
                48.3

              	
                Choice
                  of forum for the exclusive benefit of the Lender.
                  Clause 18.2
                  is
                  for the exclusive benefit of the Lender, which reserves the
                  rights:

              


      

    

    


    
      	
              (a)

            	
              to
                commence proceedings in relation to any matter which arises out of
                or in
                connection with this Guarantee in the courts of any country other
                than
                England and which have or claim jurisdiction to that matter;
                and

            


    

    


    
      	
              (b)

            	
              to
                commence such proceedings in the courts of any such country or countries
                concurrently with or in addition to proceedings in England or without
                commencing proceedings in England.

            


    

    


    The
      Guarantor shall not commence any proceedings in any country other than England
      in relation to a matter which arises out of or in connection with this
      Guarantee.

    


    
      	
              48.4

            	
              Process
                agent.
                The Guarantor irrevocably appoints Marine Legal Services at its registered
                office for the time being, presently at Gate House, 1 Farringdon
                Street,
                London EC4M 7NS, to act as its agent to receive and accept on its
                behalf
                any process or other document relating to any proceedings in the
                English
                courts which are connected with this
                Guarantee.

            


    

    


    
      	
              48.5

            	
              Lender’s
                rights unaffected.
                Nothing in this Clause 18
                shall exclude or limit any right which the Lender may have (whether
                under
                the law of any country, an international convention or otherwise)
                with
                regard to the bringing of proceedings, the service of process, the
                recognition or enforcement of a judgment or any similar or related
                matter
                in any jurisdiction.

            


    

    


    
      	
              48.6

            	
              Meaning
                of “proceedings”.
                In
                this Clause 18,
                “proceedings”
                means proceedings of any kind, including an application for a provisional
                or protective measure.

            


    

    


    THIS
      GUARANTEE
      has been
      entered into as a deed on the date stated at the beginning of this
      Guarantee.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    


    EXECUTION
      PAGE

     

    


    
      	
              GUARANTOR

            	 
	 	 
	
              EXECUTED
                as
                a DEED
                by

            	
              )

            
	
              MC
                SHIPPING INC.

            	
              )

            
	
              by
                

            	
              )

            
	
              its
                duly authorised attorney

            	
              )

            
	
              in
                the presence of:

            	
              )

            
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	
              LENDER

            	 
	 	 
	
              EXECUTED
                AS A DEED

            	
              )

            
	
              by
                SCOTIABANK
                EUROPE PLC

            	
              )

            
	
              by
                

            	
              )

            
	
              its
                duly authorised attorney

            	
              )

            
	
              in
                the presence of:

            	
              )

            


    

     

    12