Document:

Exhibit 10.1

    
      

    

    EXHIBIT
      10.1

    

    

    DATED
      APRIL 19, 2006

    

    

    MC
      HERON SHIPPING LIMITED

    and
      others

    (as
      borrowers)

    

    -
      and -

    

    FORTIS
      BANK (NEDERLAND) N.V.

    and
      KfW

    (as
      lenders)

    

    -
      and -

    

    FORTIS
      BANK (NEDERLAND) N.V.

    (as
      agent and security trustee)

    

    

    
      
        

      

    

    US$31,750,000
      SECURED

    LOAN
      FACILITY AGREEMENT

    
      

    

     

     

    STEPHENSON
      HARWOOD

    One,
      St Paul's Churchyard

    London
      EC4M 8SH

    Tel:
      +44 020 7329 4422

    Fax:
      +44 020 7329 7100

    (Ref:
      814)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CONTENTS

    

    
      	 	 	
              Page

            
	 	 	 
	
              1

            	
              Definitions
                and Interpretation

            	
              5

            
	 	 	 
	
              2

            	
              The
                Loan and its Purpose

            	
              17

            
	 	 	 
	
              3

            	
              Conditions
                Precedent and Subsequent

            	
              18

            
	 	 	 
	
              4

            	
              Representations
                and Warranties

            	
              23

            
	 	 	 
	
              5

            	
              Repayment
                and Prepayment

            	
              25

            
	 	 	 
	
              6

            	
              Interest

            	
              26

            
	 	 	 
	
              7

            	
              Fees

            	
              28

            
	 	 	 
	
              8

            	
              Security
                Documents

            	
              29

            
	 	 	 
	
              9

            	
              Agency
                and Trust

            	
              30

            
	 	 	 
	
              10

            	
              Covenants

            	
              39

            
	 	 	 
	
              11

            	
              Earnings
                Account

            	
              44

            
	 	 	 
	
              12

            	
              Events
                Of Default

            	
              45

            
	 	 	 
	
              13

            	
              Set-Off
                And Lien

            	
              49

            
	 	 	 
	
              14

            	
              Assignment
                and Sub-Participation

            	
              50

            
	 	 	 
	
              15

            	
              Payments,
                Mandatory Prepayment, Reserve Requirements and Illegality

            	
              52

            
	 	 	 
	
              16

            	
              Communications

            	
              56

            
	 	 	 
	
              17

            	
              General
                Indemnities

            	
              57

            
	 	 	 
	
              18

            	
              Miscellaneous

            	
              59

            
	 	 	 
	
              19

            	
              Law
                and Jurisdiction

            	
              64

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              SCHEDULE
                1

            	
              65

            
	
              The
                Borrowers and the Vessels

            	
              65

            
	 	 
	
              SCHEDULE
                2

            	
              67

            
	
              The
                Banks and the Commitments

            	
              67

            
	 	 
	
              SCHEDULE
                3

            	
              68

            
	
              General
                Terms and Conditions

            	
              68

            
	 	 
	
              APPENDIX
                A

            	
              71

            
	 	 
	
              APPENDIX
                B

            	
              72

            
	
              Form
                of Transfer Certificate

            	
              72

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    LOAN
      AGREEMENT

     

    Dated:    
       April 19, 2006

     

    BETWEEN:-
      

     

    
      	
              (1)

            	
              the
                companies listed in Schedule 1, each of which is a company incorporated
                according to the law of the country indicated against its name in
                Schedule
                1, with its registered office at the address indicated against its
                name in
                Schedule 1 (together "the
                Borrowers"
                and each a "Borrower");
                and 

            

    

     

    
      	
              (2)

            	
              the
                banks listed in Schedule 2, each acting through its office at the
                address
                indicated against its name in Schedule 2 (together "the
                Banks"
                and each a "Bank");
                and 

            

    

     

    
      	
              (3)

            	
              FORTIS
                BANK (NEDERLAND) N.V.,
                acting as agent and security trustee through its office at Coolsingel
                93,
                3012 AE Rotterdam, The Netherlands (in that capacity "the
                Agent").

            

    

     

     

    WHEREAS:-

     

    
      	
              (A)

            	
              Each
                of the Borrowers is the registered owner of the Vessel listed against
                its
                name in Schedule 1.

            

    

     

    
      	
              (B)

            	
              Each
                of the Vessels is or will be registered in the ownership of her Owner
                under the flag of the country indicated against its name in Schedule
                1.

            

    

     

    
      	
              (C)

            	
              Each
                of the Banks has agreed to advance to the Borrowers, as joint and
                several
                debtors and obligors, its respective Commitment of an aggregate amount
                not
                exceeding thirty one million seven hundred and fifty thousand Dollars
                ($31,750,000). The Loan will be divided into two tranches, Tranche
                A and
                Tranche B. Tranche A, in the maximum amount of twenty three million
                seven
                hundred and fifty thousand Dollars ($23,750,000) shall be used by
                the
                Borrowers in re-financing certain existing indebtedness and Tranche
                B, in
                the maximum amount of eight million Dollars ($8,000,000) shall be
                used by
                the Borrowers in financing part of the purchase price of the New
                Vessels.
                

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
       

      IT IS AGREED
        as
        follows:-

    

     

    
      
        	
                1

              	
                Definitions
                  and Interpretation

              

      

       

    

    
      	 	
              1.1

            	
              Definitions

            

    

     

    In
      this
      Agreement:-

     

    
      	 	
              1.1.1

            	
              "the
                Account Security Deed"
                means the Account Security Deed referred to in Clause
                8.1.4.

            

    

     

    
      	 	
              1.1.2

            	
              "the
                Address for Service"
                means c/o Marine Legal Services Limited, Gate House, 1 Farringdon
                Street,
                London EC4M 7NS or, in relation to any of the Security Parties, such
                other
                address in England and Wales as that Security Party may from time
                to time
                designate by no fewer than ten days' written notice to the
                Agent.

            

    

     

    
      	
            	1.1.3	
              "the
                Administration" has
                the meaning given to it in paragraph 1.1.3 of the ISM
                Code.

            

    

     

    
      	 	
              1.1.4

            	
              the
                "Advance
                Date",
                in relation to any Drawing, means the date on which that Drawing
                is
                advanced by the Banks to the Borrowers pursuant to Clause
                2.

            

    

     

    
      	 	
              1.1.5

            	
              "Annex
                VI"
                means Annex VI (Regulations for the Prevention of Air Pollution from
                Ships) to the International Convention for the Prevention of Pollution
                from Ships 1973 (as modified in 1978 and
                1997).

            

    

     

    
      	 	
              1.1.6

            	
              "the
                Assignments"
                means the deeds of assignment of the Insurances, Earnings, Requisition
                Compensation and Charter referred to in Clause 8.1.2 (each an
                "Assignment").

            

    

     

    
      	 	
              1.1.7

            	
              the
                "Attributable
                Amount",
                in relation to any Vessel and at any time, means the amount which
                is
                obtained by dividing the Index Amount of that Vessel set out against
                the
                name of that Vessel in Schedule 1 by the sum of the Index Amounts of
                the Vessels then mortgaged to the Banks or to the Agent on their
                behalf as
                security for the repayment of the Indebtedness, and multiplying the
                result
                by the amount of the Loan outstanding at that
                time.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.8

            	
              "the
                Availability Termination Date"
                means 24 April 2006 or such later date as the Banks may in their
                discretion agree (such consent not to be unreasonably
                withheld).

            

    

     

    
      	 	
              1.1.9

            	
              "Break
                Costs"
                means all costs, losses, premiums or penalties incurred by the Agent
                or
                any Bank in the circumstances contemplated by Clause 17.4, or as
                a result
                of it receiving any prepayment of all or any part of the Loan (whether
                pursuant to Clause 5 or otherwise), or any other payment under or
                in
                relation to the Security Documents on a day other than the due date
                for
                payment of the sum in question, and includes (without limitation)
                any
                losses or costs incurred in liquidating or re-employing deposits
                from
                third parties acquired to effect or maintain the Loan, and any
                liabilities, expenses or losses incurred by the Agent or any Bank
                in
                terminating or reversing, or otherwise in connection with, any Transaction
                or any other interest rate and/or currency swap, transaction or
                arrangement entered into by the Agent or any Bank to hedge any exposure
                arising under this Agreement, or in terminating or reversing, or
                otherwise
                in connection with, any open position arising under this
                Agreement.

            

    

     

    
      	 	
              1.1.10

            	
              "Business
                Day"
                means a day on which banks are open for the transaction of business
                of the
                nature contemplated by this Agreement (and not authorised by law
                to close)
                in New York, United States of America; Amsterdam, The Netherlands;
                London,
                England and any other financial centre which any Bank may consider
                appropriate for the operation of the provisions of this
                Agreement.

            

    

     

    
      	 	
              1.1.11

            	
              "Charterers"
                means the
                charterers listed in Schedule 1 as Charterers of the Vessels and
                each a
                "Charterer".

            

    

     

    
      	 	
              1.1.12

            	
              "Charters"
                means the Existing Charters and any other charters approved in writing
                by
                the Agent. 

            

    

     

    
      	 	
              1.1.13

            	
              "Commitment"
                means, in relation to each Bank, the amount of the Loan which that
                Bank
                agrees to advance to the Borrowers as its several liability as indicated
                against the name of that Bank in Schedule 2 and/or, where the context
                permits, the amount of the Loan advanced by that Bank and remaining
                outstanding.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.14

            	
              a
                "Communication"
                means any notice, approval, demand, request or other communication
                from
                one party to this Agreement to any other party to this
                Agreement.

            

    

     

    
      	 	
              1.1.15

            	
              "the
                Communications Address"
                means c/o MC Shipping Inc Aigue Marine 24, avenue de Fontvieille,
                PO Box
                658, MC 98013, Monaco, Cedex Fax no.: +377 9205 9416, marked for
                the
                attention of Ms Dominique Sergent,
                email:dominique.sergent@mcshipping.com

            

    

     

    
      	 	
              1.1.16

            	
              "the
                Company"
                means, at any given time and in relation to any Vessel, the company
                responsible for the Vessel’s compliance with the ISM Code pursuant to
                paragraph 1.1.2 of the ISM Code.

            

    

     

    
      	 	
              1.1.17

            	
              "Currency
                of Account"
                means, in relation to any payment to be made to the Agent or a Bank
                under
                or pursuant to any of the Security Documents, the currency in which
                that
                payment is required to be made by the terms of the relevant Security
                Document. 

            

    

     

    
      	 	
              1.1.18

            	
              "the
                Deeds of Covenants"
                means the deeds of covenants referred to in Clause 8.1.1 (each a
                "Deed
                of Covenants").

            

    

     

    
      	 	
              1.1.19

            	
              "Default
                Rate"
                means the rate of three per centum (3%) per annum above the cost
                to the
                Agent of obtaining funds in amount similar to the amount of the
                Indebtedness or any relevant part of the Indebtedness for such periods
                as
                the Agent shall determine.

            

    

     

    
      	 	
              1.1.20

            	
              "DOC"
                means, in relation to each Company, a valid Document of Compliance
                issued
                for the Company
                by
                the Administration pursuant to paragraph 13.2 of the ISM
                Code.

            

    

     

    
      	 	
              1.1.21

            	
              "Dollars"
                and "$"
                each means available and freely transferable and convertible funds
                in
                lawful currency of the United States of
                America.

            

    

     

    
      	 	
              1.1.22

            	
              "Drawdown
                Notice"
                means a notice complying with Clause
                2.3.

            

    

     

    
      	 	
              1.1.23

            	
              "Drawing"
                means a part of the Loan advanced by the Banks to the Borrowers in
                accordance with Clause 2.3.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.24

            	
              "Earnings",
                in relation to a Vessel, means all hires, freights, pool income and
                other
                sums payable to or for the account of the Owner in respect of that
                Vessel
                including (without limitation) all remuneration for salvage and towage
                services, demurrage and detention moneys, contributions in general
                average, compensation in respect of any requisition for hire and
                damages
                and other payments (whether awarded by any court or arbitral tribunal
                or
                by agreement or otherwise) for breach, termination or variation of
                any
                contract for the operation, employment or use of the
                Vessel.

            

    

     

    
      	 	
              1.1.25

            	
              "the
                Earnings Account"
                means a bank account to be opened in the joint names of the Borrowers
                with
                the Agent and designated "MC SHIPPING - Earnings
                Account".

            

    

     

    
      	 	
              1.1.26

            	
              "Encumbrance"
                means any mortgage, charge (fixed or floating), pledge, lien, assignment,
                hypothecation, preferential right, option, title retention or trust
                arrangement or any other agreement or arrangement which has the effect
                of
                creating security or payment
                priority.

            

    

     

    
      	 	
              1.1.27

            	
              "Event
                of Default"
                means any of the events set out in
                Clause 12.2.

            

    

     

    
      	 	
              1.1.28

            	
              "Existing Charters"
                means the charters for each Vessel made between the relevant Owner
                and the
                relevant Charterer listed in Schedule 1 (together with any option
                periods)
                and each a "Charter".

            

    

     

    
      	 	
              1.1.29

            	
              "the
                Existing Lenders"
                means Fortis Bank (Nederland) N.V. and
                KfW.

            

    

     

    
      	 	
              1.1.30

            	
              "the
                Facility Period"
                means the period beginning on the date of this Agreement and ending
                on the
                date when the whole of the Indebtedness has been repaid in full and
                the
                Borrowers have ceased to be under any further actual or contingent
                liability to the Banks or the Agent under or in connection with the
                Security Documents.

            

    

     

    
      	 	
              1.1.31

            	
              "the
                Guarantee"
                means the guarantee and indemnity of the Guarantor referred to in
                Clause
                8.1.3.

            

    

     

    
      	 	
              1.1.32

            	
              "the
                Guarantor"
                means MC Shipping Inc. a corporation incorporated under the laws
                of
                Liberia with its registered office at 80 Broad Street, Monrovia,
                Liberia
                and/or (where the context permits) any other person or company who
                shall
                at any time during the Facility Period give to the Banks or to the
                Agent
                on their behalf a guarantee and/or indemnity for the repayment of
                all or
                part of the Indebtedness.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.33

            	
              "the
                Indebtedness"
                means the Loan; all other sums of any nature (together with all interest
                on any of those sums) which from time to time may be payable by any
                of the
                Borrowers to the Agent or the Banks pursuant to the Security Documents;
                any damages payable as a result of any breach by any of the Borrowers
                of
                any of the Security Documents; and any damages or other sums payable
                as a
                result of any of the obligations of any of the Borrowers under or
                pursuant
                to any of the Security Documents being disclaimed by a liquidator
                or any
                other person, or, where the context permits, the amount thereof for
                the
                time being outstanding.

            

    

     

    
      	 	
              1.1.34

            	
              "the
                Index Amount",
                in relation to any Vessel, means the number indicated against the
                name of
                that Vessel in Schedule 1 and, in relation to any other vessel, means
                such
                number as the Borrowers and the Agent may
                agree.

            

    

     

    
      	 	
              1.1.35

            	
              an
                "Instructing
                Group"
                means any one or more Banks whose combined Proportionate Shares exceed
                sixty six point six per centum
                (66.6%).

            

    

     

    
      	 	
              1.1.36

            	
              "Insurances",
                in relation to a Vessel, means all policies and contracts of insurance
                (including all entries in protection and indemnity or war risks
                associations) which are from time to time taken out or entered into
                in
                respect of or in connection with that Vessel or her increased value
                or her
                Earnings and (where the context permits) all benefits thereof, including
                all claims of any nature and returns of
                premium.

            

    

     

    
      	 	
              1.1.37

            	
              "Interest
                Payment Date"
                means each date for the payment of interest in accordance with
                Clause 6.

            

    

     

    
      	 	
              1.1.38

            	
              "Interest
                Period"
                means each interest period selected by the Borrowers or agreed by
                the
                Agent pursuant to Clause 6.

            

    

     

    
      	 	
              1.1.39

            	
              "IAPPC"
                means a valid international air pollution prevention certificate
                for the
                Vessel issued under Annex VI.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.40

            	
              "the
                ISM Code"
                means the International Management Code for the Safe Management of
                Ships
                and for Pollution Prevention, as adopted by the Assembly of the
                International Maritime Organisation on 4 November 1993 by resolution
                A.741
                (18) and incorporated on 19 May 1994 as chapter IX of the Safety
                of Life
                at Sea Convention 1974.

            

    

     

    
      	 	
              1.1.41

            	
              "ISPS
                Code"
                means the International Ship and Port Facility Security
                Code.

            

    

     

    
      	 	
              1.1.42

            	
              "ISPS
                Company"
                means, at any given time, the company responsible for each Vessel's
                compliance with the ISPS Code.

            

    

     

    
      	 	
              1.1.43

            	
              "ISSC"
                means, in relation to a Vessel, a valid International Ship Security
                Certificate for that Vessel issued under the ISPS
                Code.

            

    

     

    
      	 	
              1.1.44

            	
              "law"
                means any law, statute, treaty, convention, regulation, instrument
                or
                other subordinate legislation or other legislative or quasi-legislative
                rule or measure, or any order or decree of any government, judicial
                or
                public or other body or authority, or any directive, code of practice,
                circular, guidance note or other direction issued by any competent
                authority or agency (whether or not having the force of
                law).

            

    

     

    
      	 	
              1.1.45

            	
              "LIBOR"
                means the rate, rounded to the nearest four decimal places downwards
                (if
                the digit displayed in the fifth decimal place is 1,2,3 or 4) or
                upwards
                (if the digit displayed in the fifth decimal place is 5,6,7,8 or
                9)
                displayed as the British Bankers' Association Interest Settlement
                Rate on
                Telerate Page 3750 or any other information service selected by the
                Agent
                on which that rate is displayed, for deposits in Dollars of amounts
                equal
                to the amount of the Loan or any relevant part of the Loan for a
                period
                equal in length to the relevant Interest Period, or (if the Agent
                is for
                any reason unable to ascertain that rate) the rate (rounded upwards
                to the
                nearest whole multiple of one-sixteenth of one per centum) at which
                deposits in Dollars of amounts comparable to the amount of the Loan
                (or
                any relevant part of the Loan) are offered to the Agent in the London
                Interbank market for a period equal in length to the relevant Interest
                Period.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.46

            	
              "the
                Loan"
                means the aggregate amount from time to time advanced by the Banks
                to the
                Borrowers pursuant to Clause 2 or, where the context permits, the
                amount
                advanced and for the time being
                outstanding.

            

    

     

    
      	 	
              1.1.47

            	
              "the
                Managers"
                means V. Ships (Cyprus) Limited and, in respect of the New Vessels,
                Wallem
                Ship Management Limited, or such other commercial and/or technical
                managers of the Vessels nominated by the Borrowers as the Agent may
                approve.

            

    

     

    
      	 	
              1.1.48

            	
              "the
                Management Agreements"
                means the management agreements between the Borrowers and the Managers
                relating to the Vessels.

            

    

     

    
      	 	
              1.1.49

            	
              "the
                Margin"
                means one point two five per centum (1.25%) per
                annum.

            

    

     

    
      	 	
              1.1.50

            	
              "Market
                Value"
                means, in respect to a valuation of a Vessel, (i) on the Advance
                Date, the
                arithmetic average of two valuations provided by two independent
                sale and
                purchase brokers appointed by the Agent and (ii) commencing on the
                first
                December following the anniversary of the Advance Date and thereafter
                on a
                semi-annual basis throughout the Facility Period and at any other
                time,
                the arithmetic average of two valuations provided by two independent
                sale
                and purchase brokers appointed by the Agent. The initial valuations
                and
                any valuations following an Event of Default shall be at the Borrowers'
                expense. The two valuations each year during the Facility Period
                shall be
                at the Agent's expense. Any valuation shall be made without physical
                inspection and on the basis of a charter free sale for prompt delivery
                for
                cash at arms' length on normal commercial terms as between a willing
                seller and a willing buyer.

            

    

     

    
      	 	
              1.1.51

            	
              "the
                Maximum Loan Amount"
                means thirty one million seven hundred and fifty thousand Dollars
                ($31,750,000).

            

    

     

    
      	 	
              1.1.52

            	
              "the
                MOA"
                means the memorandum of agreement in respect of each New Vessel,
                each
                dated 24 February 2006 on the terms and subject to the conditions
                of which
                the Seller has agreed to sell each New Vessel to the relevant
                Owner.

            

    

     

    
      	 	
              1.1.53

            	
              "the
                Mortgagees' Insurances"
                means all policies and contracts of mortgagees' interest insurance,
                mortgagees' additional perils (oil pollution) insurance and any other
                insurance from time to time taken out by the Agent on behalf of the
                Banks
                in relation to the Vessels.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.54

            	
              "the
                Mortgages"
                means the first priority and first preferred mortgages referred to
                in
                Clause 8.1 (each a "Mortgage").

            

    

     

    
      	 	
              1.1.55

            	
              "New
                Vessels"
                means m.v. "Blackfriars Bridge" (ex "Dorothea Schulte") and m.v.
                "London
                Bridge" (ex "Hermann Schulte").

            

    

     

    
      	 	
              1.1.56

            	
              "Operating
                Expenses"
                means expenses properly and reasonably incurred by the Borrowers
                in
                connection with the operation, employment, maintenance, repair and
                insurance of the Vessels.

            

    

     

    
      	 	
              1.1.57

            	
              "Owner"
                means, in relation to a Vessel, the Borrower against whose name the
                name
                of that Vessel appears in Schedule
                1.

            

    

     

    
      	 	
              1.1.58

            	
              "Potential
                Event of Default"
                means any event which, with the giving of notice and/or the passage
                of
                time and/or the satisfaction of any materiality test, would constitute
                an
                Event of Default.

            

    

     

    
      	 	
              1.1.59

            	
              "Proceedings"
                means any suit, action or proceedings begun by the Agent or any of
                the
                Banks arising out of or in connection with the Security
                Documents.

            

    

     

    
      	 	
              1.1.60

            	
              "Proportionate
                Share"
                means, at any time, the proportion which that Bank’s Commitment (whether
                or not advanced) then bears to the aggregate Commitments of all the
                Banks
                (whether or not advanced).

            

    

     

    
      	 	
              1.1.61

            	
              "Repayment
                Date"
                means the date for payment of any Repayment Instalment in accordance
                with
                Clause 5. 

            

    

     

    
      	 	
              1.1.62

            	
              "Repayment
                Instalment"
                means any instalment of the Loan to be repaid by the Borrowers pursuant
                to
                Clause 5.

            

    

     

    
      	 	
              1.1.63

            	
              "Requisition
                Compensation",
                in relation to a Vessel, means all compensation or other money which
                may
                from time to time be payable to the Owner as a result of the Vessel
                being
                requisitioned for title or in any other way compulsorily acquired
                (other
                than by way of requisition for hire).

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.64

            	
              "the
                Security Documents"
                means this Agreement, the Mortgages, the Deeds of Covenants, the
                Assignments, the Guarantee, the Account Security Deed or (where the
                context permits) any one or more of them, and any other agreement
                or
                document which may at any time be executed by any person as security
                for
                the payment of all or any part of the
                Indebtedness.

            

    

     

    
      	 	
              1.1.65

            	
              "Security
                Parties"
                means the Borrowers, the Guarantor and any other person or company
                who may
                at any time during the Facility Period be liable for, or provide
                security
                for, all or any part of the Indebtedness, and "Security
                Party"
                means any one of them.

            

    

     

    
      	
            	1.1.66	
              "the
                Seller"
                means Dale Limited of Douglas, Isle of Man and Monet Trading Limited
                of
                Douglas, Isle of Man.

            

    

     

    
      	
            	1.1.67	
              "SMC"
                means, in relation to each Vessel, a valid safety management certificate
                issued for that Vessel by or on behalf of the relevant Administration
                pursuant to paragraph 13.4 of the ISM
                Code.

            

    

     

    
      	
            	1.1.68	
              "SMS"
                means, in relation to each Vessel, a safety management system for
                that
                Vessel developed and implemented in accordance with the ISM Code
                and
                including the functional requirements, duties and obligations required
                by
                the ISM Code.

            

    

     

    
      	 	
              1.1.69

            	
              "Taxes"
                means all taxes, levies, imposts, duties, charges, fees, deductions
                and
                withholdings (including any related interest, fines, surcharges and
                penalties) and any restrictions or conditions resulting in any charge,
                other than taxes on the overall net income of the Agent or of a Bank,
                and
                "Tax"
                and "Taxation"
                shall be interpreted accordingly.

            

    

     

    
      	 	
              1.1.70

            	
              "Total
                Loss",
                in relation to a Vessel, means:- 

            

    

     

    
      	 	
              (a)

            	
              an
                actual, constructive, arranged, agreed or compromised total loss
                of that
                Vessel; or 

            

    

     

    
      	 	
              (b)

            	
              the
                requisition for title or compulsory acquisition of that Vessel by
                or on
                behalf of any government or other authority (other than by way of
                requisition for hire); or

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              the
                capture, seizure, arrest, detention or confiscation of that Vessel,
                unless
                the Vessel is released and returned to the possession of the Owner
                within
                one month after the capture, seizure, arrest, detention or confiscation
                in
                question.

            

    

     

    
      	 	
              1.1.71

            	
              "Tranche
                A"
                means a maximum amount of twenty three million seven hundred and
                fifty
                thousand Dollars ($23,750,000).

            

    

     

    
      	 	
              1.1.72

            	
              "Tranche
                B"
                means a maximum amount of eight million Dollars
                ($8,000,000).

            

    

     

    
      	 	
              1.1.73

            	
              "Tranches"
                means Tranche A and Tranche B
                together.

            

    

     

    
      	 	
              1.1.74

            	
              "Transfer
                Certificate"
                means a certificate materially in the form of Appendix
                B.

            

    

     

    
      	 	
              1.1.75

            	
              "Transfer
                Date",
                in relation to a transfer of any of a Bank's rights and/or obligations
                under or pursuant to this Agreement, means the fifth Business Day
                after
                the date of delivery of the relevant Transfer Certificate to the
                Agent, or
                such later Business Day as may be specified in the relevant Transfer
                Certificate.

            

    

     

    
      	 	
              1.1.76

            	
              "Transferee"
                means any bank or financial institution to which a Bank transfers
                any of
                its rights and/or obligations under or pursuant to this
                Agreement.

            

    

     

    
      	 	
              1.1.77

            	
              "the
                Trust Property"
                means:-

            

    

     

    
      	 	
              (a)

            	
              the
                benefit of the covenant contained in Clause 9;
                and

            

    

     

    
      	 	
              (b)

            	
              all
                benefits arising under (including, without limitation, all proceeds
                of the
                enforcement of) each of the Security Documents (other than this
                Agreement), with the exception of any benefits arising solely for
                the
                benefit of the Agent.

            

    

     

    
      	 	
              1.1.78

            	
              "Underlying
                Documents"
                means the MOAs, the Charters and the Management
                Agreements.

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.1.79

            	
              "the
                Vessels" means
                the vessels listed in Schedule 1 and everything now or in the future
                belonging to them on board and ashore (each a "Vessel").

            

    

    
      
         

        
          	 	
                  1.2

                	
                  Interpretation

                

        

      

       

    

    In
      this
      Agreement:-

     

    
      	 	
              1.2.1

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

            

    

     

    
      	 	
              1.2.2

            	
              words
                denoting persons include corporations, partnerships, associations
                of
                persons (whether incorporated or not) or governmental or
                quasi-governmental bodies or authorities and vice
                versa;

            

    

     

    
      	 	
              1.2.3

            	
              references
                to Recitals, Clauses, Schedules and Appendices are references to
                recitals
                and clauses of, and schedules and appendices to, this Agreement;
                

            

    

     

    
      	 	
              1.2.4

            	
              references
                to this Agreement include the Recitals, the Schedules and the
                Appendices;

            

    

     

    
      	 	
              1.2.5

            	
              the
                headings and contents page(s) are for the purpose of reference only,
                have
                no legal or other significance, and shall be ignored in the interpretation
                of this Agreement;

            

    

     

    
      	 	
              1.2.6

            	
              references
                to any document (including, without limitation, to all or any of
                the
                Security Documents) are, unless the context otherwise requires, references
                to that document as amended, supplemented, novated or replaced from
                time
                to time;

            

    

     

    
      	 	
              1.2.7

            	
              references
                to statutes or provisions of statutes are references to those statutes,
                or
                those provisions, as from time to time amended, replaced or
                re-enacted;

            

    

     

    
      	 	
              1.2.8

            	
              references
                to a Bank or to the Agent include its successors, transferees and
                assignees;

            

    

     

    
      	 	
              1.2.9

            	
              references
                to times of day are to London time.

            

    

    
       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	 	
                1.3

              	
                Offer
                  letter

              

      

    

     

    This
      Agreement supersedes the terms and conditions contained in any correspondence
      relating to the subject matter of this Agreement exchanged between the Agent
      or
      any of the Banks and the Borrowers or their representatives prior to the date
      of
      this Agreement. It shall be read in conjunction with the Agent's General Terms
      and Conditions (a copy of which is attached at Schedule 3 and which shall form
      an integral part hereof). In the case of any conflict between this Agreement
      and
      the said General Terms and Conditions, this Agreement shall prevail.

    
       

      
        	 	
                1.4

              	Joint and several
                liability

      

    

     

    
      	 	
              1.4.1

            	
              All
                obligations, covenants, representations, warranties and undertakings
                in or
                pursuant to the Security Documents assumed, given, made or entered
                into by
                the Borrowers shall, unless otherwise expressly provided, be assumed,
                given, made or entered into by the Borrowers jointly and
                severally.

            

    

     

    
      	 	
              1.4.2

            	
              Each
                of the Borrowers agrees that any rights which it may have at any
                time
                during the Facility Period by reason of the performance of its obligations
                under the Security Documents to be indemnified by any other Borrower
                and/or to take the benefit of any security taken by the Banks or
                by the
                Agent pursuant to the Security Documents shall be exercised in such
                manner
                and on such terms as the Agent may require. Each of the Borrowers
                agrees
                to hold any sums received by it as a result of its having exercised
                any
                such right on trust for the Agent (as agent for the Banks)
                absolutely.

            

    

     

    
      	 	
              1.4.3

            	
              Each
                of the Borrowers agrees that it will not at any time during the Facility
                Period claim any set-off or counterclaim against any other Borrower
                in
                respect of any liability owed to it by that other Borrower under
                or in
                connection with the Security Documents, nor prove in competition
                with the
                Banks or the Agent in any liquidation of (or analogous proceeding
                in
                respect of) any other Borrower in respect of any payment made under
                the
                Security Documents or in respect of any sum which includes the proceeds
                of
                realisation of any security held by the Banks or the Agent for the
                repayment of the Indebtedness.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
       

      
        	
                2

              	
                The Loan and its Purpose

              

      

       

    

    
      	 	
              2.1

            	
              Agreement
                to lend Subject
                to the terms and conditions of this Agreement, and in reliance on
                each of
                the representations and warranties made or to be made in or in accordance
                with each of the Security Documents, each of the Banks agrees to
                advance
                to the Borrowers its Commitment of an aggregate amount not exceeding
                the
                Maximum Loan Amount to be used by the Borrowers for the purposes
                referred
                to in Recital (C).

            

    

     

    
      	 	
              2.2

            	
              Drawings
                Subject
                to satisfaction by the Borrowers of the conditions set out in
                Clause 3, and subject to Clause 2.3, the Loan shall be advanced to
                the Borrowers in no more than one Drawing.
                The
                Agent shall transfer the amount of the Loan to the Borrowers or their
                order, by such method of funds transfer as the Agent and the Borrowers
                shall agree.

            

    

     

    
      	 	
              2.3

            	
              Advance
                of Loan The
                Loan shall be advanced in Dollars on a Business Day, provided that
                the
                Borrowers shall have given to the Agent not more than ten and not
                fewer
                than three Business Days' notice in writing materially in the form
                set out
                in Appendix A of the required Advance Date of the Loan. The Drawdown
                Notice once given shall be irrevocable and shall constitute a warranty
                by
                the Borrowers that:- 

            

    

     

    
      	 	
              2.3.1

            	
              all
                conditions precedent to the advance of the Loan will have been satisfied
                on or before the Advance Date requested;

            

    

     

    
      	 	
              2.3.2

            	
              no
                Event of Default or Potential Event of Default will then have occurred;
                

            

    

     

    
      	 	
              2.3.3

            	
              no
                Event of Default or Potential Event of Default will result from the
                advance of the Loan; and

            

    

     

    
      	 	
              2.3.4

            	
              there
                has been no material adverse change in the business, affairs or financial
                condition of any of the Security Parties from that pertaining at
                the date
                of this Agreement. 

            

    

     

    The
      Agent
      shall promptly notify each Bank of the receipt of the Drawdown Notice, following
      which each Bank will make its Proportionate Share of the amount of the requested
      Drawing available to the Borrowers through the Agent on the Advance Date
      requested.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.4

            	
              Availability
                Termination Date No
                Bank shall be under any obligation to advance all or any part of
                its
                Commitment after the Availability Termination
                Date.

            

    

     

    
      	 	
              2.5

            	
              Several
                obligations The
                obligations of the Banks under this Agreement are several. The failure
                of
                a Bank to perform its obligations under this Agreement shall not
                affect
                the obligations of the Borrowers to the Agent or to the other Banks,
                nor
                shall the Agent or any other Bank be liable for the failure of a
                Bank to
                perform any of its obligations under or in connection with this
                Agreement.

            

    

     

    
      	 	
              2.6

            	
              Application
                of Loan Without
                prejudice to the obligations of the Borrowers under this Agreement,
                neither the Banks nor the Agent shall be obliged to concern themselves
                with the application of the Loan by the
                Borrowers.

            

    

     

    
      	 	
              2.7

            	
              Loan
                and control accounts The
                Borrowers will open and maintain with the Agent such loan and control
                accounts as the Agent shall consider necessary or desirable.
                

            

    

    
       

      
        	
                3

              	
                Conditions Precedent and Subsequent 

              

      

       

    

    
      	 	
              3.1

            	
              Conditions
                Precedent
                Before the Borrowers shall be entitled to issue a Drawdown Notice
                pursuant
                to Clause 2.3, and before any Bank shall have any obligation to advance
                any part of its Commitment, the Borrowers shall deliver or cause
                to be
                delivered to or to the order of the Agent in form and substance
                satisfactory to the Agent the following documents and
                evidence:

            

    

     

    
      	 	
              3.1.1

            	
              Evidence
                of incorporation Such
                evidence as the Agent may reasonably require that each Security Party
                was
                duly incorporated in its country of incorporation and remains in
                existence
                and, where appropriate, in good standing, with power to enter into,
                and
                perform its obligations under, those of the Security Documents to
                which it
                is, or is intended to be, a party, including (without limitation)
                a copy,
                certified by a director or the secretary of the Security Party in
                question
                as true, complete, accurate and unamended, of all documents establishing
                or limiting the constitution of each Security Party.
                

            

    

     

    
      	 	
              3.1.2

            	
              Corporate
                authorities A
                copy, certified by a director or the secretary of the Security Party
                in
                question as true, complete, accurate and neither amended nor revoked,
                of a
                resolution of the directors and a resolution of the shareholders
                (or
                members, as the case may be) of each Security Party (together, where
                appropriate, with signed waivers of notice of any directors' or
                shareholders' (or members', as the case may be) meetings) approving,
                and
                authorising or ratifying the execution of, those of the Security
                Documents
                to which that Security Party is or is intended to be a party and
                all
                matters incidental thereto. 

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.1.3

            	
              Officer's
                certificate A
                certificate signed by a duly authorised officer of each of the Security
                Parties setting out the names of the directors, officers and
                shareholders/members of that Security Party or, a power of attorney
                otherwise duly authorised and executed in accordance with all relevant
                formalities of the jurisdiction of domicile of the relevant Security
                Party.

            

    

     

    
      	 	
              3.1.4

            	
              Power
                of attorney The
                notarially attested and legalised power of attorney of each of the
                Security Parties under which any documents are to be executed or
                transactions undertaken by that Security
                Party.

            

    

     

    
      	 	
              3.1.5

            	
              Vessel
                documents Photocopies,
                certified as true, accurate and complete by a director or the secretary
                of
                the Owner, of (in respect of each
                Vessel):-

            

    

     

    
      	 	
              (a)

            	
              the
                relevant Charter;

            

    

     

    
      	 	
              (b)

            	
              the
                management agreement between the Owner and the Managers relating
                to that
                Vessel; 

            

    

     

    
      	 	
              (c)

            	
              that
                Vessel's current Safety Construction, Safety Equipment, Safety Radio
                and
                Load Line Certificates;

            

    

     

    
      	 	
              (d)

            	
              that
                Vessel's current Certificate of Financial Responsibility issued pursuant
                to the United States Oil Pollution Act
                1990;

            

    

     

    
      	 	
              (e)

            	
              that
                Vessel’s current SMC;

            

    

     

    
      	 	
              (f)

            	
              that
                Vessel's current ISSC; 

            

    

     

    
      	 	
              (g)

            	
              the
                relevant Company’s current DOC;

            

    

     

    
      	 	
              (h)

            	
              the
                MOA, bill of sale and protocol of delivery and acceptance evidencing
                delivery of the New Vessels from the Seller to the relevant Owner;
                in each
                case together with all addenda, amendments or
                supplements.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.1.6

            	
              IAPPC
                The
                written confirmation of the Managers undertaking that the IAPPC in
                respect
                of each Vessel will be duly obtained and delivered to the Agent as
                soon as
                possible following the date of this Agreement.

            

    

     

    
      	 	
              3.1.7

            	
              Evidence
                of ownership Certificate(s)
                of ownership and encumbrance (or equivalent) issued by the Registrar
                of
                Ships (or equivalent official) at each Vessel's port of registry
                confirming that each Vessel is on the Advance Date owned by her Owner
                and
                free of registered Encumbrances.

            

    

     

    
      	 	
              3.1.8

            	
              Evidence
                of insurance Evidence
                that each Vessel is insured in the manner required by the Security
                Documents and that letters of undertaking will be issued in the manner
                required by the Security Documents, together with the written approval
                of
                the Insurances by an insurance adviser appointed by the Agent, such
                written approval to be at the expense of the
                Borrowers.

            

    

     

    
      	 	
              3.1.9

            	
              Confirmation
                of class A
                Certificate of Confirmation of Class for hull and machinery confirming
                that each Vessel is classed with the highest class applicable to
                vessels
                of her type with Lloyd's Register of Shipping or such other classification
                society as may be acceptable to the
                Agent.

            

    

     

    
      	
            	3.1.10	
              Instruction
                to classification society
                A
                letter of instruction from the Owner of each Vessel to that Vessel's
                classification society in the form required by the
                Agent.

            

    

     

    
      	 	
              3.1.11

            	
              Survey
                report A
                report by surveyors instructed by the Agent to inspect any one New
                Vessel,
                such New Vessel to be selected in the Agent's absolute discretion,
                confirming that the condition of such New Vessel is in all respects
                acceptable to the Agent, such survey to be at the expense of the
                Borrowers.

            

    

     

    
      	 	
              3.1.12

            	
              Valuations
                Two valuations of each Vessel addressed to the Agent from a broker
                acceptable to the Agent and appointed by the Agent certifying a value
                for
                each Vessel, assessed in such manner as the Agent may require, acceptable
                to the Agent, such valuations to be at the expense of the
                Borrowers.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.1.13

            	
              The
                Security Documents The
                Security Documents, together with all notices and other documents
                required
                by any of them, duly executed and, in the case of the Mortgages,
                registered with first priority through the Registrar of Ships (or
                equivalent official) at the port of registry of the Vessel
                concerned.

            

    

     

    
      	 	
              3.1.14

            	
              Drawdown
                Notice A
                Drawdown Notice.

            

    

     

    
      	 	
              3.1.15

            	
              Process
                agent A
                letter from Marine Legal Services Limited accepting their appointment
                by
                each of the Security Parties as agent for service of Proceedings
                pursuant
                to the Security Documents.

            

    

     

    
      	 	
              3.1.16

            	
              Mandates
                Such duly signed forms of mandate, and/or other evidence of the opening
                of
                the Earnings Account, as the Agent or any of the Banks may
                require.

            

    

     

    
      	 	
              3.1.17

            	
              Managers'
                confirmation The
                written confirmation of the Managers that, throughout the Facility
                Period
                unless otherwise agreed by the Agent, they will remain the commercial
                and
                technical managers of the Vessels and that they will not, without
                the
                prior written consent of the Agent, sub-contract or delegate the
                commercial or technical management of any Vessel to any third
                party.

            

    

     

    
      	 	
              3.1.18

            	
              Fees
                Payment
                of the fees payable pursuant to Clause 7
                hereof.

            

    

     

    
      	 	
              3.1.19

            	
              Underlying
                Documents
                Photocopies, certified as true, accurate and complete, of the Underlying
                Documents.

            

    

     

    
      	 	
              3.1.20

            	
              Legal
                opinions Confirmation
                satisfactory to the Agent that opinions on the laws of the Cayman
                Islands
                and the Isle of Man required by the Agent will be given substantially
                in
                the form required by the Agent.

            

    

     

    
      	 	
              3.2

            	
              Conditions
                Subsequent
                The Borrowers undertake to deliver or to cause to be delivered to
                the
                Agent on, or as soon as practicable after, the Advance Date, the
                following
                additional documents and evidence:-

            

    

     

    
      	 	
              3.2.1

            	
              Evidence
                of registration Evidence
                of registration of the Mortgages, in each case with first priority,
                with
                the Registrar of Ships (or equivalent official) at the port of registry
                of
                the Vessel concerned.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.2.2

            	
              Letters
                of undertaking Letters
                of undertaking as required by the Security Documents in form and
                substance
                acceptable to the Agent.

            

    

     

    
      	 	
              3.2.3

            	
              Legal
                opinions Such
                legal opinions as the Agent shall
                require.

            

    

     

    
      	 	
              3.2.4

            	
              Companies
                Act registrations
                Evidence that the prescribed particulars of the Security Documents
                have
                been delivered to the Registrar of Companies of England and Wales
                and the
                Isle of Man Financial Supervision Commission within the statutory
                time
                limit.

            

    

     

    
      	 	
              3.3

            	
              No
                waiver If
                the Banks in their sole discretion agree to advance any part of the
                Loan
                to the Borrowers before all of the documents and evidence required
                by
                Clauses 3.1 have been delivered to or to the order of the Agent,
                the
                Borrowers undertake to deliver all outstanding documents and evidence
                to
                or to the order of the Agent no later than the date specified by
                the
                Agent, and the advance of any part of the Loan shall not be taken
                as a
                waiver of the Agent's right to require production of all the documents
                and
                evidence required by Clauses 3.1.

            

    

     

    
      	 	
              3.4

            	
              Form
                and content All
                documents and evidence delivered to the Agent pursuant to this Clause
                shall:- 

            

    

     

    
      	 	
              3.4.1

            	
              be
                in form and substance acceptable to the Agent;

            

    

     

    
      	 	
              3.4.2

            	
              be
                accompanied, if required by the Agent, by translations into the English
                language, certified in a manner acceptable to the Agent;
                

            

    

     

    
      	 	
              3.4.3

            	
              if
                required by the Agent, be certified, notarised, legalised or attested
                in a
                manner acceptable to the Agent.

            

    

     

    
      	 	
              3.5

            	
              Event
                of Default
                No
                Bank shall be under any obligation to advance any part of its Commitment
                nor to act on the Drawdown Notice if, at the date of the Drawdown
                Notice
                or at the date on which the advance of the Loan is requested in the
                Drawdown Notice, an Event of Default or Potential Event of Default
                shall
                have occurred, or if an Event of Default or Potential Event of Default
                would result from the advance of the
                Loan.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

      
        	
                4

              	
                Representations
                  and Warranties

              

      

       

    

    Each
      of
      the Borrowers represents and warrants to each of the Banks and to the Agent
      at
      the date of this Agreement and (by reference to the facts and circumstances
      then
      pertaining) at the date of each Drawdown Notice, at each Advance Date and at
      each Interest Payment Date as follows:-

     

    
      	 	
              4.1

            	
              Incorporation
                and capacity Each
                of the Security Parties is a body corporate duly constituted and
                existing
                and (where applicable) in good standing under the law of its country
                of
                incorporation, in each case with perpetual corporate existence and
                the power to sue and be sued, to own its assets and to carry on its
                business, and all of the corporate shareholders (if any) of each
                Security
                Party are duly constituted and existing under the laws of their countries
                of incorporation with perpetual corporate existence and the power
                to sue
                and be sued, to own their assets and to carry on their business.
                

            

    

     

    
      	 	
              4.2

            	
              Solvency
                None
                of the Security Parties is insolvent or in liquidation or administration
                or subject to any other insolvency procedure, and no receiver,
                administrative receiver, administrator, liquidator, trustee or analogous
                officer has been appointed in respect of any of the Security Parties
                or
                all or any part of their assets. 

            

    

     

    
      	 	
              4.3

            	
              Binding
                obligations The
                Security Documents when duly executed and delivered will constitute
                the
                legal, valid and binding obligations of the Security Parties enforceable
                in accordance with their respective
                terms.

            

    

     

    
      	 	
              4.4

            	
              Satisfaction
                of conditions All
                acts, conditions and things required to be done and satisfied and
                to have
                happened prior to the execution and delivery of the Security Documents
                in
                order to constitute the Security Documents the legal, valid and binding
                obligations of the Security Parties in accordance with their respective
                terms have been done, satisfied and have happened in compliance with
                all
                applicable laws.

            

    

     

    
      	 	
              4.5

            	
              Registrations
                and consents With
                the exception only of the registrations referred to in Clause 3.2,
                all (if
                any) consents, licences, approvals and authorisations of, or registrations
                with or declarations to, any governmental authority, bureau or agency
                which may be required in connection with the execution, delivery,
                performance, validity or enforceability of the Security Documents
                have
                been obtained or made and remain in full force and effect and none
                of the
                Borrowers is aware of any event or circumstance which could reasonably
                be
                expected adversely to affect the right of any of the Borrowers to
                hold
                and/or obtain renewal of any such consents, licences, approvals or
                authorisations.

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.6

            	
              Disclosure
                of material facts None
                of the Borrowers is aware of any material facts or circumstances
                which
                have not been disclosed to the Agent and which might, if disclosed,
                have
                adversely affected the decision of a person considering whether or
                not to
                make loan facilities of the nature contemplated by this Agreement
                available to the Borrowers.

            

    

     

    
      	 	
              4.7

            	
              No
                material litigation There
                is no action, suit, arbitration or administrative proceeding pending
                or to
                its knowledge about to be pursued before any court, tribunal or
                governmental or other authority which in the reasonable opinion of
                the
                Agent would, or would be likely to, have a materially adverse effect
                on
                the business, assets, financial condition or creditworthiness of
                any of
                the Security Parties.

            

    

     

    
      	 	
              4.8

            	
              No
                breach of law or contract The
                execution, delivery and performance of the Security Documents will
                not
                contravene any contractual restriction or any law binding on any
                of the
                Security Parties or on any shareholder (whether legal or beneficial)
                of
                any of the Security Parties, or the constitutional documents of any
                of the
                Security Parties, nor result in the creation of, nor oblige any of
                the
                Security Parties to create, any Encumbrance over all or any of its
                assets,
                with the exception of the Encumbrances created by or pursuant to
                the
                Security Documents, and, in entering into those of the Security Documents
                to which it is, or is to be, a party, and in borrowing the Loan,
                each of
                the Borrowers is acting for its own
                account.

            

    

     

    
      	 	
              4.9

            	
              No
                deductions
                None of the Borrowers is required to make any deduction or withholding
                from any payment which it may be obliged to make to the Agent or
                any of
                the Banks under or pursuant to the Security
                Documents.

            

    

     

    
      	 	
              4.10

            	
              No
                established place of business in the United Kingdom or United
                States
                None of the Security Parties has, nor will any of them have during
                the
                Facility Period, an established place of business in the United Kingdom
                or
                the United States of America. 

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.11

            	
              Use
                of Loan The
                Loan will be used for the purposes specified in Recital
                (C).

            

    

     

    
      	 	
              4.12

            	
              Underlying
                Documents
                The certified copies of the Underlying Documents delivered to the
                Agent
                are true and complete copies, and there are no side agreements or
                other
                documents thereto which have not been disclosed to the
                Agent.

            

    

    
       

      
        	
                5

              	
                Repayment
                  and Prepayment

              

      

       

    

    
      	 	
              5.1

            	
              Repayment
                The
                Borrowers agree to repay the Loan to the Agent as agent for the Banks
                by
                nineteen (19) consecutive quarterly Repayment Instalments. The first
                Repayment Instalment will be in the sum of one million two hundred
                and
                fifty thousand Dollars ($1,250,000) and the following eighteen Repayment
                Instalments will each be in the sum of one million six hundred and
                ninety
                four thousand four hundred and forty four Dollars ($1,694,444). The
                first
                Repayment Date will be 27 April 2006 and subsequent Repayment Dates
                will
                be at consecutive intervals of three calendar months
                thereafter.

            

    

     

    
      	 	
              5.2

            	
              Reduction
                of Repayment Instalments If
                the aggregate amount advanced to the Borrowers is less than the Maximum
                Loan Amount, the amount of each Repayment Instalment shall be reduced
                pro
                rata to the amount actually
                advanced.

            

    

     

    
      	 	
              5.3

            	
              Voluntary
                Prepayment The
                Borrowers may prepay the Loan in whole or in part (without penalty
                save as
                provided in clause 5.5) in an amount equal to five hundred thousand
                Dollars ($500,000) or an integral multiple of that amount (or as
                otherwise
                may be agreed by the Agent) provided that they have first given to
                the
                Agent not fewer than fifteen (15) days' prior written notice expiring
                on a
                Business Day of their intention to do so. Any such prepayment shall
                be
                applied in accordance with Clause 5.6. Any notice pursuant to this
                Clause
                once given shall be irrevocable and shall oblige the Borrowers to
                make the
                prepayment referred to in the notice on the Business Day specified
                in the
                notice, together with all interest accrued on the amount prepaid
                up to and
                including that Business Day.

            

    

     

    
      	 	
              5.4

            	
              Involuntary
                Prepayment
                The net proceeds from the refinancing, sale, scrap or Total Loss
                of any
                Vessel shall be applied promptly upon receipt in or towards prepayment
                of
                the Indebtedness then outstanding. If such net proceeds are less
                than the
                Attributable Amount for that Vessel, the net proceeds together with
                such
                additional amount as may be required to ensure that an amount equal
                to the
                Attributable Amount shall be prepaid. If the net proceeds exceed
                the
                Attributable Amount for that Vessel, any surplus shall be released
                to the
                Borrowers provided that no Event of Default or Potential Event of
                Default
                shall have occurred and be continuing. Any such prepayment shall
                be
                applied in accordance with Clause
                5.6.

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.5

            	
              Prepayment
                indemnity If
                the Borrowers shall, subject always to Clause 5.3, make a prepayment
                on a
                Business Day other than the last day of an Interest Period in respect
                of
                the whole of the Loan, they shall, in addition to the amount prepaid
                and
                accrued interest, pay to the Agent on behalf of the Banks any amount
                which
                the Agent may certify is necessary to compensate the Banks for any
                Break
                Costs incurred by the Agent or any of the Banks as a result of the
                making
                of the prepayment in question. 

            

    

     

    
      	 	
              5.6

            	
              Application
                of prepayments Any
                prepayment made pursuant to Clause 5.3 or Clause 5.4 in an amount
                less
                than the Indebtedness shall be applied in satisfaction or reduction
                first
                of any costs and other amounts outstanding; secondly of all interest
                outstanding; thirdly of the Repayment Instalments in inverse order
                of
                maturity. 

            

    

     

    
      	 	
              5.7

            	
              No
                reborrowing No
                amount repaid or prepaid pursuant to this Agreement may in any
                circumstances be reborrowed.

            

    

    
       

      
        	
                6

              	
                Interest

              

      

       

    

    
      	 	
              6.1

            	
              Interest
                Periods
                Other than the first Interest Period, which shall be determined according
                to Clause 6.10, the period during which the Loan shall be outstanding
                pursuant to this Agreement shall be divided into consecutive Interest
                Periods of one, three, six, nine or twelve months' duration, as selected
                by the Borrowers by written notice to the Agent not later than 11.00
                a.m.
                on the third Business Day before the beginning of the Interest Period
                in
                question, or such other duration as may be agreed by the Banks in
                their
                discretion PROVIDED
                THAT
                the Borrowers may not elect to have more than three (3) one month
                Interest
                Periods in any calendar year. 

            

    

     

    
      	 	
              6.2

            	
              Beginning
                and end of Interest Periods The
                first Interest Period shall begin on the Advance Date, the next shall
                begin on 27 April 2006 and the final Interest Period shall end on
                the
                Repayment Date applicable to the final Repayment
                Instalment.

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.3

            	
              Interest
                Periods to meet Repayment Dates If
                the Borrowers shall select, or the Borrowers and the Banks shall
                agree, an
                Interest Period which does not expire on the next Repayment Date,
                there
                shall, in respect of each part of the Loan equal to a Repayment Instalment
                falling due for payment before the expiry of that Interest Period,
                be a
                separate Interest Period which shall expire on the relevant Repayment
                Date, and the Interest Period selected or agreed shall apply to the
                balance of the Loan only.

            

    

     

    
      	 	
              6.4

            	
              Interest
                rate
                Subject to Clause 6.10, during each Interest Period interest shall
                accrue
                on the Loan at the rate determined by the Agent to be the aggregate
                of
                (a) the Margin and (b) LIBOR determined at or about 11.00 a.m.
                on the second Business Day prior to the beginning of that Interest
                Period.

            

    

     

    
      	 	
              6.5

            	
              Failure
                to select Interest Period If
                the Borrowers at any time fail to select or agree an Interest Period
                in
                accordance with Clause 6.1, the interest rate applicable after the
                expiry
                of the then current Interest Period shall be the rate determined
                by the
                Agent in accordance with Clause 6.4 for consecutive Interest Periods
                each
                of such duration (not exceeding three months) as the Agent may
                select.

            

    

     

    
      	 	
              6.6

            	
              Accrual
                and payment of interest Interest
                shall accrue from day to day, shall be calculated on the basis of
                a 360
                day year and the actual number of days elapsed (or, in any circumstance
                where market practice differs, in accordance with the prevailing
                market
                practice) and shall be paid by the Borrowers to the Agent on behalf
                of the
                Banks on the last day of each Interest Period and additionally, during
                any
                Interest Period exceeding three (3) months, on the last day of each
                successive three (3) month period of that Interest
                Period.

            

    

     

    
      	 	
              6.7

            	
              Ending
                of Interest Periods Each
                Interest Period shall, subject to Clauses 6.2 and 6.3, end on the
                date
                which numerically corresponds to the date on which the immediately
                preceding Interest Period ended (or, in the case of the first Interest
                Period, to the Advance Date) in the calendar month which is the number
                of
                months selected or agreed after the calendar month in which the
                immediately preceding Interest Period ended (or, in the case of the
                first
                Interest Period, in which the Advance Date occurred), except
                that:-

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.7.1

            	
              if
                there is no numerically corresponding date in the calendar month
                in which
                the Interest Period ends, the Interest Period shall end on the last
                Business Day in that calendar month;
                and

            

    

     

    
      	 	
              6.7.2

            	
              if
                any Interest Period would end on a day which is not a Business Day,
                that
                Interest Period shall end on the next succeeding Business Day (unless
                the
                next succeeding Business Day falls in the next calendar month, in
                which
                event the Interest Period in question shall end on the next preceding
                Business Day).

            

    

     

    Any
      adjustment made pursuant to Clause 6.7.1 or 6.7.2 shall be ignored for the
      purpose of determining the date on which any subsequent Interest Period shall
      end.

     

    
      	
            	6.8	
              Default
                Rate If
                an Event of Default shall occur, the whole of the Indebtedness shall,
                from
                the date of the occurrence of the Event of Default, bear interest
                up to
                the date of actual payment (both before and after judgment) at the
                Default
                Rate, compounded at such intervals as the Agent shall determine,
                which
                interest shall be payable from time to time by the Borrowers to the
                Agent
                on behalf of the Banks on demand. 

            

    

     

    
      	 	
              6.9

            	
              Determinations
                conclusive Each
                determination of an interest rate made by the Agent in accordance
                with
                Clause 6 shall (save in the case of manifest error or on any question
                of law) be final and conclusive.

            

    

     

    
      	 	
              6.10

            	
              First
                Interest Period In
                respect of Tranche A, the first Interest Period shall begin on the
                Advance
                date and shall be fixed until 27 April 2006 at a rate of 5.8898%
                so that
                on 27 April 2006 interest (which shall include interest due and payable
                to
                the Existing Lenders) in the sum of three hundred and forty nine
                thousand
                seven hundred and three Dollars ninety one cents ($349,703.91) is
                payable
                to the Agent. In respect of Tranche B, the first Interest Period
                shall
                begin on the Advance Date and shall end on 27 April 2006. The interest
                on
                Tranche B shall accrue in that period at the rate determined by the
                Agent
                to be the aggregate of (a) the Margin and (b) LIBOR determined at
                or about
                11:00am on the second Business Day prior to the Advance
                Date.

            

    

     

    
      
        	
                7

              	
                Fees

              

      

       

    

    The
      Borrowers shall pay to or to the order of the Agent:-

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.1

            	
              on
                the date of signing of this Agreement (for distribution amongst the
                Banks
                at a rate of fifteen thousand Dollars ($15,000) per Bank) an arrangement
                fee of thirty thousand Dollars
                ($30,000).

            

    

    

    
      	 	
              7.2

            	
              an
                agency fee of five thousand Dollars ($5,000) per annum per Bank,
                with a
                maximum of ten thousand Dollars ($10,000) per annum payable in October
                2006 for the first time and annually
                thereafter.

            

    

    
       

      
        	
                8

              	
                Security
                  Documents

              

      

       

    

    
      	 	
              8.1

            	
              As
                security for the repayment of the Indebtedness, the Borrowers shall
                execute and deliver to the Agent or cause to be executed and delivered
                to
                the Agent, on or before the Advance Date, the following Security
                Documents
                in such forms and containing such terms and conditions as the Agent
                shall
                require:-

            

    

     

    
      	 	
              8.1.1

            	
              the
                Mortgages a
                first priority statutory mortgage over each Vessel together in each
                case
                with a collateral deed of
                covenants;

            

    

     

    
      	 	
              8.1.2

            	
              the
                Assignments a
                deed of assignment of the Insurances, Earnings, Requisition Compensation
                and Charter of each Vessel; 

            

    

     

    
      	 	
              8.1.3

            	
              the
                Guarantee the
                guarantee and indemnity of the
                Guarantor;

            

    

     

    
      	 	
              8.1.4

            	
              the
                Account Security Deed an
                account security deed in respect of all amounts from time to time
                standing
                to the credit of the Earnings
                Account.

            

    

     

    
      	 	
              8.2

            	
              In
                consideration of the Banks making the Loan available to the Borrowers,
                the
                Borrowers agree to procure, at any time during the Facility Period,
                execution in favour of the Agent (as agent and security trustee of
                the
                Banks) by the Guarantor of pledges over and/or charges of all the
                Guarantor's right, title and interest in and to the shares of each
                of the
                Borrowers, and the Borrowers agree, if and when required to do so
                by the
                Agent, promptly to procure the execution and delivery to the Agent
                of all
                documents which the Agent may require to obtain the full benefit
                of such
                pledges and/or charges.

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    
       

      
        	
                9

              	
                Agency
                  and Trust

              

      

       

    

    
      	 	
              9.1

            	
              Appointment
                Each
                of the Banks appoints the Agent its agent for the purpose of administering
                the Loan and the Security
                Documents.

            

    

     

    
      	 	
              9.2

            	
              Authority
                Each
                of the Banks irrevocably authorises the Agent (subject to Clauses
                9.4 and
                9.19):- 

            

    

     

    
      	 	
              9.2.1

            	
              to
                execute the Security Documents (other than this Agreement) on its
                behalf;

            

    

     

    
      	 	
              9.2.2

            	
              to
                collect, receive,
                release or pay any money on its
                behalf;

            

    

     

    
      	 	
              9.2.3

            	
              acting
                on the instructions from time to time of an Instructing Group to
                give or
                withhold
                any waivers, consents or approvals under or pursuant to any of the
                Security Documents;

            

    

     

    
      	 	
              9.2.4

            	
              acting
                on the instructions from time to time of an Instructing Group to
                exercise,
                or refrain
                from exercising, any discretions under or pursuant to any of the
                Security
                Documents; and 

            

    

     

    
      	 	
              9.2.5

            	
              to
                enforce the Security Documents on its
                behalf.

            

    

     

    The
      Agent
      shall have no duties or responsibilities as agent or as security trustee other
      than those expressly conferred on it by the Security Documents and shall not
      be
      obliged to act on any instructions from the Banks or an Instructing Group if
      to
      do so would, in the opinion of the Agent, be contrary to any provision of the
      Security Documents or to any law, or would expose the Agent to any actual or
      potential liability to any third party.

     

    
      	 	
              9.3

            	
              Trust
                The
                Agent agrees and declares, and each of the Banks acknowledges, that,
                subject to the terms and conditions of this Clause, the Agent holds
                the
                Trust Property on trust for the Banks, in accordance with their respective
                Proportionate Shares, absolutely. Each of the Banks agrees that the
                obligations, rights and benefits vested in the Agent in its capacity
                as
                security trustee shall be performed and exercised in accordance with
                this
                Clause. The Agent in its capacity as security trustee shall have
                the
                benefit of all of the provisions of this Agreement benefiting it
                in its
                capacity as agent for the Banks, and all the powers and discretions
                conferred on trustees by the Trustee Act 1925 (to the extent not
                inconsistent with this Agreement). In
                addition:-

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.3.1

            	
              the
                Agent (and any attorney, agent or delegate of the Agent) may indemnify
                itself or himself out of the Trust Property against all liabilities,
                costs, fees, damages, charges, losses and expenses sustained or incurred
                by it or him in relation to the taking or holding of any of the Trust
                Property or in connection with the exercise or purported exercise
                of the
                rights, trusts, powers and discretions vested in the Agent or any
                other
                such person by or pursuant to the Security Documents or in respect
                of
                anything else done or omitted to be done in any way relating to the
                Security Documents; and

            

    

     

    
      	 	
              9.3.2

            	
              the
                Banks acknowledge that the Agent shall be under no obligation to
                insure
                any property nor to require any other person to insure any property
                and
                shall not be responsible for any loss which may be suffered by any
                person
                as a result of the lack or insufficiency of any insurance;
                and

            

    

     

    
      	 	
              9.3.3

            	
              the
                Agent and the Banks agree that the perpetuity period applicable to
                the
                trusts declared by this Agreement shall be the period of eighty years
                from
                the date of this Agreement.

            

    

     

    
      	
            	9.4	
              Limitations
                on authority Except
                with the prior written consent of each of the Banks, the Agent shall
                not
                be entitled to :-

            

    

     

    
      	 	
              9.4.1

            	
              release
                or vary any security given for the Borrowers' obligations under this
                Agreement; nor

            

    

     

    
      	 	
              9.4.2

            	
              waive
                the payment of any sum of money payable by any of the Security Parties
                under the Security Documents; nor

            

    

     

    
      	 	
              9.4.3

            	
              change
                the meaning of the expressions "Instructing
                Group"
                or "Margin";
                nor

            

    

     

    
      	 	
              9.4.4

            	
              exercise,
                or refrain from exercising, any discretion, or give or withhold any
                consent, the exercise or giving of which is, by the terms of this
                Agreement, expressly reserved to the Banks;
                nor

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.4.5

            	
              extend
                the due date for the payment of any sum of money payable by any of
                the
                Security Parties under the Security Documents;
                nor

            

    

     

    
      	 	
              9.4.6

            	
              take
                or refrain from taking any step if the effect of such action or inaction
                may lead to the increase of the obligations of a Bank under any of
                the
                Security Documents; nor

            

    

     

    
      	 	
              9.4.7

            	
              agree
                to change the currency in which any sum is payable under the Security
                Documents (other than in accordance with the terms of the Security
                Documents); nor

            

    

     

    
      	 	
              9.4.8

            	
              agree
                to amend this Clause 9.4.

            

    

     

    
      	 	
              9.5

            	
              Liability
                Neither
                the Agent nor any of its directors, officers, employees or agents
                shall be
                liable to the Banks for anything done or omitted to be done by the
                Agent
                under or in connection with the Security Documents unless as a result
                of
                the Agent's wilful misconduct or gross
                negligence.

            

    

     

    
      	 	
              9.6

            	
              Acknowledgement
                Each
                of the Banks acknowledges that:- 

            

    

     

    
      	 	
              9.6.1

            	
              it
                has not relied on any representation made by the Agent or any of
                the
                Agent's directors, officers, employees or agents or by any other
                person
                acting or purporting to act on behalf of the Agent to induce it to
                enter
                into any of the Security Documents;

            

    

     

    
      	 	
              9.6.2

            	
              it
                has made and will continue to make without reliance on the Agent,
                and
                based on such documents and other evidence as it considers appropriate,
                its own independent investigation of the financial condition and
                affairs
                of the Security Parties in connection with the making and continuation
                of
                the Loan; 

            

    

     

    
      	 	
              9.6.3

            	
              it
                has made its own appraisal of the creditworthiness of the Security
                Parties;

            

    

     

    
      	 	
              9.6.4

            	
              the
                Agent shall not have any duty or responsibility at any time to provide
                it
                with any credit or other information relating to any of the Security
                Parties unless that information is received by the Agent pursuant
                to the
                express terms of the Security Documents.

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Each
      of
      the Banks agrees that it will not assert nor seek to assert against any
      director, officer, employee or agent of the Agent or against any other person
      acting or purporting to act on behalf of the Agent any claim which it might
      have
      against them in respect of any of the matters referred to in this
      Clause.

     

    
      	 	
              9.7

            	
              Limitations
                on responsibility The
                Agent shall have no responsibility to any of the Security Parties
                or to
                the Banks on account of:- 

            

    

     

    
      	 	
              9.7.1

            	
              the
                failure of a Bank or of any of the Security Parties to perform any
                of
                their respective obligations
                under the Security Documents; 

            

    

     

    
      	 	
              9.7.2

            	
              the
                financial condition of any of the Security Parties;
                

            

    

     

    
      	 	
              9.7.3

            	
              the
                completeness or accuracy of any statements, representations or warranties
                made in or pursuant to any of the Security Documents, or in or pursuant
                to
                any document delivered pursuant to or in connection with any of the
                Security Documents; 

            

    

     

    
      	 	
              9.7.4

            	
              the
                negotiation, execution, effectiveness, genuineness, validity,
                enforceability, admissibility in evidence or sufficiency of any of
                the
                Security Documents or of any document executed or delivered pursuant
                to or
                in connection with any of the Security
                Documents.

            

    

     

    
      	
            	9.8	
              The
                Agent's rights The
                Agent may:-

            

    

     

    
      	 	
              9.8.1

            	
              assume
                that all representations or warranties made or deemed repeated by
                any of
                the Security Parties in or pursuant to any of the Security Documents
                are
                true
                and complete, unless, in its capacity as the Agent, it has acquired
                actual
                knowledge to the contrary; and

            

    

     

    
      	 	
              9.8.2

            	
              assume
                that no Event of Default or Potential Event of Default has occurred
                unless, in its capacity as the Agent, it has acquired actual knowledge
                to
                the contrary; and 

            

    

     

    
      	 	
              9.8.3

            	
              rely
                on any document
                or
                Communication believed by it to be genuine;
                and

            

    

     

    
      	 	
              9.8.4

            	
              rely
                as to legal or
                other professional matters on opinions and statements of any legal
                or
                other professional advisers selected or approved by it;
                and

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.8.5

            	
              rely
                as to any factual matters which might reasonably be expected to be
                within
                the knowledge
                of
                any of the Security Parties on a certificate signed by or on behalf
                of
                that Security Party; and

            

    

     

    
      	 	
              9.8.6

            	
              refrain
                from exercising
                any right, power, discretion or remedy unless and until instructed
                to
                exercise that right, power, discretion or remedy and as to the manner
                of
                its exercise by the Banks (or, where applicable, by an Instructing
                Group)
                and unless and until the Agent has received from the Banks any payment
                which the Agent may require on account of, or any security which
                the Agent
                may require for, any costs, claims, expenses (including legal and
                other
                professional fees) and liabilities which it considers it may incur
                or
                sustain in complying with those
                instructions.

            

    

     

    
      	
            	9.9	
              The
                Agent's duties The
                Agent shall:-

            

    

     

    
      	 	
              9.9.1

            	
              if
                requested in writing to do so by a Bank, make enquiry and advise
                the Banks
                as to the performance or observance of any of the provisions of the
                Security Documents by any of the Security Parties or as to the existence
                of an Event of Default; and

            

    

     

    
      	 	
              9.9.2

            	
              inform
                the Banks promptly of any Event of Default of which the Agent has
                actual
                knowledge.

            

    

     

    
      	 	
              9.10

            	
              No
                deemed knowledge The
                Agent shall not be deemed to have actual knowledge of the falsehood
                or
                incompleteness of any representation or warranty made or deemed repeated
                by any of the Security Parties or actual knowledge of the occurrence
                of
                any Event of Default or Potential Event of Default unless a Bank
                or any of
                the Security Parties shall have given written notice thereof to the
                Agent
                in its capacity as the Agent. Any information acquired by the Agent
                other
                than specifically in its capacity as the Agent shall not be deemed
                to be
                information acquired by the Agent in its capacity as the Agent.
                

            

    

     

    
      	 	
              9.11

            	
              Other
                business The
                Agent may, without any liability to account to the Banks, generally
                engage
                in any kind of banking or trust business with any of the Security
                Parties
                or any of their respective subsidiaries or associated companies or
                with a
                Bank as if it were not the Agent.

            

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.12

            	
              Indemnity
                The
                Banks shall, promptly on the Agent's request, reimburse the Agent
                in their
                respective Proportionate Shares, for, and keep the Agent fully indemnified
                in respect of:- 

            

    

     

    
      	
            	9.12.1	
              all amounts
                payable by the Borrowers to the Agent pursuant to Clause 17 to the
                extent
                that those
                amounts are not paid by the Borrowers;

            

    

     

    
      	
            	9.12.2	
              all
                liabilities, damages, costs and claims sustained or incurred by the
                Agent
                in connection
                with the Security Documents, or the performance of its duties and
                obligations, or the exercise of its rights, powers, discretions or
                remedies under or pursuant to any of the Security Documents; or in
                connection with any action taken or omitted by the Agent under or
                pursuant
                to any of the Security Documents, unless in any case those liabilities,
                damages, costs or claims arise solely from the Agent's wilful
                misconduct.

            

    

     

    
      	 	
              9.13

            	
              Employment
                of agents In
                performing its duties and exercising its rights, powers, discretions
                and
                remedies under or pursuant to the Security Documents, the Agent shall
                be
                entitled to employ and pay agents to do anything which the Agent
                is
                empowered to do under or pursuant to the Security Documents (including
                the
                receipt of money and documents and the payment of money) and to act
                or
                refrain from taking action in reliance on the opinion of, or advice
                or
                information obtained from, any lawyer, banker, broker, accountant,
                valuer
                or any other person believed by the Agent in good faith to be competent
                to
                give such opinion, advice or
                information.

            

    

     

    
      	 	
              9.14

            	
              Distribution
                of payments The
                Agent shall pay promptly to the order of each of the Banks that Bank's
                Proportionate Share of every sum of money received by the Agent pursuant
                to the Security Documents or the Mortgagees' Insurances (with the
                exception of any amounts payable pursuant to Clause 7 and any amounts
                which, by the terms of the Security Documents, are paid to the Agent
                for
                the account of the Agent alone or specifically for the account of
                one or
                more Banks) and until so paid such amount shall be held by the Agent
                on
                trust absolutely for that Bank.

            

    

     

    
      	 	
              9.15

            	
              Reimbursement
                The
                Agent shall have no liability to pay any sum to a Bank until it has
                itself
                received payment of that sum. If, however, the Agent does pay any
                sum to a
                Bank on account of any amount prospectively due to that Bank pursuant
                to
                Clause 9.14 before it has itself received payment of that amount, and
                the Agent does not in fact receive payment within five Business Days
                after
                the date on which that payment was required to be made by the terms
                of the
                Security Documents or the Mortgagees' Insurances, each Bank receiving
                any
                such payment will, on demand by the Agent, refund to the Agent an
                amount
                equal to the amount received by it, together with an amount sufficient
                to
                reimburse the Agent for any amount which the Agent may certify that
                it has
                been required to pay by way of interest on money borrowed to fund
                the
                amount in question during the period beginning on the date on which
                that
                amount was required to be paid by the terms of the Security Documents
                or
                the Mortgagees' Insurances and ending on the date on which the Agent
                receives reimbursement.

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.16

            	
              Redistribution
                of payments Unless
                otherwise agreed between the Banks and the Agent, if at any time
                a Bank
                receives or recovers by way of set-off, the exercise of any lien
                or
                otherwise (other than from any assignee or transferee of or
                sub-participant in that Bank's Commitment), an amount greater than
                that
                Bank's Proportionate Share of any sum due from any of the Security
                Parties
                under the Security Documents (the amount of the excess being referred
                to
                in this Clause as the "Excess
                Amount")
                then:-

            

    

     

    
      	 	
              9.16.1

            	
              that
                Bank shall promptly notify the Agent (which shall promptly notify
                each
                other Bank);

            

    

     

    
      	 	
              9.16.2

            	
              that
                Bank shall pay to the Agent an amount equal to the Excess Amount
                within
                ten days of its receipt or recovery of the Excess Amount;
                and

            

    

     

    
      	 	
              9.16.3

            	
              the
                Agent shall treat that payment as if it were a payment by the Security
                Party in question on account of the sum owed to the Banks as aforesaid
                and
                shall account to the Banks in respect of the Excess Amount in accordance
                with the provisions of this Clause.

            

    

     

    However,
      if a Bank has commenced any Proceedings to recover sums owing to it under the
      Security Documents and, as a result of, or in connection with, those Proceedings
      has received an Excess Amount, the Agent shall not distribute any of that Excess
      Amount to any other Bank which had been notified of the Proceedings and had
      the
      legal right to, but did not, join those Proceedings or commence and diligently
      prosecute separate Proceedings to enforce its rights in the same or another
      court.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.17

            	
              Rescission
                of Excess Amount If
                all or any part of any Excess Amount is rescinded or must otherwise
                be
                restored to any of the Security Parties or to any other third party,
                the
                Banks which have received any part of that Excess Amount by way of
                distribution from the Agent pursuant to this Clause shall repay to
                the
                Agent for the account of the Bank which originally received or recovered
                the Excess Amount, the amount which shall be necessary to ensure
                that the
                Banks share rateably in accordance with their Proportionate Shares
                in the
                amount of the receipt or payment retained, together with interest
                on that
                amount at a rate equivalent to that (if any) paid by the Bank receiving
                or
                recovering the Excess Amount to the person to whom that Bank is liable
                to
                make payment in respect of such amount, and Clause 9.16.3 shall apply
                only
                to the retained amount.

            

    

     

    
      	 	
              9.18

            	
              Proceedings
                Each
                of the Banks and the Agent shall notify one another of the proposed
                commencement of any Proceedings under any of the Security Documents
                prior
                to their commencement.

            

    

     

    
      	 	
              9.19

            	
              Instructions
                Where
                the Agent is authorised or directed to act or refrain from acting
                in
                accordance with the instructions of the Banks or of an Instructing
                Group
                each of the Banks shall provide the Agent with instructions within
                three
                Business Days of the Agent's request (which request may be made orally or
                in writing). If a Bank does not provide the Agent with instructions
                within
                that period, that Bank shall be bound by the decision of the Agent.
                Nothing in this Clause shall limit the right of the Agent to take,
                or
                refrain from taking, any action without obtaining the instructions
                of the
                Banks or an Instructing Group if the Agent in its discretion considers
                it
                necessary or appropriate to take, or refrain from taking, such action
                in
                order to preserve the rights of the Banks under or in connection
                with the
                Security Documents. In that event, the Agent will notify the Banks
                of the
                action taken by it as soon as reasonably practicable, and the Banks
                agree
                to ratify any action taken by the Agent pursuant to this
                Clause.

            

    

     

    
      	 	
              9.20

            	
              Communications
                Any
                Communication under this Clause shall be given, delivered, made or
                served,
                in the case of the Agent (in its capacity as Agent or as one of the
                Banks), and in the case of the other Banks, at the address or fax
                number
                indicated in Schedule 2.

            

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.21

            	
              Payments
                All amounts payable to a Bank under this Clause shall be paid to
                such
                account at such bank as that Bank may from time to time direct in
                writing
                to the Agent.

            

    

     

    
      	 	
              9.22

            	
              Retirement
                Subject
                to a successor being appointed in accordance with this Clause, the
                Agent
                may retire as agent and/or security trustee at any time without assigning
                any reason by giving to the Borrowers and the Banks notice of its
                intention to do so, in which event the following shall apply:-
                

            

    

     

    
      	 	
              9.22.1

            	
              the
                Banks may within thirty days after the date of the Agent's notice
                appoint
                a successor
                to
                act as agent and/or security trustee or, if they fail to do so, the
                Agent
                may appoint any other bank or financial institution as its
                successor;

            

    

     

    
      	 	
              9.22.2

            	
              the
                resignation of the Agent shall take effect simultaneously with the
                appointment of its successor on written notice of that appointment
                being
                given to the Borrowers
                or
                the Banks; 

            

    

     

    
      	 	
              9.22.3

            	
              the
                Agent shall thereupon be discharged from all further obligations
                as agent
                and/or security trustee but shall remain entitled to the benefit
                of the
                provisions of this Clause; 

            

    

     

    
      	 	
              9.22.4

            	
              the
                Agent's successor
                and each of the other parties to this Agreement shall have the same
                rights
                and obligations amongst themselves as they would have had if that
                successor had been a party to this
                Agreement.

            

    

     

    
      	 	
              9.23

            	
              No
                fiduciary relationship Except
                as provided in Clauses 9.3 and 9.14, the Agent shall not have any
                fiduciary relationship with or be deemed to be a trustee of or for
                a Bank
                and nothing contained in any of the Security Documents shall constitute
                a
                partnership between any two or more Banks or between the Agent and
                any
                Bank.

            

    

     

    
      	 	
              9.24

            	
              The
                Agent as a Bank The
                expression "the
                Banks"
                when used in the Security Documents includes the Agent in its capacity
                as
                one of the Banks. The Agent shall be entitled to exercise its rights,
                powers, discretions and remedies under or pursuant to the Security
                Documents in its capacity as one of the Banks in the same manner
                as any
                other Bank and as if it were not also the
                Agent.

            

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.25

            	
              The
                Agent as security trustee
                Unless the context otherwise requires, the expression "the
                Agent"
                when used in the Security Documents includes the Agent acting in
                its
                capacities both as agent and security
                trustee.

            

    

    
       

      
        	
                10

              	
                Covenants

              

      

       

    

    The
      Borrowers covenant with the Banks and with the Agent in the following
      terms.

     

    
      	 	
              10.1

            	
              Negative
                covenants 

            

    

     

    None
      of
      the Borrowers will without the Agent's prior written consent:-

     

    
      	 	
              10.1.1

            	
              no
                disposals or third party rights dispose
                of or create or permit to arise or continue any Encumbrance or other
                third
                party right on or over all or any part of its present or future assets
                or
                undertaking; nor

            

    

     

    
      	 	
              10.1.2

            	
              no
                borrowings borrow
                any money or incur any obligations under leases;
                nor

            

    

     

    
      	 	
              10.1.3

            	
              no
                repayments repay
                any loans made to it; nor

            

    

     

    
      	 	
              10.1.4

            	
              no
                substantial liabilities except
                in the ordinary course of business, incur any liability to any third
                party
                which is in the opinion of the Agent of a substantial nature;
                nor

            

    

     

    
      	 	
              10.1.5

            	
              no
                other business engage
                in any business other than the ownership, operation, chartering and
                management of the Vessel owned by it;
                nor

            

    

     

    
      	 	
              10.1.6

            	
              no
                loans or other financial commitments make
                any loan nor enter into any guarantee or indemnity or otherwise
                voluntarily assume any actual or contingent liability in respect
                of any
                obligation of any other person; nor

            

    

     

    
      	 	
              10.1.7

            	
              no
                dividends pay
                any dividends or make any other distributions to shareholders or
                issue any
                new shares during the continuance of an Event of Default or Potential
                Event of Default; nor

            

    

     

    
      	 	
              10.1.8

            	
              no
                sale of Vessels sell
                or otherwise dispose of the Vessel owned by it or any shares in that
                Vessel nor agree to do so unless the relevant Attributable Amount
                of the
                Outstanding Indebtedness is prepaid on the date of sale or disposal;
                nor

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    
      	 	
              10.1.9

            	
              no
                chartering after Event of Default
                following the occurrence and during the continuation of an Event
                of
                Default let its Vessel on charter or renew or extend any charter
                or other
                contract of employment of its Vessel (nor agree to do so);
                nor

            

    

     

    
      	 	
              10.1.10

            	
              no
                change in management appoint
                anyone other than the Managers as commercial or technical managers
                of the
                Vessels, nor terminate or materially vary the arrangements for the
                commercial or technical management of the Vessels, nor permit the
                Managers
                to sub-contract or delegate the commercial or technical management
                of any
                Vessel to any third party; nor

            

    

     

    
      	 	
              10.1.11

            	
              no
                change in ownership or control permit
                any change in its beneficial ownership and control from that advised
                to
                the Agent at the date of this Agreement;
                nor

            

    

     

    
      	 	
              10.1.12

            	
              no
                change in class or flag
                permit any change in the classification society or flag of any of
                the
                Vessels.

            

    

     

    
      	 	
              10.1.13

            	
              Charter
                obligations
                breach its obligations under any Charter to which it is a party,
                or cancel
                or purport to cancel such Charter, or amend, vary or waive performance
                under such Charter in a manner adverse to the interests of the Bank;
                nor

            

    

     

    
      	 	
              10.1.14

            	
              no
                chartering save
                for any Charter or any extension of such a Charter on terms acceptable
                to
                the Agent, permit the Vessels to be let on any demise charter, or
                on any
                time charter, consecutive voyage charter or other contract of employment
                which (inclusive of any extension option) is capable of exceeding
                twelve
                (12) months, nor to employ any Vessel in any way which might impair
                the
                security created by the Security Documents; if the terms of any such
                proposed time charter, consecutive voyage charter or other contract
                of
                employment are equal to or better than the Existing Charter for the
                relevant Vessel (which test shall include the creditworthiness of
                the
                charterer) the Agent will give its approval;
                and

            

    

     

    
      	 	
              10.1.15

            	
              no
                acquisition of assets
                except in the ordinary course of business, acquire any asset or
                undertaking.

            

    

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      	 	
              10.2

            	
              Positive
                covenants

            

    

     

    
      	 	
              10.2.1

            	
              Registration
                and Class of Vessels The
                Borrowers undertake to maintain the registration of the Vessels under
                the
                flags and with the class indicated in Schedule 1 for the duration
                of the
                Facility Period.

            

    

     

    
      	 	
              10.2.2

            	
              Additional
                security If
                and so often as the aggregate of the Market Values of the Vessels
                (determined in accordance with Clause 1.1.50) plus the value of any
                additional security for the time being provided to the Banks (or
                to the
                Agent on their behalf) pursuant to this Clause shall be less than one
                hundred and thirty per cent. (130%) of the amount of the Indebtedness
                then
                outstanding, the Borrowers will, within thirty days of the request
                of the
                Agent to do so, at the Borrowers' option:-

            

    

     

    
      	 	
              (a)

            	
              pay
                to the Agent or to its nominee a cash deposit in the amount of the
                shortfall to be secured in favour of the Banks (or of the Agent on
                their
                behalf) as additional security for the payment of the Indebtedness;
                or
                

            

    

     

    
      	 	
              (b)

            	
              give
                to the Banks (or to the Agent on their behalf) other additional security
                in amount and form acceptable to the Banks in their discretion; or
                

            

    

     

    
      	 	
              (c)

            	
              prepay
                the amount of the Indebtedness which will ensure that the aggregate
                of the
                Market Values of the Vessels (determined as aforesaid) plus the value
                of
                any such additional security is not less than one hundred and thirty
                per
                cent. (130%) of the amount of the Loan.

            

    

     

    Clauses 5.3,
      5.5 and 5.6 shall apply, mutatis
      mutandis,
      to any
      prepayment made pursuant to this Clause and the value of any additional security
      provided pursuant to this Clause shall be determined by the Agent in its
      discretion.

     

    
      	 	
              10.2.3

            	
              Financial
                statements The
                Borrowers will supply to the Agent, without request, the annual
                consolidated financial statements of the Guarantor for each financial
                year
                of the Guarantor ending during the Facility Period, containing (amongst
                other things) the Guarantor's profit and loss account for, and balance
                sheet at the end of, each such financial year, prepared in accordance
                with
                generally accepted accounting principles and practices applicable
                in the
                USA consistently applied, and audited by a firm of chartered accountants
                (or equivalent) acceptable to the Agent, in each case within one
                hundred
                and eighty (180) days of the end of the financial year to which they
                relate and semi-annual management accounts within ninety (90) days
                of the
                end of the half year to which they relate.

            

    

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    
      	 	
              10.2.4

            	
              Other
                information The
                Borrowers will promptly supply to the Agent copies of all financial
                and
                other information from time to time given by any of the Borrowers
                to its
                shareholders and such information and explanations as the Agent may
                from
                time to time require in connection with the operation of the Vessels
                and
                the Borrowers' profit and liquidity, and will procure that the Agent
                be
                given the like information and explanations relating to all other
                Security
                Parties.

            

    

     

    
      	 	
              10.2.5

            	
              Evidence
                of goodstanding
                The Borrowers will on the request of the Agent (which shall be made
                no
                more than once in each calendar year unless an Event of Default is
                in
                existence) provide the Agent with evidence in form and substance
                satisfactory to the Agent that the Security Parties and all corporate
                shareholders of any of the Security Parties remain in good
                standing.

            

    

     

    
      	 	
              10.2.6

            	
              Evidence
                of current COFR
                Without limiting the Borrowers' obligations under Clause 10.2.4,
                the
                Borrowers will from time to time on the request of the Agent provide
                the
                Agent with such evidence as the Agent may reasonably require that
                each
                Vessel (if required) has a valid and current Certificate of Financial
                Responsibility pursuant to the United States Oil Pollution Act
                1990.

            

    

     

    
      	 	
              10.2.7

            	
              ISM
                Code compliance
                The Borrowers will:-

            

    

     

    
      	 	
              (a)

            	
              procure
                that each of the Vessels remains for the duration of the Facility
                Period
                subject to a SMS;

            

    

     

    
      	 	
              (b)

            	
              maintain
                a valid and current SMC for each of the Vessels throughout the Facility
                Period;

            

    

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              procure
                that each Company maintains a valid and current DOC throughout the
                Facility Period;

            

    

     

    
      	 	
              (d)

            	
              immediately
                notify the Agent in writing of any actual or threatened withdrawal,
                suspension, cancellation or modification of the SMC of any Vessel
                or of
                the DOC of any Company;

            

    

     

    
      	 	
              (e)

            	
              immediately
                notify the Agent in writing of any “accident”
                or “major non-conformity”,
                as each of those terms is defined in the Guidelines on the Implementation
                of the International Safety Management Code by Administrations adopted
                by
                the Assembly of the International Maritime Organisation pursuant
                to
                Resolution A.788(19), and of the steps being taken to remedy the
                situation; and

            

    

    
    

     

    
      	 	
              (f)

            	
              not
                without the prior written consent of the Agent (which will not be
                unreasonably withheld) change the identity of any
                Company.

            

    

     

    
      	 	
              10.2.8

            	
              ISPS
                Code compliance The
                Borrowers will:-

            

    

     

    
      	 	
              (a)

            	
              for
                the duration of the Facility Period comply with the ISPS Code in
                relation
                to each of the Vessels and procure that each of the Vessels and the
                ISPS
                Company comply with the ISPS Code;

            

    

     

    
      	 	
              (b)

            	
              maintain
                a valid and current ISSC for each of the Vessels throughout the Facility
                Period; and

            

    

     

    
      	 	
              (c)

            	
              immediately
                notify the Agent in writing of any actual or threatened withdrawal,
                suspension, cancellation or modification of any
                ISSC.

            

    

     

    
      	 	
              10.2.9

            	
              Annex
                VI compliance
                The Borrower will:

            

    

     

    
      	 	 	
              (a)

            	
              for
                the duration of the Facility Period comply with Annex VI in relation
                to
                the Vessel and procure that the Vessel's master and crew are familiar
                with, and that the Vessel complies with, Annex
                VI;

            

    

     

    
      	 	 	
              (b)

            	
              maintain
                a valid and current IAPPC for the Vessel throughout the Facility
                Period
                and provide a copy to the Lender;
                and

            

    

    
       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                (c)

              	
                immediately
                  notify the Lender in writing of any actual or threatened withdrawal,
                  suspension, cancellation or modification of the
                  IAPPC.

              

      

       

    

    
      	 	
              10.2.10

            	
              Inspection
                of records The
                Borrowers will permit the inspection of their financial records and
                accounts from time to time by the Agent or its nominee, such inspection
                to
                take place on reasonable notice and no more than once in each calendar
                year unless an Event of Default shall
                occur.

            

    

     

    
      	 	
              10.2.11

            	
              Pari
                passu obligations The
                Borrowers will ensure that, throughout the Facility Period, the
                obligations of the Security Parties under or pursuant to the Security
                Documents rank at least pari
                passu
                with all other existing or future indebtedness, obligations or liabilities
                of the Security Parties, other than any mandatorily preferred by
                law.

            

    

     

    
      	 	
              10.2.12

            	
              Notification
                of Event of Default
                The Borrowers will immediately notify the Agent in writing of the
                occurrence of any Event of Default or Potential Event of
                Default.

            

    

     

    
      	
            	10.2.13	
              Future
                transactions The
                Borrowers undertake to give the Agent a right to be involved in any
                future
                transactions in relation to the Borrowers or the Vessels on market
                conditions.

            

    

     

    
      
        	
                11

              	
                Earnings
                  Account

              

      

       

    

    
      	 	
              11.1

            	
              Maintenance
                of account The
                Borrowers shall maintain the Earnings Account with the Agent for
                the
                duration of the Facility Period free of Encumbrances and rights of
                set off
                other than as created by or pursuant to the Security
                Documents.

            

    

     

    
      	 	
              11.2

            	
              Earnings
                The
                Borrowers shall procure that there is credited to the Earnings Account
                all
                Earnings and any Requisition Compensation which are to be applied
                as
                follows:

            

    

     

    
      	
            	(i)	
              firstly,
                in or towards Operating Expenses;

            

    

     

    
      	
            	(ii)	
              secondly,
                in or towards payment of any costs, outstanding fees and commissions
                or
                other monies owed to the Banks relating to the
                Indebtedness;

            

    

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)

            	
              thirdly,
                in or towards payment of all due Interest accrued but unpaid in respect
                of
                the Loan; and 

            

    

     

    
      	
            	(iv)	
              fourthly,
                in or towards payment of the Repayment
                Instalments.

            

    

     

    
      	 	
              11.3

            	
              Borrowers'
                obligations not affected If
                for any reason the amount standing to the credit of the Earnings
                Account
                shall be insufficient to pay any Repayment Instalment or to make
                any
                payment of interest when due, the Borrowers' obligation to pay that
                Repayment Instalment or to make that payment of interest shall not
                be
                affected.

            

    

     

    
      	 	
              11.4

            	
              Release
                of surplus Any
                amount remaining to the credit of the Earnings Account following
                the
                making of any payment required by Clause 11.2 shall (unless an Event
                of
                Default or Potential Event of Default shall have occurred and be
                continuing) be released to or to the order of the
                Borrowers.

            

    

     

    
      	 	
              11.5

            	
              Restriction
                on withdrawal During
                the Facility Period no sum may be withdrawn from the Earnings Account
                (except in accordance with this Clause) without the prior written
                consent
                of the Agent.

            

    

     

    
      	 	
              11.6

            	
              Relocation
                of Earnings
                Account  At
                any time following the occurrence and during the continuation of
                an Event
                of Default, the Agent may without the consent of the Borrowers relocate
                the Earnings
                Account to
                any other branch of the Agent, without prejudice to the continued
                application of this Clause and the rights of the Banks under or pursuant
                to the Security Documents.

            

    

    
       

      
        	
                12

              	
                Events Of Default

              

      

       

    

    
      	 	
              12.1

            	
              The
                Agent's rights If
                any of the events set out in Clause 12.2 occurs, the Agent may (and,
                if
                instructed to do so by an Instructing Group, shall) by notice to
                the
                Borrowers declare the Banks to be under no further obligation to
                the
                Borrowers under or pursuant to this Agreement and may (and, if instructed
                to do so by an Instructing Group shall) declare all or any part of
                the
                Indebtedness (including such unpaid interest as shall have accrued)
                to be
                immediately payable, in which event the Indebtedness (or the part
                of the
                Indebtedness referred to in the Agent's notice) shall immediately
                become
                due and payable without any further demand or notice of any
                kind.

            

    

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	 	
              12.2

            	
              Events
                of Default The
                events referred to in Clause 12.1
                are:-

            

    

     

    
      	 	
              12.2.1

            	
              payment
                default if
                the Borrowers default in the payment of any part of the Indebtedness
                when
                due; or

            

    

     

    
      	 	
              12.2.2

            	
              other
                default if
                any of the Security Parties fails to observe or perform any of the
                covenants, conditions, undertakings, agreements or obligations on
                its part
                contained in any of the Security Documents or shall in any other
                way be in
                breach of or do or cause to be done any act repudiating or evidencing
                an
                intention to repudiate any of the Security Documents; or
                

            

    

     

    
      	 	
              12.2.3

            	
              misrepresentation
                or breach of warranty if
                any representation or warranty made or repeated, or any other information
                given, by any of the Security Parties to the Banks or the Agent in
                or
                leading up to or during the currency of any of the Security Documents,
                or
                in or pursuant to any notice or other document delivered to the Agent
                under or pursuant to any of the Security Documents, is false or incorrect
                or misleading in any respect which the Agent in its discretion considers
                to be material; or

            

    

     

    
      	 	
              12.2.4

            	
              execution
                if
                a distress or execution or other process of a court or authority
                is levied
                on any of the property of any of the Security Parties before or after
                final judgment or by order of any competent court or authority and
                is not
                satisfied within seven days of levy;
                or

            

    

     

    
      	 	
              12.2.5

            	
              insolvency
                events if
                any of the Security Parties:-

            

    

     

    
      	 	
              (a)

            	
              resolves
                to appoint, or applies for, or consents to, the appointment of a
                receiver,
                administrative receiver, trustee, administrator or liquidator of
                itself or
                of all or part of its assets; or

            

    

     

    
      	 	
              (b)

            	
              is
                unable or admits its inability to pay its debts as they fall due;
                or

            

    

     

    
      	 	
              (c)

            	
              makes
                a general assignment for the benefit of creditors or enters into
                a
                moratorium on payment of any of its indebtedness;
                or

            

    

     

    
      	 	
              (d)

            	
              ceases
                trading or threatens to cease trading;
                or

            

    

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              has
                appointed an Inspector under the Companies Act 1985 or any statutory
                provision which the Agent in its discretion considers analogous thereto;
                or

            

    

     

    
      	 	
              12.2.6

            	
              insolvency
                proceedings if
                any proceedings are commenced or threatened, or any order or judgment
                is
                given by any court, for the bankruptcy, liquidation, winding up,
                administration or re-organisation of any of the Security Parties
                or for
                the appointment of a receiver, administrative receiver, administrator,
                liquidator or trustee of any of the Security Parties or of all or
                part of
                the assets of any of the Security Parties, or if any person appoints
                or
                purports to appoint such receiver, administrative receiver, administrator,
                liquidator or trustee; or

            

    

     

    
      	 	
              12.2.7

            	
              impossibility
                or illegality if
                any event occurs which would, or would with the passage of time,
                render
                performance of any of the Security Documents by any of the Security
                Parties impossible, unlawful or unenforceable by the Banks or the
                Agent;
                or

            

    

     

    
      	 	
              12.2.8

            	
              conditions
                subsequent if
                any of the conditions set out in Clause 3.2 is not satisfied within
                the
                time reasonably required by the Agent;
                or

            

    

     

    
      	 	
              12.2.9

            	
              revocation
                or modification of consents etc. if
                any consent, licence, approval, authorisation, filing, registration
                or
                other requirement of any governmental, judicial or other public body
                or
                authority which is now, or which at any time during the Facility
                Period
                becomes, necessary to enable any of the Security Parties to comply
                with
                any of their obligations in or pursuant to any of the Security Documents
                is not obtained or is revoked, suspended, withdrawn or withheld,
                or is
                modified in a manner which the Agent considers is, or may be, prejudicial
                to the interests of the Banks, or ceases to remain in full force
                and
                effect; or

            

    

     

    
      	 	
              12.2.10

            	
              curtailment
                of business if
                the business of any of the Security Parties is wholly or partially
                curtailed or suspended by any intervention by or under authority
                of any
                government, or if all or a substantial part of the undertaking, property
                or assets of any of the Security Parties is seized, nationalised,
                expropriated or compulsorily acquired by or under authority of any
                government; or

            

    

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    
      	 	
              12.2.11

            	
              loss
                of Vessel if
                any Vessel or any other vessel which may from time to time be mortgaged
                to
                the Banks (or to the Agent on their behalf) as security for the repayment
                of all or any part of the Indebtedness is destroyed, abandoned,
                confiscated, forfeited, condemned as prize or becomes a Total Loss
                except
                that a Total Loss shall not be an Event of Default if each
                of:-

            

    

     

    
      	 	
              (a)

            	
              the
                Vessel or other vessel is insured in accordance with the Security
                Documents; and

            

    

     

    
      	 	
              (b)

            	
              no
                insurer has refused to meet or has disputed the claim for Total Loss
                unless the Agent has reasonable grounds to believe that any such
                refusal
                or dispute is unlikely to succeed in a court of law;
                and

            

    

     

    
      	 	
              (c)

            	
              payment
                of all insurance proceeds in respect of the Total Loss is made in
                full to
                the Agent on behalf of the Banks (or, if such insurance proceeds
                are not
                so received, the Borrowers procure payment to the Agent of the relevant
                Attributable Amount) within one hundred and twenty days of the occurrence
                of the casualty giving rise to the Total Loss in question or such
                longer
                period as the Agent may in its sole discretion agree;
                or

            

    

     

    
      	 	
              12.2.12

            	
              cross
                default if
                the Borrowers or the Guarantor commit a default under any other agreement
                to which they are a party concerning any kind of financial liability;
                or

            

    

     

    
      	 	
              12.2.13

            	
              reduction
                of capital if
                any of the Security Parties reduces its authorised or issued or subscribed
                capital; or

            

    

     

    
      	 	
              12.2.14

            	
              challenge
                to registration if
                the registration of any Vessel or any Mortgage is contested or becomes
                void or voidable or liable to cancellation or termination, or if
                the
                validity or priority of any Mortgage is contested;
                or

            

    

     

    
      	 	
              12.2.15

            	
              war
                if
                the country of registration of any Vessel becomes involved in war
                (whether
                or not declared) or civil war or is occupied by any other power and
                the
                Agent in its discretion considers that, as a result, the security
                conferred by the Security Documents is materially prejudiced;
                or

            

    

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    
      	 	
              12.2.16

            	
              notice
                of termination if
                the Guarantor gives notice to the Agent to determine its obligations
                under
                the Guarantee; or

            

    

     

    
      	 	
              12.2.17

            	
              material
                adverse change etc.
                if
                anything is done or permitted or omitted to be done by any of the
                Security
                Parties (other than the Managers) which in the reasonable opinion
                of the
                Agent jeopardises or imperils (or may jeopardise or imperil) the
                rights
                conferred on the Agent and the Banks by the Security Documents, or
                if
                there occurs (in the opinion of the Agent) any material adverse change
                in
                the business, affairs or financial condition of any of the Security
                Parties from that pertaining at the date of this Agreement;
                or

            

    

     

    
      	 	
              12.2.18

            	
              material
                adverse change
                or cancellation of an Existing Charter if
                at any time any Existing Charter is subject to a material adverse
                amendment (in the opinion of the Agent) or is terminated, revoked,
                cancelled, repudiated or otherwise ceases to be in full force and
                effect
                other than by effluxion of time and has not been replaced by another
                Charter within ten (10) Business Days; or

            

    

     

    
      	 	
              12.2.19

            	
              analogous
                events if
                any event which (in the opinion of the Agent) is analogous to any
                of the
                events set out above shall occur.

            

    

    
       

      
        	
                13

              	
                Set-Off
                  And Lien

              

      

       

    

    
      	 	
              13.1

            	
              Set-off
                The
                Borrowers irrevocably authorise the Agent and the Banks at any time
                after
                all or any part of the Indebtedness shall have become due and payable
                to
                set off without notice any liability of any of the Borrowers to any
                of the
                Banks or to the Agent (whether present or future, actual or contingent,
                and irrespective of the branch or office, currency or place of payment)
                against any credit balance from time to time standing on any account
                of
                any of the Borrowers (whether current or otherwise and whether or
                not
                subject to notice) with any branch of the Agent or of any Bank in
                or
                towards satisfaction of the Indebtedness and, in the name of the
                Agent or
                that Bank or that Borrower, to do all acts (including, without limitation,
                converting or exchanging any currency) and execute all documents
                which may
                be required to effect such
                application.

            

    

     

    
      	 	
              13.2

            	
              Lien
                The
                Agent and each Bank shall have a lien on and be entitled to retain
                and
                realise as additional security for the repayment of the Indebtedness
                any
                cheques, drafts, bills, notes or negotiable or non-negotiable instruments
                and any stocks, shares or marketable or other securities and property
                of
                any kind of any of the Borrowers (or of the Agent or that Bank as
                agent or
                nominee of any of the Borrowers) from time to time held by the Agent
                or
                that Bank, whether for safe custody or
                otherwise.

            

    

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                13.3

              	
                Application
                  Each
                  of the Borrowers irrevocably authorises the Agent to apply all
                  sums which
                  the Agent may receive:-

              

      

       

      
        	 	
                13.3.1

              	
                pursuant
                  to a sale or other disposition of a Vessel or any right, title
                  or interest
                  in a Vessel; or

              

      

       

      
        	 	
                13.3.2

              	
                by
                  way of payment to the Agent of any sum in respect of the Insurances,
                  Earnings or Requisition Compensation of a Vessel;
                  or

              

      

       

    

    
      	 	
              13.3.3

            	
              otherwise
                arising under or in connection with any of the Security Documents
                

            

    

     

    in
      or towards satisfaction, or by way of retention on
      account, of the Indebtedness, in such manner as the Agent may
      determine.

     

    
      
        	
                14

              	
                Assignment and Sub-Participation

              

      

       

    

    
      	 	
              14.1

            	
              Right
                to assign Each
                of the Banks may assign or transfer any of its rights and/or obligations
                under or pursuant to this Agreement to any other branch or subsidiary
                of
                that Bank or (with the prior written consent of the Borrowers, such
                consent not to be unreasonably withheld or delayed) to any other
                bank or
                financial institution, and may grant sub-participations in all or
                any part
                of its Commitment.

            

    

     

    
      	 	
              14.2

            	
              Borrowers'
                co-operation The
                Borrowers will co-operate fully with the Banks in connection with
                any
                assignment, transfer or sub-participation; will execute and procure
                the
                execution of such documents as the Banks may require in connection
                therewith; irrevocably authorise the Agent to sign any Transfer
                Certificate on their behalf; and irrevocably authorise the Agent
                and the
                Banks (subject to any proposed assignee, transferee or sub-participant
                signing a suitable confidentiality undertaking) to disclose to any
                proposed assignee, transferee or sub-participant (whether before
                or after
                any assignment, transfer or sub-participation and whether or not
                any
                assignment, transfer or sub-participation shall take place) all
                information relating to the Security Parties, the Loan or the Security
                Documents which the Agent or the Banks may in its discretion consider
                necessary or desirable. 

            

    

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    
      	 	
              14.3

            	
              Rights
                of assignee Any
                assignee, transferee or sub-participant of a Bank shall (unless limited
                by
                the express terms of the assignment, transfer or sub-participation)
                take
                the full benefit of every provision of the Security Documents benefiting
                that Bank. 

            

    

     

    
      	 	
              14.4

            	
              Transfer
                Certificates If
                any Bank wishes to transfer any of its rights and/or obligations
                under or
                pursuant to this Agreement, it may do so by delivering to the Agent
                a duly
                completed Transfer Certificate, in which event on the Transfer
                Date:-

            

    

     

    
      	 	
              14.4.1

            	
              to
                the extent that that Bank seeks to transfer its rights and/or obligations,
                the Borrowers (on the one hand) and the Bank in question (on the
                other)
                shall be released from all further obligations towards the
                other(s);

            

    

     

    
      	 	
              14.4.2

            	
              the
                Borrowers (on the one hand) and the Transferee (on the other) shall
                assume
                obligations towards the other(s) identical to those released pursuant
                to
                Clause 14.4.1;

            

    

     

    
      	 	
              14.4.3

            	
              the
                Agent, each of the Banks and the Transferee shall have the same rights
                and
                obligations between themselves as they would have had if the Transferee
                had been an original party to this Agreement as a Bank;
                and

            

    

     

    
      	 	
              14.4.4

            	
              the
                Transferee shall pay to the Agent for its own account a transfer
                fee of
                two thousand ($2,000) Dollars.

            

    

     

    Each
      Bank
      irrevocably authorises the Agent to sign on its behalf any Transfer Certificate
      relating to the transfer of any of the rights and/or obligations of any other
      Bank.

     

    
      	 	
              14.5

            	
              Security
                Documents Unless
                otherwise expressly provided in any Security Document or otherwise
                expressly agreed between a Bank and any proposed Transferee and notified
                by that Bank to the Agent on or before the relevant Transfer Date,
                there
                shall automatically be assigned to the Transferee with any transfer
                of a
                Bank's rights and/or obligations under or pursuant to this Agreement
                the
                rights of that Bank under or pursuant to the Security Documents (other
                than this Agreement) which relate to the portion of the Bank's rights
                and/or obligations transferred by the relevant Transfer
                Certificate.

            

    

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    
       

      
        	
                15

              	
                Payments,
                  Mandatory Prepayment, Reserve Requirements and
                  Illegality

              

      

       

    

    
      	 	
              15.1

            	
              Payments
                All
                amounts payable by any of the Borrowers under or pursuant to any
                of the
                Security Documents shall be paid to such accounts at such banks as
                the
                Agent may from time to time direct to the Borrowers, and (unless
                payable
                in any other Currency of Account) shall be paid in Dollars in same
                day
                funds (or such funds as are required by the authorities in the United
                States of America for settlement of international payments for immediate
                value). Payments shall be deemed to have been received by the Agent
                on the
                date on which the Agent receives authenticated advice of receipt,
                unless
                that advice is received by the Agent on a day other than a Business
                Day or
                at a time of day (whether on a Business Day or not) when the Agent
                in its
                discretion considers that it is impossible or impracticable for the
                Agent
                to utilise the amount received for value that same day, in which
                event the
                payment in question shall be deemed to have been received by the
                Agent on
                the Business Day next following the date of receipt of advice by
                the
                Agent.

            

    

     

    
      	 	
              15.2

            	
              No
                deductions or withholdings All
                payments (whether of principal or interest or otherwise) to be made
                by any
                of the Borrowers pursuant to the Security Documents shall, subject
                only to
                Clause 15.3, be made free and clear of and without deduction for
                or on
                account of any Taxes or other deductions, withholdings, restrictions,
                conditions or counterclaims of any nature.

            

    

     

    
      	 	
              15.3

            	
              Grossing-up
                If
                at any time any law requires (or is interpreted to require) a Borrower
                to
                make any deduction or withholding from any payment, or to change
                the rate
                or manner in which any required deduction or withholding is made,
                that
                Borrower will promptly notify the Agent and, simultaneously with
                making
                that payment, will pay to the Agent whatever additional amount (after
                taking into account any additional Taxes on, or deductions or withholdings
                from, or restrictions or conditions on, that additional amount) is
                necessary to ensure that, after making the deduction or withholding,
                the
                Agent and the Banks receive a net sum equal to the sum which they
                would
                have received had no deduction or withholding been made.
                

            

    

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    
      	 	
              15.4

            	
              Evidence
                of deductions If
                at any time a Borrower is required by law to make any deduction or
                withholding from any payment to be made by it pursuant to any of
                the
                Security Documents, that Borrower will pay the amount required to
                be
                deducted or withheld to the relevant authority within the time allowed
                under the applicable law and will, no later than thirty days after
                making
                that payment, deliver to the Agent an original receipt issued by
                the
                relevant authority, or other evidence acceptable to the Agent, evidencing
                the payment to that authority of all amounts required to be deducted
                or
                withheld. 

            

    

     

    
      	 	
              15.5

            	
              Adjustment
                of due dates If
                any payment or transfer of funds to be made under any of the Security
                Documents, other than a payment of interest on the Loan, shall be
                due on a
                day which is not a Business Day, that payment shall be made on the
                next
                succeeding Business Day (unless the next succeeding Business Day
                falls in
                the next calendar month in which event the payment shall be made
                on the
                next preceding Business Day). Any such variation of time shall be
                taken
                into account in computing any interest in respect of that
                payment.

            

    

     

    
      	 	
              15.6

            	
              Change
                in law If,
                by reason of the introduction of any law, or any change in any law,
                or the
                interpretation or administration of any law, or in compliance with
                any
                request or requirement from any central bank or any fiscal, monetary
                or
                other authority:-

            

    

     

    
      	 	
              15.6.1

            	
              any
                Bank or the Agent (or the holding company of any Bank or the Agent)
                shall
                be subject to any Tax with respect to payments of all or any part
                of the
                Indebtedness; or

            

    

     

    
      	 	
              15.6.2

            	
              the
                basis of Taxation of payments to any Bank or to the Agent in respect
                of
                all or any part of the Indebtedness shall be changed;
                or

            

    

     

    
      	 	
              15.6.3

            	
              any
                reserve requirements shall be imposed, modified or deemed applicable
                against assets held by or deposits in or for the account of or loans
                by
                any branch of any Bank; or

            

    

     

    
      	 	
              15.6.4

            	
              the
                manner in which any Bank or the Agent allocates capital resources
                to its
                obligations under this Agreement or any ratio (whether cash, capital
                adequacy, liquidity or otherwise) which any Bank or the Agent is
                required
                or requested to maintain shall be affected;
                or

            

    

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    
      	 	
              15.6.5

            	
              there
                is imposed on any Bank or on the Agent (or on the holding company
                of any
                Bank or the Agent) any other condition in relation to the Indebtedness
                or
                the Security Documents; 

            

    

     

    and
      the result of any of the above shall be to
      increase the cost to any Bank (or to the holding company of any Bank) of that
      Bank making or maintaining its Commitment or to cause any Bank or the Agent
      to
      suffer (in its opinion) a material reduction in the rate of return on its
      overall capital below the level which it reasonably anticipated at the date
      of
      this Agreement and which it would have been able to achieve but for its entering
      into this Agreement, and/or performing its obligations under this Agreement,
      then:

     

    
      	
            	(i)	
              the
                Bank affected shall notify the
                Agent,

            

    

     

    
      	 	
              (ii)

            	
              the
                Agent shall negotiate with the Borrowers in good faith with a view
                to
                restructuring the transaction constituted by the Security Documents
                in a
                way which will (in the reasonable opinion of the Agent) satisfactorily
                avoid either the unlawfulness or increased costs concerned (each
                as the
                case may be) without either decreasing the amounts or net returns
                due to
                the Agent and the Banks under the Security Documents or which would,
                but
                for such unlawfulness or such increased costs (each as the case may
                be),
                have been so due, or otherwise adversely affecting the rights, interests
                and security of the Banks under the transaction as presently constituted
                and will not (in the reasonable opinion of the Agent) increase the
                cost to
                the Borrowers of or otherwise adversely affect the rights and interests
                of
                the Borrowers under the transaction and unless the Agent nominates
                a
                longer period (which it shall be at liberty to do), such negotiations
                shall continue for a period of thirty (30) days after the Borrowers
                have
                been given notice under this clause or for such lesser period as
                is
                permitted under applicable law having regard to either the unlawfulness
                or
                the increased costs concerned (such period called the "Negotiation
                Period");

            

    

     

    
      	 	
              (iii)

            	
              if
                at the end of the Negotiation Period the Agent and the Borrowers
                have not
                reached agreement on a restructuring of the transaction on the basis
                described in sub-clause (ii) above, then the Borrowers shall on demand,
                made at any time after expiry of the Negotiation Period whether or
                not the
                relevant Bank's Contribution has been repaid, pay to such Bank the
                amount
                which such Bank specifies (in a certificate (which shall be conclusive
                in
                the absence of manifest error) setting forth the basis of the computation
                of such amount but not including any matters which such Bank regards
                as
                confidential in relation to its funding arrangements) is required
                to
                compensate such Bank for such alternative funding, increased cost,
                reduction, payment or forgone
                return.

            

    

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    
      	 	
              15.7

            	
              Illegality
                and impracticality Notwithstanding
                anything contained in the Security Documents, the obligations of
                the Banks
                to advance or maintain the Loan shall terminate in the event that
                a change
                in any law or in the interpretation of any law by any authority charged
                with its administration shall make it unlawful or, in the opinion
                of any
                Bank, impracticable for that Bank to advance or maintain its Commitment.
                In that event the Bank affected shall notify the Agent and the Agent
                shall, by written notice to the Borrowers, declare the Banks' obligations
                to be immediately terminated. If all or any part of the Loan shall
                have
                been advanced by the Banks to the Borrowers, the Indebtedness (including
                all accrued interest) shall be prepaid within thirty days from the
                date of
                such notice. Clause 5.5 shall apply to that prepayment if it is made
                on a
                day other than the last day of an Interest Period. The Agent and
                the Banks
                shall consult in good faith (as per the provisions of clause 15.6)
                with
                the Borrowers (but without incurring any legal obligations) with
                a view to
                trying to establish an alternative means of funding such Commitment,
                in a
                manner which does not breach any applicable law or
                regulation.

            

    

     

    
      	 	
              15.8

            	
              Changes
                in market circumstances If
                at any time a Bank determines (which determination shall be final
                and
                conclusive and binding on the Borrowers) that, by reason of changes
                affecting the London Interbank market, adequate and fair means do
                not
                exist for ascertaining the rate of interest on the Loan pursuant
                to this
                Agreement:-

            

    

     

    
      	 	
              15.8.1

            	
              that
                Bank shall give notice to the Agent and the Agent shall give notice
                to the
                Borrowers of the occurrence of such event;
                and

            

    

     

    
      	 	
              15.8.2

            	
              the
                Agent shall as soon as reasonably practicable certify to the Borrowers
                in
                writing the effective cost to the Banks of maintaining the Loan for
                such
                further period as shall be selected by the Banks and the rate of
                interest
                payable by the Borrowers for that period; or, if that is not acceptable
                to
                the Borrowers, 

            

    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    
      	 	
              15.8.3

            	
              the
                Agent on behalf of the Banks will negotiate with the Borrowers in
                good
                faith with a view to modifying this Agreement to provide a substitute
                basis for the Loan which is financially a substantial equivalent
                to the
                basis provided for in this Agreement.

            

    

     

    If,
      within thirty days of the giving of the notice referred to in
      Clause 15.8.1, the Borrowers and the Agent fail to agree in writing on a
      substitute basis for the Loan, the Borrowers will immediately prepay the
      Indebtedness. Clause 5.5 shall apply to that prepayment if it is made on a
      day
      other than the last day of an Interest Period.

     

    
      	 	
              15.9

            	
              Non-availability
                of currency If
                a Bank is for any reason unable to obtain Dollars in the London Interbank
                market and is, as a result, or as a result of any other contingency
                affecting the London Interbank market, unable to advance or maintain
                its
                Commitment in Dollars, that Bank shall give notice to the Agent and
                the
                Agent shall give notice to the Borrowers and the Banks' obligations
                to
                make the Loan available shall immediately cease. In that event, if
                all or
                any part of the Loan shall have been advanced by the Banks to the
                Borrowers, the Agent on behalf of the Banks will negotiate with the
                Borrowers in good faith with a view to establishing a mutually acceptable
                basis for funding the Loan from an alternative source. If the Agent
                and
                the Borrowers have failed to agree in writing on a basis for funding
                the
                Loan from an alternative source by 11.00 a.m. on the second Business
                Day
                prior to the end of the then current Interest Period, the Borrowers
                will
                (without prejudice to their other obligations under or pursuant to
                this
                Agreement, including, without limitation, their obligation to pay
                interest
                on the Loan, arising on the expiry of the then current Interest Period)
                prepay the Indebtedness to the Agent on behalf of the Banks on the
                expiry
                of the then current Interest Period.

            

    

    
       

      
        	
                16

              	
                Communications

              

      

       

    

    
      	 	
              16.1

            	
              Method
                Except for Communications pursuant to Clause 9, which shall be made
                or
                given in accordance with Clause 9.20, any Communication may be given,
                delivered, made or served (as the case may be) under or in relation
                to
                this Agreement by letter or fax and shall be in the English language
                and
                sent addressed:- 

            

    

     

    
      	 	
              16.1.1

            	
              in
                the case of the Banks or the Agent to the Agent at its address at
                the head
                of this Agreement (fax no: +31 10 401 5323) marked for the attention
                of:
                The Global Shipping Group; 

            

    

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    
      	 	
              16.1.2

            	
              in
                the case of the Borrowers to the Communications Address; or to such
                other
                address or fax number as the Banks, the Agent or the Borrowers may
                designate for themselves by written notice to the
                others.

            

    

     

    
      	 	
              16.2

            	
              Timing
                A
                Communication shall be deemed to have been duly given, delivered,
                made or
                served to or on, and received by, the Borrowers:-
                

            

    

     

    
      	 	
              16.2.1

            	
              in
                the case of a fax when the sender receives one or more transmission
                reports showing the whole of the Communication to have been transmitted
                to
                the correct fax number; 

            

    

     

    
      	 	
              16.2.2

            	
              if
                delivered to an officer of any of the Borrowers or left at the
                Communications Address at the time of delivery or leaving; or
                

            

    

     

    
      	 	
              16.2.3

            	
              if
                posted, at 9.00 a.m. on the Business Day after posting by prepaid
                first
                class post. 

            

    

     

    A
      Communication shall only be deemed to have been duly given, delivered, made
      or
      served to or on, and received by, the Banks or the Agent on actual receipt
      of
      the whole of that Communication by the Agent.

     

    
      	 	
              16.3

            	
              Indemnity
                The Borrowers shall indemnify the Agent and each Bank against any
                cost,
                claim, liability, loss or expense (including legal fees and any Value
                Added Tax or any similar or replacement tax (if applicable)) which
                the
                Agent or any of the Banks may sustain or incur as a consequence of
                any
                Communication sent by or on behalf of any of the Borrowers by fax
                not
                being received by its intended recipient, or being received incomplete,
                or
                by reason of any Communication purportedly having been sent by or
                on
                behalf of any of the Borrowers having been sent
                fraudulently.

            

    

     

    
      
        	
                17

              	
                General
                  Indemnities

              

      

       

    

    
      	 	
              17.1

            	
              Currency
                In
                the event of the Agent or a Bank receiving or recovering any amount
                payable under any of the Security Documents in a currency other than
                the
                Currency of Account, and if the amount received or recovered is
                insufficient when converted into the Currency of Account at the date
                of
                receipt to satisfy in full the amount due, the Borrowers shall, on
                the
                Agent's written demand, pay to the Agent such further amount in the
                Currency of Account as is sufficient to satisfy in full the amount
                due and
                that further amount shall be due to the Agent on behalf of the Banks
                as a
                separate debt under this Agreement.

            

    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    
      	 	
              17.2

            	
              Costs
                and expenses The
                Borrowers will, within fourteen days of the Agent's written demand,
                reimburse the Agent (on behalf of itself and the Banks) for all costs
                and
                expenses (including Value Added Tax or any similar or replacement
                tax if
                applicable) of and incidental to:- 

            

    

     

    
      	 	
              17.2.1

            	
              the
                negotiation, preparation, execution and registration of the Security
                Documents (whether or not any of the Security Documents are actually
                executed or registered and whether or not all or any part of the
                Loan is
                advanced); 

            

    

     

    
      	 	
              17.2.2

            	
              any
                amendments, addenda or supplements to any of the Security Documents
                (whether or not completed); 

            

    

     

    
      	 	
              17.2.3

            	
              any
                other documents which may at any time be required by any Bank or
                by the
                Agent to give effect to any of the Security Documents or which any
                Bank or
                the Agent is entitled to call for or obtain pursuant to any of the
                Security Documents (including, without limitation, all premiums and
                other
                sums from time to time payable by the Agent in relation to the Mortgagees'
                Insurances); and

            

    

     

    
      	 	
              17.2.4

            	
              the
                exercise of the rights, powers, discretions and remedies of the Banks
                and/or the Agent under or pursuant to the Security
                Documents.

            

    

     

    
      	 	
              17.3

            	
              Events
                of Default The
                Borrowers shall indemnify the Banks and the Agent from time to time
                on
                demand against all losses and costs incurred or sustained by any
                Bank or
                by the Agent as a consequence of any Event of Default, including
                (without
                limitation) any Break Costs. 

            

    

     

    
      	 	
              17.4

            	
              Funding
                costs
                The Borrowers shall indemnify the Banks and the Agent from time to
                time on
                demand against all losses and costs incurred or sustained by any
                Bank or
                by the Agent if, for any reason, any Drawing is not advanced to the
                Borrowers after the relevant Drawdown Notice has been given to the
                Agent,
                or is advanced on a date other than that requested in the Drawdown
                Notice
                (unless, in either case, as a result of any default by the Agent
                or by any
                of the Banks) including (without limitation) any Break
                Costs.

            

    

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    
      	 	
              17.5

            	
              Protection
                and enforcement The
                Borrowers shall indemnify the Banks and the Agent from time to time
                on
                demand against all losses, costs and liabilities which any Bank or
                the
                Agent may from time to time sustain, incur or become liable for in
                or
                about the protection, maintenance or enforcement of the rights conferred
                on the Banks and/or the Agent by the Security Documents or in or
                about the
                exercise or purported exercise by the Banks and/or the Agent of any
                of the
                rights, powers, discretions or remedies vested in them under or arising
                out of the Security Documents, including (without limitation) any
                losses,
                costs and liabilities which any Bank or the Agent may from time to
                time
                sustain, incur or become liable for by reason of the Banks or the
                Agent
                being mortgagees of any Vessel and/or a lender to the Borrowers,
                or by
                reason of any Bank or the Agent being deemed by any court or authority
                to
                be an operator or controller, or in any way concerned in the operation
                or
                control, of any Vessel.

            

    

     

    
      	 	
              17.6

            	
              Liabilities
                of Banks and Agent The
                Borrowers will from time to time reimburse the Banks and the Agent
                on
                demand for all sums which any Bank or the Agent may pay or become
                actually
                or contingently liable for on account of any Borrower or in connection
                with any Vessel (whether alone or jointly or jointly and severally
                with
                any other person) including (without limitation) all sums which any
                Bank
                or the Agent may pay or guarantees which any Bank or the Agent may
                give in
                respect of the Insurances, any expenses incurred by any Bank or by
                the
                Agent in connection with the maintenance or repair of any Vessel
                or in
                discharging any lien, bond or other claim relating in any way to
                any
                Vessel, and any sums which any Bank or the Agent may pay or guarantees
                which they may give to procure the release of any Vessel from arrest
                or
                detention.

            

    

     

    
      	 	
              17.7

            	
              Taxes
                The
                Borrowers shall pay all Taxes to which all or any part of the Indebtedness
                or any of the Security Documents may be at any time subject and shall
                indemnify the Agent and the Banks on demand against all liabilities,
                costs, claims and expenses resulting from any omission to pay or
                delay in
                paying any such Taxes.

            

    

    
       

      
        	
                18

              	
                Miscellaneous

              

      

       

    

    
      	 	
              18.1

            	
              Waivers
                No
                failure or delay on the part of the Agent or of a Bank in exercising
                any
                right, power, discretion or remedy under or pursuant to any of the
                Security Documents, nor any actual or alleged course of dealing between
                the Agent or any Bank and any of the Borrowers, shall operate as
                a waiver
                of, or acquiescence in, any default on the part of any Security Party,
                unless expressly agreed to do so in writing by the Agent, nor shall
                any
                single or partial exercise by the Agent or a Bank of any right, power,
                discretion or remedy preclude any other or further exercise of that
                right,
                power, discretion or remedy, or the exercise by the Agent or a Bank
                of any
                other right, power, discretion or remedy.

            

    

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    
      	 	
              18.2

            	
              No
                oral variations No
                variation or amendment of any of the Security Documents shall be
                valid
                unless in writing and signed on behalf of the Banks and the
                Agent.

            

    

     

    
      	 	
              18.3

            	
              Severability
                If
                at any time any provision of any of the Security Documents is invalid,
                illegal or unenforceable in any respect that provision shall be severed
                from the remainder and the validity, legality and enforceability
                of the
                remaining provisions shall not be affected or impaired in any
                way.

            

    

     

    
      	 	
              18.4

            	
              Successors
                etc. The
                Security Documents shall be binding on the Security Parties and on
                their
                successors and permitted transferees and assignees, and shall inure
                to the
                benefit of the Bank and the Agent and their respective successors,
                transferees and assignees. None of the Borrowers may assign nor transfer
                any of its rights under or pursuant to any of the Security Documents
                without the prior written consent of the
                Agent.

            

    

     

    
      	 	
              18.5

            	
              Further
                assurance If
                any provision of the Security Documents shall be invalid or unenforceable
                in whole or in part by reason of any present or future law or any
                decision
                of any court, or if the documents at any time held by the Banks or
                by the
                Agent on their behalf are considered by the Banks for any reason
                insufficient to carry out the terms of this Agreement, then from
                time to
                time the Borrowers will promptly, on demand by the Agent, execute
                or
                procure the execution of such further documents as in the opinion
                of the
                Banks are necessary to provide adequate security for the repayment
                of the
                Indebtedness.

            

    

     

    
      	 	
              18.6

            	
              Other
                arrangements The
                Banks and the Agent may, without prejudice to their rights under
                or
                pursuant to the Security Documents, at any time and from time to
                time, on
                such terms and conditions as they may in their discretion determine,
                and
                without notice to any Borrower, grant time or other indulgence to,
                or
                compound with, any other person liable (actually or contingently)
                to the
                Banks and/or the Agent in respect of all or any part of the Indebtedness,
                and may release or renew negotiable instruments and take and release
                securities and hold funds on realisation or suspense account without
                affecting the liabilities of the Borrowers or the rights of the Banks
                and
                the Agent under or pursuant to the Security
                Documents.

            

    

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    
      	 	
              18.7

            	
              Advisers
                The
                Borrowers irrevocably authorise the Agent, at any time and from time
                to
                time during the Facility Period, to consult insurance advisers on
                any
                matters relating to the Insurances, including, without limitation,
                the
                collection of insurance claims, and from time to time to consult
                or retain
                advisers or consultants to monitor or advise on any other claims
                relating
                to the Vessels. The Borrowers will provide such advisers and consultants
                with all information and documents which they may from time to time
                require and will reimburse the Agent on demand for all costs and
                expenses
                incurred by the Agent in connection with the consultation or retention
                of
                such advisers or consultants. 

            

    

     

    
      	 	
              18.8

            	
              Delegation
                The
                Banks and the Agent may at any time and from time to time delegate
                to any
                person any of their rights, powers, discretions and remedies pursuant
                to
                the Security Documents on such terms as they may consider appropriate
                (including the power to
                sub-delegate).

            

    

     

    
      	 	
              18.9

            	
              Rights
                etc. cumulative Every
                right, power, discretion and remedy conferred on the Banks and/or
                the
                Agent under or pursuant to the Security Documents shall be cumulative
                and
                in addition to every other right, power, discretion or remedy to
                which
                they may at any time be entitled by law or in equity. The Banks and
                the
                Agent may exercise each of their rights, powers, discretions and
                remedies
                as often and in such order as they deem appropriate. The exercise
                or the
                beginning of the exercise of any right, power, discretion or remedy
                shall
                not be interpreted as a waiver of the right to exercise that or any
                other
                right, power, discretion or remedy either simultaneously or
                subsequently.

            

    

     

    
      	 	
              18.10

            	
              No
                enquiry The
                Banks and the Agent shall not be concerned to enquire into the powers
                of
                the Security Parties or of any person purporting to act on behalf
                of any
                of the Security Parties, even if any of the Security Parties or any
                such
                person shall have acted in excess of their powers or if their actions
                shall have been irregular, defective or informal, whether or not
                any Bank
                or the Agent had notice thereof.

            

    

     

    
      	 	
              18.11

            	
              Continuing
                security The
                security constituted by the Security Documents shall be continuing
                and
                shall not be satisfied by any intermediate payment or satisfaction
                until
                the Indebtedness shall have been repaid in full and neither the Banks
                nor
                the Agent shall be under any further actual or contingent liability
                to any
                third party in relation to the Vessels, the Insurances, Earnings
                or
                Requisition Compensation or any other matter referred to in the Security
                Documents. 

            

    

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    
      	 	
              18.12

            	
              Security
                cumulative The
                security constituted by the Security Documents shall be in addition
                to any
                other security now or in the future held by the Banks or by the Agent for
                or in respect of all or any part of the Indebtedness, and shall not
                merge
                with or prejudice or be prejudiced by any such security or any other
                contractual or legal rights of the Banks or the Agent, nor affected
                by any
                irregularity, defect or informality, or by any release, exchange
                or
                variation of any such security. Section 93 of the Law of Property
                Act 1925
                and all provisions which the Agent considers analogous thereto under
                the
                law of any other relevant jurisdiction shall not apply to the security
                constituted by the Security Documents.

            

    

     

    
      	 	
              18.13

            	
              Re-instatement
                If
                the Banks or the Agent take any steps to exercise any of their rights,
                powers, remedies or discretions pursuant to the Security Documents
                and the
                result shall be adverse to the Banks and/or the Agent, the Borrowers,
                the
                Banks and the Agent shall be restored to their former positions as
                if no
                such steps had been taken.

            

    

     

    
      	 	
              18.14

            	
              No
                liability Neither
                the Banks nor the Agent nor any agent or employee of any Bank and/or
                the
                Agent, nor any receiver and/or manager appointed by the Agent, shall
                be
                liable for any losses which may be incurred in or about the exercise
                of
                any of the rights, powers, discretions or remedies of the Banks and/or
                the
                Agent under or pursuant to the Security Documents nor liable as mortgagee
                in possession for any loss on realisation or for any neglect or default
                of
                any nature for which a mortgagee in possession might otherwise be
                liable.

            

    

     

    
      	 	
              18.15

            	
              Rescission
                of payments etc. Any
                discharge, release or reassignment by the Banks and/or the Agent
                of any of
                the security constituted by, or any of the obligations of any Security
                Party contained in, any of the Security Documents shall be (and be
                deemed
                always to have been) void if any act (including, without limitation,
                any
                payment) as a result of which such discharge, release or reassignment
                was
                given or made is subsequently wholly or partially rescinded or avoided
                by
                operation of any law.

            

    

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

    
      	 	
              18.16

            	
              Subsequent
                Encumbrances If
                the Agent receives notice of any subsequent Encumbrance affecting
                any
                Vessel or all or any part of the Insurances, Earnings or Requisition
                Compensation or the Earnings Account, the Agent may open a new account
                in
                its books for the Borrowers. If the Agent does not open a new account,
                then (unless the Agent gives written notice to the contrary to the
                Borrowers) as from the time of receipt by the Agent of notice of
                such
                subsequent Encumbrance, all payments made to the Agent shall be treated
                as
                having been credited to a new account of the Borrowers and not as
                having
                been applied in reduction of the
                Indebtedness.

            

    

     

    
      	 	
              18.17

            	
              Releases
                If
                any Bank or the Agent shall at any time release any party from all
                or any
                part of any of the Security Documents, the liability of any other
                party to
                the Security Documents shall not be varied or
                diminished.

            

    

     

    
      	 	
              18.18

            	
              Discretions
                Unless
                otherwise expressly indicated, where any Bank or the Agent is stated
                in
                the Security Documents to have a discretion and/or where the opinion
                of
                any Bank or the Agent is referred to and/or where the consent, agreement
                or approval of any Bank or the Agent is required for any course of
                action,
                or where anything is required to be acceptable to any Bank or to
                the
                Agent, the Banks and the Agent shall have a sole, absolute and unfettered
                discretion and/or may give or withhold their consent, agreement or
                approval at their sole, absolute and unfettered
                discretion.

            

    

     

    
      	 	
              18.19

            	
              Certificates
                Any
                certificate or statement signed by an authorised signatory of the
                Agent
                purporting to show the amount of the Indebtedness (or any part of
                the
                Indebtedness) or any other amount referred to in any of the Security
                Documents shall, save for manifest error or on any question of law,
                be
                conclusive evidence as against the Borrowers of that amount.
                

            

    

     

    
      	 	
              18.20

            	
              Survival
                of representations and warranties The
                representations and warranties on the part of the Borrowers contained
                in
                this Agreement shall survive the execution of this Agreement and
                the
                advance of the Loan. 

            

    

     

    
      	 	
              18.21

            	
              Counterparts
                This
                Agreement may be executed in any number of counterparts each of which
                shall be original but which shall together constitute the same
                instrument.

            

    

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    
      	 	
              18.22

            	
              Contracts
                (Rights of Third Parties) Act 1999 No
                term of this Agreement is enforceable by a person who is not a party
                to
                it.

            

    

    
       

      
        	
                19

              	
                Law and Jurisdiction

              

      

       

    

    
      	 	
              19.1

            	
              Governing
                law This
                Agreement shall in all respects be governed by and interpreted in
                accordance with English law.

            

    

     

    
      	 	
              19.2

            	
              Jurisdiction
                For
                the exclusive benefit of the Banks and the Agent, the parties to
                this
                Agreement irrevocably agree that the courts of England are to have
                jurisdiction to settle any disputes which may arise out of or in
                connection with this Agreement and that any Proceedings may be brought
                in
                those courts. 

            

    

     

    
      	 	
              19.3

            	
              Alternative
                jurisdictions Nothing
                contained in this Clause shall limit the right of the Banks or the
                Agent
                to commence any Proceedings against any of the Borrowers in any other
                court of competent jurisdiction nor shall the commencement of any
                Proceedings against any of the Borrowers in one or more jurisdictions
                preclude the commencement of any Proceedings in any other jurisdiction,
                whether concurrently or not.

            

    

     

    
      	 	
              19.4

            	
              Waiver
                of objections Each
                of the Borrowers irrevocably waives any objection which it may now
                or in
                the future have to the laying of the venue of any Proceedings in
                any court
                referred to in this Clause, and any claim that those Proceedings
                have been
                brought in an inconvenient or inappropriate forum, and irrevocably
                agrees
                that a judgment in any Proceedings commenced in any such court shall
                be
                conclusive and binding on it and may be enforced in the courts of
                any
                other jurisdiction.

            

    

     

    
      	 	
              19.5

            	
              Service
                of process Without
                prejudice to the right of the Agent and the Banks to use any other
                method
                of service permitted by law, each of the Borrowers irrevocably agrees
                that
                any writ, notice, judgment or other legal process shall be sufficiently
                served on it if addressed to it and left at or sent by post to the
                Address
                for Service, and in that event shall be conclusively deemed to have
                been
                served at the time of leaving or, if posted, at 9.00 a.m. on the
                Business
                Day after posting by prepaid first class
                post.

            

    

     

    IN
      WITNESS
      of which
      the parties to this Agreement have executed this Agreement the day and year
      first before written.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1

     

    The
      Borrowers and the Vessels

     

    
      
        	
                Name
                  of Borrower

              	
                Country
                  of Incorporation

              	
                Registered
                  Office

              	
                Name
                  of Vessel

              	
                Flag
                  of Vessel

              	
                Type
                  of Vessel

              	
                Charterer

              	
                Period
                  + (Option)

              	
                Rate

              	
                Class

              	
                Index
                  Amount

              
	
                MC
                  Pelerin Shipping Limited

              	
                Bahamas

              	
                Mareva
                  House, 4 George Street, Nassau, Bahamas

              	
                "Coniston"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Statoil

              	
                Till
                  04/07/06

              	
                200,000

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                14%

              
	
                MC
                  Heron Shipping Limited

              	
                Bahamas

              	
                Mareva
                  House, 4 George Street, Nassau, Bahamas

              	
                "Auteuil"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Statoil

              	
                Till
                  01/07/06

              	
                170,000

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                18%

              
	
                MC
                  Cormorant Shipping Limited

              	
                Bahamas

              	
                Mareva
                  House, 4 George Street, Nassau, Bahamas

              	
                "Deauville"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Petredec

              	
                Till
                  05/06

              	
                190,000

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                18%

              
	
                MC
                  Tercel Shipping Limited

              	
                Bahamas

              	
                Mareva
                  House, 4 George Street, Nassau, Bahamas

              	
                "Longchamp"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Statoil

              	
                Till
                  14/06/06

              	
                160,000

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                12%

              
	
                Sphinx
                  Limited

              	
                St.
                  Vincent and the Grenadines

              	
                112
                  Bonadie Street, Kingstown, St Vincent and the Grenadines

              	
                "Malvern"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Statoil

              	
                Till
                  12/12/07 

              	
                188,750

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                12%

              

      

       

      
        
          
          

        

        
          65

          
            

          

        

        
          
          

        

      

       

      
        	
                MC
                  Egret Shipping Limited

              	
                Bahamas

              	
                Mareva
                  House, 4 George Street, Nassau, Bahamas

              	
                "Cheltenham"

              	
                Bahamas

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Statoil

              	
                Till
                  04/12/06 

              	
                250,000

              	
                NS
                  (Tanker, Liquefied Gases - Maximum Pressure 18.0kg/cm2 and
                  Minimum Temperature 0OC Type 2PG)

                MNS

              	
                12%

              
	
                London
                  Bridge Shipping Limited

              	
                Cayman
                  Islands

              	
                Clifton
                  House, 75 Fort Street, P.O. Box 190 GT, George Town, Grand Cayman,
                  Cayman
                  Islands

              	
                "London
                  Bridge"

              	
                Isle
                  of Man

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Dale
                  Limited

              	
                Till
                  30/03/07

              	
                300,000

              	
                100
                  A5 E ERS NLS T2D21 Liquefied Gas Tanker Type-2G

                MC
                  E AUT INERT RI

              	
                7%

              
	
                Blackfriars
                  Bridge Shipping Limited

              	
                Cayman
                  Islands

              	
                Clifton
                  House, 75 Fort Street, P.O. Box 190 GT, George Town, Grand Cayman,
                  Cayman
                  Islands

              	
                "Blackfriars
                  Bridge"

              	
                Isle
                  of Man

              	
                Liquidated
                  Petroleum Gas Carrier

              	
                Monet
                  Trading Limited

              	
                Till
                  31/03/07

              	
                300,000

              	
                100
                  A5 E ERS NLS T2D21 Liquefied Gas Tanker Type-2G

                MC
                  E AUT INERT RI

              	
                7%

              

      

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

    

    SCHEDULE
      2

     

    The
      Banks and the Commitments 

    
      
        
          

            
              	
                      The
                        Banks

                    	
                      The
                        Commitments

                    
	 	
                      (in
                        Dollars)

                    
	 	 
	
                      Fortis
                        Bank (Nederland) N.V.

                    	
                      15,875,000

                    
	
                      Coolsingel
                        93

                    	 
	
                      3012
                        AE Rotterdam

                    	 
	
                      The
                        Netherlands

                    	 
	 	 
	
                      Fax:
                        +31 10 401 5323

                    	 
	
                      Attn:
                        Global Shipping Group

                    	 
	 	 
	 	 
	
                      KfW

                    	
                      15,875,000

                    
	
                      Palmengartenstrasse
                        5-9

                    	 
	
                      60325
                        Frankfurt am Main

                    	 
	
                      Federal
                        Republic of Germany

                    	 
	 	 
	
                      Fax:
                        +49 69 7431 2944

                    	 
	
                      Attn:
                        Ship Financing Department

                    	 

            

          

        

      

       

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

    

    SCHEDULE
      3

     

    General
      Terms and Conditions

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

    

      
        	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  MC
                  PELERIN SHIPPING LIMITED

              	
                )

              
	__________________________________________	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  MC
                  HERON SHIPPING LIMITED

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  MC
                  CORMORANT SHIPPING

              	
                )

              
	
                LIMITED

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  MC
                  TERCEL SHIPPING LIMITED

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  SPHINX
                  LIMITED

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  MC
                  EGRET SHIPPING LIMITED

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  LONDON
                  BRIDGE SHIPPING 

              	
                )

              
	
                LIMITED

              	
                )

              

      

    

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

    

      
        	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  BLACKFRIARS
                  BRIDGE SHIPPING

              	
                )

              
	
                LIMITED

              	
                )

              
	__________________________________________	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  FORTIS
                  BANK (NEDERLAND) N.V.

              	
                )

              
	
                (as
                  a Bank)

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  KfW

              	
                )

              
	
                (as
                  a Bank)

              	
                )

              
	 	 
	 	 
	 	 
	
                SIGNED
                  by
                  

              	
                )

              
	
                duly
                  authorised for and on behalf 

              	
                )

              
	
                of
                  FORTIS
                  BANK (NEDERLAND) N.V.

              	
                )

              
	
                (as
                  Agent)

              	
                )

              

      

    

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    APPENDIX A

    

       

      
        	
                To: 

              	
                Fortis
                  Bank (Nederland) N.V.

              

       

       

      
        	
                From:

              	
                MC
                  Pelerin Shipping Limited

              

      

      MC
        Heron Shipping Limited

      MC
        Cormorant Shipping Ltd.

      MC
        Tercel Shipping Limited

      Sphinx
        Limited

      MC
        Egret Shipping Limited

      London
        Bridge Shipping Limited

      Blackfriars
        Bridge Shipping Limited

    

    [Date]

    

    Dear
      Sirs,

     

    Drawdown
      Notice

     

    We
      refer
      to the Loan Agreement dated  ___________________  2006 made between,
      amongst others, ourselves and yourselves ("the
      Agreement").

     

    Words
      and
      phrases defined in the Agreement have the same meaning when used in this
      Drawdown Notice. 

     

    Pursuant
      to Clause 2.3 of the Agreement, we irrevocably request that you advance the
      Loan to us on _________ 2006, which is a Business Day, by paying the amount
      of
      the Drawing to [specify account details].

     

    We
      warrant that the representations and warranties contained in Clause 4 of the
      Agreement are true and correct at the date of this Drawdown Notice and will
      be
      true and correct on ____________   2006; that no Event of Default
      nor Potential Event of Default has occurred and is continuing, and that no
      Event
      of Default or Potential Event of Default will result from the advance of the
      Drawing requested in this Drawdown Notice.

     

    Yours
      faithfully

    

    

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

    For
      and
      on behalf of

    MC
      Pelerin Shipping Limited

    MC
      Heron Shipping Limited

    MC
      Cormorant Shipping Ltd.

    MC
      Tercel Shipping Limited

    Sphinx
      Limited

    MC
      Egret Shipping Limited

    London
      Bridge Shipping Limited

    Blackfriars
      Bridge Shipping Limited

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

    APPENDIX
      B

     

    Form
      of Transfer Certificate

     

    
      
        	
                To:
                  

              	
                Fortis
                  Bank (Nederland)
                  N.V.

              

      

    TRANSFER
      CERTIFICATE

    

    This
      transfer certificate relates to a secured loan facility agreement (as from
      time
      to time amended, varied, supplemented or novated “the
      Loan Agreement")
      dated
      _______  2006, on the terms and subject to the conditions of which a
      secured loan facility of up to $31,750,000 was made available to MC Heron
      Shipping Limited and others, as joint and several borrowers, by a syndicate
      of
      banks on whose behalf you act as agent and security trustee.

     

    
      
        	
                1

              	
                Terms
                  defined in the Loan Agreement shall, unless otherwise expressly
                  indicated,
                  have the same meaning when used in this certificate. The terms
                  "Transferor"
                  and "Transferee"
                  are defined in the schedule to this
                  certificate.

              

      

      

      
        	
                2

              	
                The
                  Transferor:-

              

      

    

     

    
      	 	
              2.1 

            	
              confirms
                that the details in the Schedule under the heading "Transferor's
                Commitment"
                accurately summarise its Commitment; and

            

    

    

    
      	 	
              2.2

            	
              requests
                the Transferee to accept by way of novation the transfer to the Transferee
                of the amount of the Transferor’s Commitment specified in the Schedule by
                counter-signing and delivering this certificate to the Agent at its
                address for Communications specified in the Loan
                Agreement.

            

    

    

      
        	
                3

              	
                The
                  Transferee requests the Agent to accept this certificate as being
                  delivered to the Agent pursuant to and for the purposes of clause
                  14.4 of
                  the Loan Agreement so as to take effect in accordance with the
                  terms of
                  that clause on the Transfer Date specified in the
                  Schedule.

              

      

      

      
        	
                4

              	
                The
                  Agent (on its own behalf and on behalf of each of the Borrowers
                  and each
                  of the Banks other than the Transferor) confirms its acceptance
                  of this
                  certificate for the purposes of clause 14.4 of the Loan
                  Agreement.

              

      

      

      
        	
                5

              	
                The
                  Transferee confirms that:-

              

      

    

    

      
        	 	
                5.1

              	
                it
                  has received a copy of the Loan Agreement together with all other
                  information which it has required in connection with this transaction;
                  

              

      

      

      
        	 	
                5.2

              	
                it
                  has not relied and will not in the future rely on the Transferor
                  or any
                  other party to the Loan Agreement to check or enquire on its behalf
                  into
                  the legality, validity, effectiveness, adequacy, accuracy or completeness
                  of any such information; and

              

      

      

      
        	 	
                5.3

              	
                it
                  has not relied and will not in the future rely on the Transferor
                  or any
                  other party to the Loan Agreement to keep under review on its behalf
                  the
                  financial condition, creditworthiness, condition, affairs, status
                  or
                  nature of any of the Security
                  Parties.

              

      

    

    
       

      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

    

      
        	
                6

              	
                Execution
                  of this certificate by the Transferee constitutes its representation
                  to
                  the Transferor and to all other parties to the Loan Agreement that
                  it has
                  the power to become a party to the Loan Agreement as a Bank on
                  the terms
                  of the Loan Agreement and has taken all steps to authorise execution
                  and
                  delivery of this certificate. 

              

      

      

      
        	
                7

              	
                The
                  Transferee undertakes with the Transferor and each of the other
                  parties to
                  the Loan Agreement that it will perform in accordance with their
                  terms all
                  those obligations which by the terms of the Loan Agreement will
                  be assumed
                  by it after delivery of this certificate to the Agent and the satisfaction
                  of any conditions subject to which this certificate is expressed
                  to take
                  effect.

              

      

      

      
        	
                8

              	
                The
                  Transferor makes no representation or warranty and assumes no
                  responsibility with respect to the legality, validity, effectiveness,
                  adequacy or enforceability of any of the Security Documents or
                  any
                  document relating to any of the Security Documents, and assumes
                  no
                  responsibility for the financial condition of any of the Security
                  Parties
                  or for the performance and observance by the Security Parties of
                  any of
                  their obligations under any of the Security Documents or any document
                  relating to any of the Security Documents and any conditions and
                  warranties implied by law are expressly
                  excluded.

              

      

      

      
        	
                9

              	
                The
                  Transferee acknowledges that nothing in this certificate or in
                  the Loan
                  Agreement shall oblige the Transferor to:-

              

      

    

     

    
      	 	
              9.1 

            	
              accept
                a re-transfer from the Transferee of the whole or any part of the
                rights,
                benefits and/or obligations transferred pursuant to this certificate;
                or
                

            

    

    

    
      	 	
              9.2

            	
              support
                any losses directly or indirectly sustained or incurred by the Transferee
                for any reason including, without limitation, the non-performance
                by any
                party to any of the Security Documents of any obligations under any
                of the
                Security Documents. 

            

    

    

    
      	
              10

            	
              The
                address and fax number of the Transferee for the purposes of clause
                9.20
                of the Loan Agreement are set out in the
                Schedule.

            

    

    

      
        	
                11

              	
                This
                  certificate may be executed in any number of counterparts each
                  of which
                  shall be original but which shall together constitute the same
                  instrument.

              

      

      

      
        	
                12

              	
                This
                  certificate shall be governed by and interpreted in accordance
                  with
                  English law.

              

      

    

    
       

      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    THE SCHEDULE

    

      
        	
                1

              	
                Transferor:

              

      

      

      
        	
                2

              	
                Transferee:

              

      

      

      
        	
                3

              	
                Transfer
                  Date
                  (not earlier that the fifth Business Day after the date of delivery
                  of the
                  Transfer Certificate to the Agent):

              

      

      
        

        
          	
                  4 

                	Transferor’s Commitment:

        

         

      

      
        	
                5

              	
                Amount
                  transferred:

              

      

      

      
        	
                6

              	
                Transferee’s
                  address and fax number for the purposes of clause 9.20 of the Loan
                  Agreement:

              

      

    

    
       

       

      
        	
                [name
                  of Transferor]

              	 	
                [name
                  of Transferee]

              	 
	 	 	 	 	 	 
	
                By:

              	 	 	
                By:

              	 	 
	 	 	 	 	 	 
	
                Date:

              	 	 	
                Date:

              	 	 
	 	 	 	 	 	 

      

    

    

     

    Fortis
      Bank (Nederland) N.V.
      as
      Agent

    for
      and
      on behalf of itself, each of the Borrowers and each of the Banks (other than
      the
      Transferor)

    

      
        	
                By:
                  

              	 	 
	 	 	 
	
                Date:
                  

              	 	 

      

    

     

    
      
        
        

      

      
        74

        
          

        

      

      
        
        

      

    

    

    DATED
      APRIL 19, 2006

     

     

     

    MC
      SHIPPING INC

    

    -
      to -

    

    FORTIS
      BANK (NEDERLAND) N.V.

     

     

     

    

    
      
        

      

    

    GUARANTEE
      AND INDEMNITY

    
      
 

    

    

    

    STEPHENSON
      HARWOOD

    One,
      St Paul's Churchyard

    London
      EC4M 8SH

    Tel:
      +44 020 7329 4422

    Fax:
      +44 020 7329 7100

    (Ref:
      814)

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CONTENTS

     

    
      
        	 	 	
                Page

              
	 	 	 
	
                1

              	
                Definitions
                  and Interpretation

              	
                78

              
	 	 	 
	
                2

              	
                Representations
                  and Warranties

              	
                80

              
	 	 	 
	
                3

              	
                Guarantee
                  and Indemnity

              	
                80

              
	 	 	 
	
                4

              	
                Preservation
                  of Guarantor's Liability

              	
                81

              
	 	 	 
	
                5

              	
                Preservation
                  of Credit Parties' Rights

              	
                83

              
	 	 	 
	
                6

              	
                Undertakings

              	
                84

              
	 	 	 
	
                7

              	
                Payments

              	
                86

              
	 	 	 
	
                8

              	
                Currency

              	
                87

              
	 	 	 
	
                9

              	
                Set-Off
                  and Lien

              	
                88

              
	 	 	 
	
                10

              	
                Application
                  of Moneys

              	
                89

              
	 	 	 
	
                11

              	
                Partial
                  invalidity

              	
                90

              
	 	 	 
	
                12

              	
                Further
                  Assurance

              	
                90

              
	 	 	 
	
                13

              	
                Miscellaneous

              	
                90

              
	 	 	 
	
                14

              	
                Notices

              	
                91

              
	 	 	 
	
                15

              	
                Counterparts

              	
                91

              
	 	 	 
	
                16

              	
                Law
                  and Jurisdiction

              	
                91

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    GUARANTEE
      AND INDEMNITY

     

    Dated:    
      April 19, 2006

     

    BY:

     

    
      	
              (1)

            	
              MC
                SHIPPING INC,
                a
                corporation incorporated according to the law of the Republic of
                Liberia
                whose registered office is at 80 Broad Street, Monrovia, Liberia
                (the
                "Guarantor");
                

            

    

     

    IN
      FAVOUR OF:

     

    
      	
              (2)

            	
              FORTIS
                BANK (NEDERLAND) N.V.
                acting as agent and security trustee for the Lenders (as hereinafter
                defined) through its office at Coolsingel 93, 3012 AE Rotterdam The
                Netherlands (the "Security
                Agent").

            

    

     

    WHEREAS:-

     

    
      	
              (A)

            	
              Each
                of the banks listed in Schedule 2 to the Loan Agreement (as defined
                below)
                (collectively the "Lenders")
                has agreed to lend to MC Pelerin Shipping Limited ("MC
                Pelerin"),
                MC Heron Shipping Limited ("MC
                Heron"),
                MC Cormorant Shipping Limited ("MC
                Cormorant"),
                MC Tercel Shipping Limited ("MC
                Tercel")
                and MC Egret Shipping Limited ("MC
                Egret")
                each a Bahamian company and a wholly-owned subsidiary of the Guarantor,
                Sphinx Limited ("Sphinx"),
                a St. Vincent and Grenadines corporation and a wholly-owned subsidiary
                of
                the Guarantor and London Bridge Shipping Limited and Blackfriars
                Bridge
                Shipping Limited, each a Cayman Islands company and a wholly owned
                subsidiary of the Guarantor (MC Pelerin, MC Heron, MC Cormorant,
                MC
                Tercel, MC Egret, Sphinx, London Bridge Shipping Limited and Blackfriars
                Bridge Shipping Limited being herein collectively called the "Borrowers")
                on a joint and several basis its
                participation in a loan not exceeding thirty one million seven hundred
                and
                fifty thousand Dollars (US$31,750,000) (the "Loan")
                on the terms and subject to the conditions set out in a loan agreement
                dated            
                April 2006 (the "Loan
                Agreement")
                made between the Borrowers (as borrowers), the Lenders (as lenders)
                and
                Fortis Bank (Nederland) N.V. as agent (the "Agent")
                and security trustee for the
                Lenders.

            

    

     

    
      	
              (B)

            	
              Pursuant
                to the Loan Agreement, and as a condition precedent to the several
                obligations of the Lenders to make the Loan available to the Borrowers,
                the Borrowers have, amongst other things, agreed to procure that
                the
                Guarantor execute and deliver this Guarantee and Indemnity in favour
                of
                the Security Agent as security agent for the
                Lenders.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THIS DEED WITNESSES
      as
      follows:-

    

      
        	
                1

              	
                Definitions and Interpretation

              

      

       

    

    
      	 	
              1.1

            	
              In
                this Guarantee and Indemnity:-

            

    

     

    "Consolidated
      Net Worth"
      means,
      at any relevant time, Consolidated Shareholder's Equity of the Guarantor and
      its
      subsidiaries, plus shareholder loans (if any) less goodwill and any other
      intangible assets.

     

    "Consolidated
      Shareholder's Equity"
      and
      "Consolidated
      Net Income"
      have
      the meanings attributed to them in the Guarantor's audited accounts for the
      year
      ended 31 December 2005.

     

    "Credit
      Parties"
      means
      the Security Agent, the Agent and the Lenders.

     

    "EBITDA"
      means,
      at any relevant time, the Consolidated Net Income of the Guarantor and its
      subsidiaries plus interest expenses, taxes, depreciation, amortisation and
      provision for impairment loss (if any) for the previous period of twelve (12)
      months.

     

    "Guarantor's
      Liabilities"
      means
      all of the liabilities and obligations of the Guarantor to any of the Credit
      Parties under or pursuant to this Guarantee and Indemnity, from time to time,
      whether in respect of principal, interest, costs or otherwise and whether
      present, future, actual or contingent.

     

    "Guarantor's
      Security Documents"
      means
      this Guarantee and Indemnity and any and all documents which may at any time
      be
      executed by the Guarantor as security for the payment of all or any part of
      the
      Guarantor's Liabilities.

     

    "Liquid
      Assets"
      means
      the aggregate of cash and cash equivalents, marketable securities and available
      but undrawn credit lines not subject to any third party
      Encumbrances.

     

    "Net
      Interest Coverage Ratio"
      means,
      at any relevant time, the amount of EBITDA for the immediately preceding period
      of twelve (12) months divided by the amount of interest expense in the
      immediately preceding period of twelve (12) months under financing arrangements.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.2

            	
              Unless
                otherwise specified in this Guarantee and Indemnity, or unless the
                context
                otherwise requires, all words and expressions defined in the Loan
                Agreement shall have the same meaning when used in this Guarantee
                and
                Indemnity.

            

    

     

    
      	 	
              1.3

            	
              In
                this Guarantee and Indemnity:-

            

    

    
       

      
        	 	 	1.3.1 	
                words
                  denoting the plural number include the singular and vice
                  versa;

              

      

       

    

    
      	 	 	
              1.3.2

            	
              words
                denoting persons include corporations, partnerships, associations
                of
                persons (whether incorporated or not) or governmental or
                quasi-governmental bodies or authorities and vice
                versa;

            

    

     

    
      	 	 	
              1.3.3

            	
              references
                to Clauses are references to clauses of this Guarantee and
                Indemnity;

            

    

     

    
      	 	 	
              1.3.4

            	
              references
                to this Guarantee and Indemnity include the recitals to this Guarantee
                and
                Indemnity;

            

    

     

    
      	 	 	
              1.3.5

            	
              the
                headings and contents page(s) are for the purpose of reference only,
                have
                no legal or other significance, and shall be ignored in the interpretation
                of this Guarantee and Indemnity;

            

    

     

    
      	 	 	
              1.3.6

            	
              reference
                to any document (including, without limitation, to any of the Security
                Documents) are, unless the context otherwise requires, references
                to that
                document as amended, supplemented, novated or replaced from time
                to
                time;

            

    

     

    
      	 	 	
              1.3.7

            	
              references
                to statutes or provisions of statutes are references to those statutes,
                or
                those provisions, as from time to time amended, replaced or re-enacted;
                and

            

    

     

    
      	 	 	
              1.3.8

            	
              references
                to any Credit Party include its successors, transferees and
                assignees.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                2

              	
                Representations and Warranties

              

      

       

    

    The
      Guarantor represents and warrants to the Security Agent at the date of this
      Guarantee and Indemnity and (by reference to the facts and circumstances then
      pertaining) on each day throughout the Facility Period that:-

     

    
      	 	
              2.1

            	
              all
                representations and warranties given by the Borrowers in the Loan
                Agreement in respect of the Guarantor and/or the Guarantor's Security
                Documents are and will remain correct and none of them is or will
                become
                misleading; 

            

    

     

    
      	 	
              2.2

            	
              it
                is not necessary to ensure the legality, validity, enforceability
                or
                admissibility in evidence of any of the Guarantor's Security Documents
                that it be filed, recorded or enrolled with any court or other authority
                in any country or that any stamp, registration or similar tax be
                paid on
                or in relation to any of the Guarantor's Security Documents;
                

            

    

     

    
      	 	
              2.3

            	
              the
                Guarantor is not in breach of, or default under, any agreement of
                any sort
                binding on it or on all or any part of its assets;
                and

            

    

     

    
      	 	
              2.4

            	
              the
                Guarantor is not aware of any material facts or circumstances which
                have
                not been disclosed to the Security Agent and which might, if disclosed,
                have adversely affected the decision of a person considering whether
                or
                not to make loan facilities of the nature contemplated by the Loan
                Agreement available to the
                Borrowers.

            

    

    

      
        	
                3

              	
                Guarantee and Indemnity

              

      

       

    

    The
      Guarantor:-

     

    
      	 	
              3.1

            	
              irrevocably
                and unconditionally guarantees the due and punctual payment of each
                and
                every part of the Indebtedness in accordance with the terms of the
                Security Documents so that, if any of the Indebtedness is not paid
                when it
                is due and payable, whether on maturity or otherwise, the Guarantor
                will,
                immediately on demand, make such payment to the Security Agent in
                the
                manner specified by the Security Agent, together with interest at
                the
                Default Rate on the amount demanded from the date of demand until
                the date
                of payment, both before and after judgment;
                and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.2

            	
              agrees,
                as a separate and independent obligation, that, if any of the Indebtedness
                is not recoverable from the Guarantor under Clause 3.1 for any reason,
                the
                Guarantor will be liable as a principal debtor by way of indemnity
                for the
                same amount as that for which the Guarantor would have been liable
                had
                that Indebtedness been recoverable, and agrees to discharge its liability
                under this Clause 3.2 by making payment to the Security Agent
                immediately on demand together with interest at the Default Rate
                on the
                amount demanded from the date of demand until the date of payment,
                both
                before and after judgment.

            

    

    

      
        	
                4

              	
                Preservation of Guarantor's Liability

              

      

       

    

    
      	 	
              4.1

            	
              This
                Guarantee and Indemnity is a continuing security for the full amount
                of
                the Indebtedness from time to time until the expiry of the Facility
                Period.

            

    

     

    
      	 	
              4.2

            	
              Any
                Credit Party may without the Guarantor's consent and without notice
                to the
                Guarantor and without in any way releasing or reducing the Guarantor's
                Liabilities:-

            

    

     

    
      	 	
              4.2.1

            	
              amend,
                vary, novate, or replace any of the Security Documents (other than
                the
                Guarantor's Security Documents);
                and/or

            

    

     

    
      	 	
              4.2.2

            	
              agree
                with the Borrowers to increase or reduce the amount of the Loan,
                or vary
                the terms and conditions for its repayment or prepayment (including,
                without limitation, the rate and/or method of calculation of interest
                payable on the Loan); and/or

            

    

     

    
      	 	
              4.2.3

            	
              allow
                any time or other indulgence to any of the other Security Parties
                under or
                in connection with any of the Security Documents;
                and/or

            

    

     

    
      	 	
              4.2.4

            	
              renew,
                vary, release or refrain from enforcing any of the Security Documents
                (other than the Guarantor's Security Documents);
                and/or

            

    

     

    
      	 	
              4.2.5

            	
              compound
                with any of the other Security Parties;
                and/or

            

    

     

    
      	 	
              4.2.6

            	
              enter
                into, renew, vary or terminate any other agreement or arrangement
                with any
                of the other Security Parties; and/or

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.2.7

            	
              do
                or omit or neglect to do anything which might, but for this provision,
                operate to release or reduce the liability of the Guarantor under
                this
                Guarantee and Indemnity.

            

    

     

    
      	 	
              4.3

            	
              The
                Guarantor's Liabilities shall not be affected
                by:-

            

    

     

    
      	 	
              4.3.1

            	
              the
                absence of, or any defective, excessive or irregular exercise of,
                any of
                the powers of any of the other Security Parties; nor
                

            

    

     

    
      	 	
              4.3.2

            	
              any
                security given or payment made to any Credit Party by any of the
                other
                Security Parties being avoided or reduced under any law (whether
                English
                or foreign) relating to bankruptcy or insolvency or analogous circumstance
                in force from time to time; nor

            

    

     

    
      	 	
              4.3.3

            	
              any
                change in the constitution of the Guarantor or of any of the other
                Security Parties or of any Security Party or the absorption of or
                amalgamation by any Credit Party in or with any other entity or the
                acquisition of all or any part of the assets or undertaking of any
                Credit
                Party by any other entity; nor

            

    

     

    
      	 	
              4.3.4

            	
              the
                liquidation, administration, receivership, bankruptcy or insolvency
                of the
                Guarantor or any of the other Security Parties;
                nor

            

    

     

    
      	 	
              4.3.5

            	
              any
                of the Credit Documents (other than this Guarantee and Indemnity)
                being
                defective, void or unenforceable, or the failure of any other person
                to
                provide any Credit Party with any security, guarantee or indemnity
                envisaged by the Loan Agreement; nor

            

    

     

    
      	 	
              4.3.6

            	
              any
                composition, assignment or arrangement being made by any of the other
                Security Parties with any of its creditors;
                nor

            

    

     

    
      	 	
              4.3.7

            	
              anything
                which would, but for this provision, have released or reduced the
                liability of the Guarantor to any Credit Party.

            

    

     

    
      	 	
              4.4

            	
              Any
                Credit Party may continue the accounts of the Borrowers or open one
                or
                more new accounts for the Borrowers notwithstanding any demand under
                this
                Guarantee and Indemnity, and the Guarantor's liability at the date
                of
                demand shall not be released or affected by any subsequent payment
                into or
                out of any of the Borrowers' accounts with any Credit
                Party.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                5

              	
                Preservation of Credit
                  Parties' Rights

              

      

       

    

    
      	 	
              5.1

            	
              This
                Guarantee and Indemnity is in addition to any other security, guarantee
                or
                indemnity now or in the future held by any of the Credit Parties
                in
                respect of the Indebtedness, whether from the Borrowers or any of
                them,
                the Guarantor or any other person, and shall not merge with, prejudice
                or
                be prejudiced by, any such security, guarantee or indemnity or any
                contractual or legal right of any of the Credit
                Parties.

            

    

     

    
      	 	
              5.2

            	
              Any
                release, settlement, discharge or arrangement relating to the Guarantor's
                Liabilities shall be conditional on no payment, assurance or security
                received by any Credit Party in respect of the Indebtedness being
                avoided
                or reduced under any law (whether English or foreign) in force from
                time
                to time relating to bankruptcy, insolvency or any (in the opinion
                of the
                Security Agent) analogous circumstance, and, after any such avoidance
                or
                reduction, each Credit Party shall be entitled to exercise all of
                its
                rights, powers, discretions and remedies under or pursuant to the
                Guarantor's Security Documents and/or any other rights, powers,
                discretions or remedies which it would otherwise have been entitled
                to
                exercise, as if no release, settlement, discharge or arrangement
                had taken
                place.

            

    

     

    
      	 	
              5.3

            	
              Following
                the full payment of the Indebtedness, the Security Agent shall be
                entitled
                to retain the Guarantor's Security Documents until the Security Agent
                is
                satisfied in its discretion that no Credit Party will have to make
                any
                payment under any law referred to in
                Clause 5.2.

            

    

     

    
      	 	
              5.4

            	
              Until
                the expiry of the Facility Period the Guarantor shall not:-
                

            

    

     

    
      	 	
              5.4.1

            	
              be
                entitled to participate in any sums received by any Credit Party
                in
                respect of any of the Indebtedness;
                nor

            

    

     

    
      	 	
              5.4.2

            	
              be
                entitled to participate in any security held by any Credit Party
                in
                respect of any of the Indebtedness nor stand in the place of, or
                be
                subrogated for, any Credit Party in respect of any such security;
                nor

            

    

     

    
      	 	
              5.4.3

            	
              take
                any step to enforce any claim against any of the other Security Parties
                (or their respective estates or effects), nor claim or exercise any
                right
                of set off or counterclaim against any of the other Security Parties,
                nor
                make any claim in the bankruptcy or liquidation of any of the other
                Security Parties, in respect of any sums paid by the Guarantor to
                any
                Credit Party or in respect of any sum which includes the proceeds
                of
                realisation of any security held by any Credit Party under or pursuant
                to
                any of the Guarantor's Security Documents;
                nor

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.4.4

            	
              take
                any steps to enforce any other claim which it may have against any
                of the
                other Security Parties without the prior written consent of the Security
                Agent, and then only on such terms and subject to such conditions
                as the
                Security Agent may impose.

            

    

     

    
      	 	
              5.5

            	
              Any
                Credit Party may, but shall not be obliged to, resort for its own
                benefit
                to any other means of payment at any time and in any order it thinks
                fit
                without releasing or reducing the Guarantor's Liabilities.
                

            

    

     

    
      	 	
              5.6

            	
              Any
                Credit Party may enforce any of the Guarantor's Security Documents
                either
                before or after resorting to any other means of payment without entitling
                the Guarantor to any benefit from or share in any such other means
                of
                payment until the expiry of the Facility Period.
                

            

    

     

    
      	 	
              5.7

            	
              The
                Guarantor agrees that it is, and will throughout the Facility Period
                remain, a principal debtor in respect of the Guarantor's
                Liabilities.

            

    

     

    
      	 	
              5.8

            	
              No
                failure to exercise, nor any delay in exercising, on the part of
                any
                Credit Party, any right or remedy under the Guarantor's Security
                Documents
                shall operate as a waiver, nor shall any single or partial exercise
                of any
                right or remedy prevent any further or other exercise or the exercise
                of
                any other right or remedy. The rights and remedies provided in the
                Guarantor's Security Documents are cumulative and not exclusive of
                any
                rights or remedies provided by law.

            

    

    

      
        	
                6

              	
                Undertakings

              

      

       

    

    
      	 	
              6.1

            	
              The
                Guarantor shall pay to the Security Agent on demand on a full indemnity
                basis all costs and expenses incurred by any Credit Party in or about
                or
                incidental to the exercise by it of its rights under any of the
                Guarantor's Security Documents, together with interest at the Default
                Rate
                on the amount demanded from the date of demand until the date of
                payment,
                both before and after judgment. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.2

            	
              The
                Guarantor has not taken, and will not take without the prior written
                consent of the Security Agent (and then only on such terms and subject
                to
                such conditions as the Security Agent may impose), any security from
                any
                of the other Security Parties in connection with this Guarantee and
                Indemnity, and any security taken by the Guarantor notwithstanding
                this
                Clause shall be held by the Guarantor in trust for the Credit Parties
                absolutely as a continuing security for the Guarantor's
                Liabilities.

            

    

     

    
      	 	
              6.3

            	
              The
                Guarantor agrees to execute, at any time during the Facility Period,
                in
                favour of the Agent (as agent and security trustee of the Banks)
                pledges
                over and/or charges of all the Guarantor's right, title and interest
                in
                and to the shares of each of the Borrowers, and to execute and deliver
                to
                the Agent all documents which the Agent may require to obtain the
                full
                benefit of such pledges and/or
                charges.

            

    

     

    
      	 	
              6.4

            	
              The
                Guarantor shall supply to the Security Agent as soon as the same
                become
                available, but in any event within 180 days after the end of each
                of its
                financial years, its audited consolidated financial statements for
                that
                financial year, and with its unaudited semi-annual management accounts
                within 90 days of the end of the half year. Each set of financial
                statements shall be certified by a director of the Guarantor as fairly
                representing its financial condition as at the date at which those
                financial statements were drawn up and shall be prepared in accordance
                with generally accepted accounting principles in the Guarantor's
                jurisdiction of incorporation.

            

    

     

    
      	 	
              6.5

            	
              The
                Guarantor shall supply to the Security
                Agent:

            

    

     

    
      	 	
              6.5.1

            	
              all
                documents dispatched by the Guarantor to its shareholders (or any
                class of
                them) or its creditors generally at the same time as they are dispatched;
                and

            

    

     

    
      	 	
              6.5.2

            	
              promptly
                upon becoming aware of them, details of any litigation, arbitration
                or
                administrative proceedings which are current, threatened or pending
                against any of the Security Parties and which might, if adversely
                determined, have a material adverse effect on the business or financial
                condition of any of the Security Parties; and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.5.3

            	
              promptly,
                such further information regarding the financial condition, business
                and
                operations of any of the Security Parties as the Security Agent may
                reasonably request.

            

    

     

    
      	 	
              6.6

            	
              Financial
                covenants
                the Guarantor covenants with the Agent that it will, throughout the
                Facility Period,:-

            

    

     

    
      	 	
              6.6.1

            	
              maintain
                Liquid Assets of a minimum of US$5.0
                million;

            

    

     

    
      	 	
              6.6.2

            	
              maintain
                a Consolidated Net Worth of at least thirty million Dollars ($30,000,000)
                (to be tested quarterly by reference to the Guarantor's 10Q filings);
                and

            

    

     

    
      	 	
              6.6.3

            	
              maintain
                a Net Interest Coverage Ratio of at least 2.0 (to be tested quarterly,
                by
                reference to the Guarantor's 10Q
                filings).

            

    

    

      
        	
                7

              	
                Payments

              

      

       

    

    
      	 	
              7.1

            	
              All
                amounts payable by the Guarantor under or pursuant to any of the
                Guarantor's Security Documents shall be paid to such accounts at
                such
                banks as the Security Agent may from time to time direct to the Guarantor
                in the relevant currency in same day funds for immediate value. Payment
                shall be deemed to have been received on the date on which the Security
                Agent receives authenticated advice of receipt, unless that advice
                is
                received by the Security Agent on a day other than a Business Day
                or at a
                time of day (whether on a Business Day or not) when the Security
                Agent in
                its discretion considers that it is impossible or impracticable to
                utilise
                the amount received for value that same day, in which event the payment
                in
                question shall be deemed to have been received on the Business Day
                next
                following the date of receipt of advice by the Security
                Agent.

            

    

     

    
      	 	
              7.2

            	
              All
                payments to be made by the Guarantor pursuant to any of the Guarantor's
                Security Documents shall, subject only to Clause 7.3, be made free
                and
                clear of and without deduction for or on account of any taxes or
                other
                deductions, withholdings, restrictions, conditions or counterclaims
                of any
                nature, and the Guarantor will not claim any equity in respect of
                any
                payment due from it to any Credit Party under or in relation to any
                of the
                Guarantor's Security Documents. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.3

            	
              If
                at any time any law requires (or is interpreted to require) the Guarantor
                to make any deduction or withholding from any payment, or to change
                the
                rate or manner in which any required deduction or withholding is
                made, the
                Guarantor will promptly notify the Security Agent and, simultaneously
                with
                making that payment, will pay whatever additional amount (after taking
                into account any additional taxes on, or deductions or withholdings
                from,
                or restrictions or conditions on, that additional amount) is necessary
                to
                ensure that, after making the deduction or withholding, each relevant
                Credit Party receives a net sum equal to the sum which it would have
                received had no deduction or withholding been made.
                

            

    

     

    
      	 	
              7.4

            	
              If
                at any time the Guarantor is required by law to make any deduction
                or
                withholding from any payment to be made by it pursuant to any of
                the
                Guarantor's Security Documents, the Guarantor will pay the amount
                required
                to be deducted or withheld to the relevant authority within the time
                allowed under the applicable law and will, no later than thirty days
                after
                making that payment, deliver to the Security Agent an original receipt
                issued by the relevant authority, or other evidence acceptable to
                the
                Security Agent, evidencing the payment to that authority of all amounts
                required to be deducted or
                withheld.

            

    

     

    
      	 	
              7.5

            	
              Interest
                will be payable both before and after judgment on a daily basis and
                on the
                basis of a 360 day year and compounded at such intervals as the Security
                Agent shall in its discretion determine.

            

    

     

    
      	 	
              7.6

            	
              Any
                certificate or statement signed by an authorised signatory of the
                Security
                Agent purporting to show the amount of the Indebtedness or of the
                Guarantor's Liabilities (or any part of any of them) or any other
                amount
                referred to in any of the Credit Documents shall, save for manifest
                error
                or on any question of law, be conclusive evidence as against the
                Guarantor
                of that amount.

            

    

    

      
        	
                8

              	
                Currency

              

      

       

    

    
      	 	
              8.1

            	
              The
                Guarantor's liability under this Guarantee and Indemnity is to discharge
                the Indebtedness in the currency in which it is expressed to be payable
                (the "Agreed
                Currency").

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              8.2

            	
              If
                at any time any Credit Party receives (including by way of set off)
                any
                payment by or on behalf of the Guarantor in a currency other than
                the
                Agreed Currency, that payment shall take effect as a payment to that
                Credit Party of the amount in the Agreed Currency which that Credit
                Party
                is able to purchase (after deduction of any relevant costs) with
                the
                amount of the payment so received in accordance with its usual practice.
                

            

    

     

    
      	 	
              8.3

            	
              To
                the extent that any payment to any Credit Party (whether by the Guarantor
                or any other person and whether under any judgment or court order
                or
                otherwise) in a currency other than the Agreed Currency shall on
                actual
                conversion into the Agreed Currency fall short of the relevant liability
                of the Borrowers expressed in the Agreed Currency, then the Guarantor
                as a
                separate and independent obligation will indemnify that Credit Party
                against the shortfall. 

            

    

    

      
        	
                9

              	
                Set-Off
                  and Lien

              

      

       

    

    
      	 	
              9.1

            	
              The
                Guarantor irrevocably authorises each Credit Party at any time to
                set off
                without notice any sums then due and payable by the Guarantor to
                that
                Credit Party under this Guarantee and Indemnity (irrespective of
                the
                branch or office, currency or place of payment) against any credit
                balance
                from time to time standing on any account of the Guarantor (whether
                current or otherwise, whether or not subject to notice and whether
                or not
                that credit balance is then due to the Guarantor) with any branch
                of to
                that Credit Party in or towards satisfaction of the Guarantor's
                Liabilities and, in the name of that Credit Party or the Guarantor,
                to do
                all acts (including, without limitation, converting or exchanging
                any
                currency) which may be required to effect such set-off.
                

            

    

     

    
      	 	
              9.2

            	
              Each
                Credit Party shall have a lien on and be entitled to retain and realise
                as
                additional security for any sums then due and payable by the Guarantor
                to
                that Credit Party under this Guarantee and Indemnity any cheques,
                drafts,
                bills, notes or negotiable or non-negotiable instruments and any
                stocks,
                shares or marketable or other securities and property of any kind
                of the
                Guarantor (or of the relevant Credit Party as agent or nominee of
                the
                Guarantor) from time to time held by that Credit Party, whether for
                safe
                custody or otherwise.

            

    

     

    
      	 	
              9.3

            	
              The
                Guarantor irrevocably authorises each Credit Party at any time to
                use the
                whole or any part of any credit balance from time to time standing
                on any
                of the Guarantor's accounts with any branch of that Credit Party
                to
                purchase the Agreed Currency as if it were a receipt in accordance
                with
                Clause 8. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.4

            	
              Despite
                any term to the contrary in relation to any deposit or credit balance
                at
                any time on any account of the Guarantor with any Credit Party, no
                such
                deposit or credit balance shall be repayable or capable of being
                assigned,
                mortgaged, charged or otherwise disposed of or dealt with by the
                Guarantor
                until the Guarantor's Liabilities have been discharged in full, but
                each
                Credit Party may from time to time permit the withdrawal of all or
                any
                part of any such deposit or balance without affecting the continued
                application of this Clause.

            

    

    

      
        	
                10

              	
                Application
                  of Moneys

              

      

       

    

    
      	 	
              10.1

            	
              All
                sums which any Credit Party (other than the Security Agent) receives
                (including by way of set off) under or in connection with any of
                the
                Guarantor's Security Documents, otherwise than by payment from the
                Security Agent, shall be paid to the Security Agent immediately on
                receipt, and that payment to the Security Agent shall be deemed to
                have
                been made by the Guarantor rather than by the receiving Credit
                Party.

            

    

     

    
      	 	
              10.2

            	
              All
                sums which the Security Agent receives under or in connection with
                any of
                the Guarantor's Security Documents shall, unless otherwise agreed
                by the
                Security Agent or otherwise provided in the Loan Agreement, be applied
                by
                the Security Agent in or towards satisfaction, or by way of retention
                on
                account, of the Guarantor's Liabilities, in such manner as the Security
                Agent may in its discretion
                determine.

            

    

     

    
      	 	
              10.3

            	
              The
                Security Agent may place any money received by it under or in connection
                with any of the Guarantor's Security Documents to the credit of a
                suspense
                account on such terms and subject to such conditions as the Security
                Agent
                may in its discretion determine for so long as the Security Agent
                thinks
                fit without any obligation in the meantime to apply that money in
                or
                towards discharge of the Indebtedness, and, despite such payment,
                the
                Security Agent may claim against any of the other Security Parties
                or
                prove in the bankruptcy, liquidation or insolvency of any of the
                other
                Security Parties for the whole of the Indebtedness at the date of
                the
                Security Agent's demand for payment pursuant to this Guarantee and
                Indemnity, together with all interest, commission, charges and expenses
                accruing subsequently.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                11

              	
                Partial
                  invalidity

              

      

       

    

    If,
      at
      any time, any provision of any of the Guarantor's Security Documents is or
      becomes illegal, invalid or unenforceable in any respect under any law of any
      jurisdiction, neither the legality, validity or enforceability of the remaining
      provisions nor the legality, validity or enforceability of such provision under
      the law of any other jurisdiction will in any way be affected or
      impaired.

    

      
        	
                12

              	
                Further
                  Assurance

              

      

       

    

    The
      Guarantor agrees that from time to time on the written request of the Security
      Agent it will immediately execute and deliver to the Security Agent all further
      documents which the Security Agent may require for the purpose of perfecting
      or
      protecting the security intended to be created by the Guarantor's Security
      Documents. 

    

      
        	
                13

              	
                Miscellaneous

              

      

       

    

    
      	 	
              13.1

            	
              All
                the covenants and agreements of the Guarantor in this Guarantee and
                Indemnity shall bind the Guarantor and its successors and permitted
                assignees and shall inure to the benefit of the Credit Parties and
                their
                respective successors, transferees and
                assignees.

            

    

     

    
      	 	
              13.2

            	
              The
                representations and warranties on the part of the Guarantor contained
                in
                this Guarantee and Indemnity shall survive the execution of this
                Guarantee
                and Indemnity.

            

    

     

    
      	 	
              13.3

            	
              No
                variation or amendment of this Guarantee and Indemnity shall be valid
                unless in writing and signed on behalf of the Guarantor and the Security
                Agent.

            

    

     

    
      	 	
              13.4

            	
              A
                person who is not a party to this Guarantee and Indemnity 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 and
                Indemnity.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                14

              	
                Notices

              

      

       

    

    The
      provisions of clause 16 of the Loan Agreement shall apply (mutatis mutandis)
      to
      this Guarantee and Indemnity as if it were set out in full with references
      to
      this Guarantee and Indemnity substituted for references to the Loan Agreement
      and with references to the Guarantor substituted for references to the
      Borrowers.

    

      
        	
                15

              	
                Counterparts

              

      

       

    

    This
      Guarantee and Indemnity may be executed in any number of counterparts, and
      this
      has the same effect as if the signatures on the counterparts were on a single
      copy of this Guarantee and Indemnity. 

    

      
        	
                16

              	
                Law and Jurisdiction

              

      

       

    

    
      	 	
              16.1

            	
              This
                Guarantee and Indemnity shall in all respects be governed by and
                interpreted in accordance with English
                law.

            

    

     

    
      	 	
              16.2

            	
              For
                the exclusive benefit of the Security Agent, the Guarantor irrevocably
                agrees that the courts of England are to have jurisdiction to settle
                any
                disputes which may arise out of or in connection with this Guarantee
                and
                Indemnity and that any proceedings may be brought in those courts.
                

            

    

     

    
      	 	
              16.3

            	
              Nothing
                contained in this Clause shall limit the right of the Security Agent
                to
                commence any proceedings against the Guarantor in any other court
                of
                competent jurisdiction nor shall the commencement of any proceedings
                against the Guarantor in one or more jurisdictions preclude the
                commencement of any proceedings in any other jurisdiction, whether
                concurrently or not.

            

    

     

    
      	 	
              16.4

            	
              The
                Guarantor irrevocably waives any objection which it may now or in
                the
                future have to the laying of the venue of any proceedings in any
                court
                referred to in this Clause and any claim that those proceedings have
                been
                brought in an inconvenient or inappropriate forum, and irrevocably
                agrees
                that a judgment in any proceedings commenced in any such court shall
                be
                conclusive and binding on it and may be enforced in the courts of
                any
                other jurisdiction.

            

    

     

    
      	 	
              16.5

            	
              Without
                prejudice to any other mode of service allowed under any relevant
                law, the
                Guarantor:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              16.5.1

            	
              irrevocably
                appoints Marine Legal Services Limited as its agent for service of
                process
                in relation to any proceedings before the English courts;
                and

            

    

     

    
      	 	 	
              16.5.2

            	
              agrees
                that failure by a process agent to notify the Guarantor of the process
                will not invalidate the proceedings
                concerned.

            

    

     

    IN WITNESS
      of
      which
      this Guarantee and Indemnity has been duly executed and delivered as a deed
      the
      day and year first before written.

    
 

    
      	
              SIGNED SEALED
                and
                DELIVERED

            	
              )

            
	
              as
                a
                DEED 

            	
              )

            
	
              by
                MC
                SHIPPING INC.

            	
              )

            
	
              acting
                by

            	
              )

            
	___________________________________	
              )

            
	
              its
                duly authorised

            	
              )

            
	 	
              )

            
	
              in
                the presence of:-

            	
              )Exhibit 10.1

    
      

    

    SECOND
      AMENDMENT TO

     

    AUBURN
      CORPORATE CENTER I

    OFFICE
      LEASE

     

    This
      Second Amendment to Office Lease (the Second Amendment) is made as of March
      15th,
      2006 by
      and between Fana Auburn, LLC, a Washington Limited Liability Company
      (“Landlord”),
      and
      Zones, Inc., a Washington corporation (“Tenant”).
      As
      parties hereto, Landlord and Tenant agree:

     

    RECITALS

     

    
      	
              A.

            	
              Landlord
                and Tenant have entered into that certain Office Lease, dated as
                of
                June 9, 2003 (the “Lease”),
                wherein Tenant leased from Landlord that office space consisting
                of
                approximately 106,308 square feet of the Building located at 1102
                15th
                Street SW, Auburn, Washington, such leased premises are more particularly
                described and depicted in the Lease. The Building is now commonly
                known as
                Auburn Corporate Center I. Subsequently, through lease amendment
                No. 1,
                the lease premises was re-defined as 106,273 rentable square
                feet.

            

    

    

    
      	
              B.

            	
              The
                parties now desire to increase the rentable square feet located on
                the
                first floor by approximately 18,923 square feet and to incorporate
                a lease
                inducement provision. The final size and location of the additional
                rentable square feet shall be determined by the actual space plan
                per BOMA
                standards.

            

    

    

    NOW,
      THEREFORE, effective January 1st,
      2007,
      the parties covenant and agree as follows:

     

    
      	
              1.

            	
              Section
                1.4. - Premises, is replaced entirely as
                follows:

            

    

     

    Premises:

     

    Approximately
      125,196 rentable square feet located in that certain building with an address
      of
      1102 15th
      Street
      SW, Auburn, Washington and commonly referred to as Auburn Corporate Center
      I and
      located on Lot A of Auburn Lot Line Adjustment No. LLA-0004-91 recorded under
      Recording No. 9104171400, situated in Auburn, Washington (said Parcel, together
      with said Building, being herein referred to collectively as the “Property”), as
      such leased premises are more particularly described and/or depicted on Exhibit
      A-1 attached hereto and incorporated herein by this reference (“Premises”). The
      Premises includes the entire second floor of the Building other than 1,624
      square feet of common areas. The balance of the Premises shall be located on
      the
      first floor of the building, as shown in Exhibit A-1. In addition to Tenant’s
      rights to use and occupy the Premises as hereinafter specified, Tenant shall
      have non-exclusive rights to use the Common Area (as defined in Section 1.16
      below), but shall not have any rights to use the roof, exterior walls or utility
      raceways of the Building. Notwithstanding anything contained herein to the
      contrary, Tenant shall have the exclusive right of use of the two conference
      rooms located adjacent to the main lobby. The Property is more particularly
      described on Exhibit A-2 attached hereto. The Auburn 400 Corporate Park,
      Division One is referred to in this Lease as the “Project”. All square footage
      areas refereed to in this paragraph 1.4 may be confirmed by either party using
      current BOMA standards. If such measurements indicate that the Premises are
      larger or smaller than 125,196 rentable square feet, Annual Base Rent and
      Tenant’s Share (as defined in this Lease) shall be adjusted
      accordingly.

    

      ___
        Landlord’s Initials

      Tenant’s
        Initials

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              2.

            	
              Section
                1.5 - Term, is replaced as
                follows:

            

    

     

    Term:

     

    1.5(a)
      -
      For the 106,273 Square Foot Portion of the Premises:

    Eleven
      (11) years commencing on September 1st, 2003 and expiring on August 31st,
      2014.

    

    1.5(b)
      -
      For the 18,923 Square Foot Portion of the Premises:

    Ninety
      two (92) months commencing on January 1st, 2007 and expiring on August 31st,
      2014. 

    

    Options
      to Extend are fully addressed in Sections 3.2 and 3.3.

     

    
      	
              3.

            	
              Section
                1.7 - Initial Annual Base Rent, is replaced as follows:
                

            

    

     

    Initial
      Annual Base Rent:

     

    1.7(a)
      -
      With regard to the 106,273 Rentable Square Foot portion:

     

    On
      and
      after the Commencement Date, Tenant shall pay Annual Base Rent during each
      year
      of the Lease Term as follows, all such rent being based on 106,273 rentable
      square feet of space in the Premises; provided, however, the reference to “w/o
      pocket” refers to Tenant’s right under Paragraph 2.3 to space pocket a
      designated area without occupying it or paying rent on it and the phrase
“w/pocket” refers to Tenant’s obligation under Paragraph 2.3 to pay rent on such
      space upon occupancy during the first 24 months of the lease.

    
      

        ___
          Landlord’s Initials

        Tenant’s
          Initials

         

      

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              Term

            	 	
              Annual
                Base Rent per

              Rentable
                Square Foot, NNN

            	 	
              Total
                Annual 

              Base
                Rent, NNN

            	 	
              Monthly
                Installments

              of
                Base Rent, NNN

            	 
	
              09/01/03-08/31/04

            	 	
              $

            	
              0.00

            	 	
              $

            	
              0.00

            	 	
              $

            	
              0.00

            	 
	
              09/01/04-08/31/05

              (w/o
                pocket)

            	 	
              
              

              $

            	
              
              

              9.45

            	 	
              
              

              $

            	
              
              

              970,070.85

            	 	
              
              

              $

            	
              
              

              80,839.24

            	 
	
              09/01/04-08/31/05

              (w/
                pocket)

            	 	
              
              

              $

            	
              
              

              9.45

            	 	
              
              

              $

            	
              
              

              1,004,298.75

            	 	
              
              

              $

            	
              
              

              83,691.56

            	 
	
              09/01/05-08/31/06

            	 	
              $

            	
              9.70

            	 	
              $

            	
              1,030,867.50

            	 	
              $

            	
              85,905.63

            	 
	
              09/01/06-08/31/07

            	 	
              $

            	
              9.95

            	 	
              $

            	
              1,057,436.25

            	 	
              $

            	
              88,119.69

            	 
	
              09/01/07-08/31/08

            	 	
              $

            	
              10.20

            	 	
              $

            	
              1,084,005.00

            	 	
              $

            	
              90,333.75

            	 
	
              09/01/08-08/31/09

            	 	
              $

            	
              10.45

            	 	
              $

            	
              1,110,573.75

            	 	
              $

            	
              92,547.81

            	 
	
              09/01/09-08/31/10

            	 	
              $

            	
              10.70

            	 	
              $

            	
              1,137,142.50

            	 	
              $

            	
              94,761.88

            	 
	
              09/01/10-08/31/11

            	 	
              $

            	
              10.95

            	 	
              $

            	
              1,163,711.25

            	 	
              $

            	
              96,975.94

            	 
	
              09/01/11-08/31/12

            	 	
              $

            	
              11.20

            	 	
              $

            	
              1,190,280.00

            	 	
              $

            	
              99,190.00

            	 
	
              09/01/12-08/31/13

            	 	
              $

            	
              11.45

            	 	
              $

            	
              1,216,848.75

            	 	
              $

            	
              101,404.06

            	 
	
              09/01/13-08/31/14

            	 	
              $

            	
              11.70

            	 	
              $

            	
              1,243,417.50

            	 	
              $

            	
              103,618.13

            	 

    

    

    1.7(b)
      -
      With regard to the 18,923 Rentable Square Foot portion:

     

    On
      and
      after the Commencement Date as defined in Section 1.5(b), Tenant shall pay
      additional Annual Base Rent during each year of the Lease Term as follows,
      all
      such additional rent being based on 18,923 additional rentable square feet
      of
      space in the Premises.

     

    
      	
              Term

            	 	
              Annual
                Base Rent per

              Rentable
                Square Foot, NNN

            	 	
              Total
                Annual 

              Base
                Rent, NNN

            	 	
              Monthly
                Installments

              of
                Base Rent, NNN

            	 
	
              01/01/07-08/31/14

            	 	
              $

            	
              13.67

            	 	
              $

            	
              258,677.41

            	 	
              $

            	
              21,556.45

            	 

    

    

     

    1.7(c)
      -
      With regard to the entire Rentable Square Foot portion(s):

     

    Each
      year’s Annual Base Rent is payable in twelve equal installments, payable monthly
      in advance. Tenant shall pay Landlord for all Operating Expenses accruing under
      this Lease (herein, “NNN”), at all times from and after the Commencement
      Date.

     

    
      	
              4.

            	
              Section
                39. - Lease Inducement is added as
                follows:

            

    

     

    Lease
      Inducement:

     

    Upon
      the
      commencement date, as defined in Section 1.5(b) Landlord shall pay Tenant a
      Lease Inducement fee of Twenty Five Thousand & 00/100 Dollars
      ($25,000.00).

     

    
      	
              5.

            	
              Section
                3.4 - Termination Option, is replaced as
                follows:

            

    

     

    Termination
      Option:

    
      

        ___
          Landlord’s Initials

        Tenant’s
          Initials

         

      

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Provided
      that Tenant is not in default hereunder, Landlord grants Tenant a One-Time
      Option to Terminate the Lease as of August 31st,
      2011.

     

    The
      Termination Option must be exercised by delivery of written notice to Landlord
      no later than August 31st,
      2010.

     

    As
      a
      Condition to the effectiveness of the Termination Option, Tenant shall pay
      and
      deliver to Landlord a Termination Fee of One Million, Seven Hundred, Seventy
      Five Thousand & 00/100 Dollars ($1,775,000.00) not later than May
      31st,
      2011.

     

    
      	
              6.

            	
              Section
                1.17 - Tenant’s Share is amended as
                follows:

            

    

     

    Tenant’s
      Share:

     

    Notwithstanding
      anything contained herein to the contrary, upon the commencement date, as
      defined in Section 1.5(b), Tenant’s Percentage Share of all Operating Expenses
      (NNN) shall be calculated on the percentage of it’s rentable square feet
      compared to the total rentable square feet of the building.

     

    This
      provision shall apply whenever and wherever any reference to “Tenant’s Share
      Percentage”, that being less than 100%, may appear within the Lease. All other
      language regarding Tenant’s Share, Operating Expenses (NNN) and definitions
      thereof shall remain unchanged and as originally written in the
      Lease.

     

    
      	
              7.

            	
              Section
                1.2 - Landlord’s Address, is replaced as
                follows:

            

    

     

    Fana
      Auburn, LLC

    16400
      Southcenter Parkway, #204

    Tukwila,
      WA 98188

    

    
      	
              8.

            	
              Section
                1.3 - Tenant’s Address, is replaced as
                follows:

            

    

     

    Zones,
      Inc

    Attn:
      Ronald McFadden

    1102
      15th
      Street
      SW, Ste #102

    Auburn,
      WA 98001

    

     

    -
      The
      remainder of this page is intentionally left blank - 

    

      ___
        Landlord’s Initials

      Tenant’s
        Initials

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    EXCEPT
      AS
      modified by this Amendment, the Lease remains in full force and effect in
      accordance with all of its terms and provisions.

     

    IN
      WITNESS WHEREOF, Landlord and Tenant have executed this Second Amendment as
      of
      the day and year first above written.

     

    
      	
              LANDLORD

            	 	
              TENANT

            
	 	 	 	 	 
	
              FANA
                AUBURN, LLC

            	 	
              ZONES,
                INC.

            
	
              A
                WASHINTON LIMITED LIABILITY COMPANY

            	 	
              A
                WASHINGTON CORPORATION

            
	 	 	 	 	 
	
              By

            	
              /Michael
                W. Chase

            	 	
              By:

            	
              /Ronald
                McFadden

            
	 	 	 	 	 
	
              Title:

            	
              Authorized
                Signatory

            	 	
              Title:

            	
              Authorized
                Signatory

            
	
              Date:

            	
              May
                1, 2006

            	 	
              Date:

            	
              April
                6, 2006

            

    

    

    

      ___
        Landlord’s Initials

      Tenant’s
        Initials

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    ACKNOWLEDGEMENT
      OF LANDLORD

    

    
      	
              State
                of Washington

            	
              )

            	 
	
               

            	
              )

            	
              ss.

            
	
              County
                of King

            	
              )

            	 

    

    

    

    On
      this
      ____ day of _______, _____, before me, a Notary Public in and for the State
      of
      Washington, personally appeared __________ to me known to be the _____________
      of __________, and acknowledged said lease to be free and voluntary act and
      deed
      of said entity in his capacity as _____, and on oath stated that he was
      authorized and did execute the said lease for the uses and purposes therein
      mentioned.

    

    IN
      WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
      day and year first above written

    

    

    

    
      	 	 	 
	 	
              Notary
                (public in and for the State of 

            	 
	 	
              Washington,
                residing at:

            	 
	 	 	 
	 	 	 

    

    

    

    ACKNOWLEDGMENT
      OF TENANT

     

    
      	
              State
                of Washington

            	
              )

            	 
	
               

            	
              )

            	
              ss.

            
	
              County
                of King

            	
              )

            	 

    

    

    On
      this
      ____ day of _______, _____, before me, a Notary Public in and for the State
      of
      Washington, personally appeared __________ to me known to be the _____________
      of __________, and acknowledged said lease to be free and voluntary act and
      deed
      of said entity in his capacity as _____, and on oath stated that he was
      authorized and did execute the said lease for the uses and purposes therein
      mentioned. 

      IN
      WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
      day and year first above written

    

    

    

    
      	 	
               

            	 
	 	
              Notary
                (public in and for the State of 

            	 
	 	
              Washington,
                residing at:

            	 
	 	 	 
	 	
               

            	 

    

    
      

        ___
          Landlord’s Initials

        Tenant’s
          Initials

      

    

     

    6

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