Document:

Exhibit 10.4.6

 

Part I

 

SHIP MANAGEMENT AGREEMENT

 

1.               Date
of Agreement

 

October 6, 2005

 

2.               Owners
(name, place of registered office and law of registry) (CI. 1)

 

Name

Rebecca
Tanker Corporation

 

Place of
registered office

Majuro,
Marshall Islands

 

Law of
registry

Marshall
Islands

 

3.               Managers
(name, place of registered office and law of registry) (CI. 1)

 

Name

Tanker
Management Ltd.

 

Place of
registered office

England

 

Law of
registry

England

 

4.               Day
and year of commencement of Agreement (CI. 2)

 

See Clause 2

 

5.               Crew
management (state “yes” or “no” as agreed) (CI. 3.1)

 

Yes

 

6.               Technical
Management (state “yes” or “no” as agreed) (CI. 3.2)

 

Yes

 

7.               Commercial
Management (state “yes” or “no” as agreed) (CI. 3.3)

 

No.

 

8.               Insurance
Arrangements (state “yes” or “no” as agreed) (CI. 3.4)

 

Yes

 

9.               Accounting
Services (state “yes” or “no” as agreed) (CI. 3.5)

 

Yes, as
per Clause 3.5 only

 

10.         Sale
or purchase of the Vessel (state “yes” or “no” as agreed) (CI. 3.6)

 

No

 

11.         Provisions
(state “yes” or “no” as agreed) (CI. 3.7)

 

Yes

 

12.         Bunkering
(state “yes” or “no” as agreed) (CI. 3.8)

 

No

 

13.         Chartering
Services Period (only to be filled in if “yes” stated in Box 7) (CI. 3.3(i))

 

N/A

 

14.         Owners’
Insurance

 

See Clause
6.3

 

15.         Annual
Management Fee

 

See Clause
8.1

 

16.         Severance
Costs (state maximum amount) (CI. 8.4(ii))

 

None

 

17.         Day
and year of termination of Agreement (CI. 17)

 

See Clause
17

 

18.         Law
and Arbitration

 

See Clause 19

 

19.         Notices
(state postal and cable address, telex and telefax number for serving notice
and communication to the Owners (CI. 20)

 

Rebecca
Tanker Corporation

26 New Street

St. Helier, Jersey JE 23R4

Channel Islands

 

20.         Notices
(state postal and cable address, telex and telefax number for serving notice
and communication to the Managers) (CI. 20)

 

Tanker
Management Ltd.

Quorum 4, Balliol Business Park East, Benton Lane,

Newcastle upon Tyne NE 12 8EZ England

 

It is mutually agreed between the party stated in Box 2 and the
party stated in Box 3 that this Agreement consisting of PART I
and PART II and Schedules 1, 2 and 3 attached hereto, shall be
performed subject to the conditions contained herein.  In the event of a conflict of conditions, the
provisions of PART I shall prevail over those of PART II
and Schedules 1, 2 and 3 to the extent of such conflict but no further.

 

	
  Signature(s) (Owners)

  	
  Signature(s) (Managers)

  
	
   

  	
   

  
	
  REBECCA TANKER CORPORATION

  	
  TANKER MANAGEMENT LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ole Jacob Diesen

  	
   

  	
  By:

  	
  /s/ Ian Blackley

  	
   

  
	
   

  	
  Name: Ole Jacob Diesen

  	
   

  	
  Name: Ian Blackley

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  	
  Title: Director

  
								

 

 

PART II

Ship Management Agreement

 

1.              Definitions

 

In this
Agreement save where the context otherwise requires, the following words and
expressions shall have the meanings hereby assigned to them.

 

“Owners” means the party
identified in Box 2.

 

“Managers” means the
party identified in Box 3.

 

“Vessel” means the
M/T Rebecca, IMO Number 9043031, build in March 1994 by Hyundai Heavy
Industries Co., Ltd. in Ulsan, South Korea.

 

“Charter” means the time charter between the Owners and DHT Rebecca Aframax
Corporation dated October 6, 2005 relating to the Vessel.

 

“Crew” means the
Master, officers and ratings of the Vessel.

 

“Crew
Support Costs” means all expenses of a general nature
which are not particularly referable to any individual vessel for the time
being managed by the Managers and which are incurred by the Managers for the
purpose of providing an efficient and economic management service and, without
prejudice to the generality of the foregoing, shall include the cost of crew
standby pay, training schemes for officers and ratings, cadet training schemes,
sick pay, study pay, recruitment and interviews.

 

 “Crew Insurances” means
insurances against crew risks which shall include but not be limited to death,
sickness, repatriation, injury, shipwreck unemployment indemnity and loss of
personal effects.

 

“Management
Services” means the services specified in
subclauses 3.1 to 3.8 as indicated affirmatively in Boxes 5, 6, 8, 9 and 11.

 

“ISM Code” means the
International Management Code for the Safe Operation of Ships and for Pollution
Prevention as adopted by the International Maritime Organization (IMO) by
resolution A.741(18) or any subsequent amendment thereto.

 

“STCW 95” means the
International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent
amendment thereto.

 

2.              Appointment
of Managers

 

With
effect from the day and year of delivery of the Vessel to the Owners pursuant
to a Memorandum of Agreement between Owners and Third Aframax Tanker
Corporation dated September 20, 2005 and continuing unless and until
terminated as provided herein, the Owners hereby appoint the Managers and the
Managers hereby agree to act as the Managers of the Vessel.

 

3.              Basis of
Agreement

 

Subject
to the terms and conditions herein provided, during the period of this
Agreement, the Managers shall carry out Management Services in respect of the
Vessel as agents for and on behalf of the Owners.  The Managers shall have authority to take
such actions as they may from time to time in their absolute discretion
consider to be necessary to enable them to perform this Agreement in accordance
with sound ship management practice.

 

3.1                 Crew Management

 

(only applicable if agreed according to Box 5)

 

The
Managers shall provide suitably qualified Crew for the Vessel as required by
the Owners in accordance with the STCW 95 requirements, provision of which
includes but is not limited to the following functions:

 

(i)                                                             selecting
and engaging in Vessel’s Crew, including payroll arrangements, pension
administration, and insurances for the Crew;

 

(ii)                                                          ensuring
that the applicable requirements of the law of the flag of the Vessel are
satisfied in respect of manning levels, rank qualification and certification of
the Crew and employment regulations including Crew’s tax, social insurance,
discipline and other requirements;

 

(iii)                                                       ensuring
that all members of the Crew have passed a medical examination with a qualified
doctor certifying that they are fit for the duties for which they are engaged
and are in possession of valid medical certificates issued in accordance with
appropriate flag State requirements.  In
the absence of applicable flag State requirements the medical certificate shall
be dated not more than three months prior to the respective Crew members
leaving their country of domicile and maintained for the duration of their
service on board the Vessel;

 

(iv)                                                      ensuring
that the Crew shall have a command of the English language of a sufficient standard
to enable them to perform their duties safely;

 

(v)                                                         arranging
transportation of the Crew, including repatriation;

 

(vi)                                                      training of
the Crew and supervising their efficiency;

 

(vii)                                                   conducting
union negotiations;

 

(viii)                                                operating
the Managers’ drug and alcohol policy unless otherwise agreed;

 

(ix)                                                        If the
Owners complain of the conduct of any of the Crew, the Managers shall
immediately investigate the complaint. 
If the complaint proves to be well founded, Managers shall, without
delay, make a change in the appointments and the Managers shall in any event
communicate the result of their investigation to the Owners as soon as
possible.

 

3.2                 Technical Management

 

(only applicable if agreed according to Box 6)

 

The Managers
shall provide technical management which includes, but is not limited to, the
following functions:

 

(i)                                                             provision of
competent personnel to supervise the maintenance and general efficiency of the
Vessel;

 

(ii)                                                          arrangement
and supervision of dry dockings, repairs, alterations and the upkeep of the
Vessel necessary to ensure that the Vessel will comply with the requirements of
the Charter, the law of the flag of the Vessel and of the places where she
trades, and all requirements and recommendations of the classification society;

 

(iii)                                                       arrangement
of the supply of necessary stores, spares and lubricating oil and greases.  The level and time of the supply of such
items shall be based on that which a prudent owner of a vessel of the age and
characteristics of the Vessel (including but not limited its operating history,
planned maintenance and known wear and tear) would arrange so as to minimize
off-hire time and to undertake such maintenance as may safely be carried out at
sea by the crew;

 

(iv)                                                      appointment
of surveyors and technical consultants as the Managers may consider from time
to time to be necessary;

 

(v)                                                         development,
implementation and maintenance of a Safety Management System (SMS) in
accordance with the ISM Code (see subclause 4.2);

 

 

(vi)                                                      ensuring
that the Vessel receives at least two visits per year from one of the Managers’
technical superintendents; and.

 

(vii)                                                   arrangement
of oil company vetting so as to comply with the Owner’s obligations under the
Charter.

 

3.3                 Commercial Management

 

  N/A

 

3.4                 Insurance Arrangements

 

(only applicable if agreed according to Box 8)

 

The
Managers shall arrange insurances in accordance with Clause 6 subject to
the following:

 

Throughout
the term of this Agreement, the Managers shall consult with the Owners prior to
the time of each renewal of the Owners’ Insurances (as defined in Clause 6.1)
and, unless the Owners obtain insurance coverage from other parties as set
forth below in this Clause 3.4, the Managers shall secure coverage for the
Owners’ Insurances for the Vessel at the Owners’ expense through the Managers’
insurance program on coverage amounts (except for hull and machinery insurance in
which is subject to Clause 6.6 of this Agreement), terms and conditions that
the Managers shall determine.  The
Managers shall obtain insurance coverage for the Vessel through the Managers’
insurance program that is in accordance with the best practice of prudent
owners of vessels of a similar type to the Vessel, with first class insurance
companies, underwriters or associations. 
If the Owners can demonstrate that the insurance coverage provided by
the Managers is not in accordance with the preceding sentence and the Managers
do not make the amendments necessary for such coverage to meet such standards,
the Owners shall have the right to place the Owners’ Insurances through third
parties, provided that (x) the terms and conditions of the Owners’ Insurances
proposed by the Owners to be placed with third parties do not, in the
reasonable opinion of the Managers, impose any additional cost or liability on
the Managers under the Charter and (y) prior to placing the insurance through
third parties, Owners shall agree to indemnify Managers for any additional cost
or liability on the Managers under the Charter resulting from any such
insurance placement .  If the Owners
place any component policy of the Owners’ Insurances through third parties in
accordance with the preceding sentence, the Managers shall have the right to
terminate any other policy placed by it on behalf of the Owners, and (i) any
unearned premium advanced by the Owners shall be refunded to the Owners and (ii) any
premium due and any liability for calls for the period of coverage placed by
the Managers shall remain for the account of the Owners until fully discharged.

 

The
Managers shall arrange for the Owners’ Insurances to be in place as of the
effective date of this Agreement and shall maintain the insurance cover
existing immediately prior to such effective date at least until the discharge
of the cargo from its then current voyage.

 

3.5                 Accounting Services

 

(only applicable if agreed according to Box 9)

 

The
Managers shall maintain records relating to those expenditures incurred and
monies received in the performance of the Management Services that are necessary
for the settlement of accounts between the parties

 

3.6                 Sale or Purchase of the Vessel

 

 N/A.

 

3.7                 Provisions

 

(only applicable if agreed according to Box 11)

 

The
Managers shall arrange for the supply of provisions.

 

3.8                 Bunkering

 

N/A.

 

4.              Managers’
Obligations

 

4.1                 The Managers
undertake to use their best endeavours to provide the agreed Management
Services as agents for and on behalf of the Owners in accordance with sound
ship management practice customary in the trade and at least equivalent to the
standards followed with respect to other vessels for which the Managers provide
Management Services, if any, and to protect and promote the interests of the
Owners in all matters relating to the provision of services hereunder.  Provided, however, that the Managers in the
performance of their management responsibilities under this Agreement shall be
entitled to have regard to their overall responsibility in relation to all
vessels as may from time to time be entrusted to their management and in
particular, but without prejudice to the generality of the foregoing, the
Managers shall be entitled to allocate available supplies, manpower and
services in such manner as in the prevailing circumstances the Managers in
their absolute discretion consider to be fair and reasonable.

 

4.2                 Where the
Managers are providing Technical Management in accordance with sub-clause 3.2,
they shall procure that the requirements of the law of the flag of the Vessel
are satisfied and they shall in particular be deemed to be the “Company” as
defined by the ISM Code, assuming the responsibility for the operation of the Vessel
and taking over the duties and responsibilities imposed by the ISM Code when
applicable.

 

4.3                 The
Management Services as such term is used herein includes the discharge on
behalf of the Owners of the Owners’ technical and operational obligations to
charterers pursuant to the Charter, a copy of which has been supplied to the
Managers, including, but not limited to the Owners’ technical and operational
obligations under Clauses 73A and 75 of such Charter.

 

4.4                 Managers
shall maintain records of technical matters relating to the Vessel including
maintenance, repairs and equipment replacement (“Technical Vessel Matters”).   Three months after commencement of the
Management Services, or such other date as agreed to by the Managers and the
Owners, and quarterly thereafter, the Managers shall issue a report to the
Owners providing a summary of the Technical Vessel Matters carried out in the
previous quarter.

 

5.              Owners’
Obligations

 

5.1                 The Owners
shall pay all sums due to the Managers punctually in accordance with the terms
of this Agreement.

 

 

6.              Insurance
Policies

 

For so
long as the Managers continue to place the Owners’ Insurances (as defined
below) on behalf of the Owners in accordance with Clause 3.4 of this Agreement,
The Managers shall procure that:

 

6.1                 at the Owners’
expense, the Vessel is insured for not less than her sound market value or
entered for her full gross tonnage, as the case may be for:

 

(i)                                                             usual hull
and machinery marine risks (including crew negligence) and excess liabilities,

 

(ii)                                                          protection
and indemnity risks (including pollution risks and Crew Insurances), and

 

(iii)                                                       war risks
(including protection and indemnity and crew risks)

 

in each case in accordance with the best practice
of prudent owners of vessels of a similar type to the Vessel, with first class
insurance companies, underwriters or associations (“the Owners’ Insurances”);

 

6.2                 all premiums
and calls on the Owners’ Insurances are paid by their due date at Owners’
expense and deductibles up to the amount (per claim) of (i) $110,000 for hull
and machinery marine risks insurance and (ii) $100,000 for claims under
the “Running Down Clause” and the “Fixed and Floating Objects Clause” under the
protection and indemnity risks insurance  and $15,000 for all other protection and
indemnity claims shall be paid at the Managers’ expense.  In the event the level of deductibles set for
a policy period are increased above the amounts set forth in the preceding
sentence, whether by the action of the Owners, the Managers or the insurers, any
such incremental increase shall be for the Owners’ account.  The Owners shall be liable for the allocated
cost of any broker’s fee paid by the Managers as determined by the Mangers on a
fair and equitable basis.

 

6.3                 the Owners’
Insurances name the Managers and, subject to underwriters’ agreement, any third
party designated by the Managers as a joint assured, with full cover, with the Managers
obtaining cover in respect of each of the Owners’ Insurances on terms whereby
the Managers and any such third party are liable in respect of premiums or
calls arising in connection with the Owners’ Insurances.

 

6.4                 written
evidence is provided, to the reasonable satisfaction of the Owners, of Managers’
compliance with their obligations under Clause 6 within a
reasonable time of the commencement of the Agreement, and of each renewal date
and, if specifically requested, of each payment date of the Owners’ Insurances.

 

6.5                 loss of hire
insurance is maintained in accordance with Clause 29.

 

6.6                 the Managers
shall obtain hull and machinery insurance in accordance with Clause 6.1
based upon the sound market value as notified to the Managers by the Owners in
writing prior to the effective date of this Agreement.  The Owners shall notify the Managers in
writing if they reasonably require cover for a different value from time to
time, which shall not exceed 120% of the sound market value of the Vessel.  The Owners alone shall be responsible for
assessing and notifying the Managers of the necessary level of cover.

 

6.7            the Managers
shall obtain a certificate of financial responsibility in accordance with the
terms of the Charter, and any costs relating to such certificate shall be for
the Owners’ account.

 

7.              Income Collected
and Expenses Paid on Behalf of Owners

 

7.1                 All moneys
collected by the Managers under the terms of this Agreement (other than moneys
payable by the Owners to the Managers) and any interest thereon shall be held
to the credit of the Owners in a separate bank account.

 

7.2                 All expenses
incurred by the Managers under the terms of this Agreement on behalf of the
Owners (including expenses as provided in Clause 8) may be debited
against the Owners in the account referred to under sub-clause 7.1
but shall in any event remain payable by the Owners to the Managers on demand.

 

8.              Management
Fee

 

8.1                 The Owners
shall pay to the Managers for their services as Managers under this Agreement a
management fee as set forth in Clause 21 (the “Management Fee”).

 

8.2                 The Managers
shall, at no extra cost to the Owners, provide their own office accommodation,
office staff, facilities and stationery.

 

8.3                 In the event
of the appointment of the Managers being terminated by the Owners or the
Managers in accordance with the provisions of Clauses 18 and 22 other than by
reason of default by the Managers, or if the Vessel is lost, sold or otherwise
disposed of, in addition to any applicable Management Fee payments for the 90-day
notice period set forth in Clause 22, a one-time additional fee of $45,000,
which is to cover the Managers’ cancellation costs, shall be due and payable.

 

8.4                 Unless
otherwise agreed in writing all discounts and commissions obtained by the
Managers in the course of the management of the Vessel shall be credited to the
Managers.

 

9.              Budgets and
Management of Funds

 

N/A.

 

10.       Managers Right to Sub-Contract

 

The Managers shall not have the right to sub-contract any of their
obligations hereunder without the prior written consent of the Owners which
shall not be unreasonably withheld; provided however, that the Managers may (i) freely
assign any obligations hereunder to any affiliate of the Managers at any time
and (ii) utilize the services of third parties to fulfill the Managers’
obligations hereunder.  In the event of
such a sub-contract the Managers shall remain fully liable for the due
performance of their obligations under this Agreement.

 

11.       Responsibilities

 

11.1                   Force
Majeure - Neither the Owners nor the Managers
shall be under any liability for any failure to perform any of their
obligations hereunder by reason of any cause whatsoever of any nature or kind
beyond their reasonable control.

 

11.2                   Liability
to Owners - (i) Without prejudice to
sub-clause 11.1, the Managers shall be under no liability whatsoever to
the Owners for any loss, damage, delay or expense of whatsoever nature, whether
direct or indirect, (including but not limited to loss of profit arising out of
or in connection with detention of or delay to the Vessel) and howsoever
arising in the course of performance of the Management Services UNLESS same is proved to have resulted solely from the
negligence or wilful default of the Managers or their employees, or agents or
sub-contractors employed by them in connection with the Vessel, in which
case  (save where loss, damage, delay or
expense has resulted from the Managers’ personal act or omission committed with
the intent to cause same or recklessly and with knowledge that such loss,
damage, delay or expense would probably result)  the Managers’ liability for each incident or
series of incidents giving rise to a claim or claims shall never exceed a total
of $2 million.

 

 

(ii)  Notwithstanding anything that may appear to the
contrary in this Agreement, the Managers shall not be liable for any of the
actions of the Crew, even if such actions are negligent or wilful, except only
to the extent that they are shown to have resulted from a failure by the
Managers to discharge their obligations under sub-clause 3.1

 

11.3                   Indemnity - Except to
the extent and solely for the amount therein set out that the Managers would be
liable under sub-clause 11.2, the Owners hereby undertake to keep
the Managers and their employees, agents and sub-contractors indemnified and to
hold them harmless against all actions, proceedings, claims, demands or
liabilities whatsoever or howsoever arising which may be brought against them
or incurred or suffered by them arising out of or in connection with the
performance of the Agreement, and against and in respect of all costs, losses,
damages and expenses (including legal costs and expenses on a full indemnity
basis) which the Managers may suffer or incur (either directly or indirectly)
in the course of the performance of this Agreement.

 

11.4                   “Himalaya” - It is
hereby expressly agreed that no employee or agent of the Managers (including
every sub-contractor from time to time employed by the Managers) shall in any
circumstances whatsoever be under any liability whatsoever to the Owners for
any loss, damage or delay of whatsoever kind arising or resulting directly or
indirectly from any act, neglect or default on his part while acting in the
course of or in connection with his employment and, without prejudice to the
generality of the foregoing provisions in this Clause 11, every exemption,
limitation, condition and liberty herein contained and every right, exemption
from liability, defence and immunity of whatsoever nature applicable to the
Managers or to which the Managers are entitled hereunder shall also be
available and shall extend to protect every such employee or agent of the
Managers acting as aforesaid and for the purpose of all the foregoing
provisions of this Clause 11 the Managers are or shall be deemed to
be acting as agent or trustee on behalf and for the benefit of all persons who
are or might be their servants or agents from time to time (including
sub-contractors as aforesaid) and all such persons shall to this extent be or
be deemed to be parties to this Agreement.

 

12.       Documentation

 

Where the
Managers are providing Technical Management in accordance with sub-clause 3.2
and/or Crew Management in accordance with sub-clause 3.1, they
shall make available, upon Owners’ request, all documentation and records
related to the Safety Management System (SMS) and/or the Crew which the Owners
need in order to demonstrate compliance with the ISM Code and STCW 95 or
to defend a claim against a third party. 
The Owner shall make available, upon Managers’ request, all information,
documentation and records required under any flag state law, regulation or
international convention and to inform the Managers of any changes to those of
the Owner’s details that that are required in the Vessel’s continuous synopsis
record for the purposes of the ISPS Code .

 

13.       General Administration

 

13.1                   The Managers
shall handle and settle all claims arising out of the Management Services
hereunder and keep the Owners informed regarding any incident of which the
Managers become aware which gives or may give rise to claims or disputes
involving third parties; provided, that the settlement of any claims relating
to general average or total constructive loss must be done at the direction of
the Owners with the Owners’ involvement in such settlements..

 

13.2                   The Managers
shall, as instructed by the Owners, bring or defend actions, suits or
proceedings in connection with matters entrusted to the Managers according to
this Agreement.

 

13.3                   The Managers
shall also have power to obtain legal or technical or other outside expert
advice in relation to the handling and settlement of claims and disputes or all
other matters affecting the interests of the Owners in respect of the Vessel.

 

13.4                   The Owners
shall arrange for the provision of any necessary guarantee bond or other
security.

 

13.5                   Any costs
reasonably incurred by Managers in carrying out its obligations according to
Clause 13 in connection with matters entrusted to the Managers under this
Agreement shall be reimbursed by the Owners.

 

13.6                   The Managers
are authorized to receive sums payable by third parties to the Owners,
including, but not limited to the proceeds of insurance subject to Clause 30,
the settlement of claims and under any legal proceedings or arbitrations or any
settlement of claims.  Where the event(s)
which form the subject of such claims have caused the Managers expense under
this Agreement, the Managers are entitled to retain all or part of such
settlements equal to the amount expended by the Managers.

 

14.       Auditing

 

N/A

 

15.       Inspection of Vessel

 

The
Owners shall have the right at any time after giving reasonable notice to the
Managers to inspect the Vessel for any reason they consider necessary. The
Owners and Managers agree to meet on a quarterly basis at the offices of the
Managers to discuss the technical management of the Vessel.

 

16.       Compliance with Laws and Regulations

 

The
Managers will not do or permit to be done anything which might cause any breach
or infringement of the laws and regulations of the Vessel’s flag, or of the
places where she trades.

 

17.       Duration of the Agreement

 

This Agreement
shall come into effect in accordance with Clause 2 and terminate in
accordance with Clauses 18 and 22.

 

18.       Termination

 

18.1                   Owners’
default

 

(i)                                                             The Managers
shall be entitled to terminate the Agreement with immediate effect by notice in
writing if any moneys payable by the Owners under this Agreement shall not have
been received in the Managers’ nominated account within ten running days of
receipt by the Owners of the Managers’ written request or if the Vessel is
repossessed by the Mortgagees.

 

(ii)                                                          If the Owners:
proceed with the employment of or continue to employ the Vessel in the carriage
of contraband, blockade running, or in an unlawful trade, or on a voyage which
in the reasonable opinion of the Managers is unduly hazardous or improper, the
Managers may give notice of the default to the Owners, requiring them to remedy
it as soon as practically possible.  In
the event that the Owners fail to remedy it within a reasonable time to the
satisfaction of

 

 

the Managers, the Managers shall be entitled
to terminate the Agreement with immediate effect by notice in writing.

 

18.2                   Managers’
Default

 

If the
Managers fail to meet their obligations under Clauses 3 and 4
of this Agreement for any reason within the control of the Managers, the Owners
may give notice to the Managers of the default, requiring them to remedy it as
soon as practically possible.  In the
event that the Managers fail to remedy it within a reasonable time to the
satisfaction of the Owners, the Owners shall be entitled to terminate the
Agreement with immediate effect by notice in writing.

 

18.3                   Extraordinary
Termination

 

This
Agreement shall be deemed to be terminated in the case of the sale of the
Vessel or if the Vessel becomes a total loss or is declared as a constructive
or compromised or arranged total loss or is requisitioned.

 

18.4                   For the
purpose of sub-clause 8.3 hereof

 

(i)                                                             the date
upon which the Vessel is to be treated as having been sold or otherwise
disposed of shall be the date on which the Owners cease to be registered as
Owners of the Vessel;

 

(ii)                                                          the Vessel
shall not be deemed to be lost unless either she has become an actual total
loss or agreement has been reached with her underwriters in respect of her
constructive, comprised or arranged total loss or if such agreement with her
underwriters is not reached it is adjudged by a competent tribunal that a
constructive loss of the Vessel has occurred.

 

18.5                   This
Agreement shall terminate forthwith in the event of an order being made or
resolution passed for the winding up, dissolution, liquidation or bankruptcy of
either party (otherwise than for the purpose of reconstruction or amalgamation)
or if a receiver is appointed, or if it suspends payment, ceases to carry on
business or makes any special arrangement or composition with its creditors.

 

18.6                   The
termination of this Agreement shall be without prejudice to all rights accrued
due between the parties prior to the date of termination.

 

19.       Law and Arbitration

 

19.1                   This Agreement
shall be construed and the relations between the parties determined in
accordance with the laws of the State of New York, U.S.A.

 

19.2                   All disputes
arising out of this Agreement shall be referred to arbitration in New York in
accordance with the Rules of the Society of Marine Arbitrators, Inc.,
New York (SMA).  Any award of the
arbitrator(s) shall be final and binding and not subject to appeal.

 

20.       Notices

 

20.1                   Any notice
to be given by either party to the other party shall be in writing and may be
sent by fax, telex, registered or recorded mail or by personal service.

 

20.2                   The address
of the Parties for service of such communication shall be as stated in Boxes
19 and 20, respectively.

 

21.       MANAGEMENT FEE

 

During the first two years following the effective date of this
Agreement as set forth in Clause 2, the Owners shall pay to the Managers
for the Management Services under this Agreement a fixed daily management fee
(the “Management Fee”), of $5,800 per day, or part of a day, payable monthly in
advance based on the actual number of days in the applicable month.  The Management Fee shall increase by 2.5% per
contract year thereafter for so long as this Agreement is in effect.  Unless otherwise expressly provided in this
Agreement, the Management Fee shall constitute payment in full for all of the
Management Services, (which expression, for the avoidance of doubt for these
purposes, includes the cost of insurance deductibles pursuant to Clause 6.2
(but not insurance premiums or calls), drydocking (subject to Clause 28), repairs
 (subject to Clauses 27 and 28) and the
personnel and items supplied and arranged as part of the Management Services,
including but not limited to the Crew, stores, spares and lubricating oil and
their transportation).

 

22.       DURATION AND TERMINATION

 

The term of this Agreement shall begin at the time specified in
Clause 2 and shall continue in force until the expiration of the Charter,
unless terminated in accordance with Clause 18 of this Agreement; provided,
however, that (i) the Managers shall have the right to terminate this
Agreement upon 90 days, prior written notice to the Owners following the second
anniversary of the effective date of this Agreement and (ii) the Owners
shall have the right to terminate this Agreement upon 90 days prior written
notice to the Managers at any time.

 

23.       COMMUNICATIONS

 

All communications under this Agreement shall be in the English
language.

 

24.       ASSIGNMENT CLAUSE

 

The Owners may, upon giving notice to the Managers, assign all of their
rights under this Agreement to any mortgagee of the Vessel provided that such
assignment shall not otherwise prejudice any of the rights of the Managers
under this Agreement.  The Managers shall
acknowledge any assignment that complies with this Clause in such form as the
mortgagee may reasonably request.

 

 

25.       THIRD PARTY RIGHTS

 

Except as stated in this Clause, the parties to this Agreement do not
intend that any of the terms will be enforceable by any person not a party to
it.  This clause shall not apply to
companies in the same groups as either the Owners or the Managers or to crew or
to employees, sub-contractors and agents of the Managers to whom
Clause 11.4 “Himalaya” would apply but for this clause.

 

26.       INDEMNIFICATION

 

Notwithstanding anything to the contrary in this Agreement, but subject
to Clause 11.2, the Managers shall indemnify the Owners against the
consequences of any failure by Managers to comply with the requirements of this
Agreement.  This indemnity shall include
(without limitation) liabilities which the Owners may incur to the Charterers pursuant
to the Charter  resulting from a failure
of the Managers to perform their obligations under this Agreement.  The Managers’ liability under this indemnity
in relation to environmental claims and such third party claims against the
Vessel or the Owners that are included in the terms of the protection and
indemnity insurance of the Vessel shall be limited to the terms of such
protection and indemnity insurance.

 

27.       CHANGES AND/OR IMPROVEMENT NECESSARY FOR
THE OPERATION OF THE VESSEL OR IMPOSED BY LEGISLATION, CLASS OR VETTING
APPROVALS

 

In the event that any improvement, structural change or the installation
of new equipment is imposed by (a) compulsory legislation, (b) class rules or
(c) an oil company whose vetting approval is required pursuant to Clause
57 of the Charter, the Managers shall, at the expense of the Owners effect such
improvement, structural change or installation. 
The Owners shall reimburse the Managers for all costs arising under this
clause no later than the fifth business day following notice from the
Managers.  Owners shall not be liable for
the cost of any improvement, structural change or installation that is
requested by or made for the account of the Charterer or for which the Charterer
is otherwise responsible.

 

In the event any improvement, structural change or the installation of
new equipment is deemed necessary by the Managers but is not imposed or
required pursuant to the first paragraph of this Clause 27, Managers shall
have the right, at their own cost, to effect such improvement, structural
change or installation, with the Owners consent which shall not be unreasonably
withheld.

 

The Owners shall be notified in writing in advance by the Managers about
any changes and/or improvements under this Clause 27.

 

Any change, improvement or installation made pursuant to this
Clause 27 (other than any change or improvement to, or installation of,
equipment that belongs to the Managers or a third party) shall be the property
of Owners.

 

28.       REIMBURSEMENT OF DRYDOCKING EXPENSES;
UNANTICIPATED REPAIRS

 

Such portion of the Management Fee under this Agreement set forth on Schedule 1
hereto (the “Drydock Fee Component”) is deemed to be attributed to the cost of
the drydockings scheduled to be performed on the Vessel during the term of this
Agreement (each an “Anticipated Drydocking”). 
Schedule 2 attached hereto sets forth the dates of the Anticipated
Drydocking and the associated drydocking costs agreed to by the Managers and
the Owners (the “Agreed Drydocking Cost”). 
Throughout the term of the Agreement, the Managers shall maintain the
balance of a notional account (the “Drydock Account”) which (a) shall be
credited in an amount equal to the applicable Drydock Fee Component at the time
of each monthly payment of the Management Fee and (b) shall be debited in
an amount equal to the Agreed Drydocking Cost at the time any Anticipated
Drydocking is completed (regardless of whether the drydock costs actually
incurred by the Managers are in fact less than or greater than the Agreed Drydocking
Cost).  The Managers are not required to
physically maintain the Drydock Account in a bank account, nor provide for any
interest thereon.

 

Upon the termination of this Agreement by either party, (i) to the
extent the Drydock has a credit balance, the Managers shall pay to the Owners
an amount equal to such credit balance, and (ii) to the extent the Drydock
Account has a debit balance, the Owners shall pay to the Managers an amount
equal to such debit balance.

 

In the event any repairs to the Vessel are required to be made following
the initial  Anticipated Drydocking that
are reasonably unanticipated by the Managers and not due to the fair wear and
tear of the Vessel or its components and are not fully covered by hull and
machinery insurance or warranty, the cost attributable to such repairs in
excess of such insurance coverage and deductibles which may occur at a
subsequent Anticipated Drydocking or otherwise (in excess of any applicable
insurance or warranty payments) shall be for the account of the Owner.

 

29.       LOSS OF HIRE INSURANCE

 

The Managers shall procure, at the Owners’ expense, loss of hire
insurance on behalf of Owners on terms and conditions as requested by the
Owners subject to the availability of such coverage on commercially reasonable
terms. The Managers shall not be responsible for any deductible payments with
respect to such loss of hire insurance. 
The Managers shall arrange for loss of hire insurance, with a deductible
of 14 days and maximum coverage of 120 days, to be in place as of the effective
date of this Agreement.

 

 

30.       PROCEEDS OF INSURANCES

 

The Managers shall procure, with the Owners’ cooperation where required,
that loss payable clauses are attached to the various policies of insurance
over the Vessel so as to direct the proceeds of insurance as follows:

 

a)  In the event of actual or constructive total loss of the
Vessel, the hull and machinery insurance proceeds shall be paid by the insurer
directly to the Owners or their assignees;

 

b)  In the event of damage or partial loss to the Vessel, the
hull and machinery insurance proceeds shall be paid by the insurer directly to
the Managers or their assignees to be held and utilized in accordance with
Clause 7.

 

 

31.       LUBRICATING OILS AND GREASES AND
OTHER ITEMS BELONGING TO THE MANAGERS

 

Unused lubricating oils and greases and the items set forth on Schedule 3
to this Agreement on board the Vessel at the time of delivery to the Owners and
commencement of the Management Services under this Agreement are the property
of the Managers.  The Managers will
provide lubricating oils and greases while this Agreement is in force pursuant
to Clause 3.2 (iii).  Upon termination of
this Agreement for any reason, the Owners shall pay the Managers for the cost
price of unused/unbroached lubricating oils and greases in sealed drums and in
storage tanks and Managers shall remove the items set forth on Schedule 3
and any other items that it owns or leases at Managers’ expense.

 

32.       ISPS CODE

 

The Managers shall perform the duties of the “Company” as required by
the ISPS Code.  The Managers shall also
perform the Owners’  obligations and
benefit from the Owner’s rights under the BIMCO ISPS Code Time Charter Party
Clause in the charterparty referred to in Clause 22 of this Agreement.  The Managers shall be entitled to retain any
sums received or recovered from charterers or from any other party in relation
to ISPS Code actions and duties.  If the
Managers incur expenditure as a result of complying with the ISPS Code or
making prudent security precautions that does not fall to be apportioned or is
not recoverable from sub-charterers pursuant to the BIMCO ISPS Code Time
Charter Party Clause, the Owners shall indemnify the Managers for such
expenditure as invoiced to the Owners with full supporting documentation.

 

 

SCHEDULE 1

 

M/T Rebecca – Management Fee and Drydock Fee Component

 

	
  CHARTER

  YEAR

  	
   

  	
  COMMENCING

  	
   

  	
  ENDING

  	
   

  	
  MANAGEMENT

  FEE

  	
   

  	
  DRYDOCK FEE

  COMPONENT

  
	
   

  	
   

  	
  (0001 GMT)

  	
   

  	
  (2400 GMT)

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  October 17, 2005

  	
   

  	
  October 16, 2006

  	
   

  	
  USD 5,800 per day

  	
   

  	
  USD 700 per day

  
	
  2

  	
   

  	
  October 17, 2006

  	
   

  	
  October 16, 2007

  	
   

  	
  USD 5,800 per day

  	
   

  	
  USD 700 per day

  
	
  3

  	
   

  	
  October 17, 2007

  	
   

  	
  October 16, 2008

  	
   

  	
  USD 5,945 per day

  	
   

  	
  USD 718 per day

  
	
  4

  	
   

  	
  October 17, 2008

  	
   

  	
  October 16, 2009

  	
   

  	
  USD 6,094 per day

  	
   

  	
  USD 735 per day

  
	
  5

  	
   

  	
  October 17, 2009

  	
   

  	
  October 16, 2010

  	
   

  	
  USD 6,246 per day

  	
   

  	
  USD 754 per day

  

 

	
  OPTION

  YEAR

  	
   

  	
  COMMENCING

  	
   

  	
  ENDING

  	
   

  	
  MANAGEMENT

  FEE

  	
   

  	
  TIME CHARTER

  RATE

  
	
   

  	
   

  	
  (0001 GMT)

  	
   

  	
  (2400 GMT)

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  October 17, 2010

  	
   

  	
  October 16, 2011

  	
   

  	
  USD 6,402 per day

  	
   

  	
  USD 773 per day

  
	
  2

  	
   

  	
  October 17, 2011

  	
   

  	
  October 16, 2012

  	
   

  	
  USD 6,562 per day

  	
   

  	
  USD 792 per day

  
	
  3

  	
   

  	
  October 17, 2012

  	
   

  	
  October 16, 2013

  	
   

  	
  USD 6,726 per day

  	
   

  	
  USD 812 per day

  
	
  4

  	
   

  	
  October 17, 2013

  	
   

  	
  October 16, 2014

  	
   

  	
  USD 6,894 per day

  	
   

  	
  USD 832 per day

  
	
  5

  	
   

  	
  October 17, 2014

  	
   

  	
  October 16, 2015

  	
   

  	
  USD 7,067 per day

  	
   

  	
  USD 853 per day

  

 

 

SCHEDULE 2

 

M/T Rebecca – Estimated Date of Anticipated Drydocking

and Agreed Drydocking Cost

 

	
  ESTIMATED DATE

  OF ANTICIPATED

  DRYDOCKING

  	
   

  	
  AGREED

  DRYDOCKING

  COST

  	
   

  
	
  3q 2006

  	
   

  	
  $

  	
  120,000

  	
   

  
	
  1q 2009

  	
   

  	
  $

  	
  1,050,000

  	
   

  
	
  3q 2011

  	
   

  	
  $

  	
  715,000

  	
   

  
	
  1q 2014

  	
   

  	
  $

  	
  790,000

  	
   

  

 

 

SCHEDULE 3

 

The following
items that are on board the Vessel as of the effective date of this Agreement
are and will remain the property of the Managers.  These items may remain on board at the sole
discretion of and for the use and convenience of the Managers and may be
removed at any time after the effective date of this Agreement at the expense
of the Managers.

 

1.               Bunkers (IFO and
MDO/MGO)

 

2.               Victualling
(provisions)

 

3.               All onboard log
books up to the time and date of delivery for deck, engine and radio

 

4.               Seller’s company
forms, documents / stationery and all correspondence and company manuals

 

5.               All ISPS, ISM and
quality documentation and correspondence

 

6.               Vessel’s Rydex
communications e-mail system and server

 

7.               Training video
library, books

 

8.               Oxygen / acetylene
/ freon / nitrogen / argon cylinders / bottles

 

9.               Crew/officers
library / walport videos

 

10.         Master’s slopchest/bonded
stores; personal effects of master, officers and crew

 

11.         Personal hand-held
computers

 

12.         Personal cell phones

 

13.         Contents of master’s safe

 

14.         Arms / ammunition

 

15.         Works of art, originals,
copies, prints, statues

 

16.         Safety clothing / hats or
other shirts/hats with OSG logo

 

17.         Certificates/documents to
be returned to authorities

 

18.         Seagull training software

 

19.         All Seller’s non-class
computer software and server

 

20.         Chartco
digital chart updates system software

 

21.         Any rented or leased or
third party’s equipmentExhibit 10.4.7

 

Part I

 

SHIP MANAGEMENT AGREEMENT

 

1.               Date of Agreement

 

October 6 , 2005

 

2.               Owners (name, place of registered office
and law of registry) (CI. 1)

Name

Ania Aframax Corporation

Place of registered office

Majuro, Marshall Islands

Law of registry

Marshall Islands

 

3.               Managers (name, place of registered
office and law of registry) (CI. 1)

Name

Tanker Management Ltd.

Place of registered office

England

Law of registry

England

 

4.               Day and year of commencement of
Agreement (CI. 2)

 

See Clause 2

 

5.               Crew management (state “yes” or “no” as
agreed) (CI. 3.1)

 

Yes

 

6.               Technical Management (state “yes” or
“no” as agreed) (CI. 3.2)

 

Yes

 

7.               Commercial Management (state “yes” or
“no” as agreed) (CI. 3.3)

 

No.

 

8.               Insurance Arrangements (state “yes” or
“no” as agreed) (CI. 3.4)

 

Yes

 

9.               Accounting Services (state “yes” or “no”
as agreed) (CI. 3.5)

 

Yes, as per Clause 3.5 only

 

10.         Sale or purchase of the Vessel (state “yes” or
“no” as agreed) (CI. 3.6)

 

No

 

11.         Provisions (state “yes” or “no” as agreed) (CI.
3.7)

 

Yes

 

12.         Bunkering (state “yes” or “no” as agreed) (CI.
3.8)

 

No

 

13.         Chartering Services Period (only to be filled
in if “yes” stated in Box 7) (CI. 3.3(i))

 

N/A

 

14.         Owners’ Insurance

 

See Clause 6.3

 

15.         Annual Management Fee

 

See Clause 8.1

 

16.         Severance Costs (state maximum amount) (CI.
8.4(ii))

 

None

 

17.         Day and year of termination of Agreement (CI.
17)

 

See Clause 17

 

18.         Law and Arbitration

 

See Clause 19

 

19.         Notices (state postal and cable address, telex
and telefax number for serving notice and communication to the Owners (CI.
20)

 

Ania Aframax Corporation

26 New Street

St. Helier, Jersey JE 23R4

Channel Islands

 

20.         Notices (state postal and cable address, telex
and telefax number for serving notice and communication to the Managers)
(CI. 20)

 

Tanker Management Ltd.

Quorum 4, Balliol Business Park East, Benton Lane,

Newcastle upon Tyne NE 12 8EZ England

 

It is mutually agreed between the party stated
in Box 2 and the party stated in Box 3 that this Agreement
consisting of PART I and PART II and Schedules 1, 2 and 3
attached hereto, shall be performed subject to the conditions contained
herein.  In the event of a conflict of
conditions, the provisions of PART I shall prevail over those of PART
II and Schedules 1, 2 and 3 to the extent of such conflict but no further.

 

	
  Signature(s)
  (Owners)

  	
   

  	
  Signature(s)
  (Managers)

  
	
   

  	
   

  	
   

  
	
  ANIA AFRAMAX CORPORATION

  	
   

  	
  TANKER MANAGEMENT LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ole Jacob Diesen

  	
   

  	
   

  	
  By:

  	
  /s/ Ian Blackley 

  	
   

  
	
   

  	
  Name: Ole Jacob Diesen

  	
   

  	
   

  	
  Name: Ian Blackley

  
	
   

  	
  Title: Chief
  Executive Officer

  	
   

  	
   

  	
  Title:
  Director

  
							

 

 

PART II

Ship Management Agreement

 

1.              Definitions

 

In this Agreement save where the context
otherwise requires, the following words and expressions shall have the meanings
hereby assigned to them.

 

“Owners” means the
party identified in Box 2.

 

“Managers” means the
party identified in Box 3.

 

“Vessel” means the
M/T Ania, IMO Number 9053672, built in December 1994 by Hyundai Heavy
Industries Co., Ltd. in Ulsan, South Korea.

 

“Charter” means the time charter between the Owners and DHT Ania Aframax
Corporation dated October 6, 2005 relating to the Vessel.

 

“Crew” means the
Master, officers and ratings of the Vessel.

 

“Crew
Support Costs” means all expenses of a general nature
which are not particularly referable to any individual vessel for the time
being managed by the Managers and which are incurred by the Managers for the
purpose of providing an efficient and economic management service and, without
prejudice to the generality of the foregoing, shall include the cost of crew
standby pay, training schemes for officers and ratings, cadet training schemes,
sick pay, study pay, recruitment and interviews.

 

 “Crew Insurances” means
insurances against crew risks which shall include but not be limited to death,
sickness, repatriation, injury, shipwreck unemployment indemnity and loss of
personal effects.

 

“Management
Services” means the services specified in
subclauses 3.1 to 3.8 as indicated affirmatively in Boxes 5, 6, 8, 9 and 11.

 

“ISM Code” means the
International Management Code for the Safe Operation of Ships and for Pollution
Prevention as adopted by the International Maritime Organization (IMO) by
resolution A.741(18) or any subsequent amendment thereto.

 

“STCW 95” means the
International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent
amendment thereto.

 

2.              Appointment
of Managers

 

With effect from the day and year of delivery
of the Vessel to the Owners pursuant to a Memorandum of Agreement between
Owners and Sargasso Tanker Corporation dated September 20, 2005 and continuing
unless and until terminated as provided herein, the Owners hereby appoint the
Managers and the Managers hereby agree to act as the Managers of the Vessel.

 

3.              Basis of Agreement

 

Subject to the terms and conditions herein
provided, during the period of this Agreement, the Managers shall carry out
Management Services in respect of the Vessel as agents for and on behalf of the
Owners.  The Managers shall have
authority to take such actions as they may from time to time in their absolute
discretion consider to be necessary to enable them to perform this Agreement in
accordance with sound ship management practice.

 

3.1       Crew Management

 

(only applicable if agreed
according to Box 5)

 

The Managers shall provide suitably qualified
Crew for the Vessel as required by the Owners in accordance with the STCW 95
requirements, provision of which includes but is not limited to the following
functions:

 

(i)                             selecting and engaging in Vessel’s
Crew, including payroll arrangements, pension administration, and insurances
for the Crew;

 

(ii)                          ensuring that the applicable
requirements of the law of the flag of the Vessel are satisfied in respect of
manning levels, rank qualification and certification of the Crew and employment
regulations including Crew’s tax, social insurance, discipline and other
requirements;

 

(iii)                       ensuring that all members of the
Crew have passed a medical examination with a qualified doctor certifying that
they are fit for the duties for which they are engaged and are in possession of
valid medical certificates issued in accordance with appropriate flag State
requirements.  In the absence of
applicable flag State requirements the medical certificate shall be dated not
more than three months prior to the respective Crew members leaving their
country of domicile and maintained for the duration of their service on board
the Vessel;

 

(iv)                      ensuring that the Crew shall
have a command of the English language of a sufficient standard to enable them
to perform their duties safely;

 

(v)                         arranging transportation of the
Crew, including repatriation;

 

(vi)                      training of the Crew and
supervising their efficiency;

 

(vii)                   conducting union negotiations;

 

(viii)                                                operating
the Managers’ drug and alcohol policy unless otherwise agreed;

 

(ix)                        If the Owners complain of the
conduct of any of the Crew, the Managers shall immediately investigate the
complaint.  If the complaint proves to be
well founded, Managers shall, without delay, make a change in the appointments
and the Managers shall in any event communicate the result of their
investigation to the Owners as soon as possible.

 

3.2       Technical Management

 

(only applicable if agreed according to Box 6)

 

The Managers
shall provide technical management which includes, but is not limited to, the
following functions:

 

(i)                             provision of competent personnel
to supervise the maintenance and general efficiency of the Vessel;

 

(ii)                          arrangement and supervision of
dry dockings, repairs, alterations and the upkeep of the Vessel necessary to
ensure that the Vessel will comply with the requirements of the Charter, the
law of the flag of the Vessel and of the places where she trades, and all
requirements and recommendations of the classification society;

 

(iii)                       arrangement
of the supply of necessary stores, spares and lubricating oil and greases.  The level and time of the supply of such
items shall be based on that which a prudent owner of a vessel of the age and
characteristics of the Vessel (including but not limited its operating history,
planned maintenance and known wear and tear) would arrange so as to minimize
off-hire time and to undertake such maintenance as may safely be carried out at
sea by the crew;

 

(iv)                      appointment
of surveyors and technical consultants as the Managers may consider from time
to time to be necessary;

 

(v)                         development, implementation and
maintenance of a Safety Management System (SMS) in accordance with the ISM Code
(see subclause 4.2);

 

 

(vi)                      ensuring
that the Vessel receives at least two visits per year from one of the Managers’
technical superintendents; and.

 

(vii)                   arrangement
of oil company vetting so as to comply with the Owner’s obligations under the
Charter.

 

3.3       Commercial Management

 

N/A

 

3.4       Insurance Arrangements

 

(only applicable if agreed according to Box 8)

 

The
Managers shall arrange insurances in accordance with Clause 6 subject to
the following:

 

Throughout the term of this Agreement, the
Managers shall consult with the Owners prior to the time of each renewal of the
Owners’ Insurances (as defined in Clause 6.1) and, unless the Owners obtain
insurance coverage from other parties as set forth below in this Clause 3.4,
the Managers shall secure coverage for the Owners’ Insurances for the Vessel at
the Owners’ expense through the Managers’ insurance program on coverage amounts
(except for hull and machinery insurance in which is subject to Clause 6.6 of
this Agreement), terms and conditions that the Managers shall determine.  The Managers shall obtain insurance coverage
for the Vessel through the Managers’ insurance program that is in accordance
with the best practice of prudent owners of vessels of a similar type to the
Vessel, with first class insurance companies, underwriters or
associations.  If the Owners can demonstrate
that the insurance coverage provided by the Managers is not in accordance with the
preceding sentence and the Managers do not make the amendments necessary for
such coverage to meet such standards, the Owners shall have the right to place
the Owners’ Insurances through third parties, provided that (x) the terms and
conditions of the Owners’ Insurances proposed by the Owners to be placed with
third parties do not, in the reasonable opinion of the Managers, impose any
additional cost or liability on the Managers under the Charter and (y) prior to
placing the insurance through third parties, Owners shall agree to indemnify
Managers for any additional cost or liability on the Managers under the Charter
resulting from any such insurance placement . 
If the Owners place any component policy of the Owners’ Insurances
through third parties in accordance with the preceding sentence, the Managers
shall have the right to terminate any other policy placed by it on behalf of
the Owners, and (i) any unearned premium advanced by the Owners shall be
refunded to the Owners and (ii) any premium due and any liability for calls for
the period of coverage placed by the Managers shall remain for the account of
the Owners until fully discharged.

 

The Managers shall arrange for the Owners’
Insurances to be in place as of the effective date of this Agreement and shall
maintain the insurance cover existing immediately prior to such effective date
at least until the discharge of the cargo from its then current voyage.

 

3.5       Accounting Services

 

(only applicable if agreed according to Box 9)

 

The Managers shall maintain records relating
to those expenditures incurred and monies received in the performance of the
Management Services that are necessary for the settlement of accounts between
the parties

 

3.6       Sale or Purchase of the Vessel

 

N/A.

 

3.7       Provisions

 

(only applicable if agreed according to Box 11)

 

The
Managers shall arrange for the supply of provisions.

 

3.8       Bunkering

 

N/A.

 

4.              Managers’
Obligations

 

4.1  The Managers undertake to use their best
endeavours to provide the agreed Management Services as agents for and on
behalf of the Owners in accordance with sound ship management practice customary
in the trade and at least equivalent to the standards followed with respect to other
vessels for which the Managers provide Management Services, if any, and to
protect and promote the interests of the Owners in all matters relating to the
provision of services hereunder. 
Provided, however, that the Managers in the performance of their
management responsibilities under this Agreement shall be entitled to have
regard to their overall responsibility in relation to all vessels as may from
time to time be entrusted to their management and in particular, but without
prejudice to the generality of the foregoing, the Managers shall be entitled to
allocate available supplies, manpower and services in such manner as in the prevailing
circumstances the Managers in their absolute discretion consider to be fair and
reasonable.

 

4.2  Where the Managers are providing Technical
Management in accordance with sub-clause 3.2, they shall procure
that the requirements of the law of the flag of the Vessel are satisfied and
they shall in particular be deemed to be the “Company” as defined by the ISM
Code, assuming the responsibility for the operation of the Vessel and taking
over the duties and responsibilities imposed by the ISM Code when applicable.

 

4.3  The Management Services as such term is used
herein includes the discharge on behalf of the Owners of the Owners’ technical
and operational obligations to charterers pursuant to the Charter, a copy of
which has been supplied to the Managers, including, but not limited to the
Owners’ technical and operational obligations under Clauses 73A and 75 of such
Charter.

 

4.4  Managers shall maintain records of technical
matters relating to the Vessel including maintenance, repairs and equipment
replacement (“Technical Vessel Matters”).  
Three months after commencement of the Management Services, or such
other date as agreed to by the Managers and the Owners, and quarterly
thereafter, the Managers shall issue a report to the Owners providing a summary
of the Technical Vessel Matters carried out in the previous quarter.

 

5.              Owners’
Obligations

 

5.1       The Owners shall pay all sums due to the Managers punctually
in accordance with the terms of this Agreement.

 

 

6.              Insurance
Policies

 

For so long as the Managers continue to place
the Owners’ Insurances (as defined below) on behalf of the Owners in accordance
with Clause 3.4 of this Agreement, The Managers shall procure that:

 

6.1  at
the Owners’ expense, the Vessel is insured for not less than her sound market
value or entered for her full gross tonnage, as the case may be for:

 

(i)                             usual hull and machinery marine
risks (including crew negligence) and excess liabilities,

 

(ii)                          protection and indemnity risks
(including pollution risks and Crew Insurances), and

 

(iii)                       war risks (including protection
and indemnity and crew risks)

 

in each case in accordance with the best
practice of prudent owners of vessels of a similar type to the Vessel, with
first class insurance companies, underwriters or associations (“the Owners’
Insurances”);

 

6.2  all
premiums and calls on the Owners’ Insurances are paid by their due date at
Owners’ expense and deductibles up to the amount (per claim) of (i) $110,000
for hull and machinery marine risks insurance and (ii) $100,000 for claims
under the “Running Down Clause” and the “Fixed and Floating Objects Clause”
under the protection and indemnity risks insurance  and $15,000 for all other protection and
indemnity claims shall be paid at the Managers’ expense.  In the event the level of deductibles set for
a policy period are increased above the amounts set forth in the preceding
sentence, whether by the action of the Owners, the Managers or the insurers, any
such incremental increase shall be for the Owners’ account.  The Owners shall be liable for the allocated
cost of any broker’s fee paid by the Managers as determined by the Mangers on a
fair and equitable basis.

 

6.3  the
Owners’ Insurances name the Managers and, subject to underwriters’ agreement,
any third party designated by the Managers as a joint assured, with full cover,
with the Managers obtaining cover in respect of each of the Owners’ Insurances on
terms whereby the Managers and any such third party are liable in respect of
premiums or calls arising in connection with the Owners’ Insurances.

 

6.4  written
evidence is provided, to the reasonable satisfaction of the Owners, of Managers’
compliance with their obligations under Clause 6 within a
reasonable time of the commencement of the Agreement, and of each renewal date
and, if specifically requested, of each payment date of the Owners’ Insurances.

 

6.5  loss
of hire insurance is maintained in accordance with Clause 29.

 

6.6  the
Managers shall obtain hull and machinery insurance in accordance with
Clause 6.1 based upon the sound market value as notified to the Managers
by the Owners in writing prior to the effective date of this Agreement.  The Owners shall notify the Managers in
writing if they reasonably require cover for a different value from time to
time, which shall not exceed 120% of the sound market value of the Vessel.  The Owners alone shall be responsible for
assessing and notifying the Managers of the necessary level of cover.

 

6.7  the
Managers shall obtain a certificate of financial responsibility in accordance
with the terms of the Charter, and any costs relating to such certificate shall
be for the Owners’ account.

 

7.              Income
Collected and Expenses Paid on Behalf of Owners

 

7.1  All
moneys collected by the Managers under the terms of this Agreement (other than
moneys payable by the Owners to the Managers) and any interest thereon shall be
held to the credit of the Owners in a separate bank account.

 

7.2  All
expenses incurred by the Managers under the terms of this Agreement on behalf
of the Owners (including expenses as provided in Clause 8) may be
debited against the Owners in the account referred to under sub-clause 7.1
but shall in any event remain payable by the Owners to the Managers on demand.

 

8.              Management
Fee

 

8.1  The
Owners shall pay to the Managers for their services as Managers under this
Agreement a management fee as set forth in Clause 21 (the “Management Fee”).

 

8.2  The
Managers shall, at no extra cost to the Owners, provide their own office
accommodation, office staff, facilities and stationery.

 

8.3  In
the event of the appointment of the Managers being terminated by the Owners or
the Managers in accordance with the provisions of Clauses 18 and 22 other than
by reason of default by the Managers, or if the Vessel is lost, sold or
otherwise disposed of, in addition to any applicable Management Fee payments
for the 90-day notice period set forth in Clause 22, a one-time additional fee
of $45,000, which is to cover the Managers’ cancellation costs, shall be due
and payable.

 

8.4  Unless
otherwise agreed in writing all discounts and commissions obtained by the
Managers in the course of the management of the Vessel shall be credited to the
Managers.

 

9.              Budgets and
Management of Funds

 

N/A.

 

10.       Managers
Right to Sub-Contract

 

The Managers shall not have the right to
sub-contract any of their obligations hereunder without the prior written
consent of the Owners which shall not be unreasonably withheld; provided
however, that the Managers may (i) freely assign any obligations hereunder
to any affiliate of the Managers at any time and (ii) utilize the services
of third parties to fulfill the Managers’ obligations hereunder.  In the event of such a sub-contract the
Managers shall remain fully liable for the due performance of their obligations
under this Agreement.

 

11.       Responsibilities

 

11.1  Force Majeure - Neither the Owners nor the Managers shall be under any
liability for any failure to perform any of their obligations hereunder by
reason of any cause whatsoever of any nature or kind beyond their reasonable
control.

 

11.2  Liability to Owners
- (i) Without
prejudice to sub-clause 11.1, the Managers shall be under no liability
whatsoever to the Owners for any loss, damage, delay or expense of whatsoever
nature, whether direct or indirect, (including but not limited to loss of
profit arising out of or in connection with detention of or delay to the
Vessel) and howsoever arising in the course of performance of the Management
Services UNLESS same is proved to have resulted
solely from the negligence or wilful default of the Managers or their
employees, or agents or sub-contractors employed by them in connection with the
Vessel, in which case  (save where
loss, damage, delay or expense has resulted from the Managers’ personal act or
omission committed with the intent to cause same or recklessly and with
knowledge that such loss, damage, delay or expense would probably result)  the Managers’ liability for each incident or
series of incidents giving rise to a claim or claims shall never exceed a total
of $2 million.

 

 

(ii)  Notwithstanding
anything that may appear to the contrary in this Agreement, the Managers shall
not be liable for any of the actions of the Crew, even if such actions are
negligent or wilful, except only to the extent that they are shown to have
resulted from a failure by the Managers to discharge their obligations under
sub-clause 3.1

 

11.3  Indemnity - Except to the extent and solely for the amount therein
set out that the Managers would be liable under sub-clause 11.2,
the Owners hereby undertake to keep the Managers and their employees, agents
and sub-contractors indemnified and to hold them harmless against all actions,
proceedings, claims, demands or liabilities whatsoever or howsoever arising
which may be brought against them or incurred or suffered by them arising out
of or in connection with the performance of the Agreement, and against and in
respect of all costs, losses, damages and expenses (including legal costs and
expenses on a full indemnity basis) which the Managers may suffer or incur
(either directly or indirectly) in the course of the performance of this
Agreement.

 

11.4  “Himalaya” - It is hereby expressly agreed that no employee or agent
of the Managers (including every sub-contractor from time to time employed by
the Managers) shall in any circumstances whatsoever be under any liability
whatsoever to the Owners for any loss, damage or delay of whatsoever kind
arising or resulting directly or indirectly from any act, neglect or default on
his part while acting in the course of or in connection with his employment
and, without prejudice to the generality of the foregoing provisions in this Clause 11,
every exemption, limitation, condition and liberty herein contained and every
right, exemption from liability, defence and immunity of whatsoever nature
applicable to the Managers or to which the Managers are entitled hereunder
shall also be available and shall extend to protect every such employee or
agent of the Managers acting as aforesaid and for the purpose of all the
foregoing provisions of this Clause 11 the Managers are or shall be
deemed to be acting as agent or trustee on behalf and for the benefit of all persons
who are or might be their servants or agents from time to time (including
sub-contractors as aforesaid) and all such persons shall to this extent be or
be deemed to be parties to this Agreement.

 

12.       Documentation

 

Where the Managers are providing Technical
Management in accordance with sub-clause 3.2 and/or Crew Management
in accordance with sub-clause 3.1, they shall make available, upon
Owners’ request, all documentation and records related to the Safety Management
System (SMS) and/or the Crew which the Owners need in order to demonstrate
compliance with the ISM Code and STCW 95 or to defend a claim against a
third party.  The Owner shall make
available, upon Managers’ request, all information, documentation and records
required under any flag state law, regulation or international convention and
to inform the Managers of any changes to those of the Owner’s details that that
are required in the Vessel’s continuous synopsis record for the purposes of the
ISPS Code .

 

13.       General
Administration

 

13.1  The Managers shall handle and
settle all claims arising out of the Management Services hereunder and keep the
Owners informed regarding any incident of which the Managers become aware which
gives or may give rise to claims or disputes involving third parties; provided,
that the settlement of any claims relating to general average or total
constructive loss must be done at the direction of the Owners with the Owners’
involvement in such settlements..

 

13.2  The Managers shall, as
instructed by the Owners, bring or defend actions, suits or proceedings in
connection with matters entrusted to the Managers according to this Agreement.

 

13.3  The Managers shall also have
power to obtain legal or technical or other outside expert advice in relation
to the handling and settlement of claims and disputes or all other matters
affecting the interests of the Owners in respect of the Vessel.

 

13.4  The Owners shall arrange for the
provision of any necessary guarantee bond or other security.

 

13.5  Any costs
reasonably incurred by Managers in carrying out its obligations according to
Clause 13 in connection with matters entrusted to the Managers under this
Agreement shall be reimbursed by the Owners.

 

13.6  The Managers are authorized to
receive sums payable by third parties to the Owners, including, but not limited
to the proceeds of insurance subject to Clause 30, the settlement of claims and
under any legal proceedings or arbitrations or any settlement of claims.  Where the event(s) which form the subject of
such claims have caused the Managers expense under this Agreement, the Managers
are entitled to retain all or part of such settlements equal to the amount
expended by the Managers.

 

14.       Auditing

 

N/A

 

15.       Inspection
of Vessel

 

The Owners shall have the right at any time
after giving reasonable notice to the Managers to inspect the Vessel for any
reason they consider necessary. The Owners and Managers agree to meet on a
quarterly basis at the offices of the Managers to discuss the technical
management of the Vessel.

 

16.       Compliance
with Laws and Regulations

 

The Managers will not do or permit to be done
anything which might cause any breach or infringement of the laws and
regulations of the Vessel’s flag, or of the places where she trades.

 

17.       Duration of
the Agreement

 

This Agreement shall come into effect in
accordance with Clause 2 and terminate in accordance with Clauses 18 and
22.

 

18.       Termination

 

18.1  Owners’ default

 

(i)                             The Managers shall be entitled
to terminate the Agreement with immediate effect by notice in writing if any
moneys payable by the Owners under this Agreement shall not have been received
in the Managers’ nominated account within ten running days of receipt by the
Owners of the Managers’ written request or if the Vessel is repossessed by the Mortgagees.

 

(ii)                          If the Owners:

 

proceed
with the employment of or continue to employ the Vessel in the carriage of
contraband, blockade running, or in an unlawful trade, or on a voyage which in
the reasonable opinion of the Managers is unduly hazardous or improper,

 

the Managers may give notice of the default to
the Owners, requiring them to remedy it as soon as practically possible.  In the event that the Owners fail to remedy
it within a reasonable time to the satisfaction of

 

 

the Managers, the Managers shall be entitled
to terminate the Agreement with immediate effect by notice in writing.

 

18.2  Managers’ Default

 

If the Managers fail to meet their obligations
under Clauses 3 and 4 of this Agreement for any reason
within the control of the Managers, the Owners may give notice to the Managers
of the default, requiring them to remedy it as soon as practically
possible.  In the event that the Managers
fail to remedy it within a reasonable time to the satisfaction of the Owners,
the Owners shall be entitled to terminate the Agreement with immediate effect
by notice in writing.

 

18.3  Extraordinary Termination

 

This Agreement shall be deemed to be
terminated in the case of the sale of the Vessel or if the Vessel becomes a
total loss or is declared as a constructive or compromised or arranged total
loss or is requisitioned.

 

18.4  For the purpose of
sub-clause 8.3 hereof

 

(i)                             the date upon which the Vessel
is to be treated as having been sold or otherwise disposed of shall be the date
on which the Owners cease to be registered as Owners of the Vessel;

 

(ii)                          the Vessel shall not be deemed
to be lost unless either she has become an actual total loss or agreement has
been reached with her underwriters in respect of her constructive, comprised or
arranged total loss or if such agreement with her underwriters is not reached
it is adjudged by a competent tribunal that a constructive loss of the Vessel
has occurred.

 

18.5  This Agreement shall terminate
forthwith in the event of an order being made or resolution passed for the
winding up, dissolution, liquidation or bankruptcy of either party (otherwise
than for the purpose of reconstruction or amalgamation) or if a receiver is
appointed, or if it suspends payment, ceases to carry on business or makes any
special arrangement or composition with its creditors.

 

18.6  The termination of this
Agreement shall be without prejudice to all rights accrued due between the
parties prior to the date of termination.

 

19.       Law and
Arbitration

 

19.1  This Agreement shall be
construed and the relations between the parties determined in accordance with
the laws of the State of New York, U.S.A.

 

19.2  All disputes arising out of this
Agreement shall be referred to arbitration in New York in accordance with the
Rules of the Society of Marine Arbitrators, Inc., New York (SMA).  Any award of the arbitrator(s) shall be final
and binding and not subject to appeal.

 

20.       Notices

 

20.1  Any notice to be given by either
party to the other party shall be in writing and may be sent by fax, telex,
registered or recorded mail or by personal service.

 

20.2  The address of the Parties for
service of such communication shall be as stated in Boxes 19 and 20,
respectively.

 

21.       MANAGEMENT
FEE

 

During the first two years following the effective date of this Agreement
as set forth in Clause 2, the Owners shall pay to the Managers for the Management
Services under this Agreement a fixed daily management fee (the “Management Fee”),
of $5,800 per day, or part of a day, payable monthly in advance based on the
actual number of days in the applicable month. 
The Management Fee shall increase by 2.5% per contract year thereafter
for so long as this Agreement is in effect. 
Unless otherwise expressly provided in this Agreement, the Management
Fee shall constitute payment in full for all of the Management Services, (which
expression, for the avoidance of doubt for these purposes, includes the cost of
insurance deductibles pursuant to Clause 6.2 (but not insurance premiums or
calls), drydocking (subject to Clause 28), repairs  (subject to Clauses 27 and 28) and the
personnel and items supplied and arranged as part of the Management Services,
including but not limited to the Crew, stores, spares and lubricating oil and
their transportation).

 

22.       DURATION AND
TERMINATION

 

The term of this Agreement shall begin at the time specified in
Clause 2 and shall continue in force until the expiration of the Charter,
unless terminated in accordance with Clause 18 of this Agreement; provided,
however, that (i) the Managers shall have the right to terminate this
Agreement upon 90 days, prior written notice to the Owners following the second
anniversary of the effective date of this Agreement and (ii) the Owners
shall have the right to terminate this Agreement upon 90 days prior written
notice to the Managers at any time.

 

23.       COMMUNICATIONS

 

All communications under this Agreement shall be in the English
language.

 

24.       ASSIGNMENT
CLAUSE

 

The Owners may, upon giving notice to the Managers, assign all of their
rights under this Agreement to any mortgagee of the Vessel provided that such
assignment shall not otherwise prejudice any of the rights of the Managers
under this Agreement.  The Managers shall
acknowledge any assignment that complies with this Clause in such form as the
mortgagee may reasonably request.

 

 

25.       THIRD PARTY
RIGHTS

 

Except as stated in this Clause, the parties to this Agreement do not
intend that any of the terms will be enforceable by any person not a party to
it.  This clause shall not apply to
companies in the same groups as either the Owners or the Managers or to crew or
to employees, sub-contractors and agents of the Managers to whom
Clause 11.4 “Himalaya” would apply but for this clause.

 

26.       INDEMNIFICATION

 

Notwithstanding anything to the contrary in this Agreement, but subject
to Clause 11.2, the Managers shall indemnify the Owners against the
consequences of any failure by Managers to comply with the requirements of this
Agreement.  This indemnity shall include
(without limitation) liabilities which the Owners may incur to the Charterers pursuant
to the Charter  resulting from a failure
of the Managers to perform their obligations under this Agreement.  The Managers’ liability under this indemnity
in relation to environmental claims and such third party claims against the
Vessel or the Owners that are included in the terms of the protection and
indemnity insurance of the Vessel shall be limited to the terms of such
protection and indemnity insurance.

 

27.       CHANGES
AND/OR IMPROVEMENT NECESSARY FOR THE OPERATION OF THE VESSEL OR IMPOSED BY
LEGISLATION, CLASS OR VETTING APPROVALS

 

In the event that any improvement, structural change or the installation
of new equipment is imposed by (a) compulsory legislation, (b) class rules or (c)
an oil company whose vetting approval is required pursuant to Clause 57 of the
Charter, the Managers shall, at the expense of the Owners effect such
improvement, structural change or installation. 
The Owners shall reimburse the Managers for all costs arising under this
clause no later than the fifth business day following notice from the
Managers.  Owners shall not be liable for
the cost of any improvement, structural change or installation that is
requested by or made for the account of the Charterer or for which the
Charterer is otherwise responsible.

 

In the event any improvement, structural change or the installation of
new equipment is deemed necessary by the Managers but is not imposed or
required pursuant to the first paragraph of this Clause 27, Managers shall
have the right, at their own cost, to effect such improvement, structural
change or installation, with the Owners consent which shall not be unreasonably
withheld.

 

The Owners shall be notified in writing in advance by the Managers about
any changes and/or improvements under this Clause 27.

 

Any change, improvement or installation made pursuant to this
Clause 27 (other than any change or improvement to, or installation of,
equipment that belongs to the Managers or a third party) shall be the property
of Owners.

 

28.       REIMBURSEMENT
OF DRYDOCKING EXPENSES; UNANTICIPATED REPAIRS

 

Such portion of the Management Fee under this Agreement set forth on
Schedule 1 hereto (the “Drydock Fee Component”) is deemed to be attributed
to the cost of the drydockings scheduled to be performed on the Vessel during
the term of this Agreement (each an “Anticipated Drydocking”).  Schedule 2 attached hereto sets forth
the dates of the Anticipated Drydocking and the associated drydocking costs
agreed to by the Managers and the Owners (the “Agreed Drydocking Cost”).  Throughout the term of the Agreement, the
Managers shall maintain the balance of a notional account (the “Drydock Account”)
which (a) shall be credited in an amount equal to the applicable Drydock
Fee Component at the time of each monthly payment of the Management Fee and
(b) shall be debited in an amount equal to the Agreed Drydocking Cost at
the time any Anticipated Drydocking is completed (regardless of whether the
drydock costs actually incurred by the Managers are in fact less than or greater
than the Agreed Drydocking Cost).  The
Managers are not required to physically maintain the Drydock Account in a bank
account, nor provide for any interest thereon.

 

Upon the termination of this Agreement by either party, (i) to the
extent the Drydock has a credit balance, the Managers shall pay to the Owners
an amount equal to such credit balance, and (ii) to the extent the Drydock
Account has a debit balance, the Owners shall pay to the Managers an amount
equal to such debit balance.

 

In the event any repairs to the Vessel are required to be made following
the initial  Anticipated Drydocking that
are reasonably unanticipated by the Managers and not due to the fair wear and
tear of the Vessel or its components and are not fully covered by hull and
machinery insurance or warranty, the cost attributable to such repairs in
excess of such insurance coverage and deductibles which may occur at a
subsequent Anticipated Drydocking or otherwise (in excess of any applicable
insurance or warranty payments) shall be for the account of the Owner.

 

29.       LOSS OF HIRE
INSURANCE

 

The Managers shall procure, at the Owners’ expense, loss of hire
insurance on behalf of Owners on terms and conditions as requested by the
Owners subject to the availability of such coverage on commercially reasonable
terms. The Managers shall not be responsible for any deductible payments with
respect to such loss of hire insurance. 
The Managers shall arrange for loss of hire insurance, with a deductible
of 14 days and maximum coverage of 120 days, to be in place as of the effective
date of this Agreement.

 

 

30.  PROCEEDS OF INSURANCES

 

The Managers shall procure, with the Owners’ cooperation where required,
that loss payable clauses are attached to the various policies of insurance
over the Vessel so as to direct the proceeds of insurance as follows:

 

a)  In the event of actual or constructive total loss of the
Vessel, the hull and machinery insurance proceeds shall be paid by the insurer
directly to the Owners or their assignees;

 

b)  In the event of damage or partial loss to the Vessel, the
hull and machinery insurance proceeds shall be paid by the insurer directly to
the Managers or their assignees to be held and utilized in accordance with
Clause 7.

 

31.  LUBRICATING OILS AND GREASES AND OTHER ITEMS
BELONGING TO THE MANAGERS

 

Unused lubricating oils and greases and the items set forth on Schedule
3 to this Agreement on board the Vessel at the time of delivery to the Owners
and commencement of the Management Services under this Agreement are the property
of the Managers.  The Managers will
provide lubricating oils and greases while this Agreement is in force pursuant
to Clause 3.2 (iii).  Upon termination of
this Agreement for any reason, the Owners shall pay the Managers for the cost
price of unused/unbroached lubricating oils and greases in sealed drums and in
storage tanks and Managers shall remove the items set forth on Schedule 3 and
any other items that it owns or leases at Managers’ expense.

 

32.  ISPS CODE

 

The Managers shall perform the duties of the “Company” as required by
the ISPS Code.  The Managers shall also
perform the Owners’  obligations and
benefit from the Owner’s rights under the BIMCO ISPS Code Time Charter Party
Clause in the charterparty referred to in Clause 22 of this Agreement.  The Managers shall be entitled to retain any
sums received or recovered from charterers or from any other party in relation
to ISPS Code actions and duties.  If the
Managers incur expenditure as a result of complying with the ISPS Code or
making prudent security precautions that does not fall to be apportioned or is
not recoverable from sub-charterers pursuant to the BIMCO ISPS Code Time
Charter Party Clause, the Owners shall indemnify the Managers for such
expenditure as invoiced to the Owners with full supporting documentation.

 

 

SCHEDULE
1

 

M/T
Ania — Management Fee and Drydock Fee Component

 

	
  CHARTER

  YEAR

  	
   

  	
  COMMENCING

  	
   

  	
  ENDING

  	
   

  	
  MANAGEMENT

  FEE

  	
   

  	
  DRYDOCK FEE

  COMPONENT

  
	
   

  	
   

  	
  (0001 GMT)

  	
   

  	
  (2400 GMT)

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  October 17, 2005

  	
   

  	
  October 16, 2006

  	
   

  	
  USD 5,800 per day

  	
   

  	
  USD 700 per day

  
	
  2

  	
   

  	
  October 17, 2006

  	
   

  	
  October 16, 2007

  	
   

  	
  USD 5,800 per day

  	
   

  	
  USD 700 per day

  
	
  3

  	
   

  	
  October 17, 2007

  	
   

  	
  October 16, 2008

  	
   

  	
  USD 5,945 per day

  	
   

  	
  USD 718 per day

  
	
  4

  	
   

  	
  October 17, 2008

  	
   

  	
  October 16, 2009

  	
   

  	
  USD 6,094 per day

  	
   

  	
  USD 735 per day

  
	
  5

  	
   

  	
  October 17, 2009

  	
   

  	
  October 16, 2010

  	
   

  	
  USD 6,246 per day

  	
   

  	
  USD 754 per day

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPTION

  YEAR

  	
   

  	
  COMMENCING

  	
   

  	
  ENDING

  	
   

  	
  MANAGEMENT

  FEE

  	
   

  	
  TIME CHARTER

  RATE

  
	
   

  	
   

  	
  (0001 GMT)

  	
   

  	
  (2400 GMT)

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  October 17, 2010

  	
   

  	
  October 16, 2011

  	
   

  	
  USD 6,402 per day

  	
   

  	
  USD 773 per day

  
	
  2

  	
   

  	
  October 17, 2011

  	
   

  	
  October 16, 2012

  	
   

  	
  USD 6,562 per day

  	
   

  	
  USD 792 per day

  
	
  3

  	
   

  	
  October 17, 2012

  	
   

  	
  October 16, 2013

  	
   

  	
  USD 6,726 per day

  	
   

  	
  USD 812 per day

  
	
  4

  	
   

  	
  October 17, 2013

  	
   

  	
  October 16, 2014

  	
   

  	
  USD 6,894 per day

  	
   

  	
  USD 832 per day

  
	
  5

  	
   

  	
  October 17, 2014

  	
   

  	
  October 16, 2015

  	
   

  	
  USD 7,067 per day

  	
   

  	
  USD 853 per day

  

 

 

SCHEDULE 2

 

M/T
Ania – Estimated Date of Anticipated Drydocking

 

and
Agreed Drydocking Cost

 

	
  ESTIMATED DATE

  OF ANTICIPATED

  DRYDOCKING

  	
   

  	
  AGREED

  DRYDOCKING

  COST

  	
   

  
	
  1q
  2007

  	
   

  	
  $

  	
  185,000

  	
   

  
	
  4q
  2009

  	
   

  	
  $

  	
  1,050,000

  	
   

  
	
  2q
  2012

  	
   

  	
  $

  	
  735,000

  	
   

  
	
  4q
  2014

  	
   

  	
  $

  	
  790,000

  	
   

  

 

 

SCHEDULE 3

 

The following
items that are on board the Vessel as of the effective date of this Agreement
are and will remain the property of the Managers.  These items may remain on board at the sole
discretion of and for the use and convenience of the Managers and may be
removed at any time after the effective date of this Agreement at the expense
of the Managers.

 

1.               Bunkers (IFO and
MDO/MGO)

 

2.               Victualling
(provisions)

 

3.               All onboard log
books up to the time and date of delivery for deck, engine and radio

 

4.               Seller’s company
forms, documents / stationery and all correspondence and company manuals

 

5.               All ISPS, ISM and
quality documentation and correspondence

 

6.               Vessel’s Rydex
communications e-mail system and server

 

7.               Training video
library, books

 

8.               Oxygen / acetylene
/ freon / nitrogen / argon cylinders / bottles

 

9.               Crew/officers
library / walport videos

 

10.         Master’s slopchest/bonded
stores; personal effects of master, officers and crew

 

11.         Personal hand-held
computers

 

12.         Personal cell phones

 

13.         Contents of master’s safe

 

14.         Arms / ammunition

 

15.         Works of art, originals,
copies, prints, statues

 

16.         Safety clothing / hats or
other shirts/hats with OSG logo

 

17.         Certificates/documents to
be returned to authorities

 

18.         Seagull training software

 

19.         All Seller’s non-class
computer software and server

 

20.         Chartco
digital chart updates system software

 

21.         Any rented or leased or
third party’s equipment

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