Document:

d1080169_ex10-6.htm

    EXHIBIT
10.6

    

    Scorpio
Tankers Inc.

    150 East
58th
Street

    New York,
NY 10155

    

    Attention:
Brian Lee, Chief Financial Officer

    

    

    March 9,
2010

    

    

    CONFIDENTIAL

    

    

    Re: $150 Million Senior Secured
Credit Facility - Commitment Letter

    

    Ladies
and Gentlemen:

    

    Scorpio
Tankers Inc. (the “Company”) has requested that
Nordea Bank Finland Plc, New York Branch (“Nordea”), DnB NOR Bank ASA
(“DnB NOR”) and Fortis
Bank Nederland (“Fortis”) (in such capacity,
the “Lead Arrangers”)
arrange a credit facility to partially finance the acquisition costs of (i)
three double-hull Panamax tankers, “M/V Venice”, “M/V Noemi” and “M/V Senatore”
and (ii) other vessels not yet identified which meet the following
criteria:

     

    
      	
               
      

            	
              (i)

            	
              either
      clean petroleum or crude double-hull oil
  tankers;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              from
      35,000 dwt to 200,000 dwt;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              no
      older than seven (7) years of age at the time of acquisition;
      and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              classed
      with the American Bureau of Shipping, Det Norske Veritas or such other
      classification society as may be acceptable to the Lead
      Arrangers.

            

    

    

    The Lead
Arrangers are pleased to advise the Company that they have arranged the Credit
Facility referred to below.  As used herein, the term “Transaction” shall mean the
incurrence of all indebtedness under the Credit Facility and payment of all fees
and expenses in connection with the foregoing.

     

    The
Credit Facility (the “Credit
Facility”) shall consist of a term loan facility in the initial principal
amount of US$150,000,000 (the “Initial Facility
Amount”).  The Company shall have the right (the “Upsize Option”), until the
date falling twelve (12) months following the closing date, without consent of
the Lenders (as defined below), by notice to the Agent (as defined below), to
increase the Initial Facility Amount by adding one or more financial
institutions reasonably acceptable to the Company and the Lead Arrangers or by
allowing one or more Lead Arrangers, in their sole discretion, to increase their
respective commitment(s) under the Credit Facility, provided that:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)           the
aggregate amount of such increase shall not exceed US$100,000,000 (any such
increased amount, up to an including US$100,000,000, the “Increased Facility
Amount”);

     

    
      	
               
      

            	
              (ii)

            	
              unless
      provided by a Lead Arranger, no additional commitments shall be less than
      US$25,000,000;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Company shall have raised aggregate equity proceeds equal to or exceeding
      the Increased Facility Amount; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              no
      Lender’s commitment shall be increased without the consent of such
      Lender.

            

    

     

    A summary
of certain terms of the Credit Facility is set forth in Exhibit A attached
hereto (the “Term
Sheet”).  Please note that those matters that are not covered
or made clear herein or in the Term Sheet are subject to mutual agreement of the
parties hereto and shall be consistent with this letter and the Term Sheet
(together with the Term Sheet, this “Commitment Letter”), provided that any fee letter
(each a “Fee Letter”)
between the Lead Arrangers and the Company shall be negotiated separately
between Lead Arrangers and the Company.  The terms and conditions of
this commitment may be modified only in writing signed by each of the parties
hereto.

     

    The Lead
Arrangers are pleased to confirm that, subject to the terms and conditions set
forth herein and in the Term Sheet:

     

    
      	
               
      

            	
              (i)

            	
              each
      of the Lead Arrangers hereby commits to provide US$50,000,000 of the
      commitments for the Initial Facility Amount under the Credit
      Facility;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Nordea,
      DnB NOR and Fortis will act as Lead Arrangers for the Credit Facility;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Nordea
      will act as sole Administrative Agent and Security Trustee (in such
      capacity, the “Agent” and “Security Trustee”,
      respectively) for Nordea, DnB NOR and Fortis and such other financial
      institutions (the “Additional Lenders” and
      together with Nordea, DnB NOR and Fortis acting in such capacity, the
      “Lenders”)
      reasonably acceptable to the Company and the Lead Arrangers as may be
      added for purposes of the Upsize Option or pursuant to a Lender’s
      assignment of all or part of its commitment who will participate in the
      Credit Facility as Lenders.

            

    

     

    The
commitments in this Commitment Letter are subject to (i) the accuracy and
completeness of all representations that the Company and its subsidiaries
(collectively, the “Group”) make, and all
information that the Group furnishes, to the Lead Arrangers and (ii) the
Company’s compliance with the terms of this Commitment Letter and the payment in
full of all fees, expenses and other amounts payable hereunder or under and Fee
Letter.

     

    You
represent, warrant and covenant that (i) no information which has been or is
hereafter furnished by you or on your behalf in connection with the Company or
its subsidiaries or the transactions contemplated hereby and (ii) no other
information given at information meetings for prospective Additional Lenders and
supplied or approved by you (collectively, the “Information”) taken as a whole
contained (or, in the case of Information furnished after the date hereof, will
contain), as of the time it was (or hereafter is) furnished, any material
misstatement of fact or omitted (or will omit) as of such time to state any
material fact necessary to make the statements therein taken as a whole not
misleading, in the light of the circumstances under which they were
(or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    hereafter
are) made; provided
that, with respect to Information consisting of statements, estimates and
projections (collectively, the “Projections”) regarding the
future performance of the Company and its subsidiaries, no representation,
warranty or covenant is made other than that the Projections have been (and, in
the case of Projections furnished after the date hereof, will be) prepared in
good faith based on assumptions believed to be reasonable at the time of
preparation thereof.  You agree to supplement the Information and the
Projections from time to time until the date of the initial borrowing under the
Credit Facility, as appropriate, so that the representations and warranties in
the preceding sentence remain correct.

     

    As you
are aware, the Lead Arrangers have not yet had the opportunity to conduct their
respective business, legal, environmental, tax, financial, accounting, and
customer call due diligence in connection with the Transaction, or with respect
the Company and its subsidiaries.  Accordingly, each of the Lead
Arranger’s commitments and agreements hereunder are subject to the completion of
such business, legal, environmental, tax, financial, accounting and customer
call due diligence, and to each of the Lead Arranger’s satisfaction with the
results thereof.  Furthermore, the Lead Arranger’s commitments and
agreements hereunder are subject to:

     

    
      	
               
      

            	
              (i)

            	
              there
      not occurring or becoming known to the Lead Arrangers any condition or
      circumstance which any of the Lead Arrangers shall determine has had, or
      could reasonably be expected to have, a material adverse effect on (a) the
      Transaction, (b) the business, property, assets, condition (financial or
      otherwise), operations or prospects of the Company or its subsidiaries
      taken as a whole since December 31, 2009, or (c) the rights or remedies of
      the Lenders or the ability of the Company and its subsidiaries to perform
      their obligations to the Lenders under the Credit Facility (each, a “Material Adverse
      Effect”);

            

    

    

    
      	
               
      

            	
              (ii)

            	
              None
      of the Lead Arrangers becoming aware (whether as a result of its due
      diligence analyses and review or otherwise) after the date hereof of any
      information not previously known to any of them which any of them believes
      is materially negative information with respect to the Transaction or the
      business, property, assets, operations, liabilities, condition (financial
      or otherwise) or prospects of the Company or its subsidiaries taken as a
      whole, or which is inconsistent in a material and adverse manner with any
      such information or other matter disclosed to any of the Lead Arrangers
      prior to the date hereof;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              there
      not having occurred after the date hereof a disruption of, or an adverse
      change in, financial, banking or capital markets that could reasonably be
      expected to materially impair the ability of any of the Lead Arrangers to
      fund its commitment hereunder as determined by each of the Lead Arrangers
      in its reasonable discretion; and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              the
      other conditions set forth or referred to herein and in the Term
      Sheet.

            

    

    

    You
hereby agree that all reasonable fees and expenses (including the reasonable
fees and expenses of counsel and insurance consultants) of the Agent and its
affiliates arising in connection with this Commitment Letter and the enforcement
of rights and remedies hereunder and in connection with the Transaction and
other matters described herein (including in connection with our due diligence)
shall be for your account (and that you shall from time to time upon request
from the Agent reimburse it and its affiliates for all such fees and expenses
paid by it), whether or not the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Credit
Facility is made available or definitive credit documents are
executed.  You further agree to indemnify and hold harmless (i)
Nordea, in its capacity as Agent, Security Trustee, Lead Arranger and Lender,
(ii) DnB NOR, in its capacity as Lead Arranger and Lender, and (iii) Fortis, in
its capacity as Lead Arranger and Lender, and each of their respective
affiliates and each director, officer, employee, representative and agent
thereof (each, an “indemnified
person”) from and against any and all actions, suits, proceedings
(including any investigations or inquiries), claims, losses, damages,
liabilities or expenses of any kind or nature whatsoever which may be incurred
by or asserted or awarded against or involve any of Nordea, DnB NOR or Fortis in
their respective capacities described above, or any other such indemnified
person as a result of or arising out of or in any way related to or resulting
from this Commitment Letter (including, without limitation, in connection with
any investigation, litigation or proceeding or the preparation of a defense in
connection therewith) or the definitive documentation for the Credit Facility or
the transactions contemplated hereby or thereby or any actual or proposed use of
the proceeds of the Credit Facility and, upon demand, to pay and reimburse each
of Nordea, DnB NOR or Fortis in their respective capacities described above, and
each other indemnified person for any legal or other out-of-pocket expenses
incurred in connection with investigating, defending or preparing to defend any
such action, suit, proceeding (including any inquiry or investigation) or claim
(whether or not such entity or person is a party to any action or proceeding out
of which any such expenses arise and whether or not such action or proceeding is
brought by or on behalf of the Company, any of its directors, security holders
or creditors, an indemnified person or any other person); provided that you shall not
have to indemnify any indemnified person against any loss, claim, damage,
expense or liability to the extent same resulted from the gross negligence or
willful misconduct of the respective indemnified person (as determined by a
court of competent jurisdiction in a final and non-appealable
judgment).  This Commitment Letter is issued for your benefit only and
no other person or entity may rely hereon (except indemnified persons to the
extent set forth herein).  None of any of Nordea, DnB NOR or Fortis in
their respective capacities described above, nor any other indemnified person
shall be responsible or liable to you or any other person or entity for (i) any
determination made by it pursuant to this Commitment Letter in the absence of
gross negligence or willful misconduct on the part of such person (as determined
by a court of competent jurisdiction in a final and non-appealable judgment) or
(ii) any consequential, indirect, special or punitive damages which may be
alleged as a result of this Commitment Letter or the financing contemplated
hereby.

     

    Each of
Nordea, DnB NOR and Fortis reserves the right to employ the services of its
affiliates in providing services contemplated by this Commitment Letter and to
allocate, in whole or in part, to its affiliates certain fees payable to it in
such manner as it and its affiliates may agree in its sole
discretion.  You also agree that each of Nordea, DnB NOR and Fortis
may at any time and from time to time assign all or any portion of its
commitments hereunder to one or more of its affiliates.  You further
acknowledge that each of Nordea, DnB NOR and Fortis may share with any of its
affiliates, and such affiliates may share with them, any information related to
the Transaction, the Company and its subsidiaries and affiliates, or any of the
matters contemplated hereby.  Each of Nordea, DnB NOR and Fortis
agrees to treat, and cause any such affiliate to treat, all non-public
information provided to it by the Company and its subsidiaries as confidential
information in accordance with customary banking industry practices (it being
understood and agreed that we may provide potential Additional Lenders and their
respective affiliates with non-public information provided by the Company and
its subsidiaries).

     

    You agree
that this Commitment Letter is for your confidential use only and that, unless
each of Nordea, DnB NOR and Fortis has otherwise consented, neither its
existence nor the terms hereof will be disclosed by you to any person or entity
other than your officers, directors, employees,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    accountants,
attorneys and other advisors, and then only on a “need to know” basis in
connection with the transactions contemplated hereby and on a confidential
basis.  Notwithstanding the foregoing, following your acceptance of
the provisions hereof and your return of an executed counterpart of this
Commitment Letter to us as provided below (i) you may make public disclosure of
the existence and amount of the commitments hereunder and of the identity of
each of the Lead Arrangers, (ii) you may file a copy of this Commitment Letter
(but not any Fee Letter) in any public record in which it is required by law to
be filed and (iii) you may make such other public disclosure of the terms and
conditions hereof as, and to the extent, you are required by law, in the opinion
of your counsel, to make.  If this Commitment Letter is not accepted
by you as provided below, please immediately return this Commitment Letter (and
any copies hereof) to the undersigned.

     

    The
provisions of the three immediately preceding paragraphs shall survive any
termination of this Commitment Letter regardless of whether any definitive form
of documentation shall be executed and delivered, provided that your obligations
under this Commitment Letter relating to indemnification shall automatically
terminate and be superseded by the provisions of the definitive documentation
relating to the Credit Facility upon the initial funding thereunder, and you
shall automatically be released from all indemnification obligations under this
Commitment Letter.

     

    In order
to comply with the USA PATRIOT Act, each of Nordea, DnB NOR and Fortis must
obtain, verify and record information that sufficiently identifies each entity
(or individual) that enters into a business relationship with it.  As
a result, in addition to your and your subsidiaries’ corporate name and address,
each of Nordea, DnB NOR and Fortis will obtain your and your subsidiaries’
corporate tax identification number and certain other
information.  Each of Nordea, DnB NOR and Fortis may also request
relevant corporate resolutions and other identifying documents.

     

    This
Commitment Letter shall not be assignable by you to any person or entity without
the prior written consent of each party hereto (and any purported assignment
without such consent shall be null and void).  This Commitment Letter
may not be amended or waived except by an instrument in writing signed by you
and us.  This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement.  Delivery of an executed
signature page of this Commitment Letter or the Fee Letter by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof or thereof, as the case may be.  The Company acknowledges that
information and documents relating to the Credit Facility may be transmitted
through Intralinks, the internet or similar electronic transmission
systems.  This Commitment Letter set forth the entire agreement
between the parties hereto as to the matters set forth herein and supersede all
prior communications, written or oral, with respect to the matters
herein.

     

    THIS
COMMITMENT LETTER AND THE FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE
PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS
COMMITMENT LETTER OR THE FEE LETTER.  YOU HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN
THE COUNTY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS COMMITMENT
LETTER, THE FEE LETTER OR ANY MATTERS CONTEMPLATED HEREBY OR
THEREBY.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Our
willingness, and commitments, with respect to the Credit Facility as set forth
above will terminate on April 30, 2010, unless on or prior to such date the
Transaction has been consummated and a definitive credit agreement evidencing
the Credit Facility (together with related financing and security documentation,
the “Credit
Documentation”), in form and substance reasonably satisfactory to each of
the Lead Arranger and consistent with this Commitment Letter and Term Sheet
shall have been entered into.  Before such date, any Lead Arranger may
terminate its commitment hereunder if any event occurs or information becomes
available that, in its reasonable judgment, results or is reasonably likely to
result in the failure to satisfy any of the conditions or requirements with
which the Company must comply, contained in this letter.

     

    

    *  *  *

    

    If you
are in agreement with the foregoing, please sign and return to us the enclosed
copy of this Commitment Letter no later than 5:00 p.m., New York time, on March
12, 2010.  Unless this Commitment Letter is signed and returned by the
time and date provided in the immediately preceding sentence, this Commitment
Letter shall terminate at such time and date.

     

    Very
truly yours,

    

    NORDEA
BANK FINLAND PLC,

    NEW YORK
BRANCH

    

    

    By: /s/
Martin Lunder

    Name:
Martin Lunder

    Title:
Senior Vice President

    

    

    By: /s/
Martin Kahm

    Name:
Martin Kahm

    Title:
Vice President

    

    DNB NOR
BANK ASA

    

    

    By: /s/
Giacomo Landi

    Name:
Giacomo Landi

    Title:
Senior Vice President

    

    

    By: /s/
Nikolai A. Nachamkin

    Name:
Nikolai A. Nachamkin

    Title:
Senior Vice President

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    FORTIS
BANK NEDERLAND

    

    

    By: /s/
J.A.L.M. Gorgels

    Name:
J.A.L.M. Gorgels

    Title:
Director

    

    By: /s/
A.L. Lockhorst

    Name:
A.L. Lockhorst

    Title:

    

    

    

    

    Accepted
and Agreed to this 9 day

    of March,
2010

    

    SCORPIO
TANKERS INC.

    

    

    By: /s/
Brian M. Lee

    Name:
Brian M. Lee

    Title:
Chief Financial Officer

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    SUMMARY
OF TERMS AND CONDITIONS

    $150,000,000
MILLION SENIOR SECURED CREDIT FACILITY

    

    Unless
otherwise defined herein, capitalized terms used herein and defined in the
letter to which this Exhibit A is attached (the “Commitment Letter”) are used
herein as therein defined.  This outline of terms and conditions is
provided for indicative purposes only and is not a commitment.  No
legal obligations are intended to be, or shall be, created hereby.

    

    
      	
              Borrower:

            	
              Scorpio
      Tankers Inc., a corporation incorporated in the Republic of The Marshall
      Islands.

            

    

    

    
      	
              Guarantors:

            	
              Each
      subsidiary of the Borrower which owns or will own one or more Collateral
      Vessels (as defined herein).

            

    

    

    
      	
              Lead
      Arrangers:

            	
              DnB
      NOR ASA (“DnB
      NOR”), Fortis Bank Nederland (“Fortis”) and Nordea Bank
      Finland Plc, New York Branch (“Nordea”). It is the
      intention that each of the Lead Arrangers shall make available US$
      50,000,000 on the Closing Date.

            

    

    

    
    

    
      	
              

                Security
      Trustee
and
      Agent:

            	
              Nordea

            

    

    

    
      	
              Lenders:

            	
              The
      Lead Arrangers and such other financial institutions (the “Additional Lenders” and
      together with the Lead Arrangers the “Lenders”) as may be
      added upon the Borrower’s exercise of the Upsize Option (as defined
      herein), however such Additional Lenders shall be reasonably acceptable to
      the Lead Arrangers and the
Borrower.

            

    

    

    
      	
              Swap
      Bank(s):

            	
              Each
      or any of the Lead Arrangers.

            

    

    

    
      	
              Credit
      Facility:

            	
              A
      senior secured term loan facility (the “Credit Facility”) in an
      aggregate principal amount of US$150,000,000 or such higher amount
      resulting from exercising the Upsize Option (as defined herein) (the
      “Facility
      Amount”).

            

    

    

    
      	
              Upsize
      Option:

            	
              The
      Borrower shall have the right until the date falling twelve (12) months
      following the Closing Date, by notice to the Agent, to effectuate an
      increase of the Credit Facility by adding one or more Additional Lenders
      or by allowing one or more Lead Arrangers in their sole discretion to
      increase their respective commitments hereunder; provided that (i) such
      aggregate increase shall not exceed US$100,000,000, (ii) unless provided
      by a Lead Arranger, no added commitments shall be less than US$25,000,000,
      (iii) the Borrower shall have raised aggregate equity proceeds equal to or
      exceeding the increased Facility Amount and (iv) no Lender’s commitment
      shall be increased without the consent of such
  Lender.

            

    

    

    
      	
              Use
      of Proceeds:

            	
              The
      loans made pursuant to the Credit Facility (each a “tranche” and together
      the “Loans”) shall
      be utilized to finance, in part, the acquisition cost of Collateral
      Vessels however such financed amount shall not exceed the lower of (i)
      fifty percent (50%) of the fair market value of such Collateral Vessel as
      established by two acceptable brokerage firms at
  the

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              time
      of such tranche is drawn or (ii) fifty percent (50%) of the purchase price
      of such Collateral Vessel.

            

    

    

    
      	
              Closing
      Date:

            	
              As
      soon as practicable following the date when a Successful IPO (as defined
      below) has been completed and the shares have started trading on NYSE or
      NASDAQ; however such Closing Date shall occur no later than April 30,
      2010.

            

    

    

    
      	
              Successful
      IPO:

            	
              An
      initial public offering of capital stock of the Borrower on NYSE or NASDAQ
      raising gross proceeds of a minimum of US$
  150,000,000.

            

    

    

    
      	
              Availability:

            	
              The
      Credit Facility shall be available for drawings, with one tranche per
      Collateral Vessel, on or after the date on which the Credit Facility
      documentation is executed and delivered until the date falling eighteen
      (18) months following the Closing Date (the “Cancellation
      Date”).

            

    

    

    
      	
              Maturity
      Date:

            	
              The
      Credit Facility will mature on the fifth (5th)
      anniversary of the Closing Date.

            

    

    

    
    

    
      	
              

                Scheduled
Repayments:

            	
              Each
      tranche shall be repaid in quarterly installments, commencing on the last
      day of the calendar quarter (March 31, June 30, September 30, and December
      31) following the calendar quarter in which such tranche drawing took
      place using a linear repayment profile, i.e., equal installments of
      principal, corresponding to a full repayment of such tranche by the time
      such Collateral Vessel is fifteen (15) years of
  age.

            

    

    

    
    

    
      	
              

                Voluntary
Prepayments:

            	
              Voluntary
      prepayments of any tranche or of the Loans may be made at any time on
      three (3) business days’ notice, without premium or penalty, subject to
      minimum notice and in minimum principal amounts of US$1,000,000; provided
      that voluntary prepayments made on a day other than the last day of an
      interest period applicable thereto shall be subject to payment of
      customary breakage costs.

            

    

    

    
      	
               
      

            	
              All
      voluntary prepayments described in the preceding paragraph shall be
      applied to reduce Scheduled Repayments in an inverse order of the
      maturity.

            

    

    

    
    

    
    

    
      	
              

                Mandatory
      

                  Prepayment
      on

                
Sale
      or Total Loss:

            	
              Upon
      the sale or loss of any Collateral Vessel, the Facility Amount shall be
      required to be reduced in an amount equal to the outstanding amount of the
      respective tranche attributed to such Collateral
  Vessel.

            

    

    

    
    

    
    

    
      	
              

                

                  Voluntary
Reduction
      and
Cancellation:

            	
              Any
      unutilized commitment under the Credit Facility may be voluntarily reduced
      (each a “Voluntary
      Reduction”) by the Borrower at any time with three (3) days notice;
      however all unutilized commitments shall be cancelled on the Cancellation
      Date.

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
    

    
      	
              

                Interest
      Rate
And
      Periods:

            	
              Borrowings
      under the Credit Facility shall bear interest at the London Interbank
      Offered Rate (“LIBOR”) for an interest
      period elected by the Borrower of three or six months, or such other
      periods as the Lenders may agree, plus the Applicable Margin (as defined
      herein). Interest is payable at the end of each interest period, unless a
      period longer than three months is elected, in which case interest is
      payable quarterly in arrears.  Interest is calculated based on
      actual days over 360 days.  No interest period shall extend
      beyond the Maturity Date.

            

    

     

    
      	
               
      

            	
              The
      Credit Facility shall include customary protective provisions for such
      matters as defaulting banks, capital adequacy, increased costs, funding
      losses, illegality and withholding taxes. The Borrower shall have the
      right, in the absence of a default or event of default, to replace any
      Lender that (i) charges a material amount in excess of that being charged
      by the other Lenders with respect to contingencies described in the
      immediately preceding sentence or (ii) refuses to consent to certain
      amendments or waivers of the Credit Facility which expressly require the
      consent of such Lender.

            

    

     

    
      	
               
      

            	
              Interest
      in respect of Loans shall be payable in arrears at the end of the
      applicable interest period and every three months in the case of interest
      periods in excess of three months. All calculations of interest,
      commitment fees and other fees shall be based on a 360-day year and actual
      days elapsed.

            

    

     

    
      	
              Applicable
      Margin:

            	
              The
      Applicable Margin shall be subject to adjustments as set forth in the
      pricing grid provided below based on meeting certain debt to
      capitalization ratios;

            

    

    

    
      	
              Debt to Capitalization

            	
              Applicable Margin

            
	 
      	 
      
	
              ≤
      50%

            	
              3.00%

            
	
              >
      50%

            	
              3.50%

            

    

    

    
      	
              Initial
      Vessels:

            	
              Three
      double hull Panamax tankers “MV Venice”, “MV Noemi”, and “MV Senatore”
      (the “Initial
      Vessels”) registered in a flag state acceptable to the Lead
      Arrangers.

            

    

    

    
      	
              Collateral
      Vessels:

            	
              First
      priority mortgages in each Initial Vessel and other vessels not yet
      identified (the “Additional Vessels” and
      together with the Initial Vessels the “Collateral Vessels”),
      provided that the mortgage in respect of an Initial Vessel will be
      released upon the Borrower’s written request if (a) no tranche has been
      advanced in respect of such Initial Vessel and (b) the Borrower is in
      compliance with all covenants of the loan facility documents at the time
      such request is made and after giving effect to such request (including
      without limitation the Collateral Maintenance Ratio (as defined
      below)).  The Additional Vessels shall meet the following
      criteria: (i) be either clean petroleum or crude double-hull oil tankers,
      (ii) range in size from 35,000 dwt to 200,000 dwt, (iii) be no older than
      seven (7) years of age at the time of acquisition and (iv) be classed with
      the American Bureau of Shipping, Det Norske Veritas or such other
      classification society as may be acceptable to the Lead
      Arrangers.  The Borrower shall have the right to tender
      any

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Initial
      Vessel previously mortgaged to the Security Trustee but subsequently
      released from such mortgage as a substitute for any Additional Vessel,
      provided that such Initial Vessel meets the foregoing criteria at the time
      it is tendered as substitute
collateral.

            

    

    

    
      	
              Security:

            	
              (i)
      All amounts owing under the Credit Facility, (ii) all obligations under
      the Guaranties and (iii) the Borrower’s obligations under interest rate
      swaps (on a subordinated basis), will in each case be secured
      by:

            

    

    

    
      	
               
      

            	
              a)

            	
              First
      priority cross-collateralized mortgages over the Collateral
      Vessels;

            

    

    
      	
               
      

            	
              b)

            	
              First
      priority assignments of the insurances on the Collateral
      Vessels;

            

    

    
      	
               
      

            	
              c)

            	
              First
      priority assignment of all earnings from the Collateral
      Vessels;

            

    

    
      	
               
      

            	
              d)

            	
              First
      priority pledges of all equity interests of the Guarantors;
      and

            

    

    
      	
               
      

            	
              e)

            	
              First
      priority pledges over all earnings accounts of the Borrower and
      Guarantors. Such earnings accounts shall be held with a Lead Arranger;
      and

            

    

    
      	
               
      

            	
              f)

            	
              First
      priority assignment of all charters in excess of 12 months in respect of
      the Collateral Vessels provided that the Borrower, using reasonably
      commercial efforts, is able to obtain the charterer’s consent to any such
      assignment.

            

    

     

    
    

    
      	
              

                Collateral
Substitution:

            	
              The
      Borrower or any Guarantor may dispose of any Collateral Vessel and offer a
      substitution for such Collateral Vessel (each a “Replacement Vessel”) so
      long as no Event of Default or potential Event of Default has occurred and
      is continuing. Such Replacement Vessel shall be (i) an Initial Vessel (so
      long as it meets the requirements of an Additional Vessel) or (ii) a
      vessel of substantially similar value, type and age, as the Collateral
      Vessel it replaces and shall be reasonably acceptable to the Lead
      Arrangers.

            

    

    

    
      	
              Guaranties:

            	
              The
      Guarantors shall jointly and severally guarantee all amounts owing under
      the Credit Facility. Such Guaranties shall also guarantee, on a
      subordinated basis, obligations under interest rate swap agreements or
      other hedging agreements entered into between a Lender and the Borrower.
      The Guaranties shall be guaranties of payment and not of
      collection.

            

    

    

    
    

    
      	
              

                Documentation
      and
Governing
      Law:

            	
              The
      Lenders’ commitments will be subject to the negotiation, execution and
      delivery of mutually satisfactory definitive credit  agreement,
      security documents and other supporting documentation, consistent with the
      terms and conditions set forth herein, in each case prepared by Watson,
      Farley & Williams (New York) LLP and satisfactory to the Lenders and
      including without limitation conditions precedent, representations and
      warranties, covenants and events of default customary for transactions of
      this type and appropriate under the circumstances. All documentation
      (except security documentation that the Lenders determine should be
      governed by local law) shall be governed by New York
  law.

            

    

    

    
    

    
      	
              

                Conditions
Precedent:

            	
              Those
      conditions precedent which are usual and customary for facilities of this
      type and such additional conditions precedent as are customary under the
      circumstances including, without limitation, a Successful IPO,
      delivery

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              of
      certified resolutions of the board of directors (and, if necessary,
      shareholders) of each of the Borrower and the Guarantors, certified copies
      of the constitutional documents of each of the Borrower and the
      Guarantors, all documentation required in relation to each of the Borrower
      and the Guarantors, including without limitation, all “know your customer”
      requirements, execution and delivery of all documentation in respect of
      the Credit Facility in form and substance satisfactory to the Lenders,
      receipt of all fees due under the Credit Facility, no event of default or
      an event that with the giving of notice or the passage of time could give
      rise to an event of default shall have occurred and be continuing,
      certified copies of all required consents which any of the Borrower or the
      Guarantors are required to enter into, or make any payment or perform any
      of its obligations under or in connection with the transactions
      contemplated by the Credit Facility, certified copies of the MOAs (and
      documents to be delivered thereunder) in respect of the Collateral Vessels
      (other than the Initial Vessels), certified copies of all technical and
      commercial management agreements, fair market valuations of the Collateral
      Vessels, a favorable report from an insurance consultant nominated by the
      Agent confirming that the insurance placed on the relevant Collateral
      Vessel is in compliance with the requirements of the relevant ship
      mortgage, delivery of a confirmation of class certificate in respect of
      each Collateral Vessel and delivery of all relevant legal
      opinions.

            

    

    

    
    

    
      	
              

                Market
Disruption:

            	
              If
      a Market Disruption Event occurs in relation to any tranche of the Loan
      for any Interest Period, then the rate of interest on each Lender’s share
      of such tranche of the Loan for the Interest Period shall be the rate per
      annum which is the sum of (x) the Applicable Margin and (y) the rate
      notified to the Facility Agent by that Lender, which expresses the cost to
      that Lender of funding its participation in such tranche of the Loan from
      whatever source it may reasonably select.  A “Market Disruption
      Event” shall mean (i) if LIBOR is not available or (ii) the Facility Agent
      receives notifications from a Lender or Lenders whose participations in
      such tranche of the Loan exceed 50% of such tranche of the Loan that the
      cost to it or them of obtaining matching deposits in the London interbank
      market would be in excess of LIBOR.

            

    

    

    
    

    
      	
              

                Representations
and
      Warranties:

            	
              Those
      representations and warranties which are usual and customary for
      facilities of this type and such additional representations and warranties
      as are appropriate under the circumstances including, without limitation,
      corporate existence, good standing, power and authority, no violation,
      receipt of all necessary governmental and third party consents,
      enforceability of loan documents, accuracy of financial statements, no
      undisclosed liabilities, no pending or threatened litigation with respect
      to the Credit Facility or any documentation executed in connection
      therewith or which is reasonably likely to have a Material Adverse Effect,
      no Material Adverse Effect, no event of insolvency, true and complete
      disclosure, use of proceeds, payment of taxes, ERISA, compliance with laws
      and regulations, identity of subsidiaries, maintenance of properties and
      insurance, citizenship, vessel classification, and such additional
      representations and warranties as are customary under the
      circumstances.

            

    

    

    
      	
               
      

            	
               

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              

                Affirmative
Covenants:

            	
              Those
      covenants usual and customary for facilities of this type and such
      additional affirmative covenants as are appropriate under the
      circumstances including, without limitation, maintenance of corporate
      existence and good standing, use of proceeds, maintenance of properties,
      payment of taxes and other obligations, maintenance of customary
      insurance, maintenance of time charters, delivery of financial statements,
      access to books and records, compliance with laws and notices of defaults,
      litigation, deposit of earnings, ownership of subsidiaries, registry of
      vessels, notice of material adverse change, Collateral Vessel appraisals
      from two (2) independent appraisers (satisfactory to the Lead Arrangers)
      every six (6) months (at the expense of the Borrower), provided that the
      Lead Arrangers shall have the right to request additional vessel
      appraisals, which vessel appraisals shall not be at the expense of the
      Borrower unless an event of default shall have occurred and is continuing,
      and such additional affirmative covenants as are customary under the
      circumstances.

            

    

    

    
      	
              Negative
      Covenants:

            	
              Those
      covenants usual and customary for facilities of this type and such
      additional negative covenants as are customary under the circumstances
      including, without limitation, limitations on certain indebtedness, liens,
      investments, acquisitions, transactions with affiliates, changes in the
      registry, class, or management of the Collateral Vessels, changes in
      nature of business, changes in senior management, change in fiscal year
      end and no change of control.

            

    

    

    
      	
              Financial
      Covenants:

            	
              The
      following financial covenants shall apply to the Borrower and its
      subsidiaries on a consolidated basis and shall be measured on a quarterly
      basis (definitions to be agreed
upon):

            

    

    

    
      	
               
      

            	
              1)

            	
              Maximum
      Leverage: The ratio of debt to capitalization shall be no greater
      than 0.60 to 1.00.

            

    

    

    
      	
               
      

            	
              2)

            	
              Minimum Tangible Net
      Worth: The Borrower shall maintain consolidated tangible net worth
      of no less than US$ 150,000,000 plus 25% of the
      Borrower’s cumulative positive net income (on a consolidated basis) for
      each fiscal quarter from July 1, 2010 going forward and 75% of the
      value of any new equity issues from July 1, 2010 going
      forward.

            

    

    

    
      	
               
      

            	
              3)

            	
              Minimum Interest
      Coverage: This covenant will become effective with the commencement
      of the 5th
      fiscal quarter following the Closing Date, at which time the ratio of
      EBITDA (excluding all non-cash items (e.g. unrealized gains or losses) to
      actual interest expense (i.e., interest on indebtedness but excluding fees
      and expenses) shall be no less than 2.50 to 1.00. Such ratio shall be
      calculated quarterly on a trailing quarter basis from and including the
      5th
      fiscal quarter however for the 9th
      fiscal quarter and periods thereafter the ratio shall be calculated on a
      trailing four quarter basis.

            

    

    

    
      	
               
      

            	
              4)

            	
              Free Liquidity:
      During the first five fiscal quarters following the Closing Date
      unrestricted cash and cash equivalents including amounts on deposit with
      the Lead Arrangers shall at all times be no less than the higher of (i)
      US$ 2,000,000 per vessel or (ii) US$ 10,000,000 however thereafter
      unrestricted cash and cash equivalents shall at all times be no less than
      the higher of (i) US$ 1,000,000 per vessel or (ii) US$
      10,000,000.

            

    

    

    
      	
               
      

            	
              5)

            	
              Dividend
      Restrictions: The Borrower is not permitted to pay dividend or
      return any equity capital to its stockholders in any other form (each a
      “Dividend”) if (i)
      it is in non compliance with any of its covenants or (ii) an Event of
      Default has occurred and is continuing and provided that no Event of
      Default will occur as a result of the payment of such
      Dividend.

            

    

    

    
    

    
      	
              

                Collateral
Maintenance:

            	
              The
      aggregate fair market value of the Collateral Vessels shall at all times
      be no less than 150% of the then aggregate outstanding principal amount of
      Loans (the “Collateral
      Maintenance Ratio”).

            

    

    

    
    

    
      	
              

                Events
      of
Default:

            	
              Those
      events of default usual and customary for facilities of this type and such
      additional events of default as are customary under the circumstances
      including, without limitation, nonpayment of principal, nonpayment of
      interest, breach of affirmative covenants, breach of negative covenants,
      material inaccuracy of representations and warranties, cross default to
      other material indebtedness, ERISA event, failure of effectiveness of
      security documents or guaranty, bankruptcy or insolvency event, or change
      of control (to be defined) of the Borrower, and such additional events of
      default as are appropriate under the
  circumstances.

            

    

    

    
    

    
      	
              

                Expenses/
Indemnification:

            	
              All
      reasonable and documented costs and expenses incurred by the Lenders
      relating to the Credit Facility, the documentation and enforcement
      thereof, shall be borne by the Borrower. The documentation for the Credit
      Facility shall contain customary indemnities for the Lenders (other than
      as a result of such indemnified party’s gross negligence or willful
      misconduct).

            

    

    

    
      	
              Insurance:

            	
              The
      Borrower shall procure that each Collateral Vessel is insured as
      appropriate for an internationally reputable shipping company against such
      risks including: (i) Hull and Machinery (ii) Hull Interest, (iii) Freight
      Interest (dependent upon the level of the Hull and Machinery policy), (iv)
      Protection & Indemnity (including an adequate club cover for oil
      pollution liability for the Collateral Vessel) and (v) War Risk (including
      terrorism and confiscation), in such amounts, on such terms and conditions
      as the Facility Agent may approve and with such insurance brokers and
      insurers as the Facility Agent may
approve.

            

    

    

    
      	 	
              The
      total insured value (Hull and Machinery plus Hull Interest and Freight
      Interest) of each Collateral Vessel shall at all times be equal to or
      greater than its fair market value, and the aggregate total insured value
      of all Collateral Vessels (Hull and machinery plus Hull Interest and
      Freight Interest) shall be equal to or greater than 120% of the aggregate
      outstanding principal amount of Loans. Furthermore, the Hull and Machinery
      insured value of each Collateral Vessel shall at all times cover 80% of
      its fair market value, and the aggregate Hull and Machinery insured value
      of all Collateral Vessels shall be equal to or greater than the aggregate
      outstanding principal amount of Loans while the remaining cover may be
      taken out by way of Hull and Freight Interest
  insurances.

            

    

    

    Additionally
the Borrower shall reimburse the Facility Agent for the cost of Mortgagees
Interest Insurance and Mortgagees Additional Perils Pollution Insurance which
the Facility Agent will take out on these vessels upon such terms and in such
amounts as the Facility Agent shall deem appropriate.

     

    The loss
payable clause for each Collateral Vessel to be in excess of $1 million and
standard letters of undertaking to be executed.

     

    
      	
              Required
      Lenders:

            	
              Lenders
      having aggregate commitments in the Credit Facility in excess of 66-2/3%,
      however required lenders shall include all Lead Arrangers (the “Required
      Lenders”).

            

    

    

    
    

    
      	
              Assignments
      and Participations:

            	
              After
      the Closing Date any Lender may assign and may sell participations in its
      rights and obligations under the Credit Facility, subject to such
      limitations as may be established in the definitive credit documentation
      including, but not limited to, a requirement that no assignment or
      participation may result in any increased costs (including for taxes,
      interest or otherwise) for which the Borrower would be
    liable.

            

    

    

    
      	
              “KYC”:

            	
              The
      Borrower shall supply, or procure the supply of, such documentation and
      other evidence as is reasonably requested by the Agent or any Lender in
      order to carry out and be satisfied with all necessary KYC (“know your customer”) or
      other similar checks under all applicable laws and regulations pursuant to
      the transactions contemplated in the Credit
  Facility.

            

    

     

    

    

    SK 26596 0002
1080169d107505_ex10-7.htm

    EXHIBIT
10.7

     

    Dated 17
May 2005

    

    
 

    

    SENATORE
SHIPPING COMPANY LIMITED

    NOEMI
SHIPPING COMPANY LEVIITED

    as joint
and several Borrowers

    

    

    

    -
and -

    

    

    

    THE
ROYAL BANK OF SCOTLAND plc

    as
Lender

    

    

    

    
      	
               

              LOAN
      AGREEMENT

               

            

    

    

    

    

    

    

    
 

    

    

    

    

    

    Watson,
Farley & Williams

    London

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    INDEX

    

    
      	
              Clause

               

            	 
      	
              Page

               

            
	
              1

               

            	
              PURPOSE,
      DEFINITIONS AND INTERPRETATION

               

            	
              1

               

            
	
              2

               

            	DRAWDOWN 	 8
	
              3

               

            	
              INTEREST
      AND INTEREST PERIODS

               

            	
              9

               

            
	
              4

               

            	
              REPAYMENT
      AND PREPAYMENT

               

            	
              10

               

            
	
              5

               

            	
              CONDITIONS
      PRECEDENT

               

            	
              12

               

            
	
              6

               

            	
              REPRESENTATIONS
      AND WARRANTIES

               

            	
              18

               

            
	
              7

               

            	
              UNDERTAKINGS

               

            	
              21

               

            
	
              8

               

            	
              APPLICATION
      OF EARNINGS

               

            	
              25

               

            
	
              9

               

            	
              EVENTS
      OF DEFAULT

               

            	
              25

               

            
	
              10

               

            	
              FEES
      AND EXPENSES

               

            	
              28

               

            
	
              11

               

            	
              PAYMENTS
      AND CALCULATIONS

               

            	
              29

               

            
	
              12

               

            	
              NO
      COUNTERCLAIM, TAXATION

               

            	
              29

               

            
	
              13

               

            	
              CHANGES
      IN CIRCUMSTANCES

               

            	
              30

               

            
	
              14

               

            	
              INDEMNITIES

               

            	
              32

               

            
	
              15

               

            	
              SET-OFF

               

            	
              32

               

            
	
              16

               

            	
              SECURITY
      AND APPLICATION

               

            	
              33

               

            
	
              17

               

            	
              JOINT
      AND SEVERAL LIABILITY

               

            	
              34

               

            
	
              18

               

            	
              COMMUNICATIONS

               

            	
              34

               

            
	
              19

               

            	
              ASSIGNMENTS

               

            	
              35

               

            
	
              20

               

            	
              MISCELLANEOUS

               

            	
              35

               

            
	
              21

               

            	
              LAW
      AND JURISDICTION

               

            	
              36

               

            
	
              SCHEDULE
      MANDATORY COST RATE

               

            	 
      37
	
              APPENDIX
      A NOTICE OF DRAWING

               

            	 
      39
	
              APPENDIX
      B FORM OF MORTGAGE

               

            	 
      40
	
              APPENDIX
      C FORM OF GENERAL ASSIGNMENT

               

            	 
      41
	
              APPENDIX
      D FORM OF ACCOUNT CHARGE

               

            	 
      42

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              APPENDIX
      E FORM OF MANAGER'S UNDERTAKING

               

            	 
      43
	
              APPENDIX
      F FORM OF MASTER AGREEMENT SECURITY DEED

               

            	 
      44
	
              APPENDIX
      G FORM OF FFA TRANSACTION CONFIRMATION

               

            	 
      45
	
              APPENDIX
      H FORM OF SUBORDINATION LETTER

               

            	 
      46

    

    

     
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    THIS LOAN AGREEMENT is made on
the 17 day of May 2005

    

    BETWEEN

    

    
      	
              (1)

            	
              SENATORE SHIPPING COMPANY
      LIMITED and NOEMI
      SHIPPING COMPANY LIMITED as joint and several Borrowers;
      and

            

    

    

    
      	
              (2)

            	
              THE ROYAL BANK OF SCOTLAND
      plc, as Lender.

            

    

    

    WHEREAS the Lender has agreed
to make available to the Borrowers on a joint and several basis a loan facility
of up to Fifty six million United States Dollars (US$56,000,000) in two (2)
Tranches (as defined below), upon and subject to the terms and conditions
contained in this Agreement.

    

    WHEREBY
IT IS AGREED

    

    1           PURPOSE,
DEFINITIONS AND INTERPRETATION

    

    
      	
              1.1

            	
              The
      purpose of the Loan shall be:

            

    

    

    
      	
              (a)

            	
              to
      enable Borrower A to part finance the payment of the Contract Price of
      Ship A from Seller A; and

            

    

    

    
      	
              (b)

            	
              to
      enable Borrower B to part finance the payment of the Contract Price of
      Ship B from Seller B.

            

    

    

    
      	
              1.2

            	
              In
      this Agreement, unless the context otherwise requires, the following
      expressions shall have the following
meanings:

            

    

    

    "Account Charge" means, in
relation to each Borrower, the deed containing, inter alia, a charge in respect
of its Operating Account executed or to be executed by the relevant Borrower in
favour of the Lender substantially in the form set out in Appendix D (or in such
other form as the Lender may approve or require) and, in the plural, means both
such Account Charges;

    

    "Approved Brokers Panel" means
H Clarkson & Company Limited, Braemer Seascope Limited and Galbraith's
Limited or such other firm or firms of independent sale and purchase shipbrokers
as may from time to time be agreed by the Lender;

    

    "Approved Manager" means, for
the time being, Scorpio Ship Management S.A.M., a company incorporated under the
laws of Monaco and having a place of business at 9, Rue du Gabian, MC 98000,
Monaco, or any other company which the Lender may, in its sole and absolute
discretion, approve from time to time as the technical manager of the
Ships;

    

    "Balloon Instalments" means the
Tranche A Balloon Instalment and the Tranche B Balloon Instalment and in the
singular, means either of them;

     

    "Borrower A" means Senatore
Shipping Company Limited a corporation organised and existing under the laws of
the Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, (and includes
its successors);

    

    "Borrower B" means Noemi
Shipping Company Limited a corporation organised and existing under the laws of
Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (and includes
its successors);

    

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

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

    

    "Business Day" means a day
(other than a Saturday or Sunday) on which banks and financial markets in London
are open for business and, in respect of a day on which a payment is required to
be made hereunder, also a day on which banks and financial markets are open for
business in New York City;

    

    "Commitment" means the sum of
Fifty six million Dollars ($56,000,000) to be made available under this
Agreement by the Lender to the Borrowers in two tranches, Tranche A and Tranche
B, subject to the terms and conditions herein contained;

    

    "Contract Price" means, in
relation to Ship A, the contract price payable for Ship A under the Ship A MOA
being the amount of Fifty two million Dollars ($52,000,000) and, in relation to
Ship B, the contract price payable for Ship B under the Ship B MOA being the
amount of Fifty two million Dollars ($52,000,000);

    

    "Credit Support Document" has
the meaning given to that expression in section 14 of the Master
Agreement;

    

    "Credit Support Provider" has
the meaning given to that expression in section 14 of the Master
Agreement;

    

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

    

    "Drawdown Date" means, in
relation to each Tranche, the date upon which the Borrowers have requested that
such a Tranche be made pursuant to Clause 2, or (as the context requires) the
date on which such Tranche is actually made to the Borrowers
hereunder;

    

    "Earnings" means, in relation
to each Ship, all moneys whatsoever due or to become due to or for the account
of the Borrower which owns such Ship at any time during the Security Period
arising out of the use or operation of such Ship including (but not limited to)
all freight, hire and passage moneys, compensation payable to the Borrower which
owns such Ship in the event of requisition of such Ship for hire, remuneration
for salvage and towage services, demurrage and detention moneys and damages for
breach (or payments for variation or termination) of any charterparty or other
contract for the employment
of such Ship and all sums recoverable under insurances in respect of loss of
Earnings (and including, if and whenever such Ship is employed on terms whereby
any or all such moneys as aforesaid are pooled or shared with any other person,
that proportion of the net receipts of the relevant pooling or sharing
arrangement which is attributable to such Ship);

     

    "Early Termination Date" has
the meaning given to that expression in section 14 of the Master
Agreement;

    

    "Environmental Claim", "Environmental Incident" and
"Total Loss" have, in
relation to each Ship, the meanings respectively ascribed to such terms in the
Mortgage relating to such Ship;

    

    "Event of Default" means any
one of the events listed in Clause 9.1;

    

    "FFA Transactions" means
commodity swap transactions in respect of forward freight
arrangements;

    

    "Final Drawdown Date" means 30
June 2005;

    

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    "Financial Indebtedness" means,
in relation to any person (a) monies borrowed or raised by such person, (b) any
liability of such person under any debenture, bond, note or other security, (c)
any liability of such person under acceptance credit facilities, financial
leases, deferred purchase consideration arrangements or any other agreement or
instrument having the commercial effect of a borrowing or raising of money by
such person and (d) any guarantee, indemnity or other assurance against
financial loss given by such person in respect of any of the
foregoing;

    

    "General Assignment" means, in
relation to each Ship, the general assignment of Earnings, insurances and
requisition compensation in respect of such Ship executed or to be executed by
the relevant Borrower in favour of the Lender substantially in the form set out
in Appendix C (or in such other form as the Lender may approve or require) and
in the plural, means both the General Assignments;

    

    "Indebtedness" means, in
relation to any person, any obligation (whether present or future, actual or
contingent, secured or unsecured, as principal or surety or otherwise) for the
payment or repayment of money;

    

    "Interest Period" means, in
relation to the Loan (or any part thereof), a period the commencement and length
of which shall be determined in accordance with the provisions of Clause
3.3;

    

    "ISM Code" means in relation to
its application to each Borrower, each Ship and their operation:

    

    
      	
               
      

            	
              (a)

            	
              'The
      International Management Code for the Safe Operation of Ships and for
      Pollution Prevention', currently known or referred to as the 'ISM Code',
      adopted by the Assembly of the International Maritime Organisation by
      Resolution A.741(18)
      on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the
      International Convention for the Safety of Life at Sea 1974 (SOLAS 1974);
      and

            

    

    

    
      	
               
      

            	
              (b)

            	
              all
      further resolutions, circulars, codes, guidelines, regulations and
      recommendations which are now or in the future issued by or on behalf of
      the International Maritime Organisation or any other entity with
      responsibility for implementing the ISM Code, including without
      limitation, the 'Guidelines on implementation or administering of the
      International Safety Management (ISM) Code by Administrations' produced by
      the International Maritime Organisation pursuant to Resolution A.788(19)
      adopted on 25 November 1995,

            

    

    

    as the
same may be amended, supplemented or replaced from time to time;

    

    "ISM Code Documentation"
includes the document of compliance (DOC) and safety management certificate
(SMC) issued by a Classification Society in accordance with the ISM Code in
relation to each Ship within the periods specified by the ISM Code;

    

    "ISM SMS" means the safety
management system which is required to be developed, implemented and maintained
under the ISM Code;

    

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

    

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

    

    "Jacob-Scorpio Tanker Pool Limited
Pool" means the pool of vessels operating under the name of, and known
as, the "Jacob-Scorpio Tanker Pool Limited";

    

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

     

    "Lender" means The Royal Bank
of Scotland plc, a company incorporated in Scotland having its registered office
at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland acting through the Shipping
Business Centre at 5-10 Great Tower Street, London EC3P 3HX, England or through
any other branch notified to the Borrowers from time to time pursuant to Clause
18.3 (and includes all persons directly or indirectly deriving title under it
whether by assignment, amalgamation, operation of law or
otherwise);

    

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

    

    "Manager's Undertaking" means,
in relation to each Ship, an undertaking executed or to be executed by the
Approved Manager in respect of such Ship in the form set out in Appendix E (or
in such other form as the Lender may approve or require) and, in the plural,
means both such Manager's Undertakings;

    

    "Mandatory Cost Rate" means the
percentage rate, which represents the cost to the Lender, relative to the Loan,
of compliance with the requirements of the Bank of England,
the Financial Services Authority or any other regulatory authority, as
determined by the Lender in accordance with the formula detailed in the Schedule
hereto;

    

    "Margin" means, in relation to
each Tranche, zero point seven zero per cent (0.70%) per annum;

    

    "Master Agreement" means the
Master Agreement (on the 1992 ISDA (Multicurrency - Crossborder) form as
modified) dated 13 April 2005 as supplemented by a supplemental agreement dated
13 April 2005 and as further supplemented by a supplemental agreement of even
date herewith made between the Lender and the Borrowers, and includes all
transactions from time to time entered into and confirmations from time to time
exchanged under the Master Agreement and any amending, supplementing or
replacement agreements made from time to time;

    

    "Master Agreement Liabilities"
means, at any relevant time, all liabilities actual or contingent, present or
future, of the Borrowers to the Lender under the Master Agreement;

    

    "Master Agreement Security
Deed" means the deed containing, inter alia, a charge in respect of the
Master Agreement executed or to be executed by the Borrowers in favour of the
Lender substantially in the form set out in Appendix G (or in such other form as
the Lender may approve or require);

    

    "MOAs" means the Ship A MOA and
the Ship B MOA and, in the singular, means either of them;

    

    "Mortgage" means, in relation
to each Ship, the first preferred Marshall Islands ship mortgage over such Ship
executed or to be executed by the relevant Borrower in favour of the Lender
substantially in the form set out in Appendix B (or in such other form as the
Lender may approve or require) and in the plural, means both
Mortgages;

    

    "Notice of Drawing" means a
notice in the form set out in Appendix A (or in such other form as the Lender
may approve or require);

    

    "Operating Accounts" means, for
the time being, in relation to Borrower A, an account to be opened in the name
of Borrower A with the Lender designated "SENASHI - USD1" and, in relation to
Borrower B, an account to be opened in the name of Borrower B with the Lender
designated "NOESHI - USD1" (or in each case such other account with any other
branch of the Lender or with a bank or financial institution other than the
Lender (whether associated with the Lender or not) substituted therefor pursuant
to this Agreement) and in the singular, means either of them;

    
      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    "Original Financial Statements"
means, the audited accounts and financial statements of the Borrower for the
financial year ended 31 December 2005;

    

    "Permitted Security Interests"
means:

    

    
      	
               
      

            	
              (a)

            	
              Security
      Interests created by the Security
Documents;

            

    

    
      	
               
      

            	
              (b)

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

            

    

    

    
      	
               
      

            	
              (c)

            	
              liens
      for salvage;

            

    

    

    
      	
               
      

            	
              (d)

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

            

    

    

    
      	
               
      

            	
              (e)

            	
              liens
      for master's disbursements incurred in the ordinary course of trading and
      any other lien arising by operation of law or otherwise in the ordinary
      course of the operation, repair or maintenance of the Ships, provided such
      liens do not secure amounts more than 30 days overdue (unless the overdue
      amount is being contested by the Borrower in good faith by appropriate
      steps) and subject, in the case of liens for repair or maintenance, to
      Clause 7.1(n) of the relevant
Mortgage;

            

    

    

    
      	
               
      

            	
              (f)

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

            

    

    

    
      	
               
      

            	
              (g)

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

            

    

    

    "RBS LIBOR" means, for an
Interest Period, the rate per annum at which deposits in Dollars in an amount
approximately equal to the Loan (or any part thereof) are (or would have been)
offered by the Lender to leading banks in the London Interbank Dollar Market at
or about 11.00a.m. (London time) on the second Business Day prior to the
commencement of such Interest Period for a period equal to such Interest Period
and for delivery on the first Business Day thereof;

    

    "Receiving Bank" means American
Express Bank Limited, 3 World Financial Centre, 23rd Floor, New York, NY 10285 -
2300 USA, or such branch or other bank as may from time to time be notified by
the Lender to the Borrowers;

    

    "Relevant Interest Rate" means
RBS LIBOR or, in the case where a Transaction is to be, or has been, entered
into under the Master Agreement and the Borrowers have not made an election
pursuant to Clause 3.5(b), TELERATE;

    

    "Repayment Date" means each of
the dates specified in Clause 4.1;

    

    "Repayment Instalments" means
the repayment instalments specified in Clause 4.1 and, in the singular, means
any of them;

    

    "Security Documents" means (a)
the General Assignments, the Manager's Undertakings, the Mortgages, the Account
Charges, the Subordination Letter, the Credit Support Documents and the Master
Agreement Security Deed and (where the context so permits) this Agreement and
(b) any other agreement or document that may be executed at any
time by any of the Borrowers or any other person as security for all or any part
of the Loan, interest thereon, Master Agreement Liabilities and any other moneys
payable to the Lender under or in connection with this Agreement and/or the
Master Agreement and/or any of the documents referred to in this
definition;

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    "Security Interest" means a
mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
encumbrance, assignment, trust arrangement, title retention or other distress,
execution, attachment, arrangement or process of any kind having the effect of
conferring security;

    

    "Security Period" means the
period commencing on the date of this Agreement and terminating on the date upon
which all moneys payable or to become payable at any time and from time to time
pursuant to the terms of this Agreement and/or any of the Security Documents
shall have been paid and discharged in full;

    

    "Seller A" means
Schiffahrtsgesellschaft Ariadne Jacob mbH & Co. KG, a company organised and
existing under the laws of Germany having its registered office at Ballindamm 6,
20095 Hamburg;

    

    "Seller B" means
Schiffahrtsgesellschaft Colin Jacob mbH & Co. KG, a company organised and
existing under the laws of Germany having its registered office at Ballindamm 6,
20095 Hamburg;

    

    "Sellers" means Seller A and
Seller B and, in the singular, means either of them;

    

    "Ship A" means the 2004 built
crude and product tanker of about 72,700 dwt currently named "ARIADNE JACOB" and
registered in the name of Seller A in the German International Ship Registry and
parallel registered under Liberian flag to be purchased by Borrower A pursuant
to the Ship A MOA and registered in the name of Borrower A under the Marshall
Islands flag with the name "SENATORE";

    

    "Ship B" means the 2004 built
crude and product tanker of about 72,700 dwt currently tamed "COLIN JACOB" and
registered in the name of Seller B in the German International Ship Registry and
parallel registered under Liberian flag to be purchased by Borrower B pursuant
to the Ship B MOA and registered in the name of Borrower B under the Marshall
Islands flag with the name "NOEMI";

    

    "Ship A MOA" means the
memorandum of agreement dated 21 March 2005 entered into between Borrower A and
Seller A in respect of the sale by Seller A to, and the purchase by Borrower A
of, Ship A;

    

    "Ship B MOA" means the
memorandum of agreement dated 21 March 2005 entered into between Borrower B and
Seller B in respect of the sale by Seller B to, and the purchase by Borrower B
of, Ship B;

    

    "Ships" means Ship A and Ship B
and, in the singular, means either of them;

     

    "Subordinated Lender" means
Simon Financial Limited, a corporation organised and existing under the laws of
the Republic of Liberia and having its registered office. at 80 Broad Street,
Monrovia, the Republic of Liberia;

    

    "Subordination Letter" means a
letter of subordination to be executed by the Subordinated Lender in favour of
the Lender substantially in the form set out in Appendix H (or in such other
form as the Lender may approve or require);

    

    "Subsidiary" means a body
corporate from time to time of which another (a) has direct or indirect control,
or (b) owns directly or indirectly more than fifty (50) per cent, of the share
capital or similar right of ownership (and in this definition "control" means
the power to direct the management and the policies of a body corporate, whether
through the ownership of voting capital, by contract or otherwise);

    

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    "Taxes" includes all present
and future income, corporation or value-added taxes and all stamp and other
taxes and levies, imposts, deductions, duties, charges and withholdings
whatsoever together with interest thereon and penalties with respect thereto, if
any, and charges, fees or other amounts made on or in respect thereof (and
references to "Taxation" shall be construed accordingly);

    

    "TELERATE" means, for an
Interest Period:

    

    
      	
               
      

            	
              (a)

            	
              the
      rate per annum equal to the offered quotation for deposits in Dollars for
      a period equal to, or as near as, possible equal to, the relevant Interest
      Period which appears on Telerate. Page 3750 at or about 11.00 a.m. (London
      time) on the second Business Day prior to the commencement of that
      Interest Period (and, for the purposes of this Agreement, "Telerate Page
      3750" means the display designated as "page 3750" on the Telerate Service
      or such other page as may replace Page 3750 on that service for the
      purpose of displaying rates comparable to that rate or on such other
      service as may be nominated by the British Bankers' Association as the
      information vendor for the purpose of displaying British Bankers'
      Association Interest Settlement Rates for Dollars);
  or

            

    

    

    
      	
               
      

            	
              (b)

            	
              if
      no rate is quoted on Telerate Page 3750, the rate per annum determined by
      the Lender to be the rate per annum which leading banks in the London
      Interbank Market offer for deposits in Dollars in the London Interbank
      Market at or about 11.00 a.m. (London time) on the second Business Day
      prior to the commencement of that Interest Period for a period equal to
      that Interest Period and for delivery on the first Business Day of
      it;

            

    

    

    "Termination Amount" shall have
the meaning given to such term in Clause 7.3(a) of this Agreement;

    

    "Tranche A" means that part of
the Commitment in the amount of Twenty eight million Dollars ($28,000,000) to be
advanced, subject to the terms of this Agreement, by the Lender to the
Borrowers and as the context may require, the outstanding principal amount
thereof from time to time hereunder;

    "Tranche A Balloon Instahneuit"
has the meaning given to such term in Clause 4.1(a);

    

    "Tranche A Maturity Date" means
the date falling one hundred and twenty (120) months after the Drawdown Date of
Tranche A;

    

    "Tranche B" means that part of
the Commitment in the amount of Twenty eight million Dollars ($28,000,000) to be
advanced, subject to the terms of this Agreement, by the Lender to the Borrowers
and as the context may require, the outstanding principal amount thereof from
time to time hereunder;

    

    "Tranche B Balloon Instalment"
has the meaning given to such term in Clause 4.1(b);

    

    "Tranche B Maturity Date" means
the date falling one hundred and twenty (120) months after the Drawdown Date of
Tranche B;

    

    "Tranches" means together,
Tranche A and Tranche B and, in the singular, means either of them;
and

    

    "Transaction" means a
Transaction as defined in the introductory paragraph of the Master
Agreement.

    

    
      	
              1.3

            	
              In
      this Agreement, references to periods of "months" shall mean a period beginning in
      one calendar month and ending in the relevant calendar month on the day
      numerically corresponding to the day of the calendar month in which such
      period started, provided that (a) if such period started on the last
      Business Day in a calendar month, or if there is no such numerically
      corresponding day, such period shall end on the last Business Day in the
      relevant calendar month and (b) if such numerically corresponding day, is
      not a Business Day, such period shall end on the next following Business
      Day in the same calendar month, or if there is no such Business Day, such
      period shall end on the preceding Business Day (and "month" and "monthly" shall be construed
      accordingly).

            

    

    

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    
      	
              1.4

            	
              In
      this Agreement:

            

    

    

    
      	
              (a)

            	
              Clause
      headings are inserted for convenience only and shall not affect the
      construction of this Agreement and unless otherwise specified, all
      references to Clauses and Appendices are to Clauses of, and Appendices to,
      this Agreement;

            

    

    

    
      	
              (b)

            	
              unless
      the context otherwise requires, words denoting the singular number shall
      include the plural and vice versa;

            

    

    

    
      	
              (c)

            	
              references
      to persons include bodies corporate and
  unincorporate;

            

    

    

    
      	
              (d)

            	
              references
      to assets include property, rights and assets of every
      description;

            

    

    

    
      	
              (e)

            	
              references
      to any document are to be construed as references to such document as
      amended or supplemented from time to time;
and

            

    

    

    
      	
              (f)

            	
              references
      to any enactment include re-enactments, amendments and extensions
      thereof.

            

    

    
      	
              2

            	
              DRAWDOWN

            

    

    

    
      	
              2.1

            	
              Subject
      to the terms of this Agreement, and in reliance (inter alia) on the
      representations and warranties of the Borrowers set out in Clauses 6.1,
      6.2 and 6.3 and the representations and warranties of the Borrowers and
      the other parties to the Security Documents set out in the Security
      Documents, the Lender agrees to make available to the Borrowers a loan
      facility in an amount up to Fifty six million Dollars ($56,000,000) to be
      divided into two tranches being Tranche A and Tranche B for the purposes
      described in Clause 1.1.

            

    

    

    
      	
              2.2

            	
              The
      Borrowers may make a request for the advance of each Tranche by sending to
      the Lender a duly completed Notice of Drawing (which shall be irrevocable)
      to be received by the Lender not later than 11.00 a.m. (London time) two
      (2) Business Days prior to the relevant Drawdown Date, provided that each
      Tranche may only be advanced on a Business Day on or prior to the Final
      Drawdown Date (or such later date as the Lender, in its sole and absolute
      discretion, shall agree).

            

    

    

    
      	
              2.3

            	
              Subject
      to the terms of this Agreement, the Lender shall advance each Tranche to
      the Borrowers on the relevant Drawdown Date as
  follows:

            

    

    

    
      	
              (a)

            	
              in
      the case of Tranche A, by paying the proceeds thereof to the Operating
      Account of Borrower A for immediate payment to Seller A towards
      satisfaction of the Contract Price payable under the Ship A
      MOA;

            

    

    

    
      	
              (b)

            	
              in
      the case of Tranche B, by paying the proceeds thereof to the Operating
      Account of Borrower B for immediate payment to Seller B towards
      satisfaction of the Contract Price payable under the Ship B
      MOA;

            

    

    

    and the
Borrowers hereby unconditionally and irrevocably authorise the Lender to make
such payments on their behalf.

    

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    3             
INTEREST AND INTEREST PERIODS

    

    
      	
              3.1

            	
              Subject
      to the terms of this Agreement, the rate of interest applicable to each
      Tranche (or any part thereof) for each Interest Period relating thereto
      shall be the rate per annum determined by the Lender to be the aggregate
      of (a) the Margin and (b) the Mandatory Cost Rate and (c) the Relevant
      Interest Rate.

            

    

    

    
      	
              3.2

            	
              Subject
      to the terms of this Agreement, the Borrowers shall pay interest in
      respect of each Tranche for each Interest Period relating thereto in
      arrears on the last day of such Interest Period, provided that where such
      Interest Period is of a duration of longer than three months, accrued
      interest in respect of the Loan (or such part) shall be paid quarterly
      during such Interest Period and on the last day of such Interest
      Period.

            

    

    

    
      	
              3.3

            	
              The
      duration of each Interest Period shall be three (3), six (6) or twelve
      (12) months as notified by the Borrowers to the Lender not later than
      11.00 a.m. (London time) two (2) Business Days prior to the commencement
      of such Interest Period (or such other period as the Lender, in its sole
      and absolute discretion, may agree), provided
  that:

            

    

     

    
      	
              (a)

            	
              the
      first Interest Period in relation to each Tranche shall commence on its
      respective Drawdown Date and each subsequent Interest Period shall
      commence on the expiry of the preceding Interest Period relating
      thereto;

            

    

    

    
      	
              (b)

            	
              if
      the Borrowers fail to select an Interest Period then, subject as provided
      in this Clause 3.3, the Borrowers shall be deemed to have selected an
      Interest Period of three (3)
months;

            

    

    

    
      	
              (c)

            	
              the
      selection of Interest Periods under this Clause 3.3 shall be made in such
      manner as to ensure that the expiry of an Interest Period in respect of an
      amount of a Tranche equal to the repayment instalment which is then due to
      be repaid under Clause 4.1 in relation to such Tranche shall coincide with
      each Repayment Date relating to such Tranche (and, for this purpose alone,
      shall Interest Periods of different lengths be selected in relation to
      each Tranche); and

            

    

    

    
      	
              (d)

            	
              the
      Lender, in its sole and absolute discretion, is satisfied that deposits in
      Dollars for a period equal to such Interest Period will be available to
      the Lender in the London Interbank Dollar Market at the commencement of
      such Interest Period and, if the Lender is not so satisfied, such Interest
      Period shall be of such duration as the Lender and the Borrowers shall
      agree (or, in the absence of such agreement, as the Lender shall
      specify).

            

    

    

    
      	
              3.4

            	
              In
      the event that the Lender does not receive on the due date any sum due
      under this Agreement or any of the Security Documents to which the
      Borrowers are a party (or any agreement entered into by either of the
      Borrowers in connection herewith or therewith), the Borrowers shall pay to
      the Lender on demand interest on such sum from and including the due date
      therefor to the date of actual payment (as well after as before judgment)
      at the rate per annum determined by the Lender to be, if such sum is
      principal; one per cent. (1%) above the higher of the rates set out at (a)
      and (b) below and, if such sum is other than principal, one per cent. (1%)
      above the rate set out at (b)
below:

            

    

    

    
      	
              (a)

            	
              the
      rate (inclusive of the Margin) applicable to such overdue principal
      immediately prior to the due date (and in any event only for the unexpired
      part of any Interest Period relative to such overdue principal) together
      with the Mandatory Cost Rate;

            

    

    

    
      	
              (b)

            	
              the
      Margin plus the rate per annum at which deposits in Dollars in an amount
      equal to such overdue amount are offered by the Lender to leading banks in
      the London Interbank Dollar Market on call or for successive periods of
      any duration up to three months, as the Lender may determine from time to
      time together with the Mandatory Cost Rate. Such interest rate shall be
      determined on the commencement of each such period. If the Lender
      determines that Dollar deposits are not being made available by it to
      leading banks in the London Interbank Dollar Market in the ordinary course
      of business, such interest rate shall be determined by reference to the
      cost of funds to the Lender from such other sources as the Lender may from
      time to time determine.

            

    

    

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    Any such
interest which is not paid when due shall be compounded at the end of each such
Interest Period or other period as the case may be (both before and after any
notice of demand by the Lender under Clause 9.2).

     

    Such a
default rate of interest will not apply to any late payment if and so long as
any delay to such payment is due solely to technical problems within the
Lender's payment system beyond the control of the Borrowers.

    

    
      	
              
                3.5

              

            	
               

            

    

    

    
      	
              (a)

            	
              In
      the event that a Transaction is to be entered into under the Master
      Agreement then (subject to Clause 3.5(b) below) the Relevant Interest Rate
      for each and every Interest Period applicable to that part of the Loan the
      subject of the Transaction (commencing with the first Interest Period
      relating to such Transaction) shall be
TELERATE.

            

    

    

    
      	
              (b)

            	
              The
      Borrowers may elect for the Relevant Interest Rate for each and every
      Interest Period applicable to that part of the Loan the subject of a
      Transaction (commencing with the first Interest Period relating to such
      Transaction) to be RBS LIBOR rather than TELERATE provided that such
      election (which shall be irrevocable) is notified in writing by the
      Borrowers to the Lender not later than 11.00 a.m. (London time) three (3)
      Business Days prior to the commencement of such first Interest Period (or
      such other period as the Lender, in its sole and absolute discretion, may
      agree).

            

    

    

    4             
REPAYMENT AND PREPAYMENT

    

    
      	
              
                4.1

              

            	
               

            

    

    

    
      	
              (a)

            	
              The
      Borrowers shall repay Tranche A by (i) forty (40) consecutive quarterly
      instalments each to be in the amount of Four hundred and fifty thousand
      Dollars ($450,000), the first such instalment to be repaid three months
      after the Drawdown Date in respect of such Tranche and the fortieth and
      final of such instalments to be repaid on the Tranche A Maturity Date and
      (ii) a balloon instalment to be in the amount of Ten million Dollars
      ($10,000,000) (the "Tranche A Balloon
      Instalment"), such Tranche A Balloon Instalment to be repaid on the
      Tranche A Maturity Date.

            

    

    

    
      	
              (b)

            	
              The
      Borrowers shall repay Tranche B by (i) forty (40) quarterly instalments
      each to be in the amount of Four hundred and fifty thousand Dollars
      ($450,000), the first such instalment to be repaid three (3) months after
      the Drawdown Date in respect of such Tranche and the fortieth and final of
      such instalments to be repaid on the Tranche B Maturity Date and (ii) a
      balloon instalment to be in the amount of Ten million Dollars
      ($10,000,000) (the "Tranche B Balloon
      Instalment"), such Tranche B Balloon Instalment to be repaid on the
      Tranche B Maturity Date.

            

    

    

    
      	
              4.2

            	
              The
      Borrowers may prepay the whole or any part of a Tranche on any Business
      Day, provided that:

            

    

    

    
      	
              (a)

            	
              the
      Lender shall have received from the Borrowers not less than fourteen (14)
      days' prior written notice (which shall be irrevocable) of their intention
      to make such prepayment and specifying the amount and date on which such
      prepayment is to be made and the Tranche against which such payment is to
      be applied;

            

    

     

    
      	
              (b)

            	
              the
      amount of any such partial prepayment shall be not less than Five hundred
      thousand Dollars ($500,000) (or a higher integral multiple of Five hundred
      thousand Dollars ($500,000));

            

    

    

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    
      	
              (c)

            	
              no
      amount prepaid under this Agreement may be
  reborrowed;

            

    

    

    
      	
              (d)

            	
              each
      prepayment under this Agreement shall be made together with accrued
      interest on the amount prepaid and all other sums payable thereon under
      the terms of this Agreement and, if such prepayment is not made on the
      last day of an Interest Period relating to the amount prepaid, together
      with any sums payable pursuant to Clause 14.1(d) but without premium or
      other payment;

            

    

    

    
      	
              (e)

            	
              each
      partial prepayment of a Tranche under this Agreement shall (unless the
      Lender otherwise agrees in writing prior to the date of any relevant
      repayment) be applied against the.instalments of such Tranche in inverse
      order of maturity.

            

    

    

    
      	
              4.3

            	
              In
      the event of an arm's length sale of either of the Ships the subject of a
      Mortgage to a party unconnected to the Borrowers or in the event of a
      Total Loss of either of the Ships the subject of a Mortgage, the Borrower
      shall only be obliged to prepay the Tranche relative to such Ship (with
      the balance of the sale or Total Loss proceeds being released to the
      Borrowers) if:

            

    

    

    
      	
              (a)

            	
              the
      Borrowers and all other parties to the Security Documents are in
      compliance with all their covenants and undertakings in this Agreement and
      the Security Documents; and

            

    

    

    
      	
              (b)

            	
              no
      Event of Default (or event which, with the giving of notice and/or lapse
      of time or other applicable condition, might constitute an Event of
      Default) shall have occurred and is continuing;
  and

            

    

    

    
      	
              (c)

            	
              the
      security maintenance covenant set out in Clause 7.3 will be met in
      relation to the remaining Ship immediately following such prepayment;
      and

            

    

    

    
      	
              (d)

            	
              such
      prepayment is made in accordance with sub-clauses (c), (d) and (e) of
      Clause 4.2 immediately upon the completion of such sale or (subject to
      Clause 9.1(m)) the receipt of the insurance proceeds in respect of such
      Total Loss.

            

    

    

    
      	
              4.4

            	
              If
      for any reason any part of the Loan is not drawn down under this Agreement
      but nonetheless a Transaction has been entered into under the Master
      Agreement then, subject to Clause 4.6, the Lender shall be entitled but
      not obliged to amend, supplement, cancel, net out, terminate, liquidate,
      transfer or assign all or any part of the rights, benefits and obligations
      created by the Master Agreement and/or to obtain or re-establish any hedge
      or related trading position in any manner and with any person the Lender
      decides, and in the event of the Lender exercising any part of its
      entitlement aforesaid the Borrowers' continuing obligations under the
      Master Agreement shall, unless agreed otherwise by the Lender, be
      calculated so far as the Lender considers it practicable by reference to
      the repayment schedule for the Loan taking into account the fact that less
      than the full amount of the Loan has been
  advanced.

            

    

     

    
      	
              4.5

            	
              In
      the case of a prepayment of all or part of the Loan or a Tranche under
      this Agreement then, subject to Clause 4.6, the Lender shall be entitled
      but not obliged to amend, supplement, cancel, net out, transfer or assign
      all or such part of the rights, benefits and obligations created by the
      Master Agreement which equate or relate to the part of the Loan or Tranche
      so prepaid and/or to obtain or re-establish any hedge or related trading
      position in any manner and with any person the Lender decides, and in the
      case of a partial prepayment and the Lender exercising any part of its
      entitlement as aforesaid the Borrowers' continuing obligations under the
      Master Agreement shall, unless agreed otherwise by the Lender, be
      calculated so far as the Lender considers it practicable by reference to
      the amended repayment schedule for the Loan taking account of the fact
      that less than the full amount of the Loan remains
      outstanding.

            

    

    

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    
      	
              4.6

            	
              If:

            

    

    

    
      	
              (a)

            	
              less
      than the full amount of the Loan or a Tranche remains outstanding
      following a prepayment under this Agreement;
or

            

    

    

    
      	
              (b)

            	
              less
      than the full amount of the Loan is drawndown under this
      Agreement,

            

    

    

    and the
Lender agrees, following a written request of the Borrowers, that the Borrowers
may be permitted to maintain all or part of a Transaction in an amount not
wholly matched with or linked to all or part of the Loan, the Borrowers shall
within ten (10) days of being notified by the Lender of such requirement provide
the Lender with, or procure the provision to the Lender of, such additional
security as shall in the opinion of the Lender be adequate to secure the
performance of such Transaction, which additional security shall take such form,
be constituted by such documentation, and be entered into between such parties,
as the Lender may approve or require, and each document comprising such
additional security shall constitute a Credit Support Document.

    

    
      	
              4.7

            	
              The
      Borrowers shall on the first written demand of the Lender indemnify the
      Lender in respect of all loss, cost and expense (including the fees of
      legal advisers) incurred or sustained by the Lender as a consequence of or
      in relation to the effecting of any matters or transactions referred to in
      Clauses and 4.6.

            

    

    

    
      	
              4.8

            	
              Without
      prejudice to or limitation of the obligations of the Borrowers under
      Clause 4.7, in the event that the Lender exercises any of its rights under
      Clauses 4.4 or 4.5 and such exercise results in all or part of a
      Transaction being terminated such termination shall be treated under the
      Master Agreement in the same manner as if it were a Terminated Transaction
      (as defined in section 14 of the Master Agreement) effected by the Lender
      after an Event of Default by the Borrowers, and, accordingly, the Lender
      shall be permitted to recover from the Borrowers a payment for early
      termination calculated in accordance with the provisions of section
      6(e)(i) of the Master Agreement.

            

    

    

    5             
CONDITIONS PRECEDENT

    

    
      	
              5.1

            	
              The
      obligation of the Lender to advance any of the Tranches to the Borrowers
      shall be subject to the condition that the Lender shall have received the
      following documents and evidence
      in all respects in form and substance satisfactory to the Lender and its
      legal advisers on or before the date of this
    Agreement:

            

    

     

    
      	
              (a)

            	
              copies
      of the Memorandum and Articles of Association (or equivalent documents)
      (and all amendments thereto) of each of the Borrowers and any other
      documents required to be filed or registered or issued under the laws of
      their respective countries of incorporation to establish their
      incorporation and/or good standing;

            

    

    

    
      	
              (b)

            	
              copies
      of resolutions passed at separate meetings of the board of directors and
      shareholders of each of the Borrowers evidencing approval of such of this
      Agreement, the relevant MOA, the Master Agreement and the Security
      Documents to which each is a party and authorising appropriate officers or
      attorneys to execute the same and to sign all notices required to be given
      hereunder or thereunder on its behalf or other evidence of such approvals
      and authorisations as shall be acceptable to the Lender (or, in the case
      of the MOA, ratifying the execution
thereof);

            

    

    

    
      	
              (c)

            	
              the
      original of any power of attorney issued in favour of any person executing
      this Agreement, the Master Agreement or any of the Security Documents on
      behalf of the Borrowers;

            

    

    

    
      	
              (d)

            	
              a
      list specifying the directors and officers of each of the Borrowers
      (together with their specimen signatures) and specifying the authorised
      and issued share capital of each of the
  Borrowers;

            

    

    

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    
      	
              (e)

            	
              copies
      of all governmental and other consents, licences, approvals and
      authorisations as may be necessary to authorise the performance by the
      Borrowers of their respective obligations under those of this Agreement,
      the relevant MOA, the Master Agreement and the Security Documents to which
      each is a party and the execution, validity and enforceability of this
      Agreement, the Master Agreement and the Security
  Documents;

            

    

    

    
      	
              (f)

            	
              a
      statement in writing from a person satisfactory to the Lender confirming
      the identity of the legal and beneficial owner of the shares in each
      of the Borrowers and of the ultimate beneficial owner or owners of the
      shares in each of the Borrowers;

            

    

    

    
      	
              (g)

            	
              the
      Master Agreement Security Deed and the Subordination Letter duly executed
      and delivered by the parties thereto together with such evidence as the
      Lender and its legal advisers shall require in relation to the due
      authorisation and execution by the Subordinated Lender of the
      Subordination Letter;

            

    

    

    
      	
              (h)

            	
              a
      written confirmation from the Borrowers as to which individuals are
      authorised to give verbal and/or written instructions to the Lender on
      behalf of the Borrowers in respect of the selection of any Interest Period
      pursuant to Clause 3.3 of this
Agreement;

            

    

    

    
      	
              (i)

            	
              evidence
      that the agent for service of process named in Clause 21.5 has accepted
      its appointment for the purposes of this Agreement and the Security
      Documents;

            

    

     

    
      	
              (j)

            	
              favourable
      legal opinions from lawyers appointed by the Lender on such matters
      concerning the laws of the Marshall Islands and such other relevant
      jurisdictions as the Lender may
require;

            

    

    

    
      	
              (k)

            	
              evidence
      that the Lender has received the arrangement fees payable and due pursuant
      to Clause 10.1; and

            

    

    

    
      	
              (l)

            	
              such
      documents and evidence as the Lender shall require in relation to each
      Borrower based on applicable law and regulations, and the Lender's own
      internal guidelines, relating to the Lender's knowledge of its
      customers;

            

    

    

    each of
the documents specified in sub-clauses (a), (b), (d) and (e) above shall be
certified as a true and up-to-date copy by a Director or Secretary (or
equivalent officer) of the relevant Borrower as the case may be.

    

    
      	
              5.2

            	
              The
      obligation of the Lender to advance Tranche A shall be subject to the
      condition that the Lender shall have received the following documents and
      evidence in all respects in form and satisfactory to the Lender and its
      legal advisers on or before the Drawdown Date relating
      thereto:

            

    

    

    
      	
              (a)

            	
              evidence
      that each of the conditions specified in Clause 5.1 have been
      satisfied;

            

    

    

    
      	
              (b)

            	
              evidence
      that the Operating Account in relation to Ship A has been duly opened by
      Borrower A and that all board resolutions, mandates, signature cards and
      other documents or evidence required in connection with the opening,
      maintenance and operation of such Operating Account have been duly
      delivered to the Lender;

            

    

    

    
      	
              (c)

            	
              to
      the extent required by any change in applicable law and regulation or any
      changes in the Lender's own internal guidelines since the date on which
      the applicable documents and evidence were delivered to the Lender
      pursuant to Clause 5.1(1), such further documents and evidence as the
      Lender shall require relating to the Lender's knowledge of its
      customers;

            

    

    

    
      	
              (d)

            	
              a
      certified true and up-to-date copy of the Ship A MOA certified by a
      Director or Secretary (or equivalent officer) of Borrower
    A;

            

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    
      	
              (e)

            	
              such
      evidence as the Lender and its legal advisers shall require in relation to
      the due authorisation and execution by Seller A and Borrower A of the Ship
      A MOA and all documents to be executed by Seller A and Borrower A pursuant
      thereto;

            

    

    

    
      	
              (f)

            	
              the
      Mortgage, the General Assignment and the Account Charge relating to
      Borrower A and Ship A duly executed and delivered by the parties thereto
      together with all other items and documents required to be delivered
      pursuant to the terms thereof, including (but without limitation)
      insurance notices of assignment, acknowledgements and letters of
      undertaking pursuant to such General
Assignment;

            

    

    

    
      	
              (g)

            	
              evidence
      that:

            

    

     

    
      	 	
              (i)

            	
              Ship
      A has been unconditionally delivered by Seller A, and accepted by
      Borrower  A, pursuant to the Ship A MOA together with evidence
      that the full Contract Price in respect of Ship A payable to Seller A
      under the Ship A MOA (in addition to the part thereof to be financed by
      way of Tranche A) has been duly paid or will be paid upon the advance of
      Tranche A;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Ship
      A is provisionally registered in the name of Borrower A under the Marshall
      Islands flag;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Ship
      A is in the absolute and unencumbered ownership of Borrower A save as
      contemplated by this Agreement and the relevant' Security
      Documents;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              Ship
      A maintains the highest classification available to it with American
      Bureau of Shipping or such other classification society acceptable to the
      Lender in its absolute discretion free of all recommendations and
      qualifications of such classification society save those notified and
      approved in writing by the Lender;

            

    

    

    
      	
               
      

            	
              (v)

            	
              the
      relevant Mortgage has been duly registered against Ship A as a valid first
      preferred ship mortgage in accordance with the laws of the Republic of The
      Marshall Islands;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              Ship
      A is insured in accordance with the provisions of the relevant
      Mortgage;

            

    

    

    
      	
              (h)

            	
              a
      valuation (on a charter free basis) of Ship A, dated not earlier than
      thirty (30) days prior to the relevant Drawdown Date, from an independent
      London sale and purchase shipbroker acceptable to the Lender showing that
      the minimum security covenant contained in Clause 7.3 will be complied
      with immediately following the advance of Tranche
  A;

            

    

    

    
      	
              (i)

            	
              in
      relation to Ship A, evidence that it will, as from the Drawdown Date
      relating to Tranche A, be managed by the Approved Manager on terms
      acceptable to the Lender together
with:

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      Manager's Undertaking relative to such Ship duly executed and delivered by
      the Approved Manager;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              copies
      of the document of compliance (DOC) and safety management certificate
      (SMC) referred to in paragraph (a) in the definition of the ISM Code
      Documentation certified as true and in effect by Borrower A and the
      Approved Manager or, in the event that the DOC and SMC are not legally
      required by Borrower A for such Ship at the Drawdown Date, evidence that
      those documents have been applied for, accompanied by a statement from a
      director or officer of Borrower A and the Approved Manager that neither of
      them is aware of any reason why such application may be
      refused;

            

    

    

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    
      	
               
      

            	
              (iii)

            	
              a
      copy of the ISSC certified as true and in effect by Borrower A and the
      Approved Manager;

            

    

     

    
      	
              (j)

            	
              in
      relation to Ship A, a letter from Borrower A to the protection and
      indemnity association in which such Ship is or is to be entered
      instructing it to provide the Lender with a copy of the certificate of
      entry of such Ship and any other information relating to the entry of such
      Ship in such protection and indemnity
  association;

            

    

    

    
      	
              (k)

            	
              such
      further legal opinions from lawyers appointed by the Lender on such
      matters concerning the laws of the Marshall Islands and such other
      relevant jurisdictions as the Lender may
  require;

            

    

    

    
      	
              (l)

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

            

    

    

    
      	
              (m)

            	
              such
      evidence as the Lender and its legal advisers shall require that such part
      of the acquisition cost of Ship A which has not been funded out of the
      proceeds of the Commitment and which has been borrowed by Borrower A is
      subordinated to the obligations of Borrower A to the Lender under this
      Agreement and the Master Agreement in terms satisfactory to the Lender in
      its absolute discretion;

            

    

    

    
      	
              (n)

            	
              evidence
      that Ship A is free from the bareboat charter the subject of its bareboat
      registration under Liberian flag and evidence that Ship A has been deleted
      from both the German International Ship Registry and the Liberian Ship
      Registry free from all registered encumbrances, or in the alternative,
      evidence that Ship A will be so deleted within such period as the Lender
      shall require and that, in any event there are no encumbrances registered
      against Ship A in either of such registries;
and

            

    

    

    
      	
              (o)

            	
              in
      relation to Ship A, evidence that it will as from the Drawdown Date
      relating to Tranche A, be entered into the Jacob-Scorpio Tanker Pool
      Limited Pool and be commercially managed by the commercial managers of the
      Jacob-Scorpio Tanker Pool Limited Pool on terms acceptable to the
      Lender.

            

    

    

    
      	
              5.3

            	
              The
      obligation of the Lender to advance Tranche B shall be subject to the
      condition that the Lender shall have received the following documents and
      evidence in all respects in form and satisfactory to the Lender and its
      legal advisers on or before the Drawdown Date relating
      thereto:

            

    

    

    
      	
              (a)

            	
              evidence
      that each of the conditions specified in Clauses 5.1 and 5.2 have been
      satisfied;

            

    

    

    
      	
              (b)

            	
              evidence
      that the Operating Account in relation to Ship B has been duly opened by
      Borrower B and that all board resolutions, mandates, signature cards and
      other documents or evidence required in connection with the opening,
      maintenance and operation of such Operating Account have been duly
      delivered to the Lender;

            

    

    

    
      	
              (c)

            	
              to
      the extent required by any change in applicable law and regulation or any
      changes in the Lender's own internal guidelines since the date on which
      the applicable documents and evidence were delivered to the Lender
      pursuant to Clause 5.1(1), such further documents and evidence as the
      Lender shall require relating to the Lender's knowledge of its
      customers;

            

    

     

    
      	
              (d)

            	
              a
      certified true and up-to-date copy of the Ship B MOA certified by a
      Director or Secretary (or equivalent officer) of Borrower
    B;

            

    

    

    
      	
              (e)

            	
              such
      evidence as the Lender and its legal advisers shall require in relation to
      the due authorisation and execution by Seller B and Borrower B of the Ship
      B MOA and all documents to be executed by Seller B and Borrower B pursuant
      thereto;

            

    

    

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    
      	
              (f)

            	
              the
      Mortgage, the General Assignment and the Account Charge relating to
      Borrower B and Ship B duly executed and delivered by the parties thereto
      together with all other items and documents required to be delivered
      pursuant to the terms thereof, including (but without limitation)
      insurance notices of assignment, acknowledgements and letters of
      undertaking pursuant to such General
Assignment;

            

    

    

    
      	
              (g)

            	
              evidence
      that:

            

    

    

    
      	
               
      

            	
              (i)

            	
              Ship
      B has been unconditionally delivered by Seller B, and accepted by Borrower
      B, pursuant to the Ship B MOA together with evidence that the full
      Contract Price in respect of Ship B payable to Seller B under the Ship B
      MOA (in addition to the part thereof to be financed by way of Tranche B)
      has been duly paid or will be paid upon the advance of Tranche
      B;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Ship
      B is provisionally registered in the name of Borrower B under the Marshall
      Islands flag;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Ship
      B is in the absolute and unencumbered ownership of Borrower B save as
      contemplated by this Agreement and the relevant Security
      Documents;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              Ship
      B maintains the highest classification available to it with American
      Bureau of Shipping or such other classification society acceptable to the
      Lender in its absolute discretion free of all recommendations and
      qualifications of such classification society save those notified and
      approved in writing by the Lender;

            

    

    

    
      	
               
      

            	
              (v)

            	
              the
      relevant Mortgage has been duly registered against Ship B as a valid first
      preferred ship mortgage in accordance with the laws of the Republic, of
      The Marshall Islands;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              Ship
      B is insured in accordance with the provisions of the relevant
      Mortgage;

            

    

    

    
      	
              (h)

            	
              a
      valuation (on a charter free basis) of Ship B, dated not earlier than
      thirty (30) days prior to the relevant Drawdown Date, from an independent
      London sale and purchase shipbroker acceptable to the Lender showing that
      the minimum security covenant contained in Clause 7.3 will be complied
      with the immediately following the advance of Tranche
  15;

            

    

    

    
      	
              (i)

            	
              in
      relation to Ship B, evidence that it will, as from the Drawdown Date
      relating to Tranche B, be managed by the Approved Manager on terms
      acceptable to the Lender together
with:

            

    

     

    
      	
              (i)

            	
              the
      Manager's Undertaking relative to such Ship duly executed and delivered by
      the Approved Manager;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              copies
      of the document of compliance (DOC) and safety management certificate
      (SMC) referred to in paragraph (a) in the definition of the ISM Code
      Documentation certified as true and in effect by Borrower B and the
      Approved Manager or, in the event that the DOC and SMC are not legally
      required by Borrower B for such Ship at the Drawdown Date, evidence that
      those documents have been applied for, accompanied by a statement from a
      director or officer of Borrower B and the Approved Manager that neither of
      them is aware of any reason why such application may be
      refused;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              a
      copy of the ISSC certified as true and in effect by Borrower B and the
      Approved Manager;

            

    

    

    
      	
              (j)

            	
              in
      relation to Ship B, a letter from Borrower B to the protection and
      indemnity association in which such Ship is or is to be entered
      instructing it to provide the Lender with a copy of the certificate of
      entry of such Ship and any other information relating to the entry of such
      Ship in such protection and indemnity
  association;

            

    

    

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    
      	
              (k)

            	
              such
      further legal opinions from lawyers appointed by the Lender on such
      matters concerning the laws of the Marshall Islands and other relevant
      jurisdictions as the Lender may
require;

            

    

    

    
      	
              (l)

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

            

    

    

    
      	
              (m)

            	
              such
      evidence as the Lender and its legal advisers shall require that such part
      of the acquisition cost of Ship B which has not been funded out of the
      proceeds of the Commitment and which has been borrowed by Borrower B is
      subordinated to the obligations of Borrower B to the Lender under this
      Agreement and the Master Agreement in terms satisfactory to the Lender in
      its absolute discretion;

            

    

    

    
      	
              (n)

            	
              evidence
      that Ship B is free from the bareboat charter the subject of its bareboat
      registration under Liberian flag and evidence that Ship B has been deleted
      from both the German International Ship Registry and the Liberian Ship
      Registry free from all registered encumbrances, or in the alternative,
      evidence that Ship B will be so deleted within such period as the Lender
      shall require and that, in any event there are no encumbrances registered
      against Ship B in either of such registries;
and

            

    

    

    
      	
              (o)

            	
              in
      relation to Ship B, evidence that it will as from the Drawdown Date
      relating to Tranche B, be entered into the Jacob-Scorpio Tanker Pool
      Limited Pool and be commercially managed by the commercial managers of the
      Jacob-Scorpio Tanker Pool Limited Pool on terms acceptable to the
      Lenders.

            

    

    

    
      	
              5.4

            	
              Without
      prejudice to any of the other provisions of this Agreement, in the event
      that the Lender, in its sole and absolute discretion, advances any of the
      Tranches to the Borrowers prior to the satisfaction of all or any of the
      conditions referred to in Clauses 5.1, 5.2 and 5.3,
      the Borrowers hereby covenant and undertake to satisfy or procure the
      satisfaction of such condition or conditions within fourteen (14) days
      after the relevant Drawdown Date (or such longer period as the Lender may,
      in its sole and absolute discretion, agree or
    specify).

            

    

     

    
      	
              5.5

            	
              The
      obligation of the Lender to advance a Tranche is subject to the following
      further conditions:

            

    

    

    
      	
              (a)

            	
              that
      both at the date of the relevant Notice of Drawing and on the relevant
      Drawdown Date:

            

    

    

    
      	
               
      

            	
              (i)

            	
              no
      Event of Default (or event which, with the giving of notice and/or lapse
      of time or other applicable condition, might constitute an Event of
      Default) has occurred and is continuing or might result from the advance
      of the relevant Tranche;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      representations and warranties of the Borrowers in Clause 6.1 and the
      representations and warranties of the Borrowers and other parties to the
      Security Documents set out in the Security Documents are true and accurate
      as of each such date, as if made on each such date with reference to the
      facts then subsisting;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              none
      of the circumstances specified in Clause 13.3 has occurred and is
      continuing; and

            

    

    

    
      	
              (b)

            	
              the
      Lender has received, and found to be satisfactory to it in all respects,
      such further opinions, consents, agreements and documents in connection
      with this Agreement, the Master Agreement and the Security Documents as
      the Lender may reasonably request by notice to the Borrowers prior to the
      Drawdown Date.

            

    

    

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    6            
REPRESENTATIONS AND WARRANTIES

    

    
      	
              6.1

            	
              Each
      of the Borrowers hereby jointly represents and warrants to the Lender
      that:

            

    

    

    
      	
              (a)

            	
              each
      Borrower is a body corporate duly organised and validly existing and in
      good standing under the laws of the Marshall Islands and has an authorised
      share capital of $1,500 divided into 1500 shares of $1 each, all of which
      shares have been issued fully paid and are in the legal and beneficial
      ownership of Simon Financial
Limited;

            

    

    

    
      	
              (b)

            	
              each
      Borrower has full power and authority to (i) to execute and deliver the
      relevant MOA to purchase and pay for the relevant Ship pursuant to that
      MOA and register its Ship in its name under the Marshall Islands flag,
      (ii) to execute and deliver this Agreement, the Master Agreement and the
      Security Documents to which it is a party, (iii) to borrow under this
      Agreement and (iv) to comply with the provisions of and perform all its
      obligations under, this Agreement, the Master Agreement and the Security
      Documents to which it is a party;

            

    

    

    
      	
              (c)

            	
              each
      Borrower has complied with or, where relevant, shall have procured that
      the Approved Manager has complied with the ISM Code and the ISPS Code and
      all other statutory and other requirements relative to its business and in
      particular has obtained and maintains
      a valid SMC, DOC and ISSC and, where at the date of this Agreement it is
      not required by law to have obtained an SMC and a DOC, it has applied for
      an SMC and a DOC and has no reason to believe that such application will
      be refused within the period allowed to it to obtain those items to comply
      with the ISM Code and neither Borrower has an established place of
      business in any part of the United Kingdom or the United States of
      America;

            

    

     

    
      	
              (d)

            	
              each
      Borrower has taken all necessary action to authorise the borrowing of the
      Loan and the execution and delivery of this Agreement, the Master
      Agreement and the Security Documents to which such Borrower is a party,
      and this Agreement, the Master Agreement, and the Security Documents to
      which such Borrower is a party, constitute or, as the case may be, will,
      upon execution and delivery thereof (and, where applicable, registration
      thereof as provided for in this Agreement and the Security Documents),
      constitute each Borrower's legal, valid and binding obligations
      enforceable against it in accordance with their respective terms, except
      as such enforcement may be limited by any relevant bankruptcy, insolvency,
      administration or similar laws affecting creditors' rights
      generally;

            

    

    

    
      	
              (e)

            	
              the
      entry into and performance  by each Borrower of this Agreement,
      the Master Agreement and the Security Documents to it is a party, do not,
      and will not during the Security Period, violate in any respect (i) any
      law or regulation of any governmental or official authority or body, or
      (ii) its constitutional documents, or (iii) any agreement, contract or
      other undertaking to which it is a party or which is binding on it or any
      of its assets;

            

    

    

    
      	
              (f)

            	
              all
      consents, licences, approvals and authorisations required in connection
      with the entry into, performance, validity and enforceability of the MOAs,
      this Agreement, the Master Agreement and the Security Documents have been
      obtained and are in full force and
effect;

            

    

    

    
      	
              (g)

            	
              save
      for such registrations and filings as are referred to in this Agreement
      and the Security Documents, it is not necessary for the legality,
      validity, enforceability or admissibility in evidence of this Agreement,
      the Master Agreement and the Security Documents that any of them or any
      document relating thereto be registered, filed, recorded or enrolled with
      any court or authority in any relevant jurisdiction or that any stamp,
      registration or similar Taxes be paid on or in relation to this Agreement,
      the Master Agreement or any of the Security
  Documents;

            

    

    

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    
      	
              (h)

            	
              no
      action, suit, proceeding, litigation or dispute against either Borrower is
      currently taking place or pending or, to either Borrower's knowledge,
      threatened nor is there subsisting any judgment or award given against
      either Borrower before any court, board of arbitration or other body
      which, in either case, could or might result in any material adverse
      change in the business or condition' (financial or otherwise) of either
      Borrower other than such proceedings which are being contested in good
      faith by appropriate legal proceedings and particulars of which have been
      provided to the Lender;

            

    

     

    
      	
              (i)

            	
              neither
      Borrower is in default under the Master Agreement or any other agreement
      by which it is bound and no Event of Default (or event which, with the
      giving of notice and/or lapse of time or other applicable condition might
      constitute an Event of Default) has occurred and is continuing nor will
      such a default or Event of Default (or such event) result from the
      purchase of either Ship, the entry by the Borrowers into this Agreement,
      the Master Agreement and the Security Documents to which each Borrower is
      a party, the making of the Loan to the Borrowers or the performance by
      each Borrower of any of its obligations under this Agreement, the Master
      Agreement and the Security Documents to which it is a
    party;

            

    

    

    
      	
              (j)

            	
              all
      financial and other information furnished by or on behalf of the Borrowers
      in connection with the negotiation of this Agreement and the Security
      Documents or delivered to the Lender pursuant to this Agreement or any of
      the Security Documents was true and accurate when given and there are no
      other facts or matters the omission of which would have made any statement
      or information contained therein
misleading;

            

    

    

    
      	
              (k)

            	
              all
      payments made or to be made by the Borrowers under or pursuant to this
      Agreement, the Master Agreement and the Security Documents to which it is
      a party may be made free and clear of, and without deduction or
      withholding for or on account of, any
Taxes;

            

    

    

    
      	
              (l)

            	
              the
      copies of the MOAs delivered to the Lender prior to the date of this
      Agreement are true and complete copies thereof constituting valid, binding
      and enforceable obligations of the Sellers and the Borrowers respectively
      in accordance with their terms and no amendments thereto or variations
      thereof have been (or will be) agreed nor has any action been taken by
      such parties which, would in any way render either MOA inoperative or
      unenforceable;

            

    

    

    
      	
              (m)

            	
              there
      are no commissions, rebates, premiums or other payments in connection with
      the MOAs or the purchase by the Borrowers of the Ships, other than as
      disclosed to the Lender in writing on or prior to the date of this
      Agreement;

            

    

    

    
      	
              (n)

            	
              each
      Borrower's place of business and offices are located, and the corporate
      documents and records of the Borrower are kept at Trust Company Complex,
      Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
      MH96960;

            

    

    

    
      	
              (o)

            	
              at
      the date of this Agreement, neither Borrower is liable under or in respect
      of any Financial Indebtedness other than (i) under the MOAs, this
      Agreement, the Master Agreement and the Security Documents to which it is
      a party, (ii) such Financial Indebtedness as shall have been notified to,
      and approved by, the Lender on or prior to the date of this Agreement and
      (iii) to the Subordinated Lender;

            

    

    

    
      	
              (p)

            	
              each
      Borrower has paid all Taxes applicable to, or imposed on or in relation to
      it, its business or its Ship; and

            

    

    

    
      	
              (q)

            	
              each
      Borrower confirms that it is acting for its own account and that the
      borrowing of the Loan and the performance and discharge of its obligations
      and liabilities under this Agreement and other arrangements effected or
      contemplated by this Agreement will not involve or lead to contravention
      of any law, official, requirement or other regulatory measure
      or procedure implemented to combat "money laundering" (as defined in
      Article 1 of the Directive (91/308/EEC) of the Council of the European
      Community).

            

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    
      	
              6.2

            	
              The
      Borrowers hereby further jointly and severally represent to the Lender
      that on the Drawdown Date relating to Tranche
A:

            

    

    

    
      	
              (a)

            	
              Ship
      A will have been unconditionally delivered by Seller A to and accepted by
      Borrower A pursuant to the Ship A MOA and the full Contract Price payable
      under the Ship A MOA (in addition to the part thereof to be financed by
      way of Tranche A) will have been duly paid to Seller
  A;

            

    

    

    
      	
              (b)

            	
              Ship
      A will be provisionally registered in the name of Borrower A under the
      Marshall Islands flag;

            

    

    

    
      	
              (c)

            	
              Ship
      A will be in the absolute and unencumbered ownership of Borrower A save a
      contemplated by this Agreement and the Security
  Documents;

            

    

    

    
      	
              (d)

            	
              Ship
      A will maintain the highest classification available to it with American
      Bureau of Shipping or such other classification society acceptable to the
      Lender free of all recommendations and qualifications of such
      classification society save for those notified to, and approved in writing
      by the Lender;

            

    

    

    
      	
              (e)

            	
              Ship
      A will be operationally seaworthy;

            

    

    

    
      	
              (f)

            	
              Ship
      A will comply with all relevant laws, regulations and requirements
      (statutory or otherwise) as are applicable to (i) ships under the Marshall
      Islands flag and (ii) engaged in the same or a similar service as Ship A
      is or is to be engaged;

            

    

    

    
      	
              (g)

            	
              the
      Mortgage in relation to Ship A will have been duly registered against Ship
      A as a valid first preferred Marshall Islands ship mortgage in accordance
      with the laws of the Republic of The Marshall
  Islands;

            

    

    

    
      	
              (h)

            	
              Ship
      A will be insured in accordance with the provisions of the Mortgage
      relating thereto and the requirements in respect of insurances will have
      been complied with;

            

    

    

    
      	
              (i)

            	
              Ship
      A will be managed by the Approved Manager on terms acceptable to the
      Lender;

            

    

    

    
      	
              (j)

            	
              the
      Approved Manager will be in compliance with the ISM Code and will have
      obtained and continues to maintain a valid DOC and will have applied for
      an SMC in relation to Ship A and the Borrowers will be in compliance with
      all statutory and other requirements relative to their
      business;

            

    

    

    
      	
              (k)

            	
              Ship
      A will comply with the ISPS Code.

            

    

    

    
      	
              6.3

            	
              The
      Borrowers hereby further jointly and severally represent to the Lender
      that on the Drawdown Date relating to Tranche
B:

            

    

     

    
      	
              (a)

            	
              Ship
      B will have been unconditionally delivered by Seller B to and accepted by
      Borrower B pursuant to the Ship B MOA and the full Contract Price payable
      under the Ship B MOA (in addition to the part thereof to be financed by
      way of Tranche B) will have been duly paid to Seller
  B;

            

    

    

    
      	
              (b)

            	
              Ship
      B will be provisionally registered in the name of Borrower B under the
      Marshall Islands flag;

            

    

    

    
      	
              (c)

            	
              Ship
      B will be in the absolute and unencumbered ownership of Borrower B save a
      contemplated by this Agreement and the Security
  Documents;

            

    

    

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    
      	
              (d)

            	
              Ship
      B will maintain the highest classification available to it with American
      Bureau of Shipping or such other classification society acceptable to the
      Lender free of all recommendations and qualifications of such
      classification society save for those notified to, and approved in writing
      by the Lender;

            

    

    

    
      	
              (e)

            	
              Ship
      B will be operationally seaworthy;

            

    

    

    
      	
              (f)

            	
              Ship
      B will comply with all relevant laws, regulations and requirements
      (statutory or otherwise) as are applicable to (i) ships under the Marshall
      Islands flag and (ii) engaged in the same or a similar service as Ship B
      is or is to be engaged;

            

    

    

    
      	
              (g)

            	
              the
      Mortgage in relation to Ship B will have been duly registered against Ship
      B as a valid first preferred Marshall Islands ship mortgage in accordance
      with the laws of the Republic of The Marshall
  Islands;

            

    

    

    
      	
              (h)

            	
              Ship
      B will be insured in accordance with the provisions of the Mortgage
      relating thereto and the requirements in respect of insurances will have
      been complied with;

            

    

    

    
      	
              (i)

            	
              Ship
      B will be managed by the Approved Manager on terms acceptable to the
      Lender;

            

    

    

    
      	
              (j)

            	
              the
      Approved Manager will be in compliance with the ISM Code and will have
      obtained and continues to maintain a valid DOC and will have applied for
      an SMC in relation to Ship B and the Borrowers will be in compliance with
      all statutory and other requirements relative to their
      business;

            

    

    

    
      	
              (k)

            	
              Ship
      B will comply with the ISPS Code.

            

    

    

    
      	
              6.4

            	
              The
      representations and warranties of the Borrowers set out in Clauses 6.1,
      6.2 and 6.3 shall survive the execution of this Agreement and the advance
      of Loan hereunder and the representations and warranties set out in Clause
      6.1 shall be deemed to be repeated at the commencement of each Interest
      Period, with respect to the facts and circumstances existing at each such
      time, as if made at each such time.

            

    

     

    
      	
              7

            	
              UNDERTAKINGS

            

    

    

    
      	
              7.1

            	
              Each
      of the Borrowers jointly and severally undertakes that, as and from the
      date of this Agreement and throughout the Security Period, it will comply
      in full with the following
undertakings:

            

    

    

    
      	
              (a)

            	
              each
      Borrower will send (or procure that there is sent) to the
      Lender:

            

    

    

    
      	
               
      

            	
              (i)

            	
              as
      soon as possible, but in no event later than one hundred and fifty (150)
      days after the end of each financial year of such Borrower, the audited
      accounts and financial statements for such
year;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              as
      soon as possible, but in no event later than sixty (60) days after the end
      of each of the first three financial quarters of each financial year of
      such Borrower, unaudited accounts and financial statements for such
      financial quarter;

            

    

    

    
      	
              (b)

            	
              each
      set of accounts and financial statements delivered to the Lender pursuant
      to Clause (a)(i) shall be certified as to their correctness by DCA SAM of
      12 Avenue De Fontvieille, BP No. 185, 98004, Monaco Cedex (or other
      certified or chartered accountants acceptable to the Lender) and each set
      of accounts and financial statements delivered to the Lender pursuant to
      Clause (a)(ii) above shall be certified as to their correctness by the
      chief financial officer of such
Borrower;

            

    

    

    
      	
              (c)

            	
              each
      Borrower shall procure that each set of accounts and financial statements
      delivered pursuant to Clause (a)(i) and (a)(ii) above is prepared in
      accordance with the International Financial Reporting Standards and using
      accounting practices and financial reference periods consistent with those
      applied in the preparation of the Original Financial Statements unless, in
      relation to any set of financial statements, it notifies the Lender that
      there has been a change in the International Financing Reporting
      Standards, the accounting practices or reference periods and the
      Borrowers' auditors deliver to the
Lender:

            

    

    

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

    
      	
               
      

            	
              (i)

            	
              a
      description of any change necessary for those financial statements to
      reflect the International Financing Reporting Standards, accounting
      practices and reference periods upon which the Original Financial
      Statements were prepared; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              sufficient
      information, in form and substance as may be reasonably required by the
      Lender, to enable the Lender to make an accurate comparison between the
      financial position indicated in those financial statements and the
      Original Financial Statements.

            

    

    

    
      	
              (d)

            	
              each
      Borrower will send (or procure that there is sent) to the
      Lender:

            

    

    

    
      	
               
      

            	
              (i)

            	
              if
      so requested by the Lender a copy of any charterparty for either of the
      Ships and any addenda thereto;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              as
      soon as the same is instituted (or, to the knowledge of either Borrower,
      threatened), details of any litigation, arbitration or administrative
      proceedings against
      or involving either Borrower, the Approved Manager or either Ship
      (including any actual breach of the ISM Code) which is likely to have a
      material adverse effect on such Borrower or the operation of such
      Ship;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              promptly
      upon being sent, copies of all communications to its shareholders and/or
      creditors generally (and in their capacities as such);
  and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              from
      time to time, and on demand, such additional financial or other
      information relating to either Borrower and/or its Ship as may be
      reasonably requested by the Lender;

            

    

    

    
      	
              (e)

            	
              each
      Borrower will notify the Lender of any Event of Default (or event which,
      with the giving of notice and/or lapse of time or other applicable
      condition, might constitute an Event of Default) forthwith upon the
      occurrence thereof;

            

    

    

    
      	
              (f)

            	
              each
      Borrower will maintain its corporate existence as a body corporate duly
      organised and validly existing and in good standing under the laws of the
      Marshall Islands and will obtain and promptly renew from time to time, and
      will promptly furnish certified copies to the Lender of, all such
      authorisations, approvals, consents and licences as may be required under
      any applicable law or regulation to enable such Borrower to perform its
      obligations under this Agreement, the Master Agreement and the Security
      Documents to which it is a party (or any of them) or required for the
      validity or enforceability of this Agreement, the Master Agreement and the
      Security Documents to which it is a party (or any of them) or required to
      enable such Borrower to continue to own and operate its Ship, and such
      Borrower shall comply with the terms of the
  same;

            

    

    

    
      	
              (g)

            	
              neither
      Borrower will without the prior consent of the Lender, create, assume or
      permit to exist any Security Interest upon its Ship, her insurances or the
      Earnings or any of its other assets (whether now owned or hereafter
      acquired) (including, but not limited to, such Borrower's rights against
      the Lender under the Master Agreement or all or any part of such
      Borrower's interest in any amount payable to such Borrower by the Lender
      under the Master Agreement) except Permitted Security
      Interests;

            

    

    

    
      	
              (h)

            	
              neither
      Borrower will (voluntarily or involuntarily) without the prior consent of
      the Lender, sell, convey, transfer, lease, or otherwise dispose of all or
      a substantial part of its assets (whether by one transaction or a series
      of transactions and whether related or not) provided that a Borrower shall
      be free to agree to the sale of its Ship without the consent of the Lender
      if the sale proceeds will upon completion of such sale be sufficient to
      pay all amounts owing to the Lender under this Agreement and the Security
      Documents (or if the Ship being sold is the first of the two Ships to be
      sold by the Borrowers such amount as shall be sufficient to make a
      prepayment of the Loan in the amount required under Clause
      4.3);

            

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    
      	
              (i)

            	
              each
      Borrower or the Approved Manager on behalf of itself and the Borrowers
      will comply with the ISM Code and notify the Lender in writing in the
      event that the DOC or any SMC is withdrawn, cancelled or
      suspended;

            

    

     

    
      	
              (j)

            	
              each
      Borrower will produce such documents and evidence as the Lender from time
      to time require in relation to such Borrower, based on applicable law and
      regulations from time to time and the Lender's own internal guidelines
      from time to time relating to the Lender's knowledge of its customers;
      and

            

    

    

    
      	
              (k)

            	
              the
      Borrowers will not purchase any further tonnage without the consent of the
      Lender.

            

    

    

    
      	
              7.2

            	
              Each
      of the Borrowers further jointly and severally undertakes that it shall
      not, as and from the date of this Agreement and throughout the Security
      Period, without the prior consent of the Lender (such consent not to be
      unreasonably withheld):

            

    

    

    
      	
              (a)

            	
              conduct
      any business or activity other than the ownership, chartering and
      operation of its Ship; or

            

    

    

    
      	
              (b)

            	
              except
      for the Indebtedness under this Agreement, the MOAs the Master Agreement
      and those of the Security Documents to which it is a party and except for
      Indebtedness to the Subordinated Lender subordinated pursuant to the
      Subordination Letter, incur or agree to incur or issue any Financial
      Indebtedness, nor make any commitments, other than those occurring in the
      ordinary course of the trading of its Ship (including, without limitation,
      commitments in respect of purchases of ships);
  or

            

    

    

    
      	
              (c)

            	
              assign
      or otherwise dispose of any of its book debts;
  or

            

    

    

    
      	
              (d)

            	
              issue
      any shares in its capital other than to the shareholder(s);
    or

            

    

    

    
      	
              (e)

            	
              reduce
      its issued share capital; or

            

    

    

    
      	
              (f)

            	
              form
      or acquire any Subsidiaries; or

            

    

    

    
      	
              (g)

            	
              consolidate
      or amalgamate with, or merge into, any other entity;
  or

            

    

    

    
      	
              (h)

            	
              (save
      in accordance with the Subordination Letter) repay any stockholders' loans
      or any other loans advanced to it by any person, make any loans or
      advances to any person nor pay out any funds to any person;
    or

            

    

    

    
      	
              (i)

            	
              pay
      out any funds to any person except in connection with the administration
      of the Borrowers or the operation and/or repair of the Ships or the
      servicing of the Loan or as otherwise permitted by or pursuant to this
      Agreement and the other Security Documents;
or

            

    

    

    
      	
              (j)

            	
              employ
      a technical manager of its Ship other than the Approved Manager nor change
      any of the material terms and conditions of the technical management of
      its Ship; or

            

    

    

    
      	
              (k)

            	
              employ
      a commercial manager of its Ship other than the commercial manager of the
      Jacob-Scorpio Tanker Pool Limited Pool or the Approved
      Manager.

            

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    
      
        	
                
                  7.3

                

              	
                 

              

      

       

    

    
      	
              (a)

            	
              The
      Borrowers hereby further jointly and severally undertake that (subject to
      Clause 7.(c) below) if and so often as, the market value (as determined in
      accordance with Clause 7.3(b)) of the Ships which are the subject of a
      Mortgage (plus the market value of any additional security for the time
      being actually provided to the Lender pursuant to this Clause 7.3) falls
      below One hundred and twenty five per cent. (125%) of the aggregate
      of (i) the Loan and (ii) such amount (the "Termination Amount") as
      determined by the Lender as the amount due from the Borrowers on
      terminating any Transaction under the Master Agreement in the same manner
      as if it were a Terminated Transaction (as defined in Section 14 of the
      Master Agreement) effected by the Lender after an Event of Default, they
      will within ten (10) days of being notified by the Lender of such
      requirement (which notification shall be conclusive and binding on the
      Borrowers) either:

            

    

    

    
      	
               
      

            	
              (i)

            	
              provide
      the Lender with, or procure the provision to the Lender of, such
      additional security as shall in the opinion of the Lender be adequate to
      make up such deficiency, which additional security shall take such form,
      be constituted by such documentation and be entered into between such
      parties as the Lender in its absolute discretion may approve or require
      (and, if the Borrowers do not make proposals satisfactory to the Lender in
      relation to such additional security within five (5) days of the date of
      the Lender's notification to the Borrowers aforesaid, the Borrowers shall
      be deemed to have elected to prepay in accordance with (ii) below);
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              prepay
      (subject to, and in accordance with, sub-clauses (c), (d) and (e) of
      Clause 4.2) such part of the Loan as will ensure that the market value
      (determined as aforesaid) of the Ships which are the subject of a Mortgage
      and any such additional security is after such prepayment at least One
      hundred and twenty five per cent. (125%) of the aggregate of (i) the Loan
      and (ii) the Termination Amount.

            

    

    

    
      	
              (b)

            	
              For
      the purposes of this Clause 7.3, the market value of a Ship shall be
      determined at any such time as the Lender may request by means of a
      valuation made by such independent sale and purchase shipbroker as may
      from time to time be selected and appointed by the Lender from the
      Approved Brokers Panel. For this purpose, such valuation shall be made
      with or without physical inspection of such Ship (as the Lender may
      require), on the basis of a sale for prompt delivery for cash at arm's
      length on normal commercial terms as between a willing seller and a
      willing buyer, free of any existing charter or other contract of
      employment. The Borrowers agree to accept any valuation made by a
      shipbroker or shipbrokers appointed as aforesaid as conclusive evidence of
      the market value of such Ship at the date of such valuation. The Borrowers
      agree to supply to the Lender and to any such shipbroker such information
      concerning the Ships and their condition as such shipbroker may require
      for the purpose of making such
valuation.

            

    

    

    
      	
              (c)

            	
              All
      costs of obtaining valuations pursuant to Clause 7.3 shall be for the
      account of the Borrower provided that unless an Event of Default has
      occurred or unless any valuations show that the test set out in Clause
      7.3(a) is not being met, the Borrowers shall not be required to pay for
      more than one set of such valuations in each calendar
  year.

            

    

     

    
      	
              (d)

            	
              Any
      cash collateral provided by the Borrower to the Lender pursuant to the
      terms of the Master Agreement shall be deducted from the Termination
      Amount when determining whether the Borrowers have complied with their
      undertaking under this Clause 7.3. For the purpose of this Clause 7.3, the
      market value of any other additional security provided or to be provided
      to the Lender shall be determined by the Lender in its absolute discretion
      without any necessity for the Lender assigning any reason therefor. If the
      market value of the Ships which are the subject of a Mortgage (plus the
      market value of any additional security for the time being actually
      provided to the Lender pursuant to this Clause 7.3) exceeds 125% of the
      aggregate of the Loan and the Termination Amount, the Lender shall, as
      soon as reasonably practicable after notice from the Borrowers to do so
      and subject to being indemnified to its reasonable satisfaction against
      the cost of doing so, release any such further security specified by the
      Borrowers provided that after such release the Lender is satisfied that
      the covenant in this Clause 7.3 shall be
  satisfied.

            

    

    

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

    
      	
              (e)

            	
              In
      connection with any additional security provided in accordance with this
      Clause 7.3, the Lender shall be entitled to receive certified copies of
      such documents of the kinds referred to in sub-clauses (a), (b), (c), (d)
      and (e) (inclusive) of Clause 5.1 and such favourable legal opinions as
      the Lender shall in its absolute discretion
  require.

            

    

    

    
      	
              7.4

            	
              The
      Borrowers may enter into FFA Transactions under the Master Agreement
      subject to the terms and conditions of the Master Agreement and subject to
      the following:

            

    

    

    
      	
              (a)

            	
              all
      Confirmations for such FFA Transactions will be substantially in the form
      set out in Appendix G or in such other form as the Lender may reasonably
      require or agree;

            

    

    

    
      	
              (b)

            	
              such
      FFA Transactions may only be entered into under the Master Agreement once
      drawdown of both Tranches under this Agreement has occurred and (subject
      to the following) for a period of eight years
  thereafter;

            

    

    

    
      	
              (c)

            	
              each
      such FFA Transaction will be for a maximum tenor of twelve (12)
      months;

            

    

    

    In the
event that either Ship is sold or becomes a Total Loss, the Lender shall have
the right not to continue with the availability of the aforesaid FFA Facility if
it so elects at the time.

    

    
      	
              7.5

            	
              Each
      Borrower is permitted to declare or pay any dividend or make any other
      distribution if its assets or profits to any stockholder provided that, in
      doing so, it is acting prudently and following the payment of such
      dividend or the making of such distribution it shall be able to continue
      to meet its payment obligations under this Agreement and the Security
      Documents.

            

    

    

    8             
APPLICATION OF EARNINGS

    

    
      	
              8.1

            	
              The
      Borrowers will comply with any written requirement of the Lender from time
      to time as to the location or relocation of the Operating Accounts and
      will from time to time enter into such documentation as the Lender may
      require in order to create or maintain in favour of the Lender a Security
      Interest in the Operating Accounts, all at the cost and expense of the
      Borrowers.

            

    

     

    
      	
              8.2

            	
              The
      Borrowers will procure that, throughout the Security Period (and subject
      only to the provisions of the General Assignment), all the Earnings
      relating to each Ship shall be paid to the Operating Account relating to
      such Ship.

            

    

    

    
      	
              8.3

            	
              Any
      amounts standing to the credit of the Operating Accounts shall, provided
      that the foregoing provisions of this Clause 8 shall have been complied
      with and provided that no Event of Default (or event which, with the
      giving of notice and/or lapse of time or other applicable condition, might
      constitute an Event of Default) shall have occurred, be at the free
      disposal of the Borrowers.

            

    

    

    9             
EVENTS OF DEFAULT

    

    
      	
              9.1

            	
              Each
      of the following events shall constitute an Event of Default (whether such
      event shall occur or come about voluntarily or involuntarily or by
      operation of law or regulation or pursuant to, or in compliance with, any
      judgment, decree or order of any court or other
  authority):

            

    

    

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    
      	
              (a)

            	
              either
      Borrower or any other party to any of the Security Documents fails to pay
      on the due date or, in the case of sums expressed to be payable on demand,
      within three (3) Business Days of the Lender's demand) any sum payable
      pursuant to this Agreement or any of the Security Documents (or any
      agreement entered into in connection with this Agreement or any of the
      Security Documents); or

            

    

    

    
      	
              (b)

            	
              either
      Borrower breaches any of the undertakings in Clause 7.1(f), (g), (h) or
      (k) or Clause 7.2 or either of the Borrowers fail to provide additional
      security or make a prepayment of part of the Loan in the circumstances
      referred to in Clause 7.3 within the time therein prescribed;
      or

            

    

    

    
      	
              (c)

            	
              either
      Borrower defaults under, or in the due and punctual observance and
      performance of, any other provision of this Agreement and where, in the
      opinion of the Lender, such default is capable of remedy, such default is
      not remedied within ten (10) days after written notice from the Lender
      requesting action to remedy the same;
or

            

    

    

    
      	
              (d)

            	
              either
      Borrower or any other party to any of the Security Documents (other than
      the Lender) defaults under, or in the due observance and performance of
      any provision of any of the Security Documents;
  or

            

    

    

    
      	
              (e)

            	
              any
      representation or warranty made by either Borrower or any other party to
      any of the Security Documents (other than the Lender) in or pursuant to
      this Agreement or any of the Security Documents or in any notice,
      certificate, instrument or statement contemplated hereby or thereby or
      made or delivered pursuant hereto or thereto is, or proves to be, untrue
      or incorrect in any respect when made or deemed to be repeated;
      or

            

    

    

    
      	
              (f)

            	
              any
      Financial Indebtedness of either Borrower in an amount of Two hundred and
      fifty thousand Dollars ($250,000) (or its equivalent in other currencies)
      or more is not paid when due or becomes prematurely payable or capable of
      being prematurely declared payable as a consequence of a default with
      respect thereto or any Security Interest over any assets of either
      Borrower is enforced or becomes capable of being enforced;
    or

            

    

     

    
      	
              (g)

            	
              any
      preparatory or other steps are taken by any person to convene a meeting of
      any Borrower for the purposes of considering or passing any resolution or
      petition for the winding-up or dissolution of either Borrower, or (ii) a
      petition is presented or an order is made or a resolution is passed for
      the winding-up or dissolution of either Borrower, or (iii) either Borrower
      becomes insolvent or is deemed unable to pay its debts within the meaning
      of Section 123 of the Insolvency Act 1986 or either Borrower becomes
      unable to pay its debts as they fall due, or (iv) either Borrower stops or
      threatens to stop making payments generally or declares or threatens to
      declare a moratorium or suspension of payments with respect to all or any
      part of its debts or enters into any composition, scheme, compromise or
      other arrangement with its creditors generally (or any class of .them), or
      (v) any preparatory or other steps are taken by any person to appoint an
      administrative or other receiver or similar official of either Borrower or
      any of its assets, or (vi) any notice appointing an administrator or
      examiner or any notice of intended appointment or any other notice which
      is required by law (generally or in the case concerned) to be filed with
      the court or given to a person prior to, or in connection with, the
      appointment of an administrator or examiner is so filed or given in
      respect of either Borrower or (vii) any meeting of either Borrower is
      convened or any other preparatory or other steps are taken for the purpose
      of considering an application for an administration order in relation to
      either Borrower or such an administration order is made by a court, or
      (viii) (in the reasonable opinion of the Lender) anything analogous to any
      of the foregoing events occurs in any applicable jurisdiction;
      or

            

    

    

    
      	
              (h)

            	
              an
      encumbrancer takes possession of the whole or, in the reasonable opinion
      of the Lender, any material part of the assets of either Borrower or a
      Security Interest (other than in favour of the Lender) is levied or
      enforced upon or sued out against the whole or, in the reasonable opinion
      of the Lender, a material part of the assets of either Borrower;
      or

            

    

    

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    
      	
              (i)

            	
              either
      Borrower ceases or threatens to cease, to carry on all or, in the
      reasonable opinion of the Lender, any material part of its business;
      or

            

    

    

    
      	
              (j)

            	
              any
      event occurs which renders it unlawful or impossible for (i) either
      Borrower or any other party to any of the Security Documents (other than
      the Lender) to perform or observe, or to procure the performance or
      observance of, any of its obligations or undertakings contained in this
      Agreement, the MOAs or any of the Security Documents, or (ii) the Lender
      to exercise any of the rights and remedies conferred on the Lender under
      this Agreement or any of the Security Documents;
  or

            

    

    

    
      	
              (k)

            	
              any
      authorisation, approval, consent, licence, exemption, filing or
      registration or other requirement necessary to enable either Borrower or
      any other party to any of the Security Documents (other than the Lender)
      to comply with any of its obligations or undertakings contained in this
      Agreement, the MOAs or any of the Security Documents is modified, revoked
      or withheld or does not remain in full force and effect;
  or

            

    

    

    
      	
              (l)

            	
              without
      the prior consent of the Lender, there is a change in the legal and
      beneficial owner or owners of the shares in either Borrower or in the
      ultimate beneficial ownership of shares in either Borrower from that
      disclosed to the Lender pursuant to Clause
  5.1(f);

            

    

    
      	
              (m)

            	
              either
      Ship the subject of a Mortgage shall become a Total Loss and within one
      hundred and twenty (120) days (or such longer period as the Lender may
      agree) following the occurrence of such Total Loss either the Borrowers do
      not make a prepayment of the Loan in the amount required under Clause 4.3
      or the Lender does not receive insurance proceeds relating to such Total
      Loss in an amount not less than the amount required to be prepaid under
      Clause 4.3; for the purpose of this Clause (m), (i) an actual Total Loss
      of such Ship shall be deemed to have occurred at the date and time when
      such Ship was lost but if the date of the loss is unknown the actual Total
      Loss shall be deemed to have occurred on the date on which such Ship was
      last reported, (ii) a constructive Total Loss Shall be deemed to have
      occurred at the date and time at which notice of abandonment of such Ship
      is given to the insurers of such Ship and (iii) a compromised, agreed or
      arranged Total Loss shall be deemed to have occurred on the date of the
      relevant compromise, agreement or arrangement;
  or

            

    

    

    
      	
              (n)

            	
              any
      Earnings of a Ship are paid otherwise than to the Operating Account
      relative to such Ship (unless so directed by the Lender);
    or

            

    

    

    
      	
              (o)

            	
              for
      any reason whatsoever, either Ship ceases to comply with the ISM Code or
      the ISPS Code; or

            

    

    

    
      	
              (p)

            	
              for
      any reason whatsoever, either Ship ceases to be technically managed by the
      Approved Manager on terms in all respects approved by the Lender;
      or

            

    

    

    
      	
              (q)

            	
              for
      any reason whatsoever, either Ship ceases to be employed within the
      Jacob-Scorpio Tanker Pool Limited Pool or to be commercially managed by
      the commercial managers of the Jacob-Scorpio Tanker Pool Limited Pool on
      terms in all respects approved by the Lender;
or

            

    

    

    
      	
              (r)

            	
              the
      security constituted by any of the Security Documents is in the reasonable
      opinion of the Lender imperilled or jeopardised in any way whatsoever;
      or

            

    

    

    
      	
              (s)

            	
              this
      Agreement or any of the other Security Documents ceases at any time to be
      the legal, valid and binding obligations of either Borrower or any other
      party thereto (other than the
Lender);

            

    

    

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    
      	
              (t)

            

    

    

    
      	
               
      

            	
              (i)

            	
              notice
      of an Early Termination Date is given by the Lender under section 6(a) of
      the Master Agreement; or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              a
      person entitled to do so gives notice of an Early Termination Date under
      section 6(b)(iv) of the Master Agreement;
or

            

    

    

    
      	
               
      

            	
              (iii)

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

            

    

    

    
      	
               
      

            	
              (iv)

            	
              the
      Master Agreement is terminated, cancelled, suspended, rescinded or revoked
      or otherwise ceases to remain in full force and effect for any reason
      (except in the event that the Master Agreement is voluntarily terminated
      by the Borrowers); or

            

    

    

    
      	
              (u)

            	
              any
      other event or events (whether related or not) occurs (including, without
      limitation, a material (in the reasonable opinion of the Lender) adverse
      change, from the position applicable as at the date of this Agreement, in
      the business, affairs or condition (financial or otherwise) of either of
      the Borrowers or a Credit Support Provider) (including any such change
      resulting from an Environmental Incident) the effect of which is, in the
      reasonable opinion of the Lender, to impair, delay or prevent the due
      Fulfilment by either of the Borrowers or a Credit Support Provider of any
      of their respective obligations or undertakings contained in this
      Agreement, the Master Agreement or any of the Security
      Documents.

            

    

    

    
      	
              9.2

            	
              Upon
      the occurrence of an Event of Default which is
  continuing:

            

    

    

    
      	
              (a)

            	
              the
      Lender, by notice to the Borrowers, may terminate the obligations of the
      Lender under this Agreement, whereupon the same shall be so terminated;
      and/or

            

    

    

    
      	
              (b)

            	
              the
      Lender, by notice to the Borrowers, may declare the Loan, accrued interest
      thereon and all other amounts payable under this Agreement either
      immediately due and payable or payable on demand, whereupon the Loan,
      accrued interest thereon and all other amounts payable under this
      Agreement shall become immediately due and payable or (as the case may be)
      payable on demand by the Lender;
and/or

            

    

    

    
      	
              (c)

            	
              the
      Lender may take any other action, exercise any other right or pursue any
      other remedy conferred upon the Lender by this Agreement, the Master
      Agreement and/or by all or any of the Security Documents or by any
      applicable law or regulation or otherwise as a consequence of such Event
      of Default.

            

    

    

    10           FEES
AND EXPENSES

    

    
      	
              10.1

            	
              The
      Borrowers shall pay to the Lender an arrangement fee of Two hundred and
      ten thousand Dollars ($210,000) on the date of this
    Agreement.

            

    

    

    
      	
              10.2

            	
              The
      Borrowers shall reimburse to the Lender on demand all costs, fees and
      expenses (including, but not limited to, legal fees and expenses) and
      Taxes thereon incurred by the Lender in connection
  with:

            

    

    

    
      	
              (a)

            	
              the
      negotiation, preparation and execution of this Agreement, the Master
      Agreement and the Security Documents and the insurance consultant's report
      referred to in Clauses 5.2(1) and 5.3(1);
and/or

            

    

    

    
      	
              (b)

            	
              any
      variation of, or amendment or supplement to, any of the terms of this
      Agreement, the Master Agreement and the Security Documents (or any of
      them); and/or

            

    

    

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    
      	
              (c)

            	
              any
      consent or waiver required from the Lender in relation to this Agreement,
      the Master Agreement and the Security Documents (or any of them), and in
      each case, regardless of whether the same is actually implemented,
      completed or granted, as the case may
be.

            

    

    

    
      	
              10.3

            	
              The
      Borrowers shall reimburse to the Lender on demand all costs, fees and
      expenses (including, bid not limited to, legal fees and expenses) and
      Taxes thereon incurred by the Lender
      in connection with the preserving or enforcing of, or attempting to
      preserve or enforce, any of its rights under this Agreement, the Master
      Agreement and the Security Documents (or any of
    them).

            

    

    

    
      	
              10.4

            	
              The
      Borrowers shall pay promptly all stamp, documentary and other like duties
      and Taxes to which this Agreement, the Master Agreement and the Security
      Documents (or any of them) may be subject or give rise and shall indemnify
      the Lender on demand against any and all liabilities with respect to or
      resulting from any delay or omission on the part of the Borrower to pay
      any such duties or Taxes.

            

    

    

    
      	
              10.5

            	
              The
      Lender shall, without prejudice to any other of the provisions of this
      Agreement, be entitled (but not obliged) at any time and from time to time
      (without prior notice) to debit the Operating Accounts or either of them
      in order to satisfy all or any amounts payable by the Borrowers to the
      Lender pursuant to this Clause 10.

            

    

    

    11           PAYMENTS
AND CALCULATIONS

    

    
      	
              11.1

            	
              All
      payments to be made by the Borrowers to the Lender under this Agreement
      and any of the Security. Documents to which either of the Borrowers is a
      party shall be made by not later than 11.00 a.m. (London time) on the due
      date in same day Dollar funds settled through the New York Interbank
      Payments System (or in such other Dollar funds and/or settled in such
      other manner as the Lender shall specify as being customary at the time
      for the settlement of international transactions of the type contemplated
      by this Agreement) to the account of the Lender at the Receiving Bank
      (Account No 000261123), or to such other account with such other bank as
      the Lender shall from time to time notify to the
  Borrowers.

            

    

    

    
      	
              11.2

            	
              If
      any sum payable by the Borrowers under this Agreement or any of the
      Security Documents to which either of the Borrowers is a party shall
      become due on a day which is not a Business Day, the due date therefor
      shall be extended to the next succeeding Business Day, unless such
      Business Day falls in the next calendar month, in which event such due
      date shall be the immediately preceding Business Day, and interest shall
      be payable on such sum during any such extension at the rate payable on
      the original due date.

            

    

    

    
      	
              11.3

            	
              The
      Lender shall maintain accounts showing the amounts from time to time lent
      by it under this Agreement and all other sums owing by the Borrowers under
      this Agreement and the Security Documents and all payments in respect
      thereof made by the Borrowers from time to time. Such accounts, in the
      absence of manifest error, shall be conclusive evidence as to any amounts
      from time to time owing by the Borrowers under this Agreement and the
      Security Documents.

            

    

    

    
      	
              11.4

            	
              All
      payments of interest and commitment fee and any other payments hereunder
      of an annual or periodic nature shall accrue from day-to-day and shall be
      calculated on the basis of the actual number of days elapsed in a three
      hundred and sixty (360) day year.

            

    

    

    
      	
              12

            	
              NO
      COUNTERCLAIM, TAXATION

            

    

    

    
      	
              12.1

            	
              All
      payments to be made by or on behalf of the Borrowers to the Lender
      pursuant to this Agreement and any of the Security Documents to which
      either Borrower is a party shall be made (a) without set-off counterclaim
      or condition whatsoever (including, but not limited to, any set-off,
      counterclaim or condition arising under or in relation to or in connection
      with the Master Agreement) and (b) free and clear of, and without
      deduction for or on account of, any present or future Taxes, unless the
      Borrowers are required by law or regulation to make any such payment
      subject to any Taxes.

            

    

    

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    
      	
              12.2

            	
              In
      the event that either Borrower is required by any law or regulation to
      make any deduction or withholding on account of any Taxes which arise as a
      consequence of any payment due under this Agreement or any of the Security
      Documents to which such Borrower is a party,
  then:

            

    

    

    
      	
              (a)

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

            

    

    

    
      	
              (b)

            	
              such
      Borrower shall remit promptly the amount of such Taxes to the appropriate
      taxation authority, and in any event prior to the date on which penalties
      attach thereto;

            

    

    

    
      	
              (c)

            	
              such
      payment shall be increased by such amount as may be necessary to ensure
      that the Lender receives a net amount which, after deducting or
      withholding such Taxes, is equal to the full amount which the Lender would
      have received had such payment not been subject to such Taxes;
      and

            

    

    

    
      	
              (d)

            	
              such
      Borrower shall indemnify the Lender against any liability of the Lender in
      respect of such Taxes.

            

    

    

    
      	
              12.3

            	
              Not
      later than thirty days after each deduction or withholding of any such
      Taxes, such Borrower shall forward to the Lender evidence satisfactory to
      the Lender that such Taxes have been remitted to the appropriate taxation
      authority.

            

    

    

    
      	
              12.4

            	
              If,
      following any such deduction or withholding as is referred to in Clause
      12.2 from any payment by the Borrowers, the Lender shall receive or be
      granted a credit against or remission for any Taxes payable by it, the
      Lender shall, subject to the Borrowers having made any increased payment
      in accordance with Clause 12.1 and to the extent that the Lender can do so
      without prejudicing the retention of the amount of such credit or
      remission and without prejudice to the right of the Lender to obtain any
      other relief or allowance which may be available to it, reimburse the
      Borrowers with such amount as the Lender shall in its absolute discretion
      certify to be the proportion of such credit or remission as will leave the
      Lender (after such reimbursement) in no worse position than it would have
      been in had there been no such deduction or withholding from the payment
      by the Borrowers as aforesaid. Such reimbursement shall be made forthwith
      upon the Lender certifying that the amount of such credit or remission has
      been received by it. Nothing contained in this Agreement shall oblige the
      Lender to rearrange its tax affairs or to disclose any information
      regarding its tax affairs and computations. Without prejudice to
      the generality of the foregoing the Borrowers shall not by virtue of this
      Clause 12.4 be entitled to enquire about the Lender's tax
      affairs.

            

    

     

    13           CHANGES
IN CIRCUMSTANCES

    

    
      	
              13.1

            	
              In
      the event that by reason of:

            

    

    

    
      	
              (a)

            	
              the
      introduction of, or any change in, any applicable law or regulation, or
      any change in the interpretation or application thereof;
  or

            

    

    

    
      	
              (b)

            	
              compliance
      by the Lender with any directive, request or requirement (whether or not
      having the force of law) of any central bank, government, fiscal or other
      authority,

            

    

    

    it
becomes unlawful or it is prohibited or it is contrary to such directive,
request or requirement for the Lender to maintain or give effect to any of its
obligations as contemplated by this Agreement, then the Lender may notify the
Borrowers thereof and, if the Loan has been advanced by the Lender, the
Borrowers shall prepay the Loan forthwith in accordance with the terms of this
Agreement and the obligations of the Lender shall thereupon
terminate.

    

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    
      	
              13.2

            	
              If
      the Lender shall at any time be of the reasonable opinion
      that:

            

    

    

    
      	
              (a)

            	
              the
      effect of any applicable law, regulation or regulatory requirements, or
      the interpretation or application thereof, or any change therein
      (including the imposition of Taxes on payments hereunder, other than Taxes
      on the overall net income of the Lender);
or

            

    

    

    
      	
              (b)

            	
              the
      effect of complying with any applicable directive, request or requirement
      (whether or not having the force of law) of any central bank or any
      governmental, monetary or other authority (including any type of
      liquidity, stock or capital adequacy controls or other banking or monetary
      controls or requirements which affects the manner in which the Lender
      allocates capital resources to its, obligations hereunder),
      is:

            

    

    

    
      	
               
      

            	
              (i)

            	
              to
      increase the cost to the Lender of making, funding or maintaining its
      commitment hereunder or the Loan or being a party to this Agreement;
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              to
      reduce the amount of any payment to the Lender under this Agreement or the
      effective return to the Lender under this Agreement or on its
      capital,

            

    

    

    then, and
in any such case, the Lender shall notify the Borrowers as soon as practicable
thereof and the Borrowers shall from time to time pay to the Lender on demand
such amounts as the Lender shall specify to be necessary to compensate the
Lender for such increased cost or such reduction or, at the Borrowers' election,
the Borrowers shall prepay the Loan in accordance with the terms of this
Agreement whereupon the obligations of the Lender shall terminate.

    

    
      	
              13.3

            	
              If
      and each time that prior to any Interest Period the Lender shall have
      determined that, by reason of circumstances affecting the London Interbank
      Dollar Market, either:

            

    

    
      	
              (a)

            	
              adequate
      and fair means do not exist for ascertaining the rate of interest
      applicable to the Loan (or any part thereof) during such Interest Period
      pursuant to Clause 3.1; or

            

    

    

    
      	
              (b)

            	
              Dollars
      are not available to the Lender in order to fund the Loan (or any part
      thereof) during such Interest
Period,

            

    

    

    then the
Lender shall as soon as practicable give notice of such determination to the
Borrowers and, if such notice shall be given prior to the Loan being advanced by
the Lender, the Borrowers' right to borrow hereunder shall be suspended during
the continuance of such circumstances. In any event, during the thirty days
following the giving of such notice, the Borrowers and the Lender shall
negotiate in good faith in order to arrive at an alternative interest rate or
(as the case may be) an alternative basis for the Lender to fund or continue to
fund the Loan (or the relevant part thereof) during such Interest Period. If
within such thirty day period an alternative interest rate or (as the case may
be) an alternative basis to fund or to continue to fund the Loan (or the
relevant part thereof) is agreed upon, then such alternative interest rate or
(as the case may be) such alternative basis shall take effect in accordance with
its terms. If the Borrowers and the Lender fail to agree on such an alternative
interest rate or (as the case may be) alternative basis within such thirty day
period and such circumstances are continuing at the end of such thirty day
period, then the Lender shall set an interest period and interest rate
representing the cost of funding of the Lender in Dollars or in any available
currency of the Loan plus the Margin. If the circumstance shall continue at the
end of such interest period, the procedure in this Clause 13.3 shall be
repeated. If the Borrowers shall not agree with such rate then the Borrowers may
give not less than fifteen (15) Business Days' irrevocable notice of prepayment
to the Lender in which case the commitment hereunder of the Lender shall
thereupon be cancelled and, if the Loan is outstanding, the Borrowers shall
prepay the Loan on the first Business Day after such period in accordance with
the terms of this Agreement and the obligations of the Lender shall thereupon
terminate.

    

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    14           INDEMNITIES

    

    
      	
              14.1

            	
              The
      Borrowers shall indemnify the Lender on demand against all costs,
      expenses, liabilities and losses sustained or incurred as a result of or
      in connection with:

            

    

    

    
      	
              (a)

            	
              any
      default in payment on the due date of any sum due hereunder (after giving
      credit for any default interest paid by the Borrowers thereon under Clause
      3.4); and/or

            

    

    

    
      	
              (b)

            	
              the
      occurrence and/or continuance of any Event of Default (or event which,
      with the giving of notice and/or lapse of time or other applicable
      condition, might constitute an Event of Default) and/or the acceleration
      of repayment of the Loan pursuant to Clause 9.2;
  and/or

            

    

    

    
      	
              (c)

            	
              either
      Tranche not being borrowed on the date specified in the Notice of Drawing
      relating thereto, other than as a result of a default by the Lender,
      and/or

            

    

     

    
      	
              (d)

            	
              the
      payment or other receipt or recovery of all or any part of a Tranche or
      any part thereof or an overdue sum otherwise than on the last day of an
      Interest Period relating thereto or other relevant
  period,

            

    

    

    (including,
where appropriate, but not limited to loss of profit and any losses sustained or
incurred in liquidating or employing deposits from third parties acquired or
arranged to effect or maintain the relevant Tranche or any part thereof and, in
the applicable circumstances referred to in Clause 14.1(d), an amount equal to
the Margin which would, but for prepayment or other receipt or recovery of all
or any part of the relevant Tranche, have accrued on the relevant Tranche from
the date of such prepayment, receipt or recovery to the end of the current
Interest Period).

    

    
      	
              14.2

            	
              If,
      under any applicable law or regulation, and whether pursuant to a judgment
      being made or registered against the Borrowers or the liquidation of the
      Borrowers or for any other reason, any payment under or in connection with
      this Agreement is made or falls to be satisfied in a currency (the "payment currency") other
      than the currency in which such payment is due under or in connection with
      this Agreement (the "contractual currency"),
      then to the extent that the amount of such payment actually received by
      the Lender, when converted into the contractual currency at the rate of
      exchange, falls short of the amount due under or in connection with this
      Agreement, the Borrowers, as a separate and independent obligation, shall
      indemnify and hold harmless the Lender against the amount, of such
      shortfall. For the purposes of this Clause 14.2, "rate of exchange" means
      the rate at which the Lender is able on or about the date of such payment
      to purchase the contractual currency with the payment currency and shall
      take into account any premium and other costs of exchange with respect
      thereto.

            

    

    

    
      	
              14.3

            	
              The
      Borrowers shall indemnify the Lender on demand against all costs,
      expenses, liabilities and losses sustained or incurred as a result of or
      in connection with any Environmental Claims being made against the Lender
      or otherwise howsoever arising out of any Environmental
      Incident

            

    

    

    15           SET-OFF

    

    
      	
              15.1

            	
              The
      Borrowers hereby authorise the Lender (without prior notice) to apply any
      credit balance (whether or not then due) which is at any time held by the
      Lender for the account of the Borrowers at any office of the Lender in any
      country in or towards satisfaction of any sum then due from the Borrowers
      to the Lender under this Agreement, the Master Agreement or any of the
      Security Documents to which any Borrower is a party and unpaid Provided
      however that such right shall not be exercisable by the Lender until the
      occurrence of an Event of Default. For that
  purpose:

            

    

    

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    
      	
              (a)

            	
              the
      Lender is authorised to use all or any part of a deposit or other credit
      balance to buy such other currencies as may be necessary to effect such
      application; and

            

    

    

    
      	
              (b)

            	
              break,
      or alter the maturity of, all or any part of a deposit or other credit
      balance of either Borrower; and

            

    

    
      	
              (c)

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

            

    

    

    
      	
              15.2

            	
              If
      either Borrower is the defaulting party under the Master Agreement, the
      Lender, as the non-defaulting party, may (without prejudice to or
      limitation of its right of set-off under section 6(e) of the Master
      Agreement and its rights under Clause 15.1) at the same time as, or at any
      time after, such Borrower's default set-off any amount due from the
      Borrowers to the. Lender under this Agreement against any amount due from
      the Lender to the Borrowers under the Master Agreement, and apply the
      first amount in discharging the second amount. The effect of any set-off
      under this Clause 15.2 shall be effective to extinguish or, as the case
      may require, reduce the liabilities of the Lender under the Master
      Agreement.

            

    

    

    
      	
              15.3

            	
              The
      Lender shall not be obliged to exercise any • of its rights under Clause
      15.1, which shall be without prejudice and in addition to any right of
      set-offs combination of accounts, lien or other rights to which the Lender
      is at any time otherwise entitled (whether by operation of law, contract
      or otherwise).

            

    

    

    16           SECURITY
AND APPLICATION

    

    
      	
              16.1

            	
              The
      Borrowers hereby undertake with the Lender to execute, deliver and perform
      the provisions of, and procure the execution, delivery and performance by
      the other parties thereto (other than the Lender) of, the Security
      Documents and the provisions thereof at the times and in the manner
      provided in this Agreement and in the Security Documents so that all such
      documents shall both at the date of such execution and delivery and at all
      times during the Security Period be valid and binding obligations of the
      Borrowers and such other parties enforceable in accordance with their
      respective terms.

            

    

    

    
      	
              16.2

            	
              All
      Moneys received by the Lender under or pursuant to this Agreement or any
      of the Security Documents and expressed to be applicable in accordance
      with the provisions of this Clause 16.2 shall (unless the Lender otherwise
      requires) be applied by the Lender in the following manner:
    

            

    

    

    FIRST: in
or towards satisfaction of any amounts as are then accrued due and payable under
this Agreement, the Master Agreement and the Security Documents (or any of them)
or are then due and payable by virtue, of payment demanded under this Agreement,
the Master Agreement and the Security Documents (or any of them) in such order
of application as the Lender shall think fit;

    

    SECONDLY:
at the option of the Lender (i) in retention of an amount equal to any amounts
which are not then accrued due and payable under this Agreement, the Master
Agreement and the Security Documents (or any of them) or are not then due and
payable by virtue of payment demanded under this Agreement, the Master Agreement
and the Security Documents (or any of them) but which (in the sole and absolute
opinion of the Lender) will or may become due and payable in the future and,
upon the same becoming due and payable, in or towards satisfaction thereof in
accordance with the foregoing provisions of this Clause 16.2 and/or (ii) in or
towards prepayment of the Loan in accordance with sub-clauses (d) and (e) of
Clause 4.2; and

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    THIRDLY:
the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be
entitled thereto.

    

    17           JOINT
AND SEVERAL LIABILITY

    

    
      	
              17.1

            	
              All
      the liabilities and obligations of the Borrowers under this Agreement
      shall, whether expressed to be so or not, be joint and several so that
      each Borrower shall be jointly and severally responsible with the other
      Borrower for all liabilities and obligations of the Borrowers under this
      Agreement and so that such liabilities and obligations shall not be
      impaired by:

            

    

    

    
      	
              (a)

            	
              any
      failure of this Agreement to be legal, valid, binding and enforceable in
      relation to either of the Borrowers whether as a result of lack of
      corporate capacity, due authorisation, effective execution or
      otherwise;

            

    

    

    
      	
              (b)

            	
              any
      giving of time, forbearance, indulgence, waiver or discharge in relation
      to either of the Borrowers or any party to either of the Security
      Documents;

            

    

    

    
      	
              (c)

            	
              any
      other matter or event whatsoever which might have the effect of impairing
      all or any of the liabilities and obligations of either of the
      Borrowers.

            

    

    

    
      	
              17.2

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

            

    

    

    
      	
              17.3

            	
              Until
      such sums owing to the Lender by the Borrowers under this Agreement and
      the Security Documents have been paid in full neither of the Borrowers
      (hereinafter called the "Creditor Borrower") will
      without the prior written consent of the Lender ask, demand, sue for, take
      or receive from the other Borrower (hereinafter called the "Debtor Borrower") by
      set-off or in any manner whatsoever the whole or any part of all present
      and future sums, liabilities and obligations payable or owing by the
      Debtor Borrower to the Creditor Borrower whether actual or contingent,
      jointly and severally or otherwise howsoever so long as any Senior
      Liabilities are outstanding to the Lender (for such purposes "Senior Liabilities"
      shall mean all present and future sums, liabilities and obligations
      whatsoever payable or owing by the Borrowers (or either of them) to the
      Lender under the Loan Agreement and the Security Documents (or any of
      them) or otherwise whatsoever, whether actual or contingent jointly or
      severally or otherwise howsoever.

            

    

    

    18           COMMUNICATIONS

    

    
      	
              18.1

            	
              Except
      as otherwise provided for in this Agreement, all notices or other
      communications under or in respect of this Agreement to either party
      hereto shall be in writing (that is by letter or fax) and shall be deemed
      to be duly given or made when delivered (in the case of personal
      delivery or letter) and when despatched or in the case of a fax from
      either party to the other) to such party addressed to it at the address
      appearing below (or at such address as such party may hereafter specify
      for such purpose to the other by notice in
  writing):

            

    

     

    
      	
              (a)

            	
              in
      the case of the Borrowers:

            	
              Scorpio
      Ship Management S.A.M.

              Rue
      de Gabian

              MC-98000

              Monaco

               

              Fax
      No:          00 377 92
      05 31 46

               

              Attention:     Emanuele
      A. Laura

            

    

    

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    
      	
              (b)

            	
              in
      the case of the Lender:

            	
              Shipping
      Business Centre

              5-10
      Great Tower Street,

              London
      EC3P 3HX

               

              Fax
      No:   44 20 7283 7538

               

              Attention:     
      Ship Finance Portfolio Management

            

    

    

    A notice
or other communication received on a non-working day or after business hours in
the place of receipt, shall be deemed to be served on the next following working
day in such place.

    

    
      	
              18.2

            	
              All
      communications and documents delivered pursuant to or otherwise relating
      to this Agreement or any of the Security Documents shall either be in
      English or accompanied by a certified English translation prepared by a
      translator approved by the Lender.

            

    

    

    
      	
              18.3

            	
              A
      certificate or determination of the Lender as to any matter provided for
      in this Agreement or any of the Security Documents shall, in the absence
      of manifest error, be conclusive and binding on the
    Borrowers.

            

    

    

    19           ASSIGNMENTS

    

    
      	
              19.1

            	
              This
      Agreement shall be binding upon and inure to the benefit of the Lender and
      the Borrowers and their respective successors and permitted
      assigns.

            

    

    

    
      	
              19.2

            	
              The
      Borrowers may not assign or transfer all or any part of its rights and/or
      obligations under this Agreement.

            

    

    

    
      	
              19.3

            	
              The
      Lender may assign, transfer or sub-participate all or any part, of its
      rights or obligations under this Agreement and the Security Documents or
      change its lending office, in any such case, following consultation with
      the Borrowers. The Lender shall notify the Borrowers promptly following
      any such assignment or transfer or change of lending
    office.

            

    

     

    
      	
              19.4

            	
              The
      Lender may disclose to any potential assignee or transferee of all or any
      part of its rights or obligations under this Agreement and the Security
      Documents or to any such sub-participant or any other person who may
      otherwise enter into contractual relations with the Lender in relation to
      this Agreement and the Security Documents such information about this
      Agreement and/or the Security Documents (or any of them) and the Borrowers
      and/or its related entities as the Lender thinks
  fit.

            

    

    

    20           MISCELLANEOUS

    

    
      	
              20.1

            	
              Time
      shall be of the essence in this Agreement. No delay or omission on the
      part of the Lender in exercising any right, power or remedy under this
      Agreement shall impair such right, power or remedy or be construed as a
      waiver thereof nor shall any single or partial exercise of any such right,
      power or remedy preclude any further exercise thereof or the exercise of
      any other right, power or remedy. The rights, powers and remedies herein
      provided are cumulative and not exclusive of any rights, powers and
      remedies provided by law and may be exercised from time to time and as
      often as the Lender deems
expedient.

            

    

    

    
      	
              20.2

            	
              Any
      waiver by the Lender of any provision of this Agreement, or any consent or
      approval given by the Lender hereunder, shall only be effective if given
      in writing and then only for the purpose and upon the terms for which it
      is. given.

            

    

    

    
      	
              20.3

            	
              If
      at any time any one or more of the provisions in this Agreement is or
      becomes invalid, illegal or unenforceable in any respect under any law or
      regulation, the validity, legality and enforceability of the remaining
      provisions of this Agreement shall not be in any way affected or impaired
      thereby.

            

    

    

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    
      	
              20.4

            	
              The
      obligations of the Borrowers under this Agreement shall remain in full
      force and effect until the Lender shall have received all amounts due or
      to become due to it hereunder and under the Security Documents in
      accordance with the terms hereof and thereof. Without prejudice to the
      foregoing, the obligations of the Borrower under Clauses 3.4, 10, 12, 13.2
      and 14 shall survive the repayment of the
Loan.

            

    

    

    
      	
              20.5

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

            

    

    

    21           LAW
AND JURISDICTION

    

    
      	
              21.1

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

            

    

    

    
      	
              21.2

            	
              Subject
      to Clause 21.4, the courts of England shall have exclusive jurisdiction in
      relation to all matters which may arise out of or in connection with this
      Agreement.

            

    

    

    
      	
              21.3

            	
              The
      Borrowers shall not commence any proceedings in any country other than
      England in relation to a matter which arises out of or in connection with
      this Agreement.

            

    

    

    
      	
              21.4

            	
              Clause
      21.2 is for the exclusive benefit of the Lender which reserves the
      rights:

            

    

     

    
      	
              (a)

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

            

    

    

    
      	
              (b)

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

            

    

    

    
      	
              21.5

            	
              The
      Borrowers irrevocably appoint Cheeswrights at its office for the time
      being, presently at 10 Philpot Lane, London EC3M 8BR, to act as its agent
      to receive and accept on its behalf any process or other document relating
      to any proceedings in the English courts which are connected with this
      Agreement.

            

    

    

    
      	
              21.6

            	
              In
      this Clause 21, "proceedings" means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

    

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    SCHEDULE

    

    MANDATORY
COST RATE

    

    The
Mandatory Cost Rate will be calculated in accordance with the following
formula:

    

    
      	 
      	
              F x 0.01

            
	 
      	
              300

            

    

    

    where on
the day(s) of application of the formula:

    

    F.           is
the rate of charge payable by the Lender to the Financial Services Authority
pursuant to paragraph 2 of the Fees Regulations (but where for this purpose, the
figure at paragraph 2.02b/2.03b shall be deemed to be zero) and expressed in
pounds per £1 million of the Fee Base of the Lender.

    

    For the
purposes. of this Schedule:

    

    Fee Base
has the meaning ascribed to it for the purposes of, and all be calculated in
accordance with, the Fees Regulations.

    

    Fees
Regulations means, as appropriate, either the Banking Supervision (Fees)
Regulations 2000 or such regulations as from time to time may be in force,
relating to the payment of fees for banking supervision in respect of periods
subsequent to 31 March 2001.

    

    Any
reference to a provision of any statute, directive, order or regulation herein
is a reference to that provision as amended or re-enacted from time to
time.

    

    If
alternative or additional financial requirements are imposed which in the
Lender's opinion make the formula set out above no longer appropriate, the
Lender shall be entitled to stipulate such other formula as shall be suitable to
apply in substitution for the formula set out above.

    

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    IN WITNESS whereof the parties
hereto have entered into this Agreement the date first above
written.

    

    

    
      	
              SIGNED
      by

            	
              )

            
	 
      	
              )

            
	
              for
      and on behalf of

            	
              )

            
	
              SENATORE
      SHIPPING COMPANY LIMITED

            	
              )

            
	
              in
      the presence of

            	 
      	 
      
	 
      	
              Kavita
      Shah

              Solicitor

              London

              EC2A
      2HB

            	 
      

    

    

    
      	
              SIGNED
      by

            	
              )

            
	 
      	
              )

            
	
              for
      and on behalf of

            	
              )

            
	
              NOEMI
      SHIPPING COMPANY LIMITED

            	
              )

            
	
              in
      the presence of

            	 
      	 
      
	 
      	
              Kavita
      Shah

              Solicitor

              London

              EC2A
      2HB

            	 
      

    

    

    
      	
              SIGNED
      by

            	
              )

            
	 
      	
              )

            
	
              for
      and on behalf of

            	
              )

            
	
              THE
      ROYAL BANK OF SCOTLAND PLC

            	
              )

            
	
              in
      the presence of

            	 
      	 
      
	 
      	
              Kavita
      Shah

              Solicitor

              London

              EC2A
      2HB

            	 
      

    

    

    

    
      
         

      

      
        38

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]