Document:

ex-10_38.htm

     

    
      TBS
INTERNATIONAL LIMITED & SUBSIDIARIES                       EXHIBIT 10.38

       

    

     

     

     

     

     

    Date: as
of January 16, 2008

     

    BEDFORD
MARITIME CORP.

    BRIGHTON
MARITIME CORP.

    HARI
MARITIME CORP.

    PROSPECT
NAVIGATION CORP.

    HANCOCK
NAVIGATION CORP

    COLUMBUS
MARITIME CORP.

    and

    WHITEHALL
MARINE TRANSPORT CORP.

    as joint
and several Borrowers

     

    TBS
INTERNATIONAL LIMITED

    as
Guarantor

     

    THE
BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN

    as
Lenders

     

    DVB
GROUP MERCHANT BANK (ASIA) LTD.

    as
Facility Agent and Security Trustee

     

    THE
GOVERNOR AND COMPANY OF THE BANK OF IRELAND

    as
Payment Agent

     

    DVB
BANK AG

    THE
GOVERNOR AND COMPANY OF THE BANK OF IRELAND

    and

    NATIXIS

    as Swap
Banks

     

    MOUNT
WASHINGTON LLC

    as
Arranger

    _______________________________________________________

     

    LOAN
AGREEMENT

    _______________________________________________________

     

    relating
to

    a loan
facility of up to the lesser of $75,000,000 and

    59% of
the aggregate Fair Market Value of the Ships

    

     

    INDEX

     

    Clause                                                                                                                                  Page

    

    1        INTERPRETATION [INSERT PAGE NUMBER]

    2        FACILITY [INSERT PAGE NUMBER]

    3        DRAWDOWN [INSERT PAGE NUMBER]

    4        INTEREST [INSERT PAGE NUMBER]

    5        INTEREST
PERIODS [INSERT PAGE
NUMBER]

    6        DEFAULT
INTEREST [INSERT PAGE
NUMBER]

    7        REPAYMENT AND
PREPAYMENT [INSERT PAGE
NUMBER]

    8        CONDITIONS
PRECEDENT [INSERT PAGE
NUMBER]

    9        REPRESENTATIONS AND
WARRANTIES [INSERT PAGE
NUMBER]

    10        COVENANTS [INSERT PAGE NUMBER]

    11        PAYMENTS AND
CALCULATIONS [INSERT PAGE
NUMBER]

    12        APPLICATION OF
RECEIPTS [INSERT PAGE
NUMBER]

    13        EVENTS OF
DEFAULT [INSERT PAGE
NUMBER]

    14        FEES AND
EXPENSES [INSERT PAGE
NUMBER]

    15        INDEMNITIES [INSERT PAGE NUMBER]

    16        NO SET-OFF OR TAX
DEDUCTION [INSERT PAGE
NUMBER]

    17        ILLEGALITY,
ETC [INSERT PAGE
NUMBER]

    18        ASSIGNMENTS AND
PARTICIPATIONS; CHANGES IN LENDING OFFICE [INSERT PAGE NUMBER]

    19        VARIATIONS AND
WAIVERS [INSERT PAGE
NUMBER]

    20        NOTICES [INSERT PAGE NUMBER]

    21        GUARANTY [INSERT PAGE NUMBER]

    22        JOINT AND SEVERAL
LIABILITY [INSERT PAGE
NUMBER]

    23        SUPPLEMENTAL [INSERT PAGE NUMBER]

    24        THE FACILITY AGENT, THE
PAYMENT AGENT AND THE SECURITY TRUSTEE [INSERT PAGE NUMBER]

    25        LAW AND
JURISDICTION [INSERT PAGE
NUMBER]

    26        WAIVER OF JURY
TRIAL [INSERT PAGE
NUMBER]

    27        PATRIOT ACT; OFAC AND BANK
SECRECY ACT [INSERT PAGE
NUMBER]

    28        POSITION OF THE LENDERS AND
THE SWAP BANKS [INSERT PAGE
NUMBER]

    

    SCHEDULE
1                                           LENDERS
AND COMMITMENTS

    SCHEDULE
2                                           DRAWDOWN
NOTICE

    SCHEDULE
3                                           CONDITION
PRECEDENT DOCUMENTS

    SCHEDULE
4                                           FORM
OF ASSIGNMENT AND ACCEPTANCE

    SCHEDULE
4                                           FORM
OF DELETION LETTER

    SCHEDULE
5                                           FORM
OF DELETION POWER OF ATTORNEY

    

    APPENDIX
A                                           FORM
OF COMPLIANCE CERTIFICATE

    APPENDIX
B                                           FORM
OF EARNINGS ASSIGNMENT

    APPENDIX
C                                           FORM
OF INSURANCE ASSIGNMENT

    APPENDIX
D                                           FORM
OF MANAGER’S UNDERTAKINGS

    APPENDIX
E                                           FORM
OF MORTGAGE

    APPENDIX
F                                           FORM
OF NOTE

    

    

     

    THIS LOAN
AGREEMENT (this Agreement) is made as of
January 16, 2008

     

    AMONG

     

    
      	
              (1)

            	
              BEDFORD
      MARITIME CORP., BRIGHTON MARITIME CORP., HARI MARITIME CORP., PROSPECT
      NAVIGATION CORP., HANCOCK NAVIGATION CORP., COLUMBUS MARITIME CORP. and
      WHITEHALL MARINE TRANSPORT CORP., each a corporation organized and
      existing under the law of the Republic of The Marshall Islands, as joint
      and several borrowers (each, a “Borrower” and together,
      the “Borrowers”);

            

    

    

    
      	
              (2)

            	
              TBS
      INTERNATIONAL LIMITED, a company organized and existing under the law of
      Bermuda, as guarantor (the “Guarantor”);

            

    

     

    
      	
              (3)

            	
              THE
      BANKS AND FINANCIAL INSTITUTIONS NAMED ON SCHEDULE 1 HERETO, as lenders
      (together with any bank or financial institution which becomes a Lender
      pursuant to Clause 18 hereof, the “Lenders”, and each
      separately a “Lender”);

            

    

     

    
      	
              (4)

            	
              DVB
      GROUP MERCHANT BANK (ASIA) LTD., acting through its office at 77 Robinson
      Road 30-02, Singapore, as facility agent (in such capacity, the “Facility Agent”) for the
      Lenders and as security trustee (in such capacity, the “Security Trustee”) for
      the Lenders and the Swap Banks;

            

    

     

    
      	
              (5)

            	
              THE
      GOVERNOR AND COMPANY OF THE BANK OF IRELAND, acting through its office at
      Head Office, Building A3, Lower Baggot Street, Dublin 2, Ireland, as
      payment agent (the “Payment Agent”) for the
      Lenders;

            

    

     

    
      	
              (6)

            	
              DVB
      BANK AG, acting through its office at Friedrich-Ebert-Anlage 2-14, 600325
      Frankfurt am Main, Federal Republic of Germany, THE GOVERNOR AND COMPANY
      OF THE BANK OF IRELAND, acting through its office at Head Office, Building
      A3, Lower Baggot Street, Dublin 2, Ireland, and NATIXIS, acting through
      its office at BP 4 - F-75060, Paris Cedex 02, France, as swap banks (each,
      a “Swap Bank” and
      together, the “Swap
      Banks”); and

            

    

     

    
      	
              (7)

            	
              MOUNT
      WASHINGTON LLC, c/o AER Holding N.V., Zeelandia Office Park, Kaya W.F.G.
      Mensing 14, Curacao, Netherlands Antilles, as arranger (the “Arranger”).

            

    

     

    WHEREAS, the Lenders have
agreed to make available to the Borrowers on the terms and conditions set forth
herein a secured term loan facility in the aggregate amount of up the lesser of
$75,000,000 and 59% of the aggregate Fair Market Value of the Ships to refinance
such Ships and for general corporate purposes of the Borrowers and the
Guarantor.

    

    WHEREAS, the Borrowers shall
enter into an interest rate hedging agreement with each of the Swap Banks on the
2002 ISDA (Multicurrency-Cross Border) form, as amended, to fix the interest
rate under this Agreement and the Borrowers’ liabilities thereunder shall be
secured with the Borrowers’ obligations under this Agreement and the other
relevant Finance Documents; and

    

    WHEREAS, at the request of the
Borrowers, DVB Group Merchant Bank (Asia) Ltd., Singapore Branch, has agreed to
serve as Facility Agent and Security Trustee, and The Governor and Company of
the Bank of Ireland has agreed to serve as Payment Agent under this
Agreement.

    

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained
herein, it is agreed as follows:

     

    1           INTERPRETATION

     

    1.1           Definitions.  Subject
to Clause 1.4, in this Agreement:

     

    “Actual Drawdown Date” means,
in respect of the Advance under this Agreement, the date on which the Advance is
actually made;

     

    “Advance” means the advance by
the Lenders of the Loan to the Borrowers under this Agreement;

     

    “Affiliate” means, as to any
person, any other person that, directly or indirectly, controls, is controlled
by or is under common control with such person or is a director or officer of
such person, and for purposes of this definition, the term “control” (including the terms
“controlling”, “controlled by” and “under common control with”)
of a person means the possession, direct or indirect, of the power to vote 50%
or more of the voting stock of such person or to direct or cause direction of
the management and policies of such person, whether through the ownership of
voting stock, by contract or otherwise;

     

    “Approved Bareboat Flag” means,
with respect to each Ship, temporary bareboat registration of such Ship in the
name of the relevant Bareboat Charterer under Philippine flag;

     

    “Approved Managers” means
Roymar Ship Management, Inc., as technical manager, and TBS Shipping Services,
Inc., as commercial manager, or such other manager(s) as may be approved from
time to time in writing by the Facility Agent, such approval not to be
unreasonably withheld, and in the singular means either of them;

     

    “Approved Primary Flag” means,
with respect to each Ship, registration of such Ship in the name of the relevant
Borrower under Liberian flag or such other flag acceptable to the Majority
Lenders;

     

    “Assignment and Acceptance”
means an assignment and acceptance entered into by a Lender and an assignee of
such Lender, and accepted by the Facility Agent, pursuant to Clause 18.2 hereof,
in substantially the form of Schedule 4 hereto;

     

    “Availability Period” means
any Business Day from the Effective Date until January 30, 2008;

     

    “Bareboat Charter” means, in
respect of each Ship, the bareboat charter dated December 5, 2007 between the
Borrower owning that Ship, as owner, and relevant Bareboat Charterer, as
charterer;

     

    “Bareboat Charterer”
means:

     

    
      	
              (a)  

            	
              Filscan,
      in respect of the APACHE MAIDEN;

            

    

     

    
      	
              (b)  

            	
              Viking,
      in respect of the KICKAPOO BELLE;

            

    

     

    
      	
              (c)  

            	
              Sea
      Star, in respect of the NAVAJO
PRINCESS;

            

    

     

    
      	
              (d)  

            	
              General
      Charterer, in respect of the INCA
MAIDEN;

            

    

     

    
      	
              (e)  

            	
              Viking,
      in respect of the KIOWA PRINCESS;

            

    

     

    
      	
              (f)  

            	
              Intermodal,
      in respect of the SENECA MAIDEN;
and

            

    

     

    
      	
              (g)  

            	
              General
      Charterer, in respect of the CHEROKEE
PRINCESS;

            

    

     

    “Bareboat Registry” has the
meaning assigned such term in Clause 10.4(a);

     

    “Broker” means each of
Simpson, Spence & Young (New York Office), R.S. Platou Shipbrokers A.S. and
such other internationally recognized ship brokers as the Facility Agent may,
with the consent of the Majority Lenders, approve from time to time in writing,
such approval not to be unreasonably withheld;

     

    “Business Day” means a day on
which dealings are carried out in the London Interbank Market and which is also
a day on which commercial banks are not authorized or required to close in New
York, New York, Singapore, Dublin, Ireland, Frankfurt, Germany, or Paris
France;

     

    “Classification Society”
means, in relation to a Ship, the American Bureau of Shipping, Det Norske
Veritas, Lloyd’s Register, Bureau Veritas, Nippon Kaiji Kyokai, Germanischer
Lloyd or such other first-class vessel classification society which is a member
of IACS that the Facility Agent has, with the consent of the Majority Lenders,
approved in writing, such approval not to be unreasonably withheld;

     

    “Collateral” means all
property (including, without limitation, any proceeds thereof) referred to in
the Finance Documents that is or is intended to be subject to any Security
Interest in favor of the Security Trustee, for the benefit of the Lenders and
the Swap Banks, securing the obligations of the Borrowers under this Agreement
or any other Finance Documents;

     

    “Collateral Maintenance Ratio”
has the meaning assigned such term in Clause 10.3;

     

    “Commitment” means, at any
time with respect to each Lender, the maximum sum to be advanced at such time by
such Lender to the Borrowers pursuant to this Agreement, which sum as of the
Effective Date shall be the amount set forth opposite such Lender’s name on
Schedule 1 hereto, as such amount shall be reduced from time to time pursuant to
this Agreement, and “Total
Commitments” means the aggregate of the Commitments of all the
Lenders;

     

    “Compliance Certificate” means
the certificate executed by the Guarantor’s chief financial officer or
equivalent officer, in the form set out in Appendix A hereto;

     

    “Confirmation”, in relation to
any Designated Transaction, shall have the meaning assigned such term in the
relevant Master Agreement;

     

    “Contractual Currency” has the
meaning given in Clause 15.5;

     

    “Credit Parties” means the
Lenders, the Security Trustee, the Facility Agent, the Payment Agent and the
Swap Banks and in the singular means any of them;

     

    “Deletion Letter” means, in
respect of each Ship, a letter addressed to the Maritime Industry Authority of
the Republic of the Philippines in the form set out in Schedule 5;

     

    “Deletion Power of Attorney”
means, in respect of each Ship, a Power of Attorney in the form set out in
Schedule 6;

     

    “Designated Transaction” means
a Transaction which fulfills the following requirements:

    

    
      	
               
      

            	
              (a)

            	
              it
      is entered into by the Borrowers and a Swap Bank pursuant to a Master
      Agreement;

            

    

    

    
      	
               
      

            	
              (b)

            	
              its
      purpose is to hedge the Borrowers’ exposure under this Agreement to
      fluctuations in the interest rate arising from the funding of the Loan (or
      any part thereof) for a period expiring no later than the Maturity Date;
      and

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      notional principal amount of such Transaction, together with all other
      continuing Designated Transactions, does not and in the future (taking
      into account the scheduled amortization thereof) will not exceed the
      aggregate amount of the Loan scheduled to be outstanding from time to
      time;

            

    

    

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

     

    “Drawdown Notice” means a
notice in the form set out in Schedule 2;

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    “Earnings Assignment” means,
in respect of each Ship, an assignment of the Earnings and any Requisition
Compensation in the form set out in Appendix B;

     

    “Effective Date” means the
date on which this Agreement is executed and delivered by the parties
hereto;

     

    “Eligible Assignee”
means:

     

    
      	
               
      

            	
              (a)

            	
              any
      commercial bank organized under the laws of the United States, or any
      State thereof, and having total assets in excess of
      $1,000,000,000;

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      commercial bank organized under the laws of any other country that is a
      member of the OECD or has concluded special lending arrangements with the
      International Monetary Fund Associated with its General Arrangements to
      Borrow, or a political subdivision of any such country, and having total
      assets in excess of $1,000,000,000, so long as such bank is acting through
      a branch or agency located in the United States or in the country in which
      it is organized or another country that is described in this clause
      (b);

            

    

     

    (c)           the
central bank of any country that is a member of the OECD;

     

    
      	
               
      

            	
              (d)

            	
              any
      finance company, insurance company or other financial institution or fund
      (whether a corporation, partnership, trust or other entity) that (i) is
      not an Affiliate of any of the Obligors, (ii) is engaged in making,
      purchasing or otherwise investing in commercial loans in the ordinary
      course of its business and (iii) has total assets in excess of
      $1,000,000,000; and

            

    

     

    
      	
               
      

            	
              (e)

            	
              any
      other Person (other than an Affiliate of any of the Obligors) whose
      primary business is not owning, managing or chartering vessels approved by
      the Facility Agent and the Obligors and having assets in excess of
      $1,000,000,000, such approval not to be unreasonably
    withheld;

            

    

     

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

     

    “Environmental Permit” means
any permit, approval, identification number, license or other authorization
required under any Environmental Law;

     

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

     

    “Event of Default” means any
of the events or circumstances described in Clause 13.1;

     

    “Expected Drawdown Date”
means, in relation to the Advance, the date requested by the Borrowers in the
Drawdown Notice for the Advance to be made;

     

    “Fair Market Value” means, in
relation to each Ship, the market value of such Ship at any date that is shown
by the average of two (2) valuations each prepared and addressed to the Facility
Agent:

    

    
      	
              (a)  

            	
              as
      at a date not more than 30 days prior to the date such valuation is
      delivered to the Facility Agent;

            

    

    

    
      	
              (b)  

            	
              by
      a Broker;

            

    

    

    
      	
              (c)  

            	
              with
      or without physical inspection of that Ship (as the Facility Agent may
      require);

            

    

    

    
      	
              (d)  

            	
              on
      the basis of a sale for prompt delivery for cash on normal arm’s length
      commercial terms as between a willing seller and a willing buyer, free of
      any existing charter or other contract of employment (and with no value to
      be given to any pooling arrangements);
and

            

    

    

    
      	
              (e)  

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

            

    

    

    “Filscan” means Filscan
Shipping, Inc., a corporation duly organized and validly existing under the laws
of the Republic of the Philippines;

     

    “Finance Documents”
means:

     

    (a)           this
Agreement;

     

    (b)           the
Note;

     

    (c)           the
Earnings Assignment;

     

    (d)           the
Insurance Assignments;

     

    (e)           the
Mortgages;

     

    (f)           the
Master Agreements; and

     

    
      	
               
      

            	
              (g)

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

            

    

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    (b)           under
any bond, note or other security issued by the debtor;

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

            	
              under
      any interest or currency swap or any other kind of derivative transaction
      entered into by the debtor or, if the agreement under which any such
      transaction is entered into requires netting of mutual liabilities, the
      liability of the debtor for the net amount;
or

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    “General Charterer” means
General Charterer Inc., a corporation duly organized and validly existing under
the laws of the Republic of the Philippines;

     

    “Guarantor Group” means any
entity that is owned or controlled by the Guarantor;

     

    “Insurances” means, in respect
of each Ship:

     

    
      	
               
      

            	
              (a)

            	
              all
      policies and contracts of insurance, including entries of the Ship in any
      protection and indemnity or war risks association, which are effected in
      respect of the Ship, her Earnings or otherwise in relation to her (except
      for any loss of hire insurance);
and

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    “Insurance Assignment” means,
in respect of each Ship, an assignment of the Insurances in the form set out in
Appendix C;

     

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

     

    “Intermodal” means Intermodal
Shipping Inc., a corporation duly organized and validly existing under the laws
of the Republic of the Philippines;

     

    “ISM Code” means in relation
to its application to each Ship and its 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’
      (including the guidelines on its implementation), adopted by the
      International Maritime Organization (“IMO”) as Resolution
      A.741(18) and Resolution A.913(22) (superseding Resolution A.788(19)) (and
      the terms “safety
      management system”, “Safety Management
      Certificate” and “Document of Compliance”
      have the same meanings as are given to them in the ISM Code);
      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 IMO or any other entity with responsibility for implementing the ISM
      Code;

            

    

     

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

     

    “ISM Code Documentation”
includes, in respect of a Ship:

     

    
      	
               
      

            	
              (a)

            	
              the
      Document of Compliance and Safety Management Certificate issued pursuant
      to the ISM Code in relation to such Ship within the periods specified by
      the ISM Code;

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      other documents and data which are relevant to the safety management
      system and its implementation and verification which the Facility Agent
      may require; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      other documents which are prepared or which are otherwise relevant to
      establish and maintain such Ship’s compliance or the compliance of the
      relevant Borrower or relevant Approved Manager with the ISM Code which the
      Facility Agent may require;

            

    

     

    “ISM Responsible Person”
means, in respect of a Ship:

     

    
      	
               
      

            	
              (a)

            	
              each
      and every person who has assumed responsibility for the operation of such
      Ship and has agreed to take over or is required to assume responsibility
      for the performance or observance of the duties and responsibilities
      imposed by the ISM Code; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              each
      and every person ashore who is a ‘designated person’ for the purposes of
      the ISM Code with direct access to the highest level of management of such
      Ship’s owner or operator and who, in that capacity, has under the ISM Code
      responsibility and authority which
includes:

            

    

     

    
      	
               
      

            	
              (i)

            	
              monitoring
      the safety and pollution prevention aspects of the operation of such Ship;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              ensuring
      that adequate resources and shore-based support are supplied, as required,
      in each case, under the ISM Code;

            

    

     

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

    

    “ISPS Code Documentation”
includes:

     

    
      	
              (a)  

            	
              the
      International Ship Security Certificate issued pursuant to the ISPS Code
      in relation to each Ship within the period specified in the ISPS Code;
      and

            

    

     

    
      	
              (b)  

            	
              all
      other documents and data which are relevant to the ISPS Code and its
      implementation and verification which the Facility Agent may
      require;

            

    

     

    “LIBOR” means (a) the
applicable Screen Rate or (b) if no Screen Rate is available for the relevant
Interest Period the arithmetic mean of the rates (rounded upwards to four
decimal places) as supplied to the Facility Agent at its request quoted by the
Reference Banks to leading banks in the London interbank market, in the case of
either (a) or (b) at or about 11 a.m. (London time) on the Quotation Date for
the offering of deposits in the currency of the Loan for a period comparable to
the relevant Interest Period, in each case for an amount approximately equal to
the principal amount of the Advance to be outstanding during the applicable
Interest Period;

     

    “Loan” means the principal
amount of the borrowing for the time being outstanding under this
Agreement;

     

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

     

    “Majority Lenders” means, at
any time, Lenders holding at least 66.67% of the then aggregate outstanding
principal amount of the Loan or, if no such principal amount is then
outstanding, Lenders having at least 66.67% of the aggregate amount of the
Commitments then effect;

     

    “Manager’s Undertaking” means,
in respect of each Ship, the letter executed or to be executed by each Approved
Manager in the form set out in Appendix D;

     

    “Margin” means 2.50 percent
per annum;

     

    “Margin Stock” has the meaning
specified in Regulation U of the Board of Governors of the Federal Reserve
System and any successor regulations thereto, as in effect from time to
time;

     

    “Master Agreement” means each
master agreement (on the 2002 ISDA (Multicurrency - Crossborder) form) (as the
same may be amended, supplemented or modified from time to time), made between
the Borrowers and a Swap Bank and includes all Designated Transactions from time
to time entered into thereunder and Confirmations from time to time exchanged
under that master agreement;

     

    “Maturity Date” means the
fifth anniversary of the Actual Drawdown Date;

     

    “Memorandum of Three Party
Agreement” means, in respect of a Ship, the Memorandum of Three Party
Agreement dated December 5, 2007 among the Borrower which owns such Ship, the
Bareboat Charterer of such Ship and Pacific Rim, relating to the charter
arrangements and bareboat registration arrangements of such Ship;

     

    “Mortgage” means, in respect
of each Ship, the first preferred Liberian ship mortgage on such Ship in the
form set out in Appendix E;

     

    “Negotiation Period” has the
meaning given in Clause 4.4;

     

    “Note” means a promissory note
of the Borrowers, payable to the order of the Payment Agent, evidencing the
aggregate indebtedness of the Borrowers under this Agreement, in the form set
out in Appendix F hereto;

     

    “Obligors” means the Borrowers
and the Guarantor, and in the singular means any of them;

     

    “Outstanding Indebtedness”
means the aggregate of all sums of money at any time and form time to time owing
by the Borrowers to the Lenders under or pursuant to this Agreement and the
other Finance Documents (or any of them), including, without limitation, any
amounts owed under Clause 15 of this Agreement;

     

    “Pacific Rim” means Pacific
Rim Shipping Corp., a corporation duly organized and validly existing under the
laws of The Republic of the Marshall Islands;

     

    “Payment Currency” has the
meaning given in Clause 15.5;

     

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

     

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

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

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

     

    “Quotation Date” means, in
relation to any Interest Period (or any other period for which an interest rate
is to be determined under any provision of a Finance Document), two Business
Days before the first day of that period, unless market practice differs in the
Relevant Interbank Market for the currency of the Loan, in which case the
Quotation Date for that currency will be determined by the Facility Agent in
accordance with market practice in the Relevant Interbank Market (and if quotations would
normally be given
by leading banks in the Relevant Interbank Market on more than one day, the
Quotation Date will be the last of those days);

     

    “Ratable Portion” means, as to
any Lender at any time, (a) with respect to any Advance, the percentage obtained
by dividing such Lender’s Commitment in relation to such Advance by the Total
Commitments in relation to such Advance, and (b) in all other cases, a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Lender at such time and the denominator of which is the Total Commitments at
such time, provided that
if the Ratable Portion of any Lender is to be determined after the Total
Commitments have been terminated, then the percentages of the Lenders shall be
determined immediately prior (and without giving effect) to such
termination;

     

    “Reference Banks” means, for
purposes of LIBOR, the reference banks chosen
from time to time by the British Bankers’ Association;

     

    “Register” has the meaning
assigned such term in Clause 18.2(c);

     

    “Relevant Interbank Market”
mean the London interbank market;

     

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

     

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

     

    “Screen Rate” means, in
relation to LIBOR, the British Bankers’ Association Interest Settlement Rate for
the relevant currency and period displayed on the appropriate page of the
Reuters screen.  If the agreed page is replaced or service ceases to
be available, the Facility Agent may specify another page or service displaying
the appropriate rate after consultation with the Borrowers and the Majority
Lenders;

     

    “Sea Star” means Sea Star
Shipping Corporation, a corporation duly organized and validly existing under
the laws of the Republic of the Philippines;

     

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

     

    “Security Interest”
means:

     

    
      	
               
      

            	
              (a)

            	
              a
      mortgage, charge or pledge, any maritime or other lien or any other
      security interest of any kind;

            

    

    

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

    

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

     

    
      	
               
      

            	
              (a)

            	
              all
      amounts which have become due for payment by either Obligor under the
      Finance Documents have been paid;

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

            	
              no
      Obligor has any future or contingent liability under any provision of any
      Finance Document; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              no
      Credit Party believes that there is a significant risk that any payment or
      transaction under a Finance Document would be set aside, or would have to
      be reversed or adjusted, in any present or possible future bankruptcy of
      an Obligor or in any present or possible future proceeding relating to a
      Finance Document or any asset covered (or previously covered) by a
      Security Interest created by a Finance
Document;

            

    

     

    “Ships” means the Liberian
flag vessels APACHE MAIDEN, Official Number 12146, CHEROKEE PRINCESS, Official
Number 12145, INCA MAIDEN, Official Number 12149, KICKAPOO BELLE, Official
Number 12147, KIOWA PRINCESS, Official Number 12150, NAVAJO PRINCESS, Official
Number 12148, and SENECA MAIDEN, Official Number 12151, and in the singular
means any one of them;

     

    “TBS Credit Facility” means
the Credit Agreement dated July 31, 2006, as amended or supplemented from time
to time, among the Guarantor and certain of its subsidiaries as borrowers, Bank
of America, N.A., as Administrative Agent and a Lender, Citibank, N.A., as
Syndication Agent and a Lender, Westlb AG New York Branch, as Documentation
Agent and a Lender,  Keybank, N.A. as a Lender, LaSalle Bank, National
Association, as a Lender, North Fork Business Capital Corporation, as a Lender,
and Webster Bank National Association, as a Lender, upon the terms and
conditions of which a $140.0 million credit facility was made available to the
Guarantor and certain of its subsidiaries;

     

    “TBS Credit Facility Financial
Covenants” means the covenants stated in Section 7.13 of the TBS Credit
Agreement;

     

    “Total Loss” means, in respect
of a Ship:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

            	
              any
      requisition (whether or not for title) of such Ship by or on behalf of any
      government or other authority (other than by way of requisition for hire
      for a fixed period not exceeding one year without any right to an
      extension);

            

    

     

    
      	
              (c)  

            	
              the
      capture, seizure, arrest, detention, confiscation, expropriation or
      condemnation of such Ship (other than where the same amounts to
      requisition (whether or not for title) of such Ship) by any governmental
      authority, or by any person claiming to be or purporting to act on behalf
      of any governmental authority, unless such Ship is released and returned
      to the possession of her registered or demise owner within 12 months after
      the capture, seizure, arrest, detention, confiscation, expropriation or
      condemnation in question; or

            

    

     

    
      	
              (d)  

            	
              assailing
      thievery or piracy of such Ship, which deprives the operator of the use of
      such Ship for a period of 90 days;

            

    

     

    “Total Loss Date” means, in
respect of a Ship:

     

    
      	
              (a)  

            	
              in
      the case of an actual loss of such Ship on the actual date or at the time
      such Ship was lost or, if such date is not known, on the date on which
      such Ship was last reported;

            

    

     

    
      	
              (b)  

            	
              in
      the case of a constructive total loss of such Ship, on the date and at the
      time notice of abandonment of such Ship is given to the insurers of such
      Ship;

            

    

     

    
      	
              (c)  

            	
              in
      the case of an arranged, agreed or compromised total loss, on the date
      upon which a binding agreement as to such arranged, agreed or compromised
      total loss is entered into by the insurers of such
  Ship;

            

    

     

    
      	
              (d)  

            	
              in
      the case of any requisition (whether or not for title) of such Ship by or
      on behalf of any government or other authority (other than by way of
      requisition for hire for a fixed period not exceeding one year without any
      right to an extension), on the date on which such requisition
      occurred;

            

    

     

    
      	
              (e)  

            	
              in
      the case of the capture, seizure, arrest, detention, confiscation,
      expropriation or condemnation of such Ship (other than where the same
      amounts to requisition (whether or not for title) of such Ship) by any
      governmental authority, or by any person claiming to be or purporting to
      act on behalf of any governmental authority, which deprives the operator
      of the use of such Ship for more than 12 months, upon the expiry of the
      period of 12 months after the date upon which the capture, seizure,
      arrest, detention, confiscation, expropriation or condemnation of such
      Ship occurred;

            

    

     

    
      	
              (f)  

            	
              in
      the case of assailing thievery or piracy of such Ship, which deprives the
      operator of the use of such Ship for a period of 90 days, upon the expiry
      of the period of 90 days after the date upon which the assailing thievery
      or piracy occurred; and

            

    

     

    
      	
              (g)  

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

            

    

     

    “Transaction” has the meaning
assigned such term in the Master Agreements;

     

    “Viking” means Viking
International Carriers Inc., a corporation duly organized and validly existing
under the laws of the Republic of the Philippines; and

     

    “Westbrook” means Westbrook
Holdings Ltd., a corporation duly organized and validly existing under the laws
of The Republic of the Marshall Islands.

     

    1.2           Construction of certain
terms.  In this Agreement:

     

    “approved” means, unless the
context otherwise requires, approved in writing by the Facility Agent acting
upon the instructions of the Majority Lenders;

     

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

     

    “company” includes any
corporation, limited liability company, partnership, joint venture,
unincorporated association, joint stock company and trust;

     

    “consent” includes an
authorization, consent, approval, resolution, license, exemption, filing,
registration, notarization and legalization;

     

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

     

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

     

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

     

    “law” includes any form of
delegated legislation, any order or decree, any treaty or international
convention and any regulation or resolution of the United States of America, any
state thereof, the Council of the European Union, the European Commission, the
United Nations or its Security Council or any other Pertinent
Jurisdiction;

     

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

     

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

     

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

     

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

     

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

     

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

     

    “subsidiary” has the meaning
given in Clause 1.4;

     

    “successor” includes any
person who is entitled (by assignment, novation, merger or otherwise) to any
other person’s rights under this Agreement or any other Finance Document (or any
interest in those rights) or who, as administrator, liquidator or otherwise, is
entitled to exercise those rights; and in particular references to a successor
include a person to whom those rights (or any interest in those rights) are
transferred or pass as a result of a merger, division, reconstruction or other
reorganization of it or any other person;

     

    “tax” includes any present or
future tax, duty, impost, levy or charge of any kind which is imposed by any
state, any political sub-division of a state or any local or municipal authority
(including any such imposed in connection with exchange controls), and any
connected penalty, interest or fine.

     

    
      	
              1.3

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              1.4

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

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

     

    1.5           General
Interpretation.

     

    (a)           Agreement:

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

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

     

    
      	
               
      

            	
              (iv)

            	
              Clauses
      1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
      intention appears;

            

    

     

    
      	
              (b)

            	
              References
      in Clause 1.1 to a document being in the form of a particular Appendix
      include references to that form with any modifications to that form which
      the Facility Agent approves or reasonably requires;
  and

            

    

     

    (c)           The
clause headings shall not affect the interpretation of this
Agreement.

     

    2           FACILITY

     

    
      	
              2.1

            	
              Amount of
      facility.  Subject to the other provisions of this
      Agreement, the Lenders severally agree to make available to the Borrowers,
      on a joint and several basis, a loan facility of up to the lesser of
      $75,000,000 and 59% of the aggregate Fair Market Value of the
      Ships.

            

    

     

    
      	
              2.2

            	
              Lenders’
      participations.  Subject to the other provisions of this
      Agreement, each Lender shall participate in the Advance in an amount equal
      to its Ratable Portion of the Advance as at the Actual Drawdown
      Date.

            

    

    

    
      	
              2.3

            	
              Purpose of
      Loan.  The Borrowers undertake to use the Loan only for
      the purposes stated in the preamble to this
  Agreement.

            

    

     

    3           DRAWDOWN

     

    
      	
              3.1

            	
              Request for the
      Advance.  Subject to the following conditions, the
      Borrowers may request the Advance to be made by delivering to the Facility
      Agent a completed Drawdown Notice not later than 11:00 a.m. (New York
      time) three (3) Business Days prior to the Expected Drawdown Date
      thereof.  The Facility Agent shall promptly notify the Lenders
      that it has received a Drawdown Notice and shall inform each Lender
      of:

            

    

    

    (a)           the
amount of and the Expected Drawdown Date for the Advance;

    

    (b)           the
amount of each Lender’s Ratable Portion of the Advance; and

    

    
      	
              (c)

            	
              the
      duration of the first Interest Period applicable to the
      Advance.

            

    

    

    3.2           Conditions to
availability.  The conditions referred to in Clause 3.1 are
that:

    

    
      	
              (a)

            	
              the
      Expected Drawdown Date and Actual Drawdown Date must be a Business Day
      during the Availability Period;

            

    

    

    
      	
              (b)

            	
              there
      shall be no more than a single Advance and the Loan shall not exceed the
      lesser of $75,000,000 and 59% of the aggregate Fair Market Value of the
      Valuation Ships;

            

    

    

    
      	
              (c)

            	
              the
      outstanding principal amount of the Advances shall not exceed the Total
      Commitments; and

            

    

    

    
      	
              (d)

            	
              the
      applicable conditions precedent stated in Clause 8 hereof shall have been
      satisfied or waived as provided
therein.

            

    

    

    
      	
              3.3

            	
              Drawdown Notice
      irrevocable.  A Drawdown Notice must be signed by an
      officer or duly authorized attorney-in-fact of each Borrowers; and once
      served, a Drawdown Notice cannot be revoked without the prior consent of
      the Facility Agent, acting with the authority of the Majority
      Lenders.

            

    

    

    3.4           Disbursement of an
Advance.  Subject to the provisions of this
Agreement:

    

    
      	
              (a)

            	
              Each
      Lender shall before 11:00 a.m. (New York City time) make its Ratable
      Portion of each Advance available to the Payment Agent, for the account of
      the Borrowers, on and with the value date of the Expected Drawdown Date
      for such Advance.  After the Payment Agent’s receipt of such
      funds and upon fulfillment or waiver of the applicable conditions set
      forth in Clause 8 hereof, the Payment Agent will make such funds available
      to the Borrowers by paying such funds to such account(s) which the
      Borrowers specify in the Drawdown Notice.  The payment by the
      Payment Agent under this Clause 3.4 to such account(s) shall constitute
      the making of an Advance to the Borrowers and the Borrowers shall
      thereupon become indebted, jointly and severally as principal and direct
      obligors, to each Lender in an amount equal to such Lender’s Ratable
      Portion of an Advance.

            

    

    

    
      	
              (b)

            	
              Unless
      the Payment Agent shall have received notice from a Lender prior to the
      relevant Expected Drawdown Date that such Lender will not make available
      to the Facility Agent such Lender’s Ratable Portion of an Advance, the
      Payment Agent may assume, or at its option request confirmation from such
      Lender, that such Lender has made its Ratable Portion available to the
      Payment Agent on such date in accordance with subsection (a) of this
      Clause 3.4 and the Payment Agent may in its sole discretion, in reliance
      upon such assumption or confirmation (as the case may be), make available
      to the Borrowers (by paying such funds to such account(s) which the
      Borrowers specify in the Drawdown Notice) on such date a corresponding
      amount.  If and to the extent that such Lender shall not have so
      made such Ratable Portion available to the Payment Agent, such Lender and
      the Borrowers (but without duplication) severally agree to repay to the
      Payment Agent forthwith on demand such corresponding amount, together with
      interest thereon, for each day from the date such amount is made available
      to the Borrowers by the Payment Agent until the date such amount is repaid
      to the Payment Agent, at the LIBOR rate for overnight or weekend
      deposits.  If such Lender shall pay to the Payment Agent such
      corresponding amount, such amount so paid shall constitute such Lender’s
      Ratable Portion of such Advance for purposes of this
      Agreement.  Nothing in this Clause 3.4(b) shall be deemed to
      relieve any Lender of its obligation to make Advances to the extent
      provided in this Agreement.

            

    

    

    
      	
              (c)

            	
              In
      the event that the Borrowers are required to repay all or a portion of an
      Advance pursuant to Clause 3.4(b), as between the Borrowers and the
      defaulting Lender, the liability for any breakage costs as described in
      Clause 17.2 shall be borne by the defaulting Lender, provided that if the
      defaulting Lender has not paid any such breakage costs upon demand by the
      Payment Agent therefor, the Borrowers shall pay such breakage costs upon
      demand by the Payment Agent and the Borrowers shall be entitled to recover
      from the defaulting Lender any such payment for breakage costs made by the
      Borrowers.

            

    

    

    
      	
              3.5

            	
              Notation of Advances on
      Note.  Each Advance made by the Lenders to the Borrowers
      may be evidenced by a notation of the same made by the Facility Agent on
      the grid attached to the Note, which notation, absent manifest error,
      shall be prima
      facie evidence of the amount of the
  Advance.

            

    

    

    4           INTEREST

     

    
      	
              4.1

            	
              Normal rate of
      interest.  Subject to the provisions of this Agreement,
      the rate of interest on the Loan or any part thereof in respect of an
      Interest Period shall be the aggregate of the Margin and LIBOR for that
      Interest Period.

            

    

     

    
      	
              4.2

            	
              Payment of normal
      interest.  Subject to the provisions of this Agreement,
      interest on the Loan or any part thereof in respect of each Interest
      Period shall be paid by the Borrowers on the last day of that Interest
      Period, unless the Borrowers shall have selected a 6 or 12 month Interest
      Period, in which case interest on the Loan or any part thereof shall also
      be payable quarterly in arrears.

            

    

     

    
      	
              4.3

            	
              Payment of accrued
      interest.  In the case of an Interest Period longer than
      3 months, accrued interest shall be paid every 3 months during that
      Interest Period and on the last day of that Interest
    Period.

            

    

     

    
      	
              4.4

            	
              Notification of interest
      rate.  The Facility Agent shall notify the Borrowers and
      each Lender of the rate of interest as soon as it is
      determined.

            

    

    

    
      	
              4.5

            	
              Notification of market
      disruption.  The Facility Agent shall promptly notify the
      Borrowers if:

            

    

     

    
      	
              (a)

            	
              it
      is unable to determine LIBOR;

            

    

     

    
      	
              (b)

            	
              at
      least one (1) Business Day before the start of an Interest Period, Lenders
      having Commitments amounting to more than 50% of the Total Commitments
      notify the Facility Agent that LIBOR fixed by the Facility Agent would not
      accurately reflect the cost to those Lenders of funding their respective
      Ratable Portion (or any part of them) during the Interest Period in the
      London Interbank Market at or about 11:00 a.m. (London time) on the
      Quotation Date for the Interest Period;
or

            

    

     

    
      	
              (c)

            	
              if
      for any reason a Lender (the “Affected Lender”) is
      unable to obtain Dollars in the London Interbank Market in order to fund
      all or any part of its Ratable Portion of the Advance during any Interest
      Period,

            

    

     

    stating
the circumstances which have caused such notice to be given.

     

    
      	
              4.6

            	
              Suspension of
      drawdown.  If the Facility Agent’s notice under Clause
      4.5 is served before the Advance is made, then while the circumstances
      referred to in the Facility Agent’s notice
  continue:

            

    

    

    
      	
              (a)

            	
              in
      the case of Clause 4.5(a) or (b), each Lender’s obligation to make its
      Ratable Portion of the Advance; and

            

    

    

    
      	
              (b)

            	
              in
      the case of Clause 4.5(c), the Affected Lender’s obligation to make its
      Ratable Portion of the Advance,

            

    

    

    shall be
suspended while the circumstances referred to in the Facility Agent’s notice
continue.

    

    
      	
              4.7

            	
              Negotiation of alternative rate
      of interest.  If the Facility Agent’s notice under Clause
      4.5 is served after the Advance is made, the Borrowers, the Facility Agent
      and the Lenders or (as the case may be) the Affected Lender shall use
      reasonable endeavors to agree, within the 30 days after the date on which
      the Facility Agent serves its notice under Clause 4.5 (the “Negotiation Period”), an
      alternative interest rate or (as the case may be) an alternative basis for
      each Lender or (as the case may be) the Affected Lender to fund or
      continue to fund its Ratable Portion of the relevant Advance or Advances
      during the Interest Period
concerned.

            

    

    

    
      	
              4.8

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

            

    

    

    
      	
              4.9

            	
              Alternative rate of interest in
      absence of agreement.  If an alternative interest rate or
      alternative basis is not agreed within the Negotiation Period, and the
      relevant circumstances are continuing at the end of the Negotiation
      Period, then the Facility Agent shall set an interest period and interest
      rate representing the cost of funding of the Lenders or (as the case may
      be) the Affected Lender in Dollars or in any available currency of their
      or its Ratable Portion of the relevant Advance or Advances plus the
      applicable Margin; and the procedure provided for by this Clause 4.9 shall
      be repeated if the relevant circumstances are continuing at the end of the
      interest period so set by the Facility
Agent.

            

    

    

    
      	
              4.10

            	
              Notice of
      prepayment.  If the Borrowers do not agree with an
      interest rate set by the Facility Agent under Clause 4.9, the Borrowers
      may give the Facility Agent not less than five (5) Business Days’ notice
      of their intention to prepay (without premium or penalty) the Advance at
      the end of the interest period set by the Facility
  Agent.

            

    

    

    
      	
              4.11

            	
              Prepayment; termination of
      Commitments.  A notice under Clause 4.10 shall be
      irrevocable.  The Facility Agent shall promptly notify the
      Lenders or (as the case may be) the Affected Lender of the Borrowers’
      notice of intended prepayment and:

            

    

    

    
      	
              (a)

            	
              on
      the date on which the Facility Agent so notifies the Lenders or (as the
      case may be) the Affected Lender, the Total Commitments or (as the case
      may be) the Commitment of the Affected Lender shall be cancelled;
      and

            

    

    

    
      	
              (b)

            	
              on
      the last Business Day of the interest period set by the Facility Agent,
      the Borrowers shall prepay (without premium or penalty) the Loan or (as
      the case may be) the Affected Lender’s Ratable Portion, together with
      accrued interest thereon at the applicable rate plus the
      Margin.

            

    

    

    
      	
              4.12

            	
              Application of
      prepayment.  The relevant provisions of Clause 7 in
      respect of a voluntary prepayment shall apply in relation to the
      prepayment.

            

    

    

    
      	
              4.13

            	
              Designated
      Transactions.  The Borrowers shall enter into Designated
      Transactions with the Swap Banks in an aggregate notional principal amount
      of up to or equal to the aggregate principal amount of the Loan
      outstanding from time to time on such terms as the Swap Banks and the
      Borrowers shall agree.  The Borrowers hereby agree and undertake
      throughout the Security Period not to conclude Designated Transactions
      which would result, at any time during the Security Period, in the
      notional principal amount of all Designated Transactions then remaining
      exceeding the amount of the Loan.

            

    

     

    5           INTEREST
PERIODS

     

    
      	
              5.1

            	
              Duration of normal Interest
      Periods.  Subject to Clause 5.2, each Interest Period in
      relation to the Outstanding Indebtedness shall
  be:

            

    

     

    
      	
              (a)

            	
              3,
      6, 9 or 12 months, but no more than three one-month periods per year, as
      notified by the Borrowers to the Facility Agent not later than 11:00 a.m.
      (New York time) three (3) Business Days before the commencement of the
      Interest Period; or

            

    

     

    
      	
              (b)

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

            

    

     

    (c)           such
other period as the Majority Lenders may agree with the Borrowers.

     

    
      	
              5.2

            	
              Duration of Interest Periods
      overrunning Repayment Date.  If the Borrowers have
      selected an Interest Period which would overrun a Repayment Date or
      Repayment Dates, then:

            

    

     

    
      	
              (a)

            	
              in
      the case of the final Repayment Date, the Interest Period shall end on the
      final Repayment Date; and

            

    

     

    (b)           in
the case of any other Repayment Date, the Loan shall be divided so
that:

     

    
      	
               
      

            	
              (i)

            	
              the
      amount of each repayment installment (or, as the case may be, the
      aggregate amount of installments payable on the same date pursuant to
      Clause 7.2) falling due before the end of the Interest Period selected
      shall have an Interest Period ending on the Repayment Date on which it
      falls (or, as the case may be, they fall) due;
  and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      balance of the Loan from time to time outstanding during such Interest
      Period shall have an Interest Period ascertained in accordance with the
      provisions of Clause 5.1;

            

    

     

    and for
this purpose alone may there be Interest Periods of different lengths in
relation to the Loan.

    

    6           DEFAULT
INTEREST

     

    
      	
              6.1

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              if
      a Finance Document provides that such amount is payable on demand, the
      date on which the demand is served;
or

            

    

     

    
      	
              (c)

            	
              if
      such amount has become immediately due and payable under Clause 13.2, the
      date on which it became immediately due and
  payable.

            

    

     

    
      	
              6.2

            	
              Rate of default
      interest.  Interest shall accrue on an overdue amount
      from (and including) the relevant date until the date of actual payment
      (as well after as before judgment) at the rate per annum determined by the
      Facility Agent to be 2 percent plus the Margin plus LIBOR for a period of
      1 month (determined by the Facility Agent on the first Business Day of
      each calendar month).

            

    

     

    
      	
              6.3

            	
              Notification of rates of
      default interest.  The Facility Agent shall promptly
      notify the Borrowers of each interest rate determined by the Facility
      Agent under Clause 6.2; but this shall not be taken to imply that the
      Borrowers are liable to pay such interest only with effect from the date
      of the Facility Agent’s
notification.

            

    

     

    
      	
              6.4

            	
              Payment of accrued default
      interest.  Subject to the other provisions of this
      Agreement, any interest due under this Clause shall be paid on
      demand.

            

    

     

    
      	
              6.5

            	
              Compounding of default
      interest.  Any such interest which is not paid on the
      date on which it is due for payment shall thereupon be compounded
      daily.

            

    

     

    
      	
              6.6

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

            

    

     

    7           REPAYMENT
AND PREPAYMENT

     

    
      	
              7.1

            	
              Amount and dates of repayment
      installments.  The Borrowers shall repay the Loan in 20
      consecutive quarterly installments of $4,892,000 each for installments 1
      through 10, and $2,608,000 each for installments 11 through
      20.

            

    

     

    
      	
              7.2

            	
              Repayment
      Dates.  The first repayment installment in respect of the
      Advance shall be made on the date falling three (3) months after the
      Actual Drawdown Date of the Advance.  Each subsequent repayment
      installment in respect of the Advance shall be repaid quarterly thereafter
      and the last repayment installment shall be repaid on the Maturity Date,
      together with all other sums then accrued or owing under any Finance
      Document.

            

    

     

    
      	
              7.3

            	
              Voluntary
      prepayment.  Subject to the following conditions, the
      Borrowers may prepay the whole or any part of the
  Loan.

            

    

     

    7.4           Conditions for voluntary
prepayment.  The conditions referred to in Clause 7.3
are:

     

    
      	
              (a)

            	
              that
      a partial prepayment shall be in an amount not less than $1,000,000 and
      increments of an integral multiple of
  $1,000,000;

            

    

     

    
      	
              (b)

            	
              that
      the Facility Agent has received from the Borrowers at least ten (10)
      Business Days’ prior written notice specifying the amount to be prepaid
      and the date on which the prepayment is to be made;
  and

            

    

     

    
      	
              (c)

            	
              the
      Borrowers have provided evidence satisfactory to the Facility Agent that
      any consent required by the Borrowers in connection with the prepayment
      has been obtained and remains in force, and that any regulation relevant
      to this Agreement which affects the Borrowers has been complied with
      (which may be satisfied by the Borrowers certifying that no consents are
      required and that no regulations need to be complied
  with).

            

    

     

    
      	
              7.5

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

            

    

     

    
      	
              7.6

            	
              Notification to Lenders of
      notice of prepayment.  The Facility Agent shall notify
      the Lenders promptly upon receiving a prepayment notice, and shall provide
      any Lender which so requests with a copy of any document delivered by the
      Borrowers under Clause 7.4(c).

            

    

     

    
      	
              7.7

            	
              Mandatory
      prepayment.  If a Ship is sold or becomes a Total Loss,
      the Borrowers shall prepay the Loan in an amount equal to the net sale or
      insurances proceeds (as the case may be) received for such
      Ship:

            

    

     

    
      	
              (a)

            	
              in
      the case of a sale, on the date on which the sale is completed by delivery
      of the Ship to the buyer; or

            

    

     

    
      	
              (b)

            	
              in
      the case of a Total Loss, on the earlier of the date falling 120 days
      after the Total Loss Date and the date of receipt by the Security Trustee
      of the proceeds of insurance relating to such Total
  Loss.

            

    

     

    7.8           Amounts payable on
prepayment.  A prepayment shall be made together
with:

     

    
      	
              (a)

            	
              accrued
      interest (and any other amount payable under Clause 15.1 below or
      otherwise) in respect of the amount
prepaid;

            

    

     

    
      	
              (b)

            	
              if
      the prepayment is not made on the last day of an Interest Period, together
      with any sums payable under Clause 15.2;
and

            

    

     

    
      	
              (c)

            	
              but
      without premium or penalty except in the case of a voluntary prepayment,
      for which the Borrowers shall pay a prepayment penalty equal
      to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              1.0%
      of the amount prepaid if the voluntary prepayment is made prior to or the
      first anniversary of the Actual Drawdown Date;
  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              0.5%
      of the amount prepaid if the voluntary prepayment is made after the first
      anniversary of the Actual Drawdown Date but prior to or on the second
      anniversary of the Actual Drawdown
Date.

            

    

     

    
      	
              7.9

            	
              Application of
      prepayment.  Each prepayment shall be applied as required
      by Clause 12.1 hereof, provided that
      prepayments shall be applied to the remaining repayment installments of
      principal and interest in inverse order of
  maturity.

            

    

     

    7.10           No reborrowing.  No
amount repaid or prepaid may be reborrowed.

     

    
      	
              7.11

            	
              Unwinding of Designated
      Transactions.  On or prior to any repayment or prepayment
      under this Clause 7, the Borrowers shall wholly or partially reverse,
      offset, unwind or otherwise terminate one or more of the continuing
      Designated Transactions to the extent necessary to ensure that the
      aggregate notional principal amount of the continuing Designated
      Transactions thereafter remaining does not and will not in the future
      (taking into account the scheduled amortization thereof) exceed the
      aggregate amount of the Loan scheduled to be outstanding from time to time
      hereunder.

            

    

     

    
      	
              7.12

            	
              Repayment of Swap
      Benefit.  If a Designated Transaction is terminated in
      circumstances where the Swap Banks would be obliged to pay an amount to
      the Borrowers under the Master Agreement, the Borrowers hereby agree that
      such payment shall be applied in prepayment of the Loan under Clause 7.9
      and authorizes Swap Banks to pay such amount to the Payment Agent for such
      purpose.

            

    

     

    8           CONDITIONS
PRECEDENT

     

    
      	
              8.1

            	
              Documents, fees and no
      default.  Each Lender’s obligation to make its Ratable
      Portion of the Advance is subject to the following conditions
      precedent:

            

    

     

    
      	
              (a)

            	
              that
      on or before the service of the Drawdown Notice, the Facility Agent shall
      have received:

            

    

    

    (i)           this
Agreement, duly executed by all parties hereto; and

    

    
      	
               
      

            	
              (ii)

            	
              such
      documentation and other evidence as is reasonably requested by the
      Facility Agent, a Lender or a Swap Bank in order for each Lender or Swap
      Bank, as the case may be, to carry out and be satisfied with the results
      of all necessary “know your customer” or other checks which it is required
      to carry out in relation to the transactions contemplated by this
      Agreement and the other Finance Documents, including without limitation
      obtaining, verifying and recording certain information and documentation
      that will allow the Facility Agent, each of the Lenders and the Swap Banks
      to identify each of the Obligors in accordance with the requirements of
      the USA PATRIOT Act (Title III of Pub.: 107-56 (signed into law October
      26, 2001)) (the “PATRIOT
      Act”);

            

    

    

    
      	
              (b)

            	
              that
      on or before the Expected Drawdown Date of the Advance, the Facility Agent
      shall have received (i) the documents described in Schedule 3, each to be
      in form and substance satisfactory to the Facility Agent and its lawyers,
      and (ii) payment of all accrued commitment fees and all other fees and
      expenses referred to in Clause 14 that are payable at that
      time;

            

    

    

    
      	
              (c)

            	
              that
      at the date of the Drawdown Notice, at the Expected Drawdown Date and at
      the Actual Drawdown Date:

            

    

    

    
      	
               
      

            	
              (i)

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

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      representations and warranties in Clause 9 and those of any Obligor which
      are set out in the other Finance Documents would be true and not
      misleading if repeated on each of those dates with reference to the
      circumstances then existing;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              there
      has been no material adverse change in the financial condition, operations
      or business prospects of any of the Obligors since the date on the
      Obligors provided information concerning those topics to the Facility
      Agent and/or any Lender; and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              none
      of the circumstances contemplated by Clause 4.5 has occurred and is
      continuing;

            

    

    

    
      	
              (h)

            	
              that,
      if the Collateral Maintenance Ratio were applied immediately following the
      making of the Advance, the Borrowers would not be obliged to provide
      additional Collateral or prepay part of the Loan (and if the Borrowers
      would be so obliged the amount of the Advance shall be correspondingly
      reduced); and

            

    

    

    
      	
              (i)

            	
              that
      the Facility Agent shall have received, and found to be acceptable to it,
      any further opinions, consents, agreements and documents in connection
      with the Finance Documents which the Facility Agent may reasonably request
      by notice to the Borrowers prior to the relevant Expected Drawdown
      Date.

            

    

    

    
      	
              8.2

            	
              Waiver of conditions
      precedent.  If the Facility Agent, acting upon the
      instructions of the Majority Lenders, permits the Loan to be borrowed
      before certain of the conditions referred to in Clause 8.1 are satisfied,
      the Borrowers shall ensure that those conditions are satisfied within five
      (5) Business Days after the Actual Drawdown Date (or such longer period as
      the Facility Agent may specify).

            

    

     

    9           REPRESENTATIONS
AND WARRANTIES

     

    9.1           General.  Each
Obligor represents and warrants as follows.

     

    
      	
              9.2

            	
              Status.  Each
      Obligor is:

            

    

     

    
      	
              (a)

            	
              duly
      formed and validly existing and in good standing under the law of its
      jurisdiction of formation; and

            

    

     

    
      	
              (b)

            	
              duly
      qualified and in good standing as a foreign company in each other
      jurisdiction in which it owns or leases property or in which the conduct
      of its business requires it to so qualify or be licensed except where, in
      each case, the failure to so qualify or be licensed and be in good
      standing could not reasonably be expected to have a material adverse
      effect on its business, assets or financial condition or which may affect
      the legality, validity, binding effect or enforceability of the Finance
      Documents.

            

    

     

    
      	
               
      

            	
              and
      there are no proceedings or actions pending or contemplated by any
      Obligor, or to the knowledge of the Obligors contemplated by any third
      party, to dissolve, wind-up or terminate any
  Obligor.

            

    

     

    
      	
              9.3

            	
              Company power;
      consents.  Each Obligor has the capacity and has taken
      all action, and no consent of any person is required,
  for:

            

    

     

    
      	
              (a)

            	
              it
      to own or lease and operate its properties and to carry on its business as
      now conducted and as proposed to be
conducted;

            

    

     

    
      	
              (b)

            	
              it
      to execute the Bareboat Charter, Memorandum of Three Party Agreement and
      the Finance Documents to which it is or is to become a
    party;

            

    

     

    
      	
              (c)

            	
              it
      to borrow under this Agreement and for it to make all payments
      contemplated by, and to comply with, the obligations of the Finance
      Documents to which it is or is to become a
  party;

            

    

     

    
      	
              (d)

            	
              it
      to comply with its obligations under the under the Bareboat Charter and
      Memorandum of Three Party Agreement to which it is a
  party;

            

    

     

    
      	
              (e)

            	
              it
      to grant the liens granted by it pursuant to the Finance Documents to
      which it is a party;

            

    

     

    
      	
              (f)

            	
              the
      perfection or maintenance of the liens created by the Finance Documents
      (including the first priority nature thereof);
  and

            

    

     

    
      	
              (g)

            	
              the
      exercise by the Facility Agent, Security Trustee, any Swap Bank or any
      Lender of their rights under any of the Finance Documents or the remedies
      in respect of the Collateral pursuant to the Finance
      Documents;

            

    

     

    except
for consents which have been duly obtained, taken, given or made and are in full
force and effect.

     

    
      	
              9.4

            	
              Consents not liable to
      revocation.  Nothing has occurred which makes any of the
      consents referred to in Clause 9.3 liable to revocation, and each Obligor
      is in compliance with all applicable
laws.

            

    

     

    
      	
              9.5

            	
              Legal validity; effective
      Security Interests.

            

    

     

    
      	
              (a)

            	
              Each
      Bareboat Charter and Finance Document to which each Obligor is a party do
      now or, as the case may be, will, upon execution and delivery (and, where
      applicable, registration as provided for in the Finance Documents)
      constitute such Obligor’s legal, valid and binding obligations enforceable
      against it in accordance with their respective terms (subject, in the case
      of each Bareboat Charter, to the relevant Memorandum of Three Party
      Agreement); and

            

    

     

    
      	
              (b)

            	
              The
      Finance Documents to which each Obligor is a party do now or, as the case
      may be, will, upon execution and delivery (and, where applicable,
      registration as provided for in the Finance Documents) create legal, valid
      and binding Security Interests enforceable in accordance with their
      respective terms over all the assets to which they, by their terms,
      relate;

            

    

     

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

     

    
      	
              9.6

            	
              No conflicts; no
      liens.  The execution by each Obligor of each Finance
      Document and the respective Bareboat Charter and Memorandum of Three Party
      Agreement to which it is a party, the borrowing by the Borrowers of the
      Loan, the compliance by each Obligor with its obligations under the
      respective Bareboat Charter and Memorandum of Three Party Agreement and
      under each Finance Document to which it is a party, will
    not:

            

    

     

    
      	
              (a)

            	
              involve
      or lead to a contravention of (i) any law or regulation or order, writ,
      judgment, injunction, decree, determination or award applicable to such
      Obligor; (ii) the constitutional documents of such Obligor; or (iii) any
      contractual or other obligation or restriction which is binding on such
      Obligor or any of its assets; and

            

    

     

    
      	
              (b)

            	
              except
      for liens created by the Finance Documents, result in or require the
      creation or imposition of any lien upon or with respect to any of the
      properties of such Obligor.

            

    

     

    
      	
              9.7

            	
              Taxes.

            

    

     

    
      	
              (a)

            	
              All
      payments which an Obligor is liable to make under the Finance Documents to
      which it is a party may be made without deduction or withholding for or on
      account of any tax payable under any law of any Pertinent
      Jurisdiction.

            

    

     

    
      	
              (b)

            	
              Each
      Obligor has filed or has caused to be filed all tax returns and other
      reports that it is required by law or regulation to file in any Pertinent
      Jurisdiction, and has paid or caused to be paid all taxes, assessments and
      other similar charges that are due and payable in any Pertinent
      Jurisdiction, other than taxes and charges (i) which are (x) not yet
      delinquent or (y) being contested in good faith by appropriate proceedings
      and for which adequate reserves have been established and in a manner that
      does not involve any risk of sale, forfeiture, loss, confiscation or
      seizure of any of the Ships, or (ii) the non-payment of which could not
      reasonably be expect to have a material adverse effect on such
      Obligor.  The charges, accruals, and reserves on the books of
      each Obligor respecting taxes are adequate in accordance with applicable
      accounting principles and
practices.

            

    

     

    
      	
              (c)

            	
              No
      material claim for any tax has been asserted against any of the Obligors
      or any of their Affiliates by any Pertinent Jurisdiction or other taxing
      authority other than claims that are included in the liabilities for taxes
      in the most recent balance sheet of such Obligor or disclosed in the notes
      thereto, if any.

            

    

     

    
      	
              (d)

            	
              The
      execution, delivery, filing and registration or recording (if applicable)
      of the Finance Documents, each Bareboat Charter, and the consummation of
      the transactions contemplated thereby, will not cause any of the Credit
      Parties to be required to make any registration with, give any notice to,
      obtain any license, permit or other authorization from, or file any
      declaration, return, report or other document with any governmental
      authority in New York, the Marshall Islands, Liberia, the Philippines or
      any Pertinent Jurisdiction.

            

    

     

    
      	
              (e)

            	
              No
      taxes are required by any governmental authority in New York, the Marshall
      Islands, Liberia, the Philippines or any Pertinent Jurisdiction to be paid
      with respect to or in connection with the execution, delivery, filing,
      recording, performance or enforcement of any Finance
    Document.

            

    

     

    
      	
              (f)

            	
              The
      execution, delivery, filing, registration, recording, performance and
      enforcement of the Finance Documents by any Credit Party will not cause
      such Credit Party to be deemed to be resident, domiciled or carrying on
      business in or subject to taxation under any law or regulation of any
      governmental authority in the Marshall Islands, Liberia, the Philippines
      or any Pertinent Jurisdiction.

            

    

     

    
      	
              (g)

            	
              Other
      than the recording of each Mortgage in accordance with the laws of the
      relevant Approved Primary Flag and the filing of Uniform Commercial Code
      Financing Statements in Washington, D.C. in respect of certain of the
      Finance Documents, and fees consequent thereto, it is not necessary for
      the legality, validity, enforceability or admissibility into evidence of
      this Agreement or any other Finance Document 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
      or any of the other Finance
Documents.

            

    

     

    
      	
              9.8

            	
              No
      default.  No Event of Default or Potential Event of
      Default has occurred and is continuing and there are no incipient or other
      defaults under any other agreements of any
  Obligor.

            

    

     

    
      	
              9.9

            	
              Information.  All
      financial and other information which has been provided in writing by or
      on behalf of each of the Obligors to any of the Credit Parties in
      connection with any Finance Document was true and accurate at the time it
      was given, there are no other facts or matters the omission of which would
      have made or make any such information false or misleading and there has
      been no material adverse change in the financial condition, operations or
      business prospects of any of the Obligors since the date on which such
      information was provided.

            

    

     

    
      	
              9.10

            	
              No
      litigation.  No legal or administrative action involving
      any Obligor (including any action relating to any alleged or actual breach
      of the ISM Code or ISPS Code or any Environmental Law) has been commenced
      or taken or, to any Obligor’s knowledge, is likely to be commenced or
      taken which, in either case, would be likely to have a material adverse
      effect on the business, assets or financial condition of any Obligor or
      which may affect the legality, validity, binding effect or enforceability
      of the Finance Documents.

            

    

     

    
      	
              9.11

            	
              ISM Code and ISPS Code
      compliance.  Each Borrower has obtained or will obtain or
      will cause the Approved Manager (technical) to obtain all necessary ISM
      Code Documentation in connection with the Ship owned by it and its
      operation and will be or will cause the Ship owned by it and the Approved
      Manager to be in full compliance with the ISM Code and the ISPS
      Code.

            

    

     

    
      	
              9.12

            	
              Validity and completeness of
      each Bareboat Charter; delivery of each Ship under the relevant Bareboat
      Charter.

            

    

     

    
      	
              (a)

            	
              Each
      Borrower has entered into the Bareboat Charter to which it is a party, and
      to the best knowledge of such Borrower, each such Bareboat Charter is in
      full force and effect (subject to the delivery of the relevant Ship under
      the relevant Bareboat Charter and the relevant Memorandum of Three Party
      Agreement), and true and complete copies thereof, together with all
      agreements, instruments and other documents delivered in connection
      therewith and amendments thereto (including the relevant Memorandum of
      Three Party Agreement), have been furnished to the Facility Agent and the
      Lenders.

            

    

    

    
      	
              (b)

            	
              Subject
      to the terms of the relevant Memorandum of Three Party Agreement, each
      Bareboat Charter constitutes valid, binding and enforceable obligations of
      the parties thereto in accordance with its
  terms.

            

    

    

    
      	
              (c)

            	
              Except
      for the relevant Memorandum of Three Party Agreement in respect of each
      Bareboat Charter, no amendments or additions to the Bareboat Charters have
      been or will be agreed nor have the parties thereto waived any of their
      respective rights thereunder save as notified to the Facility Agent in
      writing.

            

    

    

    
      	
              (d)

            	
              There
      is no default on the part of the relevant Borrower or, to the best
      knowledge of such Borrower, on the part of the relevant Bareboat Charterer
      with respect to the relevant Bareboat Charter, and there is no accrued
      right of any party thereto to terminate any Bareboat
    Charter.

            

    

    

    
      	
              (e)

            	
              Each
      Ship will on the Actual Drawdown Date be delivered by the relevant
      Borrower to and accepted by the relevant Bareboat Charterer under the
      relevant Bareboat Charter.

            

    

    

    
      	
              9.13

            	
              Intentionally
      omitted.

            

    

    

    
      	
              9.14.

            	
              Margin
      Stock.  None of the Obligors is engaged in the business
      of extending credit for the purpose of purchasing or carrying Margin Stock
      and no proceeds of the Loan will be used to buy or carry any Margin Stock
      or to extend credit to others for the purpose of buying or carrying any
      Margin Stock.

            

    

    

    
      	
              9.15.

            	
              Compliance with Environmental
      Law; Environmentally Sensitive Material.  Except to the
      extent the following could not reasonably be expected to have a material
      adverse effect on the business, assets or financial condition of the
      Obligors or which may affect the legality, validity, binding effect or
      enforceability of the Finance
Documents:

            

    

    

    
      	
              (a)

            	
              the
      operations and properties of each Obligor complies with all Environmental
      Law, all necessary Environmental Permits have been obtained and are in
      effect for the operations and properties of the Obligors and each Obligor
      is in compliance in all material respects with all such Environmental
      Permits; and

            

    

    

    
      	
              (b)

            	
              none
      of the Obligors has been notified in writing by any person that it or any
      of its Affiliates is potentially liable for the remedial or other costs
      with respect to treatment, storage, disposal, release, arrangement for
      disposal or transportation of any Environmentally Sensitive Material,
      except for costs incurred in the ordinary course of business with respect
      to treatment, storage, disposal or transportation of such Environmentally
      Sensitive Material.

            

    

    

    
      	
              9.16.

            	
              Subsidiaries; Ownership of
      Borrowers; Ownership of Westbrook.  None of the Borrowers
      has any subsidiaries.  All of the outstanding equity of the
      Borrowers has been validly issued, is fully paid, non-assessable and free
      and clear of all liens and is owned beneficially and of record by
      Westbrook.  All of the outstanding equity of Westbrook has been
      validly issued, is fully paid, non-assessable and free and clear of all
      liens and is owned beneficially and of record by the
      Guarantor.

            

    

    

    
      	
              9.17.

            	
              Investment Company, Holding
      Company, etc.  None of the Obligors is (i) an “investment
      company,” or an “affiliated person” of, or “promoter” or “principal
      underwriter” for, an “investment company,” as such terms are defined in
      the Investment Company Act of 1940, as amended, or (ii) a “holding
      company” or a “subsidiary company” of a “holding company” or an affiliate
      of a “holding company” or of a “subsidiary company” of a “holding company”
      or a “public utility” within the meaning of the Public Utility Holding
      Company of 1935, as amended, or (iii) a “public utility” within the
      meaning of the Federal Power Act of 1920, as
  amended.

            

    

    

    
      	
              9.18.

            	
              Asset Control None of
      the Obligors is a “national” of any “designated foreign country”, within
      the meaning of the Foreign Assets Control Regulations or the Cuban Asset
      Control Regulations of the U.S. Treasury Department, 31 C.F.R., Subtitle
      B, Chapter V, as amended, or a “specially designated national” listed by
      the Office of Foreign Assets Control (“OFAC”), the U.S.
      Department of the Treasury, or any regulations or rulings issued
      thereunder.  Neither the making of the Advance nor the use of
      the proceeds thereof nor the performance by the Obligors of their
      obligations under any of the Finance Documents to which it is a party
      violates any statute, regulation or executive order restricting loans to,
      investments in, or the export of assets to, foreign countries or entities
      doing business there.

            

    

    

    
      	
              9.19.

            	
              ERISA.  None
      of the Obligors has ever established or maintained any employee benefit
      plan subject to Title IV of the Employee Retirement Income Security Act of
      1974, as amended.

            

    

    

    
      	
              9.20.

            	
              Use of
      Proceeds.  The Borrowers are using the proceeds of the
      Loan only for the purposes stated in the preamble to this
      Agreement.

            

    

    

    
      	
              9.21.

            	
              Ownership of the
      Ships.  The Borrowers are or will be on
      the Actual Drawdown Date the sole owner of the whole of the
      Ships.

            

    

    

    
      	
              9.22

            	
              Place of
      Business.  The chief place of business of each Obligor
      and the office where the records of each Obligor are kept is located
      at:

            

    

    

    Commerce
Building, One Chancery Lane

    Hamilton
HM 12, Bermuda

    

    10           COVENANTS

     

    
      	
              10.1

            	
              Affirmative
      covenants.  From the date of this Agreement and
      throughout the Security Period (unless otherwise
    specified):

            

    

     

    
      	
              (a)

            	
              each
      Obligor shall duly observe and perform its obligations under this
      Agreement, the other Finance Documents to which it is a party, and the
      Bareboat Charter and Memorandum of Three Party Agreement to which it is a
      party, and each Obligor shall promptly notify the Agent of (i) any
      material default by any party to the Bareboat Charter or Memorandum of
      Three Party Agreement to which it is a party, (ii) any material
      interruption in the performance of the Bareboat Charter to which it is a
      party, whether or not the same constitutes a default thereunder, and (iii)
      any significant damage or injury caused by or to a
  Ship;

            

    

     

    
      	
              (b)

            	
              each
      Obligor shall promptly inform the Facility Agent, upon becoming aware of
      the same, of the occurrence of an Event of Default or of any Potential
      Event of Default or any other event (including any litigation) which might
      adversely affect its ability to perform its obligations under this
      Agreement or any of the other Finance Documents to which it is a party or
      its respective Bareboat Charter and Memorandum of Three Party
      Agreement;

            

    

     

    
      	
              (c)

            	
              each
      Borrower shall be duly qualified and in goodstanding as a foreign maritime
      entity under the law of the Republic of Liberia for so long as the Ship
      owned by it is registered under Liberian
flag;

            

    

     

    
      	
              (d)

            	
              each
      Obligor shall obtain or cause to be obtained, maintain in full force and
      effect and comply with the conditions and restrictions (if any) imposed in
      connection with, every consent and do all other acts and things, which may
      from time to time be necessary or required for the continued due
      performance of all their obligations under this Agreement and the other
      Finance Documents to which it is a party or its respective Bareboat
      Charter and Memorandum of Three Party Agreement, and shall deliver a copy
      of all such consents to the Facility Agent promptly upon its
      request;

            

    

     

    
      	
              (e)

            	
              each
      Obligor shall comply in all material respects with all applicable federal,
      state, local and foreign laws, ordinances, rules, orders and regulations
      now in force or hereafter enacted, including, without limitation, all
      Environmental Laws and regulations relating to thereto, the failure to
      comply with which would be likely to have a material adverse effect on the
      business, assets or financial condition of such Obligor or affect the
      legality, validity, binding effect or enforceability of the Finance
      Documents to which such borrower is a
party;

            

    

     

    
      	
              (f)

            	
              each
      Obligor shall keep proper books of record and account, in which full and
      materially correct entries shall be made of all financial transactions and
      the assets and business of such Obligor in accordance with accounting
      principles and practices acceptable to the Facility Agent, and the
      Facility Agent shall have the right to examine the books and records of
      the Obligors wherever the same may be kept from time to time as it sees
      fit, in its sole discretion, or to cause an examination to be made by a
      firm of accountants selected by it;

            

    

     

    
      	
              (g)

            	
              [intentionally
      omitted];

            

    

     

    
      	
              (h)

            	
              the
      Guarantor shall deliver to the Facility
Agent:

            

    

     

    
      	
               
      

            	
              (i)

            	
              its
      quarterly and annual financial statements and other reports of material
      events as soon as practicable but not later than 10 Business Days after
      the Guarantor files such financial statements on Forms 10-Q and 10-K and
      reports on Form 8-K with the United States Securities and Exchange
      Commission (but in no event later than: (1) 120 days after the end of its
      fiscal year with respect to its annual financial statements and (2) 90
      days after the end of each fiscal
quarter);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              together
      with its annual financial statements, reports of and/or updates on all
      off-balance sheet financings and time charter hire commitments of the
      Guarantor;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              together
      with its quarterly and annual financial statements, a Compliance
      Certificate; and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              such
      other financial statements, annual budgets, projections and reports as may
      be reasonably requested by the Facility Agent, each to be in such form as
      the Facility Agent may reasonably
request;

            

    

     

    
      	
              (i)

            	
              each
      Obligor shall prepare and timely file all tax returns required to be filed
      by it and pay and discharge all taxes imposed upon it or in respect of any
      of its property and assets before the same shall become in default, as
      well as all lawful claims (including, without limitation, claims for
      labor, materials and supplies) which, if unpaid, might become a lien or
      charge upon the Collateral or any part thereof, except in each case, for
      any such taxes (i) as are being contested in good faith by appropriate
      proceedings or (ii) the failure of which to pay or discharge would not be
      likely to have a material adverse effect on the business, assets or
      financial condition of such Obligor or to affect the legality, validity,
      binding effect or enforceability of the Finance
  Documents;

            

    

     

    
      	
              (j)

            	
              each
      Borrower shall permit any person designated by the Facility Agent for that
      purpose to visit and inspect the Ship owned by it, at the cost of the
      Borrowers, at such times and so often as the Facility Agent may reasonably
      require, provided that
      (i) any visitation and inspection shall be done without undue
      interference with the operation of the Ships, (ii) so long as no Event of
      Default has occurred and is continuing, the Facility Agent shall not
      exercise such visitation and inspection right more than one time per year
      for the Ship and (iii) the person designated by the Facility Agent to
      visit and inspect the Ship shall execute a release and waiver satisfactory
      in form and substance to such Borrower, the relevant Bareboat Charterer
      and the Facility Agent;

            

    

     

    
      	
              (k)

            	
              each
      Borrower shall procure that the Ship owned by it shall at all times be (i)
      kept in a good and safe condition and state of repair that is consistent
      with first-class ship ownership and management practice, (ii) in
      compliance with all laws and regulations applicable to vessels (A)
      registered under the law of the Approved Primary Flag and the Approved
      Bareboat Flag in which the Ship is registered and (B) trading to any
      jurisdiction to which the Ship may trade from time to time, (iii) managed
      by the Approved Managers in accordance with vessel management agreements
      acceptable to the Facility Agent, (iv) registered under the law of an
      Approved Primary Flag and, so long as such Ship is subject to the Bareboat
      Charter, registered under the law of the Approved Bareboat Flag, and (v)
      classed with the Classification Society in the highest classification and
      rating for vessels of the same age and type without any outstanding
      conditions or recommendations affecting class (other than those for which
      the time prescribed for curing the condition or recommendation has not
      passed);

            

    

     

    
      	
              (l)

            	
              each
      Borrower shall procure that the operator of the Ship owned by it will
      comply, in all material respects within the requisite applicable time
      limits for vessels of the same type, size, age and flag as the Ship, with
      the ISM Code and, in particular, without prejudice to the generality of
      the foregoing, as and when required to do so by the ISM Code and at all
      times thereafter, (i) procure that the operator of its Ship holds a valid
      Document of Compliance and Safety Management Certificate, (ii) provide the
      Facility Agent with copies of any such Document of Compliance and Safety
      Management Certificate promptly following the issuance thereof and after
      every renewal and (iii) procure that there is kept, on board its Ship a
      copy of any such Document of Compliance and the original of any such
      Safety Management Certificate;

            

    

     

    
      	
              (m)

            	
              each
      Borrower shall procure that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Ship owned by it maintains for the duration of the Security Period a valid
      International Ship Security
Certificate;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              its
      Ship’s security system and associated security equipment complies with the
      applicable requirements of Chapter XI-2 of SOLAS and Part A of the ISPS
      Code; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      approved ship security plan is in
place;

            

    

     

    
      	
              (n)

            	
              each
      Obligor shall do or cause to be done all things necessary to preserve and
      keep its corporate existence in full force and effect and in
      goodstanding;

            

    

     

    
      	
              (o)

            	
              each
      Borrower shall maintain insurance on the Ship owned by it as required by
      the terms of the relevant Mortgage;

            

    

     

    
      	
              (p)

            	
              each
      Borrower shall maintain insurance on any of its properties other than the
      Ship owned by it, payable in United States Dollars, with responsible
      companies, in such amounts and against such risks as is usually carried by
      owners of similar businesses and properties in the same general areas in
      which it operates, and as shall be satisfactory to the Majority
      Lenders;

            

    

     

    
      	
              (q)

            	
              except
      to the extent the failure to do so could not reasonably be expected to
      have a material adverse effect on the business, assets or financial
      condition of the Obligors or which may affect the legality, validity,
      binding effect or enforceability of the Finance Documents, each Obligor
      shall maintain and preserve all of its properties that are used or useful
      in the conduct of its business in good working order and condition,
      ordinary wear and tear excepted;

            

    

     

    
      	
              (r)

            	
              the
      Borrowers shall use the proceeds of the Loan solely for the purposes
      stated in the preamble to this
Agreement;

            

    

     

    
      	
              (s)

            	
              each
      Obligor shall notify promptly the Facility Agent of any change in the
      location of its chief place(s) of business or the office(s) where it keeps
      records;

            

    

     

    
      	
              (t)

            	
              each
      Borrower shall furnish promptly to the Facility Agent each material
      amendment or other modification to the Bareboat Charter and Memorandum of
      Three Party Agreement in respect of the Ship owned by
  it;

            

    

     

    
      	
              (u)

            	
              each
      Obligor shall take, or cause to be taken, such actions as may be
      reasonably required to mitigate potential liability to it arising out of
      pollution incidents or as may be reasonably required to protect the
      interests of the Credit Parties with respect
  thereto;

            

    

     

    
      	
              (v)

            	
              each
      Borrower shall cause all loans made by the Guarantor to it and all sums
      and other obligations (financial or otherwise) owed by it to the relevant
      Bareboat Charterer or the Approved Managers to be fully subordinated to
      all Secured Liabilities of such
Borrower;

            

    

     

    
      	
              (w)

            	
              the
      Borrowers shall procure and deliver to the Facility Agent an annual
      written appraisal report and such other interim valuations as the Facility
      Agent may request, prepared by Broker, at the expense of the Borrowers,
      setting forth the Fair Market Value of the
  Ships;

            

    

     

    
      	
              (x)

            	
              the
      Guarantor shall be in compliance with the TBS Credit Facility Financial
      Covenants regardless of whether the TBS Credit Facility is in effect or
      not or whether the TBS Credit Facility Financial Covenants are in effect
      or not (in which case the TBS Credit Facility Financial Covenants shall
      apply in their last form before removal from the TBS Credit Facility), and
      shall evidence such compliance by means of delivery of a quarterly
      compliance certificate to the Facility Agent;
  and

            

    

     

    
      	
              (y)

            	
              from
      time to time, at its expense, each Obligor shall duly execute and deliver
      to the Facility Agent and the Security Trustee, such further documents and
      assurances as the Majority Lenders, the Facility Agent or the Security
      Trustee may request to effectuate the purposes of this Agreement, the
      other Finance Documents or obtain the full benefit of any of the
      Collateral.

            

    

     

    
      	
              10.2

            	
              Negative
      covenants.  Without the prior written consent of the
      Majority Lenders, which consent shall not be unreasonably
      withheld:

            

    

     

    
      	
              (a)

            	
              none
      of the Borrowers will create, assume or permit to exist any Security
      Interest whatsoever upon any of its properties or assets, whether now
      owned or hereafter acquired, except for (i) any Security Interest created
      by the Finance Documents to which it is a party, and (ii) any liens that
      arise by operation of law in the ordinary course of business, the failure
      of which to pay or discharge would not be likely to have a material
      adverse effect on the business, assets or financial condition of such
      Borroweror to affect the legality, validity, binding effect or
      enforceability of the Finance Documents to which such Borrower is a
      party;

            

    

     

    
      	
              (b)

            	
              none
      of the Borrowers will sell, transfer or lease (except for its respective
      Bareboat Charter), all of or a substantial portion of its properties and
      assets, or enter into any transaction of merger or consolidation or
      liquidate, windup or dissolve itself (or suffer any liquidation or
      dissolution), unless:

            

    

     

    
      	
               
      

            	
              (i)

            	
              immediately
      after giving effect to such transaction, no Event of Default shall have
      occurred and be continuing; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              with
      respect to any such sale, transfer, lease or disposition or transaction of
      merger or consolidation, the purchaser, transferee or surviving company
      (as the case may be) is reasonably acceptable to the Majority Lenders and
      assumes all obligations and liabilities (including, without limitation,
      any obligations or liabilities under the Finance Documents) of the seller,
      transferor or non-surviving entity (as the case may be), such assumption
      of obligations and liabilities to be in form and substance satisfactory to
      the Majority Lenders;

            

    

     

    
      	
              (c)

            	
              none
      of the Borrowers will enter into any transaction or series of related
      transactions, whether or not in the ordinary course of business, with any
      Affiliate, other than on terms and conditions substantially as favorable
      to such person as would be obtainable by such person at the time in a
      comparable arm’s-length transaction with a person other than an Affiliate,
      provided that the
      foregoing shall not prohibit or prevent the pooling and sharing of
      Earnings by the Borrowers;

            

    

     

    
      	
              (d)

            	
              none
      of the Borrowers will change the nature of its business or commence any
      business otherwise than in connection with, or for the purpose of,
      operating the Ship owned by it;

            

    

     

    
      	
              (e)

            	
              none
      of the Borrowers will transfer or change or permit the transfer or change
      of the flag of the Ship owned by it from the Approved Primary Flag in
      which such Ship is registered on the Actual Drawdown Date (provided that each Ship
      may be bareboat registered under the Approved Bareboat Flag by the
      relevant Bareboat Charterer pursuant to the terms of the relevant Bareboat
      Charter), change the classification or the Classification Society of the
      Ship owned by it, or do or allow to be done anything as a result of which
      such registration or classification might be imperiled or
      cancelled;

            

    

     

    
      	
              (f)

            	
              none
      of the Borrowers will change or permit a change of the Approved Managers
      for the Ship owned by it or agree or consent to any material amendment or
      other modification of the terms of any of technical or commercial
      management agreements relating to the Ship owned by it, including any
      increase in the rate of compensation payable
  thereunder;

            

    

     

    
      	
              (g)

            	
              none
      of the Borrowers will permit any act, event or circumstance that would
      result in Westbrook holding directly less than 100% of such Borrower’s
      equity and the Guarantor will not permit any act, event or circumstance
      that would result in the Guarantor holding directly less than 100% of
      Westbrook;

            

    

     

    
      	
              (h)

            	
              none
      of the Borrowers will incur any Financial Indebtedness other than (i) the
      Loan, (ii) in the usual course of business, (iii) as permitted by the
      Finance Documents, and (iv) Financial Indebtedness that is fully
      subordinated to the Loan;

            

    

     

    
      	
              (i)

            	
              if
      an Event of Default shall have occurred and so long as such Event of
      Default shall be continuing, none of the Borrowers shall declare or pay
      any dividends or return any capital to any equity holder or authorize or
      make any other distribution, payment or delivery of property or cash to
      any equity holder as such, or redeem, retire, purchase or otherwise
      acquire, directly or indirectly, for value, any share of any class of its
      capital stock or other form of equity interest (or require any rights,
      options or warrants relating thereto but not including convertible debt)
      now or hereafter outstanding, or repay any subordinated loans or set aside
      any funds for any of the foregoing
purposes;

            

    

     

    
      	
              (j)

            	
              none
      of the Borrowers will increase its capital by way of the creation of
      preference securities, further common or ordinary securities or otherwise
      howsoever, or create any new class of equity; none of the Borrowers will
      permit any act, event or circumstance that would result in Westbrook
      owning beneficially and of record less than 100% of the equity of each of
      the Borrowers; and the Guarantor shall not sell, transfer, pledge, assign
      or otherwise convey or dispose of any of the share capital of
      Westbrook;

            

    

     

    
      	
              (k)

            	
              none
      of the Borrowers shall permit any material amendment of or other
      modification to the Bareboat Charter or Memorandum of Three Party
      Agreement to which it is a party;

            

    

     

    
      	
              (l)

            	
              none
      of the Borrowers will make any loan or advance to, make any investment in,
      or enter into any working capital maintenance or similar agreement with
      respect to any person, whether by acquisition of stock or indebtedness, by
      loan, guarantee or otherwise;

            

    

     

    
      	
              (m)

            	
              none
      of the Borrowers will acquire any capital assets (including any vessel
      other than the Ship owned by it) by purchase, charter or otherwise; provided that for the
      avoidance of doubt nothing in this Clause 10.2(m) shall prevent or be
      deemed to prevent capital improvements being made to the Ship owned by
      it;

            

    

     

    
      	
              (n)

            	
              none
      of the Borrowers will enter into any arrangements, directly or indirectly,
      with any person whereby it shall sell or transfer any property, whether
      real or personal, and used and useful in its business, whether now owned
      or hereafter acquired, if it, at the time of such sale or disposition,
      intends to lease or otherwise acquire the right to use or possess (except
      by purchase) such property or like property for a substantially similar
      purpose;

            

    

     

    
      	
              (o)

            	
              none
      of the Borrowers shall make or permit any change in accounting policies
      affecting (i) the presentation of financial statements or (ii) reporting
      practices, except in either case in accordance with accounting principles
      and practices acceptable to the Facility
Agent;

            

    

     

    
      	
              (p)

            	
              none
      of the Obligors shall change the jurisdiction of its formation or amend
      its constitutional documents except in connection with a merger or
      consolidation that is not prohibited by the terms of Clause 10.2(b);
      or

            

    

     

    
      	
              (q)

            	
              none
      of the Borrowers shall permit the Ship owned by such Borrower to be
      employed by a person (other than an Affiliate) if the net time charter
      equivalent rate of such employment is less than $14,000 per day and the
      Ship is contracted for such employment for a period equal to or in excess
      of 18 months.

            

    

     

    10.3           Collateral
Maintenance Ratio.

    

    
      	
              (a)

            	
              If,
      at any time, the aggregate Fair Market Value of the Ships shall be less
      than 135% of the unpaid principal amount of the Loan (the “Collateral Maintenance
      Ratio”), the Facility Agent shall have the right to require the
      Borrowers, within 30 Business Days of the date of the written demand of
      the Facility Agent, to either (x) prepay the Loan in such amount as may be
      necessary to cause such aggregate Fair Market Value of the Ships to equal
      or exceed 135% of the unpaid principal amount of the Loan or (y) provide
      such additional Collateral as may be acceptable to the Facility Agent in
      its sole reasonable discretion so that aggregate Fair Market Value of the
      Ships and such additional Collateral equals or exceeds 135% of the unpaid
      principal amount of the Loan, and the Borrowers hereby agree to comply
      with any such written demand made by the Facility
  Agent.

            

    

    

    
      	
              (b)

            	
              Any
      prepayment made pursuant to this Clause 10.3 shall be applied to the
      remaining repayment installments of principal and interest in inverse
      order of maturity, may not be re-borrowed, and shall be subject to the
      requirements of Clause 7.8, provided that any
      prepayment made pursuant to this Clause 10.3 shall not be subject to a
      prepayment penalty under Clause
7.8(c).

            

    

     

    
      	
              10.4

            	
              Recognition by Philippine
      Maritime Industry Authority.  Each Borrower shall with
      respect to the Ship owned by it:

            

    

    

    
      	
              (a)

            	
              cause
      a cautionary notice with respect to the existence of the Mortgage on such
      Ship to be filed on the Actual Drawdown Date, or as soon thereafter as is
      feasible, in the bareboat registry of the Philippine Maritime Industry
      Authority (the “Bareboat
      Registry”), such notice to be in form and substance acceptable to
      the Facility Agent; and

            

    

    

    
      	
              (b)

            	
              deliver
      to the Facility Agent as soon as possible, but in no event later than 60
      days, following the Actual Drawdown Date, evidence acceptable to the
      Facility Agent that the Philippine Maritime Industry Authority has
      recognized the existence of the Mortgage with respect such Ship and that
      such Mortgage is governed by the law of the Republic of Liberia, and has
      duly noted the same in the Bareboat
Registry.

            

    

    

    
      	
              10.5

            	
              Deletion from Philippine
      Bareboat Registry.  Unless the Facility Agent, acting
      upon the instruction of the Majority Lenders, shall otherwise agree, upon
      termination of a Bareboat Charter, the Borrower that owns the affected
      Ship shall:

            

    

    

    
      	
              (a)

            	
              cause
      the cancellation and deletion of such Ship from the Philippine flag, and
      the Facility Agent shall be entitled to do all such acts and things in the
      name of the Borrower that owns such Ship and the relevant Bareboat
      Charterer, or either of them, as may be required to effect such
      cancellation and deletion and to comply with any requirements of the
      Philippine Maritime Industry Authority for the purpose of ensuring that
      the registration of such Ship under Liberian law is valid in every
      respect; and

            

    

    

    
      	
              (b)

            	
              deliver
      or cause to be delivered to the Facility Agent or its designee the
      following documents, in each case in form and substance acceptable to the
      Facility Agent:

            

    

    

    
      	
               
      

            	
              (i)

            	
              a
      certificate of deletion in respect of such Ship from the Philippine
      Maritime Industry Authority;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      original Temporary Certificate of Vessel Registry issued for such Ship by
      the Philippine Maritime Industry
Authority;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              the
      original of each certificate issued by any governmental entity of the
      Republic of the Philippines, including the certificate of the National
      Telecommunications Commission of the Republic of the Philippines on such
      Ship’s call sign and all SOLAS
certificates;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              an
      original certificate issued the Bureau of Internal Revenue of the Republic
      of the Philippines that all applicable withholding taxes shall have been
      paid; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              such
      other documents and instruments as may be necessary or advisable to effect
      such cancellation and deletion and to comply with any requirements of the
      Philippine Maritime Industry Authority for the purpose of ensuring that
      the registration of such Ship under Liberian law is valid in every
      respect.

            

    

    

    11           PAYMENTS
AND CALCULATIONS

     

    
      	
              11.1

            	
              Currency and method of
      payments.  All payments to be made by the Borrowers under
      the Finance Documents to which it is a party shall be made to the Payment
      Agent:

            

    

     

    (a)           not
later than 10:00 a.m. (New York City time) on the due date;

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              at
      JP Morgan Chase Manhattan Bank, New York, ABA No. 021000021, SWIFT:
      CHASUS33, for credit to Bank of Ireland Global Markets (Account No.
      0011015815), SWIFT: BIGTIE2D, Reference: Corporate Loans Administration –
      TBS Int., or to such other account with such other bank as the Payment
      Agent may from time to time notify to the
  Borrowers.

            

    

     

    
      	
              11.2

            	
              Payment on non-Business
      Day.  If any payment by a Borrower under the Finance
      Documents to which it is a party would otherwise fall due on a day which
      is not a Business Day:

            

    

     

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

     

    
      	
              (b)

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

            

    

     

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

     

    
      	
              11.3

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

            

    

     

    11.4           Distribution of payments to Credit
Parties.  Subject to Clauses 11.5, 11.6 and 11.7:

    

    
      	
              (a)

            	
              any
      amount received by the Payment Agent under a Finance Document for
      distribution or remittance to a Credit Party shall be made available by
      the Payment Agent to that Credit Party by payment, with funds having the
      same value as the funds received, to such account as such Credit Party may
      have notified to the Payment Agent not less than five (5) Business Days
      previously; and

            

    

    

    
      	
              (b)

            	
              amounts
      to be applied in satisfying amounts of a particular category which are due
      to the Lenders generally shall be distributed by the Agent to each Lender
      pro rata to the
      amount in that category which is due to
it.

            

    

    

    
      	
              11.5

            	
              Permitted deductions by Payment
      Agent.  Notwithstanding any other provision of this
      Agreement or any other Finance Document, the Payment Agent may, before
      making an amount available to a Credit Party, deduct and withhold from
      that amount any sum which is then due and payable to the Payment Agent
      from that Credit Party under any Finance Document or any sum which the
      Payment Agent is then entitled under any Finance Document to require that
      Lender to pay on demand.

            

    

    

    
      	
              11.6

            	
              Agent only obliged to pay when
      monies received.  Notwithstanding any other provision of
      this Agreement or any other Finance Document, the Payment Agent shall not
      be obliged to make available to the Borrowers or any Credit Party any sum
      which the Payment Agent is expecting to receive for remittance or
      distribution to the Borrowers or that Credit Party until the Payment Agent
      has satisfied itself that it has received that
  sum.

            

    

    

    
      	
              11.7

            	
              Refund to Payment Agent of
      monies not received. Except as is otherwise provided in Clause
      3.4(b) of this Agreement, if and to the extent that the Payment Agent
      makes available a sum to the Borrowers or a Credit Party, without first
      having received that sum, the Borrowers or (as the case may be) the Credit
      Party concerned shall, on demand:

            

    

    

    (a)           refund
the sum in full to the Agent; and

    

    
      	
              (b)

            	
              pay
      to the Payment Agent the amount (as certified by the Payment Agent) which
      will indemnify the Payment Agent against any funding or other loss,
      liability or expense incurred by the Payment Agent as a result of making
      the sum available before receiving
it.

            

    

    

    
      	
              11.8

            	
              Payment Agent may assume
      receipt.  Clause 11.7 shall not affect any claim which
      the Payment Agent has under the law of restitution, and applies
      irrespective of whether the Payment Agent had any form of notice that it
      had not received the sum which it made available (except an express notice
      from a Lender that it will not fund its Ratable Portion of the
      Advance).

            

    

    

    
      	
              11.9

            	
              Credit Party
      accounts.  Each Credit Party (other than the Swap Banks)
      shall maintain accounts showing the amounts owing to it by the Borrowers
      under the Finance Documents and all payments in respect of those amounts
      made by the Borrowers.

            

    

    

    
      	
              11.10

            	
              Payment Agent’s memorandum
      account.  The Payment Agent shall maintain a memorandum
      account showing the amounts advanced by the Lenders and all other sums
      owing to the Payment Agent, the Security Trustee and each Lender from the
      Borrowers under the Finance Documents and all payments in respect of those
      amounts made by the Borrowers.

            

    

    

    
      	
              11.11

            	
              Accounts prima facie
      evidence.  If any accounts maintained under Clauses 12.9
      and 12.10 show an amount to be owing by the Borrowers to a Credit Party,
      those accounts shall be prima facie evidence that that amount is owing to
      that Credit Party.

            

    

    

    12           APPLICATION
OF RECEIPTS

     

    
      	
              12.1

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

            

    

     

    FIRST: in
or towards the payment or reimbursement of any expenses or liabilities incurred
by the Credit Parties in connection with the ascertainment, protection or
enforcement of their respective rights and remedies hereunder and under the
other Finance Documents, including without limitation any amounts due under
Clause 15 hereof;

     

    SECOND:
in or towards payment of any accrued default interest due but unpaid under
Clause 6;

     

    THIRD: in
or towards the payment of all accrued interest due but unpaid under Clause 4 and
in payment of any amounts due and payable in respect of a scheduled payment date
under any of the Master Agreements, on a pro rata
basis;

     

    FOURTH:
in or towards payment of any principal due but unpaid under Clause 7 and in
payment of any other amounts then due under the Master Agreements, on a pro rata
basis;

     

    FIFTH: in
or towards payment of all other sums which may be owing to any Credit Party
under this Agreement and the other Finance Documents (or any of them);
and

     

    SIXTH:
any surplus shall be paid to the Borrowers or to whomsoever else may be entitled
thereto.

     

    
      	
              12.2

            	
              Application of credit
      balances.  A Lender may with seven (7) days prior notice
      or without prior notice if an Event of Default has occurred and is
      continuing:

            

    

     

    
      	
              (a)

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

            

    

     

    (b)           for
that purpose:

     

    (i)           break,
or alter the maturity of, all or any part of a deposit of such
Borrower;

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
              12.3

            	
              Existing rights
      unaffected.  A Lender shall not be obliged to exercise
      any of its rights under Clause 12.2; and those rights shall be without
      prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which such Lender is
      entitled (whether under the general law or any
  document).

            

    

     

    
      	
              12.4

            	
              Payments in excess of ratable
      share.  If any Lender shall obtain any payment (whether
      voluntary, involuntary, through the exercise of any right of set-off,
      counterclaim or otherwise) on account of its portion of the Loan and in
      excess of its ratable share of payments on account of the Loan obtained by
      all the Lenders, such Lender shall forthwith purchase from the other
      Lenders such participation in their respective portions of the Loan as
      shall be necessary to share the excess payment ratably with each of them;
      provided that if
      all or any portion of such excess payment is thereafter recovered from
      such purchasing Lender, such purchase from each Lender shall be rescinded
      and such Lender shall repay to the purchasing Lender the purchase price to
      the extent of such recovery together with an amount equal to such Lender’s
      ratable share (according to the proportion of (a) the amount of such
      Lender’s required repayment to (b) the total amount so recovered from the
      purchasing Lender) of any interest or other amount paid or payable by the
      purchasing Lender in respect of the total amount so
      recovered.  Each Borrower agrees that any Lender so purchasing a
      participation from another Lender pursuant to this Clause 12.4 may, to the
      fullest extent permitted by law, exercise all of its rights of payment
      (including the right of set-off) with respect to such participation as
      fully as if such Lender were the direct creditor of the Borrowers in the
      amount of such participation.  Notwithstanding the preceding
      sentences of this Clause 12.4, any Lender which shall have commenced or
      joined (as a plaintiff) in an action or proceeding in any court to recover
      sums due to it under this Agreement or any other Finance Document and
      pursuant to a judgment obtained therein or a settlement or compromise of
      that action or proceeding shall have received any amount, shall not be
      required to share any proportion of that amount with a Lender which has
      the legal right to, but does not, join such action or proceeding or
      commence and diligently prosecute a separate action or proceeding to
      enforce its rights in the same or another court.  Each Lender
      exercising or contemplating exercising any rights giving rise to a receipt
      or receiving any payment of the type referred to in this Clause 12.4 or
      instituting legal proceedings to recover sums owing to it under this
      Agreement shall, as soon as reasonably practicable thereafter, give notice
      thereof to the Facility Agent who shall give notice to the other
      Lenders.

            

    

     

    13           EVENTS
OF DEFAULT

     

    13.1           Events of
Default.  There shall be an Event of Default if:

     

    
      	
              (a)

            	
              any
      sum payable under this Agreement or any of the other Finance Documents is
      not paid when due or, only in the case of sums payable on demand, when
      first demanded; or

            

    

     

    
      	
              (b)

            	
              an
      Obligor or any other party (other than a Credit Party) commits any
      material breach of or fails to observe any of its material obligations,
      covenants or undertakings under this Agreement or any of the other Finance
      Documents, or an event of default, or an event or circumstance which, with
      the giving of any notice, the lapse of time or both would constitute an
      event of default, has occurred under any of the other Finance Documents,
      and such default continues unremedied for 10 Business Days after written
      notice from the Facility Agent requesting action to remedy the same;
      or

            

    

     

    
      	
              (c)

            	
              any
      Financial Indebtedness of an Obligor is not paid when due or, only in the
      case of sums payable on demand, when first demanded, and such default
      remains uncured for 30 days, except for any such Financial Indebtedness
      which is being contested by such Obligor in good faith and through
      appropriate proceedings; or

            

    

     

    
      	
              (d)

            	
              any
      representation or warranty made by an Obligor or any other party (other
      than a Credit Party) in or pursuant to this Agreement or any of the other
      Finance Documents or in a Bareboat Charter or Memorandum of Three Party
      Agreement shall prove to have been incorrect in any material respect when
      made or deemed made or confirmed;

            

    

     

    
      	
              (e)

            	
              any
      of the consents referred to in Clause 9.3 is modified in a manner
      unacceptable to the Majority Lenders or is not granted or is revoked or
      terminated or expires and is not renewed or otherwise ceases to be in full
      force and effect; or

            

    

     

    
      	
              (f)

            	
              an
      Obligor suspends payment of its debts or is unable or admits inability to
      pay its debts as they fall due or shall make a general assignment for the
      benefit of creditors or any proceeding shall be instituted by or against
      an Obligor seeking to adjudicate it a bankrupt or insolvent, or seeking
      liquidation, winding up, reorganization, arrangement, adjustment,
      protection, relief, or composition of it or its debts under any law of any
      relevant jurisdiction relating to bankruptcy, insolvency or reorganization
      or relief of debtors, or seeking the entry of an order for relief or the
      appointment of a receiver, trustee, custodian or other similar official
      for it or for any substantial part of its property and, in the case of any
      such proceeding instituted against it (but not instituted by it), and, in
      the case of any such proceeding instituted against it (but not instituted
      by it), either such proceeding shall remain undismissed or unstayed for a
      period of 45 days, or any of the actions sought in such proceeding
      (including, without limitation, the entry of an order for relief against,
      or the appointment of a receiver, trustee, custodian or other similar
      official for, it or for any substantial part of its property) shall occur;
      or an Obligor shall take any company action to authorize any of the
      actions set forth above in this Clause 13.1(f);
  or

            

    

     

    
      	
              (g)

            	
              the
      occurrence of any act, event or circumstance which results in the
      Guarantor owning, beneficially and of record, directly or indirectly, less
      than 100% of the issued and outstanding equity of Westbrook or Westbrook
      owning, beneficially and of record, directly or indirectly, less than 100%
      of the issued and outstanding equity of a Borrower;
  or

            

    

     

    
      	
              (h)

            	
              an
      Obligor ceases or threatens to cease to carry on its business;
      or

            

    

     

    
      	
              (i)

            	
              all
      or a material part of the undertakings, assets, rights or revenues of, or
      shares or other ownership interest in, an Obligor are seized,
      nationalized, expropriated or compulsorily acquired by or under authority
      of any government; or

            

    

     

    
      	
              (j)

            	
              a
      creditor attaches or takes possession of, or a distress, execution,
      sequestration or process (each an “arrest or attachment”)
      is levied or enforced upon or sued out against, a material part of the
      undertakings, assets, rights or revenues (the “assets”) of an Obligor
      in relation to a claim by such creditor where such Obligor does not or
      does not procure that such arrest or attachment is lifted, released or
      expunged within 30 Business Days of such action being (A) instituted and
      (B) notified to the Obligor; or

            

    

     

    
      	
              (k)

            	
              a
      Ship becomes a Total Loss and insurance proceeds are not collected or
      received by the Security Trustee from the underwriters within 120 days of
      the Total Loss Date; or

            

    

     

    
      	
              (l)

            	
              in
      the reasonable determination of the Majority Lenders, it becomes
      impossible or unlawful for an Obligor or any other party thereto (other
      than a Credit Party) to fulfill any of the covenants and obligations
      required to be fulfilled as contained in any Finance Document or any of
      the instruments granting or creating rights in any of the Collateral in
      any material respect, or for a Credit Party to exercise any of the rights
      or remedies vested in it under any Finance Document, any of the Collateral
      or any of such instruments in any material
  respect;

            

    

     

    
      	
              (m)

            	
              there
      occurs, in the reasonable opinion of the Majority Lenders, a material
      adverse change in the financial condition of an Obligor;
  or

            

    

     

    
      	
              (n)

            	
              any
      other event occurs or circumstance arises which, in the reasonable opinion
      of the Majority Lenders, is likely materially and adversely to
      affect:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      ability of an Obligor or any other party (other than a Credit Party) to
      perform all or any of its respective obligations under or otherwise to
      comply with the terms of this Agreement or any of the other Finance
      Documents to which it is a party;
or

            

    

     

    (ii)           the
security created by any of the Finance Documents; or

     

    
      	
              (o)

            	
              any
      party to a Bareboat Charter or a Memorandum of Three Party Agreement
      commits any material breach of or fails to observe any of its material
      obligations, covenants or undertakings under such Bareboat Charter or
      Memorandum of Three Party Agreement, or an event of default, or an event
      or circumstance which, with the giving of any notice, the lapse of time or
      both would constitute an event of default, has occurred under such
      Bareboat Charter or Memorandum of Three Party Agreement;
  or

            

    

     

    
      	
              (p)

            	
              the
      results of any inspection of a Ship are deemed unsatisfactory by the
      Facility Agent in its sole, reasonable discretion;
  or

            

    

     

    
      	
              (q)

            	
              the
      Guarantor fails to comply with the TBS Credit Facility Financial
      Covenants; or

            

    

     

    
      	
              (r)

            	
              an
      event of default, or an event or circumstance which, with the giving of
      any notice, the lapse of time or both would constitute an event of
      default, has occurred under any contract or agreement (other than the
      Finance Documents) to which an Obligor is a
  party.

            

    

     

    
      	
              13.2

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              serve
      on the Borrowers a notice stating that the Loan, all accrued interest and
      all other amounts accrued or owing under this Agreement are immediately
      due and payable or are due and payable on demand; provided that in the
      case of an Event of Default under any of Clauses 13.1 (f), the Loan and
      all accrued interest and other amounts accrued or owing hereunder shall be
      deemed immediately due and payable without notice or demand therefor;
      and/or

            

    

     

    
      	
              (c)

            	
              change
      the Approved Managers; and/or

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              13.3

            	
              Termination of
      obligations.  On the service of a notice under paragraph
      (a) of Clause 13.2, all the obligations of the Lenders to the Borrowers
      under this Agreement shall
terminate.

            

    

     

    
      	
              13.4

            	
              Acceleration of
      Loan.  On the service of a notice under paragraph (b) of
      Clause 13.2, the Loan, all accrued interest and all other amounts accrued
      or owing from the Borrowers under this Agreement and every other Finance
      Document shall become immediately due and payable or, as the case may be,
      payable on demand, and the Security Trustee shall forthwith be entitled to
      enforce the Security Interests created by this Agreement and any other
      Finance Document in any manner available to it and in such sequence as the
      Security Trustee may, in its absolute discretion,
    determine.

            

    

     

    
      	
              13.5

            	
              Multiple notices; action
      without notice.  The Facility Agent may serve notices
      under paragraphs (a) and (b) of Clause 13.2 simultaneously or on different
      dates and it may take any action referred to in that Clause if no such
      notice is served or simultaneously with or at any time after the service
      of both or either of such notices.

            

    

     

    14           FEES
AND EXPENSES

     

    14.1           Fees.  The Borrowers
shall pay:

     

    
      	
              (a)

            	
              to
      the Facility Agent, a Facility Agent’s fee of $7,500 per annum, which
      shall be non-refundable and payable upon the execution of this Agreement
      and annually upon the anniversary of the execution of this
      Agreement;

            

    

     

    
      	
              (b)

            	
              to
      the Security Trustee, a Security Trustee’s fee of $7,500 per annum, which
      shall be non-refundable and payable upon the execution of this Agreement
      and annually upon the anniversary of the execution of this
      Agreement;

            

    

     

    
      	
              (c)

            	
              to
      the Payment Agent, a Payment Agent’s fee of $10,000 per annum, which shall
      be non-refundable and payable upon the execution of this Agreement and
      annually upon the anniversary of the execution of this Agreement;
      and

            

    

     

    
      	
              (d)

            	
              to
      each Lender, a commitment fee equal to 0.75% per annum of the undrawn
      portion of the Commitment, payable monthly in arrears during the period
      from (and including) the date of execution of this Agreement to the Actual
      Drawdown Date.

            

    

     

    
      	
              14.2

            	
              Costs of negotiation,
      preparation etc.  The Borrowers shall pay to the Facility
      Agent on its demand the amount of all expenses incurred by the Facility
      Agent or any other Credit Party in connection with the negotiation,
      preparation, execution, registration or enforcement of any Finance
      Document or any related document or with any transaction contemplated by a
      Finance Document or a related document, including, without limitation, the
      reasonable fees and disbursements of the Facility Agent’s legal counsel
      and any local counsel retained by
them.

            

    

     

    
      	
              14.3

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrowers shall pay to
      the Facility Agent, on the Facility Agent’s demand, the amount of all
      expenses incurred by the Facility Agent in connection
  with:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              any
      consent or waiver by any Credit Party under or in connection with a
      Finance Document, or any request for such a consent or
    waiver;

            

    

     

    
      	
              (c)

            	
              the
      valuation of or any other matter relating to the Collateral;
      or

            

    

     

    
      	
              (d)

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

            

    

     

    There
shall be recoverable under paragraph (d) the full amount of all legal expenses
as may be incurred by such Credit Party.

     

    
      	
              14.4

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

            

    

     

    15           INDEMNITIES

     

    
      	
              15.1

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrowers shall fully
      indemnify a Credit Party on such Credit Party’s first demand in respect of
      all reasonable expenses, liabilities and losses which are incurred by such
      Credit Party, or which such Credit Party reasonably and with due diligence
      estimates that it will incur, as a result of or in connection
      with:

            

    

     

    
      	
              (a)

            	
              the
      Advance not being borrowed on the Expected Drawdown Date specified in the
      Drawdown Notice for any reason other than a default by the affected
      Lender;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              any
      failure (for whatever reason) by the Borrowers to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Borrowers
      on the amount concerned under Clause
7);

            

    

     

    
      	
              (d)

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under Clause
      13;

            

    

     

    and in
respect of any tax (other than tax on its overall net income imposed by a taxing
jurisdiction in which such Credit Party is organized, holds or books the Loan or
has a principal place of business) for which such Credit Party is liable in any
jurisdiction directly in connection with any amount paid or payable to such
Credit Party under any Finance Document.

     

    
      	
              15.2

            	
              Breakage
      costs.  Without limiting its generality, Clause 15.1
      covers any liability, expense or loss incurred by a Credit
      Party:

            

    

     

    
      	
              (a)

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of the Loan and/or any overdue amount
      (or an aggregate amount which includes the Loan or any overdue amount);
      and

            

    

     

    
      	
              (b)

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of such Credit Party) to hedge
      any exposure arising under this Agreement or that part which such Credit
      Party determines is fairly attributable to this Agreement of the amount of
      the liabilities, expenses or losses incurred by it in terminating, or
      otherwise in connection with, a number of transactions of which this
      Agreement is one.

            

    

     

    
      	
               
      

            	
              It
      is understood and agreed that unless an Event of Default has occurred and
      is continuing any gain realized by a Credit Party under Clause 15.2(b)
      shall be for credit against the amount then due from the Borrowers to such
      Credit Party.

            

    

     

    
      	
              15.3

            	
              Miscellaneous
      indemnities.  The Borrowers shall fully indemnify each
      Credit Party in respect of all claims, demands, proceedings, liabilities,
      taxes, losses and expenses of every kind (“liability items”)
      which may be made or brought against, or incurred by, such Credit Party,
      in any country, in relation to:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              any
      other event, matter or question which occurs or arises at any time during
      the Security Period and which has any connection with any payment or other
      transaction relating to a Finance Document or any asset covered (or
      previously covered) by a Security Interest created (or intended to be
      created) by a Finance Document;

            

    

     

    other
than liability items which are shown to have been caused by the gross negligence
or willful misconduct of such Credit Party’s own officers or
employees.

     

    
      	
              15.4

            	
              Other
      indemnities.  The Borrowers further agree to fully
      indemnify each Credit Party on any such Credit Party’s first demand in
      respect of all reasonable expenses, liabilities and losses which are
      incurred by such Credit Party, or which such Credit Party reasonably and
      with due diligence estimates that it will incur, as a result of or in
      connection with the enforcement (whether through negotiations, legal
      proceedings or otherwise) of the Finance Documents and any other document
      to be delivered hereunder.

            

    

     

    
      	
              15.5

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

            

    

     

    
      	
              (a)

            	
              making
      or lodging any claim or proof against the Borrowers, whether in its
      liquidation, any arrangement involving it or otherwise;
  or

            

    

     

    (b)           obtaining
an order or judgment from any court or other tribunal; or

     

    (c)           enforcing
any such order or judgment;

     

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

     

    In this
Clause 15.5, the “available
rate of exchange” means the rate at which the Credit Party concerned is
able at the opening of business (London time) on the Business Day after it
receives the sum concerned to purchase the Contractual Currency with the Payment
Currency.

     

    This
Clause 15.5 creates a separate liability of the Borrowers which is distinct from
its other liabilities under the Finance Documents and which shall not be merged
in any judgment or order relating to those other liabilities.

     

    
      	
              15.6

            	
              Increased
      costs.  If a Lender reasonably determines that compliance
      with any law or regulation or any guideline or request from any central
      bank or other governmental or monetary authority in regard to capital
      adequacy (whether or not having the force of law) including, without
      limitation, any guideline contemplated by the report dated July 1988
      entitled “International Convergence of Capital Management and Capital
      Standards” issued by the Bank Committee on Banking Regulations and
      Supervisory Practices, in any case in which such law, regulation,
      guideline or request became effective or was made after the date hereof,
      has or would have the effect of reducing the rate of return on the capital
      of, or maintained by, such Lender or any corporation controlling such
      Lender as a consequence of such Lender making its Ratable Portion of the
      Advance or Commitment hereunder and other commitments of this type, by
      increasing the amount of capital required or expected to be maintained by
      such Lender or any corporation controlling such Lender, to a level below
      that which such Lender or any corporation controlling such Lender could
      have achieved but for such adoption, effectiveness, change or compliance
      (taking into account such Lender’s or such corporation’s policies with
      respect to capital adequacy) then the Borrowers shall, from time to time,
      pay such Lender, upon demand by such Lender made within 60 days after the
      first date on which such Lender has actual knowledge that it is entitled
      to make demand for payment under this Clause 15.6 of such reduction in
      return, such additional amount as may be specified by such Lender as being
      sufficient to compensate such Lender for such reduction in return, to the
      extent that such Lender reasonably determines such reduction to be
      attributable to the existence of such Lender’s commitment to lend
      hereunder; provided that
      if such Lender fails to so notify the Borrowers within such 60-day
      period, such amounts shall commence accruing on such later date on which
      such Lender notifies the Borrowers.  A certificate as to such
      amounts submitted to the Borrowers by a Lender shall be conclusive and
      binding for all purposes, absent manifest
error.

            

    

     

    16           NO
SET-OFF OR TAX DEDUCTION

     

    
      	
              16.1

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

            

    

     

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

     

    
      	
              (b)

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

            

    

     

    
      	
              16.2

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

            

    

     

    
      	
              (a)

            	
              that
      Obligor shall notify the Facility Agent as soon as it becomes aware of the
      requirement;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              16.3

            	
              Evidence of payment of
      taxes.  Within 30 days after making any tax deduction,
      the Obligors shall deliver to the Facility Agent documentary evidence
      satisfactory to the Facility Agent that the tax had been paid to the
      appropriate taxation authority.

            

    

     

    
      	
              16.4

            	
              Exclusion of tax on overall net
      income.  In this Clause 16 “tax deduction” means
      any deduction or withholding for or on account of any present or future
      tax except tax on a Lender’s overall net income imposed by a taxing
      jurisdiction in which such Lender is organized, holds or books the Loan or
      has a principal place of business.

            

    

     

    17           ILLEGALITY,
ETC

     

    
      	
              17.1

            	
              Illegality.  This
      Clause 17 applies if a Lender notifies the Borrowers that it has become,
      or will with effect from a specified date,
  become:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

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

     

    
      	
              17.2

            	
              Notification and effect of
      illegality.  On a Lender notifying the Borrowers under
      Clause 17.1, such Lender’s obligation to make available its Commitment
      shall terminate; and thereupon or, if later, on the date specified in such
      Lender’s notice under Clause 17.1 as the date on which the notified event
      would become effective, the Borrowers shall prepay to such Lender that
      portion of the Loan then due and payable to such Lender plus all amounts
      otherwise payable under Clause 7.8.

            

    

     

    18           ASSIGNMENTS
AND PARTICIPATIONS; CHANGES IN LENDING OFFICE

     

    
      	
              18.1

            	
              Assignment by
      Borrowers.  Except as permitted by Clause 10.2(b), no
      Borrower may, without the consent of the Majority
  Lenders:

            

    

     

    (a)           transfer
any of its rights or obligations under any Finance Document; or

     

    
      	
              (b)

            	
              enter
      into any merger, de-merger or other reorganization, or carry out any other
      act, as a result of which any of its rights or liabilities under any
      Finance Document would vest in, or pass to, another
  person.

            

    

     

    
      	
              18.2

            	
              Assignments by
      Lender.

            

    

     

    
      	
              (a)

            	
              Each
      Lender may at its own expense and with the consent of the Borrowers, such
      consent not to be unreasonably withheld, assign to a bank or other entity
      all or a portion of its rights and obligations under this Agreement
      (including, without limitation, all or a portion of its Commitment or the
      Advance(s) owing to it), provided
      that:

            

    

    

    
      	
               
      

            	
              (i)

            	
              each
      such assignment shall be of a uniform, and not a varying, percentage of
      all rights and obligations under this
Agreement;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      amount of the Commitment of the assigning Lender being assigned pursuant
      to each such assignment (determined as of the date of the Assignment and
      Acceptance with respect to such assignment) shall in no event be less than
      $5,000,000 and shall be an integral multiple of $1,000,000 in excess
      thereof, or shall be an assignment to another Lender or an assignment of
      all of the assigning Lender’s rights and obligations
      hereunder;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              each
      such assignment shall be to (x) another Lender or a financial Affiliate of
      the assigning Lender or (y) to an Eligible
  Assignee;

            

    

    

    
      	
               
      

            	
              (v)

            	
              at
      the time of such assignment, no such assignment shall, without the consent
      of the Borrowers, result in increased liability to the Borrowers under
      this Agreement; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              the
      parties to each such assignment shall execute and deliver to the Facility
      Agent, for its acceptance and recording in the Register, an Assignment and
      Acceptance, together with a processing and recordation fee of $3,000 from
      the assignee.

            

    

    

    
      	
               
      

            	
              Upon
      such execution, delivery, acceptance and recording, from and after the
      effective date specified in each Assignment and Acceptance, (x) the
      assignee thereunder shall be a party hereto and, to the extent that rights
      and obligations hereunder have been assigned to it pursuant to such
      Assignment and Acceptance, have the rights and obligations of a Lender
      hereunder and (y) the Lender assignor thereunder shall, to the extent that
      rights and obligations hereunder have been assigned by it pursuant to such
      Assignment and Acceptance, relinquish its rights and be released from its
      further obligations under this Agreement (and, in the case of an
      Assignment and Acceptance covering all or the remaining portion of an
      assigning Lender’s rights and obligations under this Agreement, such
      Lender shall cease to be a party
hereto).

            

    

    

    
      	
              (b)

            	
              By
      executing and delivering an Assignment and Acceptance, the Lender assignor
      thereunder and the assignee thereunder confirm to and agree with each
      other and the other parties hereto as
follows:

            

    

    

    
      	
               
      

            	
              (i)

            	
              other
      than as provided in such Assignment and Acceptance, such assigning Lender
      makes no representation or warranty and assumes no responsibility with
      respect to any statements, warranties or representations made in or in
      connection with this Agreement or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Agreement or any
      other instrument or document furnished pursuant
  hereto;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              such
      assigning Lender makes no representation or warranty and assumes no
      responsibility with respect to the financial condition of any of the
      Obligors or the performance or observance by any of the Obligors of any of
      its obligations under this Agreement, any other Finance Document or any
      other instrument or document furnished pursuant hereto or
      thereto;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              such
      assignee confirms that it has received a copy of this Agreement, together
      with copies of such other documents and information as it has deemed
      appropriate to make its own credit analysis and decision to enter into
      such Assignment and Acceptance;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              such
      assignee will, independently and without reliance upon the Facility Agent,
      the Security Trustee or the Payment Agent, such assigning Lender or any
      other Lender and based on such documents and information as it shall deem
      appropriate at the time, continue to make its own credit decisions in
      taking or not taking action under this
  Agreement;

            

    

    

    
      	
               
      

            	
              (v)

            	
              such
      assignee confirms that it is an Eligible Assignee or another Lender or a
      financial Affiliate of the assigning
Lender;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              such
      assignee appoints and authorizes the Facility Agent, the Security Trustee
      and the Payment Agent to take such action on its behalf and to exercise
      such powers under this Agreement as are delegated to such party by the
      terms hereof, together with such powers as are reasonably incidental
      thereto;

            

    

    

    
      	
               
      

            	
              (vii)

            	
              such
      assignee agrees that it will perform in accordance with their terms all of
      the obligations which by the terms of this Agreement are required to be
      performed by it as a Lender; and

            

    

    

    
      	
              (viii)

            	
              such
      assigning Lender and such assignee represent and warrant that such
      assignment is not in violation of any applicable laws, including
      securities laws.

            

    

    

    
      	
              (c)

            	
              The
      Facility Agent shall maintain at its address referred to in Clause 20.2 a
      copy of each Assignment and Acceptance delivered to and accepted by it and
      a register for the recordation of the names and addresses of the Lenders
      and the Commitment of, and principal amount of the Advances owing to, each
      Lender from time to time (the “Register”).  The
      entries in the Register shall be conclusive and binding for all purposes,
      absent manifest error, and the Borrowers, the Facility Agent, the Payment
      Agent, the Security Trustee and the Lenders may treat each person whose
      name is recorded in the Register as a Lender hereunder for all purposes of
      this Agreement.  The Register shall be available for inspection
      by the Borrowers or any Lender at any reasonable time and from time to
      time upon reasonable prior notice.

            

    

    

    
      	
              (d)

            	
              Upon
      its receipt of an Assignment and Acceptance executed by an assigning
      Lender and an assignee, the Facility Agent shall, if such Assignment and
      Acceptance has been completed and is in substantially the form of Schedule
      4 hereto, (i) accept such Assignment and Acceptance, (ii) record the
      information contained therein in the Register and (iii) give prompt notice
      thereof to the Borrowers and the other Credit
  Parties.

            

    

    

    
      	
              (e)

            	
              Notwithstanding
      any other provision set forth in this Agreement, any Lender may, at its
      own expense, at any time create a security interest in all or any portion
      of its rights under this Agreement (including, without limitation, the
      Advances owing to it) in favor of any Federal Reserve Bank in accordance
      with Regulation A of the Board of Governors of the Federal Reserve
      System.

            

    

    

    
      	
              18.3

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

            

    

     

    
      	
              18.4

            	
              Subrogation
      assignment.  A Lender may assign, in any manner and on
      terms agreed by it, all or any part of those rights to an insurer or
      surety who has become subrogated to
them.

            

    

     

    
      	
              18.5

            	
              Participations.  Each
      Lender may, at is own expense, without the Borrowers’ consent, sell
      participations to one or more banks or other entities in or to all or a
      portion of its rights and obligations under this Agreement (including
      without limitation, all or a portion of its Commitment and the Advance(s)
      owing to it); provided
      that:

            

    

    

    
      	
               
      

            	
              (i)

            	
              such
      Lender’s obligations under this Agreement (including, without limitation,
      its Commitment to the Borrower hereunder) shall remain
      unchanged;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              such
      Lender shall remain solely responsible to the other parties hereto for the
      performance of such obligations;

            

    

    

    
      	
              (iii)

            	
              such
      Lender shall remain the Lender for all purposes of this
      Agreement;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              the
      Borrowers, the Facility Agent, the Payment Agent, the Security Trustee and
      the other Lenders shall continue to deal solely and directly with such
      Lender in connection with such Lender’s rights and obligations under this
      Agreement; and

            

    

    

    
      	
               
      

            	
              (v)

            	
              no
      participant under any such participation shall have any right to approve
      any amendment or waiver of any provision of any Finance Document, or any
      consent to any departure by an Obligor
  therefrom.

            

    

    

    
      	
              18.6

            	
              Disclosure of
      information.  The Lenders may disclose to a potential
      assignee or sub-participant any information which the Lenders have
      received in relation to the Obligors or their affairs under or in
      connection with any Finance Document, provided that if the
      information is clearly of a confidential nature the potential assignee or
      sub-participant shall enter into a confidentiality
    agreement.

            

    

     

    
      	
              18.7

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

            

    

     

    (a)           the
date on which the Borrowers receive the notice; and

     

    
      	
              (b)

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

            

    

     

    
      	
               
      

            	
              provided that such
      change in lending office does not increase the Borrowers’ cost under this
      Agreement.

            

    

     

    19           VARIATIONS
AND WAIVERS

     

    
      	
              19.1

            	
              Variations, waivers
      etc.

            

    

     

    
      	
              (a)

            	
              A
      document shall be effective to vary, waive, suspend or limit any provision
      of a Finance Document, or a Credit Party’s rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the relevant Obligor(s) and the relevant
      Credit Party.

            

    

     

    
      	
              (b)

            	
              Except
      as otherwise provided in this Agreement, this Agreement or any term hereof
      may be amended, modified, waived, discharged or terminated only by an
      instrument in writing, signed by the Majority Lenders or by the Facility
      Agent acting with the consent of the Majority Lenders; provided that so long as
      this Agreement remains in effect or there are any Designated Transactions
      continuing, no amendment, modification or waiver shall, unless by an
      instrument signed by all the Lenders or the Swap Banks, or by the Facility
      Agent acting with the consent of all the Lenders and the Swap
      Banks:

            

    

     

    
      	
               
      

            	
              (i)

            	
              increase
      the Commitment of any Lender, or increase or extend the term, or extend
      the time or waive any requirement for the reduction or termination, of the
      Advance;

            

    

     

    (ii)           extend
the date fixed for the payment of principal or interest on the
Loan;

     

    
      	
               
      

            	
              (iii)

            	
              reduce
      the amount of any payment of principal thereof or the rate at which
      interest is payable thereon or any fee is payable
    hereunder;

            

    

     

    (iv)           alter
the terms of this Clause 19;

     

    (v)           waive
any of the conditions precedent set forth in Clause 8;

     

    
      	
               
      

            	
              (vi)

            	
              release
      any Collateral, except as contemplated in this Agreement or by a Finance
      Document; or

            

    

     

    (vii)           change
the definition of the term “Majority Lenders”;

     

    provided further that any
amendment of Clause 24 shall require the written consent of the Agent and the
Security Trustee.

     

    
      	
              19.2

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clause 19.1, no document, and no act, course of conduct,
      failure or neglect to act, delay or acquiescence on the part of a Credit
      Party (or any person acting on its behalf) shall result in such Credit
      Party (or any person acting on its behalf) being taken to have varied,
      waived, suspended or limited, or being precluded (permanently or
      temporarily) from enforcing, relying on or
  exercising:

            

    

     

    (a)           a
provision of this Agreement or another Finance Document; or

     

    (b)           an
Event of Default or Potential Event of Default; or

     

    
      	
              (c)

            	
              a
      breach by an Obligor of an obligation under a Finance Document or the
      general law; or

            

    

     

    
      	
              (d)

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

            

    

     

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

     

    20           NOTICES

     

    
      	
              20.1

            	
              General.  Unless
      otherwise specifically provided, any notice under or in connection with
      any Finance Document shall be given by registered mail (with a copy by fax
      sent the same day) or by fax; and references in the Finance Documents to
      written notices, notices in writing and notices signed by particular
      persons shall be construed
accordingly.

            

    

     

    20.2           Addresses for
communications.  A notice shall be sent:

     

    (a)           to
the
Borrowers:                                 c/o
TBS International Limited

    Suite 306, Commerce
Building

    One
Chancery Lane

    Hamilton
HM 12, Bermuda

    Attention:
William J. Carr

    Fax:
+(441) 295-4957

    

    and

    

    TBS Shipping Services
Inc.

    612 East
Grassy Sprain Road

    Yonkers,
New York 10710

    Attention:
Ferdinand V. Lepere

    Fax: +(
914) 779-5230

    

    (b)           to
the
Guarantor:                                   TBS
International Limited

    Suite 306, Commerce
Building

    One
Chancery Lane

    Hamilton
HM 12, Bermuda

    Attention:
William J. Carr

    Fax:
+(441) 295-4957

    

    (c)           to
the Facility Agent:

    and
Security
Trustee:                          DVB
Group Merchant Bank (Asia) Ltd.

    77 Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    (d)           to
the Payment
Agent:                        The
Governor and Company of the Bank of Ireland

    Head
Office

    Building
A3

    Lower
Baggot Street

    Dublin 2,
Ireland

    Attention:
Kimberly Jones

    Facsimile:
+353 1 611 5411

    

    (e)           to
any Swap
Bank:                                DVB
Bank AG

    Friedrich-Ebert-Anlage
2-14

    600325
Frankfurt am Main

    Federal
Republic of Germany

    Attention: Manager OP-DD

    Facsimile
No.: +49 69 97 504 581

    

    The
Governor and Company of the Bank of Ireland

    Head
Office, Building A3

    Lower
Baggot Street

    Dublin 2,
Ireland

    Attention:
Kimberly Jones

    Facsimile:
+353 1 611 5411

    

    Natixis

    Middle
Office Shipping 

    68/76,
Quai de la Rapee

    75012
Paris

    France

    Attention:
Franck Chambras / Aurélie Robert

    Facsimile:
+331 5819 3672

    

    With copy
to Antoine Saint Olive

    Fax: +1
212 354 9095

    

    (f)           to
the
Arranger:                                     Mount
Washington LLC

    c/o AER
Holding N.V.

    Zeelandia
Office Park

    Kaya
W.F.G. Mensing 14

    Curacao,
Netherlands Antilles

    Attention:
Asandro Van Aerde

    Facsimile:
+5999 465 2366

    

    (g)           to
any
Lender:                                                      At
its address listed on Schedule 1 hereto,

     

    or to
such other address or addresses as each party may notify the other.

     

    20.3           Effective date of
notices.  Subject to Clauses 20.4 and 20.5:

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              a
      notice which is sent by post shall be deemed to be served, and shall take
      effect, three (3) days after the date of posting;
  and

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              20.4

            	
              Service outside business
      hours.  However, if under Clause 20.3 a notice would be
      deemed to be served:

            

    

     

    (a)           on
a day which is not a Business Day in the place of receipt; or

     

    (b)           on
such a Business Day, but after 5:00 p.m. local time;

     

    the
notice shall (subject to Clause 20.5) be deemed to be served, and shall take
effect, at 9:00 a.m. on the next day which is such a Business Day.

     

    
      	
              20.5

            	
              Illegible
      notices.  Clauses 20.3 and 20.4 do not apply if the
      recipient of a notice notifies the sender within one (1) hour after the
      time at which the notice would otherwise be deemed to be served that the
      notice has been received in a form which is illegible in a material
      respect.

            

    

     

    
      	
              20.6

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

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              20.7

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

            

    

     

    
      	
              20.8

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

            

    

     

    
      	
              21

            	
              GUARANTY

            

    

     

    
      	
              21.1

            	
              Guaranty.  In
      order to induce the Lenders to make the Loan to the Borrowers, and to
      induce the Swap Banks to enter into Designated Transactions with the
      Borrowers, the Guarantor hereby guarantees (this “Guaranty”), as a
      primary obligor and not merely as a surety, the performance and punctual
      payment when due, whether at stated maturity, by acceleration or
      otherwise, of all Secured Liabilities of the Borrowers now or hereafter
      existing under this Agreement and any other Finance Document, whether for
      principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed
      Obligations”) due or owing to any of the Lenders or the Swap Banks
      (each, a “Guaranteed
      Party”), and agrees to pay any and all expenses (including, without
      limitation, counsel fees and expenses) incurred by a Guaranteed Party, the
      Security Trustee, the Facility Agent or the Payment Agent in enforcing any
      rights under this Guaranty.  The obligations of the Guarantor
      under this Guaranty are in addition to and shall not in any way be
      prejudiced by any other guaranty or security now or subsequently held by
      the Guaranteed Parties.  The Guarantor hereby further agrees
      that if the Borrowers shall fail to pay in full when due (whether at
      stated maturity, by acceleration or otherwise) any of the Guaranteed
      Obligations, the Guarantor will promptly pay the same, on first demand,
      and that in the case of any extension of time of payment or renewal of any
      of the Guaranteed Obligations, the same will be promptly paid in full when
      due (whether at extended maturity, by acceleration or otherwise) in
      accordance with the terms of such extension or
  renewal.

            

    

     

    
      	
              21.2

            	
              Obligations
      absolute.  The Guarantor guarantees that the Guaranteed
      Obligations will be performed and paid to the Guaranteed Parties strictly
      in accordance with the terms of any applicable agreement, express or
      implied, of the Borrowers, regardless of any law, regulation or order of
      any jurisdiction affecting any term of any Guaranteed Obligation or the
      rights of the Guaranteed Parties with respect thereto, including, without
      limitation, any law, rule or policy which is now or hereafter promulgated
      by any governmental authority (including, without limitation, any central
      bank) or regulatory body any of which may adversely affect the Borrowers’
      ability or obligation to make, or right of the Guaranteed Parties to
      receive, such payments, including, without limitation, any sovereign act
      or circumstance which might otherwise constitute a defense to, or a legal
      or equitable discharge of, the
Borrowers.

            

    

     

    
      	
              21.3

            	
              Guaranty
      Unconditional.  The liability of the Guarantor hereunder
      shall be unconditional irrespective of, and the Guarantor hereby waives
      any defenses it may assert with respect
to:

            

    

     

    
      	
              (a)

            	
              any
      lack of validity or enforceability of any Guaranteed Obligation or
      agreement or instrument relating
thereto;

            

    

     

    
      	
              (b)

            	
              any
      change in the time, manner or place of payment of, or in any other term
      of, any Guaranteed Obligation;

            

    

     

    
      	
              (c)

            	
              any
      exchange, release or non-perfection of any other Collateral securing
      payment of any Guaranteed
Obligation;

            

    

     

    
      	
              (d)

            	
              any
      moratorium, bankruptcy, insolvency or other similar law or any other law,
      regulation or order of any jurisdiction affecting any term of any
      Guaranteed Obligation or a Guaranteed Party’s rights with respect thereto;
      or

            

    

     

    
      	
              (e)

            	
              any
      other circumstance which might otherwise constitute a defense available
      to, or the discharge of, any of the Borrowers, or the
      Guarantor.

            

    

     

    
      	
              21.4

            	
              Waiver of subrogation;
      Contribution.  Notwithstanding any other provision of
      this Guaranty, until payment in full of the Guaranteed Obligations in cash
      after termination of any of the Guaranteed Parties’ commitments with
      respect thereto:

            

    

     

    
      	
              (a)

            	
              the
      Guarantor hereby irrevocably waives any right to assert, enforce, or
      otherwise exercise any right of subrogation to any of the rights, security
      interests, claims, or liens which the Guaranteed Parties have against the
      Borrowers in respect of the Guaranteed
  Obligations;

            

    

     

    
      	
              (b)

            	
              the
      Guarantor shall not have any right of recourse, reimbursements,
      contribution, indemnification, or similar right (by contract or otherwise)
      against the Borrowers in respect of the Guaranteed Obligations;
      and

            

    

     

    
      	
              (c)

            	
              the
      Guarantor hereby irrevocably waives any and all of the foregoing rights
      and also irrevocably waives the benefit of, and any right to participate
      in, any Collateral or other security given to the Guaranteed Parties to
      secure payment of the Guaranteed
Obligations.

            

    

     

    
      	
              21.5

            	
              Subordination.  The
      Guarantor agrees that, so long as the Borrowers remain under any actual or
      contingent liability under this Agreement or any other Finance Document,
      any rights which the Guarantor may have at any time by reason of the
      performance by the Guarantor of the Guaranteed Obligations to take the
      benefit (in whole or in part) of any security taken pursuant to this
      Agreement or any of the other Finance Documents shall be subject and
      subordinate to the rights of the Guaranteed Parties hereunder and shall be
      exercised by the Guarantor in such manner and upon such terms as the
      Guaranteed Parties may require and further agree to hold any monies at any
      time received by the Guarantor as a result of the exercise of any such
      rights or otherwise for and on behalf of the Guaranteed Parties for
      application in or towards payment of any sums at any time owed by the
      Borrowers under the Agreement or the other Finance
    Documents.

            

    

     

    
      	
              21.6

            	
              Reinstatement.  This
      Guaranty shall continue to be effective or be reinstated, as the case may
      be, if at any time any payment of any of the Guaranteed Obligations is
      rescinded or must otherwise be returned by a Guaranteed
    Party.

            

    

     

    
      	
              21.7

            	
              Waiver.  The
      Guarantor waives promptness, diligence and notices with respect to any
      Guaranteed Obligation and this Guaranty and any requirement that a
      Guaranteed Party exhaust any right or take any action against the
      Borrowers or any other entity or any or their
  property.

            

    

     

    21.8           Payments;
No Reductions.

     

    
      	
              (a)

            	
              All
      payments under this Guaranty shall be made in accordance with Clauses 11,
      15 and 16 of this Agreement.

            

    

     

    
      	
              (b)

            	
              The
      Guarantor agrees to pay any taxes which arise from any payment made
      hereunder or from the execution, delivery or registration by such
      Guarantor of, or otherwise with respect to, this
  Agreement.

            

    

     

    
      	
              (c)

            	
              The
      Guarantor will indemnify a Guaranteed Party in accordance with Clause 15
      upon demand.

            

    

     

    
      	
              (d)

            	
              Within
      30 days after the date of any payment of taxes, the Guarantor will furnish
      to each Guaranteed Party at its address for notices, the original or a
      certified copy of a receipt evidencing payment thereof.  If no
      taxes are payable in respect of any payment, the Guarantor will furnish to
      each Guaranteed Party a certificate from each appropriate taxing
      authority, or an opinion of counsel acceptable to each Guaranteed Party,
      in either case stating that such payment is exempt from or not subject to
      taxes.

            

    

     

    
      	
              21.9

            	
              Continuing
      Guarantee.  This Guaranty is a continuing guaranty, is
      joint and several with any other guarantee given in respect of the
      Guaranteed Obligations, and shall remain in full force and effect until
      the later of the termination of any Commitment of the Lenders under this
      Agreement and the payment in full of the Guaranteed Obligations and all
      other amounts payable hereunder and shall be binding upon the Guarantor,
      its successors and permitted assigns.  The obligations of the
      Guarantor under this Guaranty shall rank pari passu with all
      other unsecured obligations of the
Guarantor.

            

    

     

    22           JOINT AND SEVERAL
LIABILITY

     

    
      	
              22.1

            	
              General.  All
      liabilities and obligations of the Borrowers under this Agreement shall be
      joint and several, whether expressed to be so or
  not.

            

    

     

    
      	
              22.2

            	
              No impairment of Borrowers’
      obligations.  The joint and several liabilities and
      obligations of a Borrower shall not be impaired
  by:

            

    

     

    
      	
              (a)

            	
              this
      Agreement or any other Finance Document being or later becoming void,
      unenforceable or illegal as regards any other
  Borrower;

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (e)

            	
              any
      combination of the foregoing.

            

    

     

    
      	
              22.3

            	
              Principal
      debtors.  Each Borrower declares that it is and will,
      throughout the Security Period, remain a principal debtor for all amounts
      owing under this Agreement and the other Finance Documents to which it is
      a party and no Borrower shall in any circumstances be construed to be a
      surety for the obligations of any other Borrower under this Agreement or
      the other Finance Documents.

            

    

     

    
      	
              22.4

            	
              Subordination.  Subject
      to Clause 22.5, during the Security Period, no Borrower
    shall:

            

    

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

            	
              exercise
      or assert any combination of the
foregoing.

            

    

     

    
      	
              22.5

            	
              Borrowers’ required
      action.  If during the Security Period, the Security
      Trustee, by notice to a Borrower, requires it to take any action referred
      to in paragraphs (a) to (d) of Clause 22.4, in relation to any other
      Borrower, that Borrower shall take that action as soon as practicable
      after receiving the Agent’s notice.

            

    

     

    23           SUPPLEMENTAL

     

    
      	
              23.1

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

            

    

     

    (a)           are
cumulative;

     

    (b)           may
be exercised as often as appears expedient; and

     

    
      	
              (c)

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

            

    

     

    
      	
              23.2

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

            

    

     

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

     

    
      	
              24

            	
              THE
      FACILITY AGENT, THE PAYMENT AGENT AND THE SECURITY
  TRUSTEE

            

    

     

    
      	
              24.1

            	
              Appointment and
      Granting.

            

    

    

    
      	
              (a)

            	
              The Facility
      Agent.  Each Lender and each Swap Bank irrevocably
      appoints and authorizes the Facility Agent to act as its agent hereunder
      and under any of the other Finance Documents with such powers as are
      specifically delegated to the Facility Agent by the terms of this
      Agreement and of any of the other Finance Documents, together with such
      other powers as are reasonably incidental
  thereto.

            

    

    

    
      	
              (d)

            	
              The Payment
      Agent.  Each Lender and each Swap Bank irrevocably
      appoints and authorizes the Payment Agent to act as its agent hereunder
      and under any of the other Finance Documents with such powers as are
      specifically delegated to the Payment Agent by the terms of this Agreement
      and of any of the other Finance Documents, together with such other powers
      as are reasonably incidental
thereto.

            

    

    

    (c)           The Security
Trustee.

    

    
      	
               
      

            	
              (i)

            	
              Authorization of Security
      Trustee.  Each of the Lenders, the Facility Agent, the
      Payment Agent and the Swap Banks irrevocably appoints and authorizes the
      Security Trustee to act as security trustee hereunder and under the other
      Finance Documents (other than the Notes) with such powers as are
      specifically delegated to the Security Trustee by the terms of this
      Agreement and such other Finance Documents, together with such other
      powers as are reasonably incidental
thereto.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Granting
      Clause.  To secure the payment of all sums of money from
      time to time owing (i) to the Lenders under this Agreement, the Note, and
      the other Finance Documents in the maximum principal amount of $75,000,000
      plus accrued interest thereon and (ii) to the Swap Banks under this
      Agreement, the Master Agreement and the other Finance Documents in the
      maximum principal amount of $18,750,000 plus accrued interest thereon, and
      all other amounts owing to the Lenders, the Facility Agent, the Payment
      Agent, the Security Trustee or the Swap Banks pursuant to this Agreement,
      the Notes, the Master Agreements and the other Finance Documents, and the
      performance of the covenants of the Borrowers and any other obligor herein
      and therein contained, and in consideration of the premises and of the
      covenants herein contained and of the extensions of credit by the Lenders,
      the Security Trustee does hereby declare that it will hold as such trustee
      in trust for the benefit of the Lenders, the Facility Agent, the Payment
      Agent and the Swap Banks, from and after the execution and delivery
      thereof, all of its right, title and interest as mortgagee in, to and
      under the Mortgages and its right, title and interest as assignee and
      secured party under the other Finance Documents (the right, title and
      interest of the Security Trustee in and to the property, rights and
      privileges described above, from and after the execution and delivery
      thereof, and all property hereafter specifically subjected to the lien of
      the indenture created hereby and by the Finance Documents by any amendment
      hereto or thereto are herein collectively called the “Estate”); TO HAVE AND TO
      HOLD the Estate unto the Security Trustee and its successors and assigns
      forever, BUT IN TRUST, NEVERTHELESS, for the equal and proportionate
      benefit and security of the Lenders, the Facility Agent, the Payment
      Agent, and the Swap Banks and their respective successors and assigns
      without any priority of any one over any other, UPON THE CONDITION that,
      unless and until an Event of Default under this Agreement shall have
      occurred and be continuing, the Borrowers shall be permitted, to the
      exclusion of the Security Trustee, to possess and use the
      Ships.  IT IS HEREBY COVENANTED, DECLARED AND AGREED that all
      property subject or to become subject hereto is to be held, subject to the
      further covenants, conditions, uses and trusts hereinafter set forth, and
      each Borrower, for itself and its respective successors and assigns,
      hereby covenants and agrees to and with the Security Trustee and its
      successors in said trust, for the equal and proportionate benefit and
      security of the Lenders, the Facility Agent, the Payment Agent and the
      Swap Banks as hereinafter set
forth.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Acceptance of
      Trusts.  The Security Trustee hereby accepts the trusts
      imposed upon it as Security Trustee by this Agreement, and the Security
      Trustee covenants and agrees to perform the same as herein expressed and
      agrees to receive and disburse all monies constituting part of the Estate
      in accordance with the terms
hereof.

            

    

    

    
      	
              24.2

            	
              Scope of
      Duties.  None of the Facility Agent, the Payment Agent,
      or the Security Trustee (which terms as used in this sentence and in
      Section 24.5 hereof shall include reference to their respective affiliates
      and their own respective and their respective affiliates’ officers,
      directors, employees, agents and attorneys-in-fact): (a) shall have any
      duties or responsibilities except those expressly set forth in this
      Agreement and in any of the Finance Documents, and shall not by reason of
      this Agreement or any of the Finance Documents be (except, with respect to
      the Security Trustee, as specifically stated to the contrary in this
      Agreement) a trustee for a Lender or a Swap Bank; (b) shall be responsible
      to the Lenders or the Swap Banks for any recitals, statements,
      representations or warranties contained in this Agreement or in any of the
      Finance Documents, or in any certificate or other document referred to or
      provided for in, or received by any of them under, this Agreement or any
      of the Finance Documents, or for the value, validity, effectiveness,
      genuineness, enforceability or sufficiency of this Agreement or any of the
      Finance Documents or any other document referred to or provided for herein
      or therein or for any failure by the Borrowers or any other person to
      perform any of its obligations hereunder or thereunder or for the
      location, condition or value of any property covered by any lien under any
      of the Finance Documents or for the creation, perfection or priority of
      any such lien; (c) shall be required to initiate or conduct any litigation
      or collection proceedings hereunder or under any of the Finance Documents
      unless expressly instructed to do so in writing by the Majority Lenders;
      or (d) shall be responsible for any action taken or omitted to be taken by
      it hereunder or under any of the Finance Documents or under any other
      document or instrument referred to or provided for herein or therein or in
      connection herewith or therewith, except for its own gross negligence or
      willful misconduct.  Each of the Security Trustee, the Facility
      Agent and the Payment Agent may employ agents and attorneys-in-fact and
      none of the Security Trustee, the Facility Agent or the Payment Agent
      shall be responsible for the negligence or misconduct of any such agents
      or attorneys-in-fact selected by it in good faith.  Each of the
      Security Trustee, the Facility Agent and the Payment Agent may deem and
      treat the payee of a Note as the holder thereof for all purposes hereof
      unless and until a written notice of the assignment or transfer thereof
      shall have been filed with the Facility Agent, together with the written
      consent of the Borrowers to such assignment or
  transfer.

            

    

    

    
      	
              24.3

            	
              Reliance.  Each
      of the Security Trustee, the Facility Agent and the Payment Agent shall be
      entitled to rely upon any certification, notice or other communication
      (including any thereof by telephone, telex, telefacsimile, telegram or
      cable) believed by it to be genuine and correct and to have been signed or
      sent by or on behalf of the proper person or persons, and upon advice and
      statements of legal counsel, independent accountants and other experts
      selected by the Security Trustee, the Facility Agent or the Payment Agent,
      as the case may be.  As to any matters not expressly provided
      for by this Agreement or any of the Finance Documents, each of the
      Security Trustee, the Facility Agent and the Payment Agent shall in all
      cases be fully protected in acting, or in refraining from acting,
      hereunder or thereunder in accordance with instructions signed by the
      Majority Lenders, and such instructions and any action taken or failure to
      act pursuant thereto shall be binding on all of the
    Lenders.

            

    

    

    
      	
              24.4

            	
              Knowledge.  None
      of the Security Trustee, the Facility Agent or the Payment Agent shall be
      deemed to have knowledge or notice of the occurrence of a Potential Event
      of Default or Event of Default (other than, in the case of the Payment
      Agent, the non-payment of principal of or interest on the Loan or any
      Advance) unless each of the Security Trustee, the Facility Agent and the
      Payment Agent has received notice from a Lender or a Borrower specifying
      such Potential Event of Default or Event of Default and stating that such
      notice is a “Notice of Default”.  If the Facility Agent receives
      such a notice of the occurrence of such Potential Event of Default or
      Event of Default, the Facility Agent shall give prompt notice thereof to
      the Security Trustee, the Payment Agent, the Swap Banks and the Lenders
      (and shall give each Lender prompt notice of each such
      non-payment).  Subject to Section 24.8 hereof, the Security
      Trustee, the Facility Agent and the Payment Agent shall take such action
      with respect to such Potential Event of Default or Event of Default or
      other event as shall be directed by the Majority Lenders, except that,
      unless and until the Security Trustee, the Facility Agent and the Payment
      Agent shall have received such directions, each of the Security Trustee,
      the Facility Agent and the Payment Agent may (but shall not be obligated
      to) take such action, or refrain from taking such action, with respect to
      such Potential Event of Default or Event of Default or other event as it
      shall deem advisable in the best interest of the Lenders and the Swap
      Banks.

            

    

    

    
      	
              24.5

            	
              Security Trustee, Facility
      Agent and Payment Agent as
      Lenders.  Each of the Security Trustee, the Facility
      Agent and the Payment Agent (and any successor acting as Security Trustee,
      Facility Agent or Payment Agent, as the case may be) in its individual
      capacity as a Lender hereunder shall have the same rights and powers
      hereunder as any other Lender and may exercise the same as though it were
      not acting as the Security Trustee, Facility Agent or Payment Agent, as
      the case may be, and the term “Lender” or “Lenders” shall, unless the
      context otherwise indicates, include each of the Security Trustee, the
      Facility Agent and the Payment Agent in their respective individual
      capacities.  Each of the Security Trustee, the Facility Agent
      and the Payment Agent (and any successor acting as Security Trustee,
      Facility Agent and Payment Agent, as the case may be) and their respective
      affiliates may (without having to account therefor to a Lender) accept
      deposits from, lend money to and generally engage in any kind of banking,
      trust or other business with a Borrower and any of its subsidiaries or
      affiliates as if it were not acting as the Security Trustee, Facility
      Agent or Payment Agent, as the case may be, and each of the Security
      Trustee, the Facility Agent and the Payment Agent and their respective
      affiliates may accept fees and other consideration from such Borrower for
      services in connection with this Agreement or otherwise without having to
      account for the same to the
Lenders.

            

    

    

    
      	
              24.6

            	
              Indemnification of Security
      Trustee, Facility Agent and Payment Agent.  The Lenders
      agree to indemnify each of the Security Trustee, the Facility Agent and
      the Payment Agent (to the extent not reimbursed under other provisions of
      this Agreement, but without limiting the obligations of the Borrowers
      under said other provisions, ratably in accordance with the aggregate
      principal amount of each Lenders’ participation in the Loan), for any and
      all liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements of any kind and nature
      whatsoever which may be imposed on, incurred by or asserted against the
      Security Trustee, the Facility Agent or the Payment Agent in any way
      relating to or arising out of this Agreement or any of the Finance
      Documents or any other documents contemplated by or referred to herein or
      therein or the transactions contemplated hereby (including, without
      limitation, the costs and expenses which the Borrowers are to pay
      hereunder, but excluding, unless an Event of Default has occurred and is
      continuing, normal administrative costs and expenses incident to the
      performance of their respective agency duties hereunder) or the
      enforcement of any of the terms hereof or thereof or of any such other
      documents, except that no Lender shall be liable for any of the foregoing
      to the extent they arise from the gross negligence or wilful misconduct of
      the party to be indemnified.

            

    

    

    
      	
              24.7

            	
              Reliance on Security Trustee,
      Facility Agent or Payment Agent.  Each Lender agrees that
      it has, independently and without reliance on the Security Trustee, the
      Facility Agent or the Payment Agent or any other Lender, and based on such
      documents and information as it has deemed appropriate, made its own
      credit analysis of the Obligors and decision to enter into this Agreement
      and that it will, independently and without reliance upon the Security
      Trustee, the Facility Agent or the Payment Agent or any other Lender, and
      based on such documents and information as it shall deem appropriate at
      the time, continue to make its own analysis and decisions in taking or not
      taking action under this Agreement or any of the Finance
      Documents.  None of the Security Trustee, the Facility Agent or
      the Payment Agent shall be required to keep itself informed as to the
      performance or observance by the Borrowers of this Agreement or any of the
      Finance Documents or any other document referred to or provided for herein
      or therein or to inspect the properties or books of the
      Borrowers.  Except for notices, reports and other documents and
      information expressly required to be furnished to the Lenders by the
      Security Trustee, the Facility Agent or the Payment Agent hereunder, none
      of the Security Trustee, the Facility Agent or the Payment Agent shall
      have any duty or responsibility to provide a Lender with any credit or
      other information concerning the affairs, financial condition or business
      of the Obligors or any of their respective parents, subsidiaries or
      affiliates which may come into the possession of the Security Trustee, the
      Facility Agent or the Payment Agent or any of their respective
      affiliates.

            

    

    

    
      	
              24.8

            	
              Actions by Security Trustee,
      Facility Agent and Payment Agent.  Except for action
      expressly required of the Security Trustee, the Facility Agent or the
      Payment Agent hereunder and under the other Finance Documents, each of the
      Security Trustee, the Facility Agent and the Payment Agent shall in all
      cases be fully justified in failing or refusing to act hereunder and
      thereunder unless it shall receive further assurances to its satisfaction
      from the Lenders of their indemnification obligations under Section 24.5
      hereof against any and all liability and expense which may be incurred by
      it by reason of taking or continuing to take any such
    action.

            

    

    

    
      	
              24.9

            	
              Resignation and
      Removal.  Subject to the appointment and acceptance of a
      successor Security Trustee, Facility Agent or Payment Agent (as the case
      may be) as provided below, each of the Security Trustee, the Facility
      Agent and the Payment Agent may resign at any time by giving notice
      thereof to the Lenders and the Borrowers, and the Security Trustee, the
      Facility Agent or the Payment Agent may be removed at any time with or
      without cause by the Majority Lenders.  Upon any such
      resignation or removal, the Majority Lenders shall have the right to
      appoint a successor Security Trustee, Facility Agent or Payment Agent, as
      the case may be, which shall be a Lender, or a Lender with an Affiliate,
      which has an office in New York, New York.  If no successor
      Security Trustee, Facility Agent or Payment Agent, as the case may be,
      shall have been so appointed by the Lenders or, if appointed, shall not
      have accepted such appointment within 30 days after the retiring Security
      Trustee’s, Facility Agent’s, or Payment Agent’s, as the case may be,
      giving of notice of resignation or the Majority Lenders’ removal of the
      retiring Security Trustee, Facility Agent or Payment Agent, as the case
      may be, then the retiring Security Trustee, Facility Agent or Payment
      Agent, as the case may be, may, on behalf of the Lenders, appoint a
      successor Security Trustee, Facility Agent or Payment Agent, as the case
      may be, which shall be a Lender, or a Lender with an Affiliate, which has
      an office in New York, New York.  Upon the acceptance of any
      appointment as Security Trustee, Facility Agent or Payment Agent hereunder
      by a successor Security Trustee, Facility Agent or Payment Agent, such
      successor Security Trustee, Facility Agent or Payment Agent, as the case
      may be, shall thereupon succeed to and become vested with all the rights,
      powers, privileges and duties of the retiring Security Trustee, Facility
      Agent or Payment Agent, as the case may be, and the retiring Security
      Trustee, Facility Agent or Payment Agent shall be discharged from its
      duties and obligations hereunder.  After any retiring Security
      Trustee’s, Facility Agent’s or Payment Agent’s resignation or removal
      hereunder as Security Trustee, Facility Agent or Payment Agent, as the
      case may be, the provisions of this Clause 24 shall continue in effect for
      its benefit in respect of any actions taken or omitted to be taken by it
      while it was acting as Security Trustee, Facility Agent or Payment Agent,
      as the case may be.

            

    

    

    
      	
              24.10

            	
              Release of
      Collateral.  Without the prior written consent of the
      Lenders and the Swap Banks, none of the Security Trustee, the Facility
      Agent or the Payment Agent will consent to any modification, supplement or
      waiver under any of the Finance Documents nor without the prior written
      consent of all of the Lenders and the Swap Banks release any Collateral or
      otherwise terminate any lien under the Finance Documents, except that no
      such consent is required, and each of the Security Trustee, the Facility
      Agent and the Payment Agent is authorized, to release any lien covering
      property if the obligations have been paid and performed in full or which
      is the subject of a disposition of property permitted hereunder or to
      which the Lenders and the Swap Banks have
  consented.

            

    

     

    25           LAW
AND JURISDICTION

     

    
      	
              25.1

            	
              Governing
      law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
      IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
  YORK.

            

    

     

    25.2           Consent
to Jurisdiction.

     

    
      	
              (a)

            	
              Each
      Obligor hereby irrevocably submits to the jurisdiction of any New York
      State or Federal court sitting in New York County and any appellate court
      from any thereof in any action or proceeding arising out of or relating to
      this Agreement or any other Finance Document, and each Obligor hereby
      irrevocably agrees that all claims in respect of any such action or
      proceeding may be heard and determined in such New York State or in such
      Federal court.  Each Obligor hereby irrevocably waives, to the
      fullest extent that it may effectively do so, any objection it may now or
      hereafter have to the laying of the venue of any action or proceeding
      arising out of or relating to this Agreement or any other Finance Document
      and the defense of an inconvenient forum to the maintenance of any such
      action or proceeding.  Each Obligor also irrevocably consents to
      the service of any and all process in any such action or proceeding by the
      mailing of copies of such process to its address specified in Clause
      20.2.  Each Obligor hereby agrees to appoint Cardillo &
      Corbett, with offices currently located at 29 Broadway, New York, New York
      10006, Attention: Tulio R. Prieto, as its designated agent for service of
      process for any action or proceeding arising out of or relating to this
      Agreement or any other Finance Document.  Each Obligor agrees
      that a final judgment in any such action or proceeding shall be conclusive
      and may be enforced in other jurisdictions by suit on the judgment or in
      any other manner provided by law.

            

    

     

    
      	
              (b)

            	
              Nothing
      in this Clause 25.2 shall affect the right of a Credit Party to serve
      legal process in any other manner permitted by law or affect the right of
      such person to bring any action or proceeding against an Obligor or its
      property in the courts of any other jurisdictions where such action or
      proceeding may be heard.

            

    

     

    
      	
              25.3

            	
              Rights
      unaffected.  Nothing in this Clause 25 shall exclude or
      limit any right a Credit Party may have (whether under the law of any
      country, an international convention or otherwise) with regard to the
      bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              25.4

            	
              Meaning of
      “proceedings”.  In this Clause 25, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

    26           WAIVER
OF JURY TRIAL

     

    
      	
              26.1

            	
              WAIVER.  THE
      OBLIGORS AND THE CREDIT PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL
      RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
      RELATING TO THIS AGREEMENT, THE OTHER FINANCE DOCUMENTS OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

            

    

    

    27           PATRIOT
ACT; OFAC AND BANK SECRECY ACT

     

    
      	
              27.1

            	
              PATRIOT Act
      Notice.  The Facility Agent hereby notifies the Obligors
      that pursuant to the requirements of the PATRIOT Act and the Credit
      Parties’ policies and practices, each of the Credit Parties is required to
      obtain, verify and record certain information and documentation that
      identifies the Obligors, which information includes the name and address
      of the Obligors and such other information that will allow the Credit
      Parties to identify the Obligors in accordance with the PATRIOT
      ACT.

            

    

    

    
      	
              27.2

            	
              OFAC and Bank Secrecy
      Act.

            

    

    

    
      	
              (a)

            	
              Each
      Obligor shall ensure that no person who owns a controlling interest in or
      otherwise controls such Obligor or any subsidiary thereof is or shall be
      listed on the Specially Designated Nationals and Blocked Person List or
      other similar lists maintained by the Office of Foreign Assets Control
      (“OFAC”), the U.S.
      Department of the Treasury or included in any Executive
      Orders.

            

    

    

    
      	
              (b)

            	
              The
      Obligors shall not use or permit the use of the proceeds of the Loan to
      violate any of the foreign asset control regulations of OFAC or any
      enabling statute or Executive Order relating
  thereto.

            

    

    

    
      	
              (c)

            	
              The
      Obligors shall comply, and shall cause each of its subsidiaries to comply,
      with all applicable Bank Secrecy Act laws and regulations, as
      amended.

            

    

    

    
      	
              28

            	
              POSITION
      OF THE LENDERS AND THE SWAP BANKS

            

    

    

    
      	
              28.1

            	
              Interests of Credit Parties
      several.  The rights of the Credit Parties under this
      Agreement are several.

            

    

    

    
      	
              28.2

            	
              Individual Credit Parties’
      right of action.  Each Lender and each of the Swap Banks
      shall be entitled to sue for any amount which has become due and payable
      by the Borrowers to it under this Agreement, any Master Agreement or any
      other Finance Document without joining the Facility Agent, the Security
      Trustee or any other Credit Party as additional parties in the
      proceedings, provided
      that neither any of the Swap Banks nor any Lender may commence
      proceedings against the Borrowers or any other Obligor in connection with
      a Finance Document without the prior consent of the Majority
      Lenders.

            

    

    

    
      	
              28.3

            	
              Obligations of Credit Parties
      several.  The obligations of the Lenders and the Swap
      Banks under this Agreement are several, and a failure of a Lender or the
      Swap Banks to perform its obligations under this Agreement shall not
      result in:

            

    

    

    
      	
              (a)

            	
              the
      obligations of the other Lenders or the Swap Banks being increased;
      or

            

    

    

    
      	
              (b)

            	
              the
      Borrowers, any other Obligor, any other Lender or the Swap Banks being
      discharged (in whole or in part) from its obligations under any Finance
      Document;

            

    

    

    and in no
circumstances shall a Lender or the Swap Banks have any responsibility for a
failure of another Lender or the Swap Banks (as the case may be) to perform its
obligations under this Agreement.

    

    
      	
              22.4

            	
              Swap Pari
      Passu.  At all times during the Security Period, each of
      the Swap Banks and the Lender agree that the rights of the Swap Banks
      under the Master Agreements (including, without limitation, any right of
      repayment) shall be pari
      passu with the rights of the Lenders under this Agreement and the
      other Finance Documents.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
               
      

            	
              [SIGNATURE
      PAGE FOLLOWS ON NEXT PAGE]

            

    

    WHEREFORE,
the parties hereto have caused this Loan Agreement to be executed as of the date
first above written.

     

    
      	
              BEDFORD
      MARITIME CORP., as Borrower

               

               

              By:  /s/ Tara DeMakes

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Lender

               

              By:
      /s/ Evan Cohen
      

              Evan Cohen

              Managing Director

               

            
	
              BRIGHTON
      MARITIME CORP., as Borrower

               

               

               

              By:  
      /s/ Tara
      DeMakes

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              DVB
      GROUP MERCHANT BANK (ASIA) LTD., as Facility Agent and Security
      Trustee

               

              By:
      /s/ Evan Cohen
      

              Evan Cohen

              Managing Director

               

            
	
              HARI
      MARITIME CORP., as Borrower

               

               

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              THE
      GOVERNOR AND COMPANY OF THE BANK OF IRELAND, as Payment Agent

               

               

              By:
      /s/ Paul
      Packard

              Paul Packard

              Head of Maritime
      Industries

               

              By:
      /s/ John
O'Dea

              John O’Dea

              Senior Manager

               

            
	
              PROSPECT
      NAVIGATION CORP., as Borrower

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes 

                  Attorney-in-Fact

            	
              DVB
      BANK AG, as Swap Bank

               

               

              By:
      /s/ Daniel C.
      Rodgers

                  Daniel
      C. Rodgers

                  Attorney-in-Fact

               

            
	
              HANCOCK
      NAVIGATION CORP., as Borrower

               

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

            	
              THE
      GOVERNOR AND COMPANY OF THE BANK OF IRELAND, as Swap Bank

               

               

              By:
      /s/ Paul
      Packard

              Paul Packard

              Head of Maritime
      Industries

               

              By:
      /s/ John
O'Dea

              John O’Dea

              Senior Manager

               

            
	
              COLUMBUS
      MARITIME CORP., as Borrower

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              NATIXIS,
      as Swap Bank

               

               

              By:
      /s/ Guillaume de
      Beaucorps

                  Guillaume de
      Beaucorps

                  Authorized
      Signatory

               

              By:
      /s/ Franck
      Chambras

              Franck Chambras

              Authorized Signatory

               

            
	
              WHITEHALL
      MARINE TRANSPORT CORP.,

              as
      Borrower

               

               

              By: /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact

               

            	
              MOUNT
      WASHINGTON LLC

              as
      Arranger

               

               

              By:
      /s/ Carol Ann Malinowski
      

                  Carol
      Ann Malinowski

                  Attorney-in-Fact

            
	
              TBS
      INTERNATIONAL LIMITED, as Guarantor

               

               

              By:  /s/ Tara DeMakes 

                  Tara
      DeMakes

                  Attorney-in-Fact:

            	 
      

    

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
1

     

    LENDERS
AND COMMITMENTS

     

    Lender                                                                                                                                Commitment

     

    DVB GROUP
MERCHANT BANK (ASIA) LTD.$75,000,000

    

    Lending
Office:                                           77
Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    Address for
Notices:                                           77
Robinson Road 30-02

    Singapore

    Attention:
Martijn van Tuyl and/or Gah May Ng

    Facsimile:
+65 6511 0700

    

    

    

    SCHEDULE
2

     

    DRAWDOWN
NOTICE

     

    

    To:           DVB
Group Merchant Bank (Asia) Ltd., as Facility Agent

    
      	
               
      

            	
              77
      Robinson Road 30-02

            

    

    
      	
               
      

            	
              Singapore

            

    

    

    Date:
January [l],
2008

     

    
      	
              1

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      as of January 16, 2008 and made between ourselves, as Borrowers, and the
      other parties named therein in connection with a loan facility of up to
      the lesser of $75,000,000 and 59% of the aggregate Fair Market Value of
      the Ships.  Terms defined in the Loan Agreement have their
      defined meanings when used in this Drawdown
  Notice.

            

    

    

    2           We
request to borrow as follows:

     

    (a)           Amount
of the Advance: $[l]

     

    (b)           Expected
Drawdown Date: [l]

     

    (c)           Duration
of the first Interest Period shall be [l] month(s).

     

    (d)           Payment
instructions:  [l]

     

    

     

    

     

    

     

    

     

    3           We
represent and warrant that:

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            

    

     

    4           This
notice cannot be revoked without your prior consent.

     

    
      	
              5

            	
              We
      authorize you to deduct any balance of the upfront fee referred to in
      Clause 14 outstanding on the Expected Drawdown Date from the amount of the
      Advance.

            

    

     

    
      	
              BEDFORD
      MARITIME CORP., BRIGHTON MARITIME CORP., HARI MARITIME CORP., PROSPECT
      NAVIGATION CORP., HANCOCK NAVIGATION CORP., COLUMBUS MARITIME CORP. and
      WHITEHALL MARINE TRANSPORT CORP. as Borrowers

               

               

              By:
      

              Name:
      

              Title:
      

               

            

    

    

     

    SCHEDULE
3

     

    CONDITIONS
PRECEDENT DOCUMENTS

     

    
      	
              1.

            	
              An
      original of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              each
      Finance Document and each document required to be delivered by each
      Finance Document, each duly executed by each party thereto, and
      documentary evidence that the Security Interests created by such Finance
      Documents have been duly perfected;

            

    

     

    
      	
               
      

            	
              (b)

            	
              each
      Manager’s Undertaking and each document required to be delivered by each
      Manager’s Undertaking, each duly executed by each party
      thereto;

            

    

     

    (c)           each
Deletion Letter (undated), duly executed by each party thereto; and

     

    
      	
               
      

            	
              (d)

            	
              each
      Deletion Power of Attorney, duly executed in counterparts by each party
      thereto (and, if executed by any party thereto outside of the Republic of
      the Philippines, duly consularized before a consulate of the Republic of
      the Philippines in the jurisdiction of
  execution).

            

    

     

    
      	
              2.

            	
              Copies
      of the constitutional documents, and each amendment thereto, of each
      Obligor, certified as of a date reasonably near the date of the relevant
      Drawdown Notice by the president or the secretary (or equivalent officer)
      of such party as being a true and correct copy
  thereof.

            

    

     

    
      	
              3.

            	
              Copies
      of certificates dated as of a date reasonably near the date of the
      Drawdown Notice, certifying that each Obligor is duly incorporated (or
      formed) and in goodstanding under the laws of such party’s jurisdiction of
      incorporation (or formation) and, in respect of each Borrower, that such
      Borrower is duly qualified and in goodstanding as a foreign maritime
      entity under the law of the Republic of
Liberia.

            

    

     

    
      	
              4.

            	
              Copies
      of resolutions of the directors (or equivalent governing body) (and where
      required, the shareholders or equivalent equity holders)
    of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              each
      Obligor authorizing the execution of each of the Finance Documents to
      which such Obligor is or is to be a party (and additionally, in the case
      of each Borrower, the Bareboat Charter and Memorandum of Three Party
      Agreement to which such Borrower is or is to be a party) and authorizing
      named officers or attorneys-in-fact to execute such documents and, in the
      case of the Borrowers, to give the Drawdown Notice and other notices
      required by the Finance Documents;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      relevant Bareboat Charterer and Pacific Rim authorizing the execution of
      the relevant Bareboat Charter(s) and Memorandum of Three Party Agreement
      to which it is a party and authorizing named officers or attorneys-in-fact
      to execute such documents and to give any notices required
      thereunder,

            

    

     

    in each
case certified as of a date reasonably near the date of the Drawdown Notice by
the president or the secretary (or equivalent officer) of such party as being a
true and correct copy thereof.

     

    
      	
              5.

            	
              The
      original of any power of attorney under which a Bareboat Charter,
      Memorandum of Three Party Agreement or any Finance Document is to be
      executed on behalf of an Obligor.

            

    

     

    
      	
              6.

            	
              Copies
      of all consents which any of the Obligors requires to enter into, or make
      any payment or perform any of its obligations under or in connection with
      the transactions contemplated by this Agreement, each certified as of a
      date reasonably near the date of the relevant Drawdown Notice by the
      president or the secretary (or equivalent officer) of such party as being
      a true and correct copy thereof, or certification by such president or
      secretary (or equivalent officer) that no such consents are
      required.

            

    

     

    
      	
              7.

            	
              Copies
      of each Bareboat Charter and Memorandum of Three Party Agreement,
      certified as of a date reasonably near the date of the relevant Drawdown
      Notice by the president or the secretary (or equivalent officer) of the
      respective Borrower thereto as being a true and correct copy thereof, each
      Bareboat Charter and Memorandum of Three Party Agreement to be in form and
      substance acceptable to the Facility
Agent.

            

    

     

    
      	
              8.

            	
              Documentary
      evidence that the agent for service of process named in Clause 25.2 has
      accepted its appointment in respect of the
  Obligors.

            

    

     

    
      	
              9.

            	
              A
      certificate of each Obligor, signed on behalf of each such party by the
      president or the secretary (or equivalent officer) of the Guarantor, dated
      as of the Expected Drawdown Date (the statements made in such certificate
      shall be true on and as of the Expected Drawdown Date), certifying as
      to:

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      absence of any proceeding for the dissolution or liquidation of such
      party;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      veracity in all material respects of the representations and warranties
      contained in this Agreement as though made on and as of the Expected
      Drawdown Date;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      absence of any material misstatement of fact in any information provided
      by the Borrowers to the Facility Agent or any Lender and that such
      information did not omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      absence of any event occurring and continuing, or resulting from the
      making of the Advance, that constitutes a Potential Event of Default or an
      Event of Default.

            

    

     

    10.           Documentary
evidence that:

     

    
      	
               
      

            	
              (a)

            	
              [intentionally
      omitted]

            

    

     

    
      	
               
      

            	
              (b)

            	
              each
      Ship has been delivered by the relevant Borrower to the relevant Bareboat
      Charterer in accordance with all of the terms and conditions of the
      relevant Bareboat Charter, free and clear of all liens and encumbrances
      other than the relevant Mortgage, together with a copy of the Protocol of
      Delivery and Acceptance for such Ship, duly executed by the relevant
      Borrower and the relevant Bareboat Charterer, certified as of the Expected
      Drawdown Date by the president or the secretary (or equivalent officer) of
      the relevant Borrower as being a true and correct copy of the
      original;

            

    

     

    
      	
               
      

            	
              (c)

            	
              there
      is/are no pending dispute(s) or arbitration proceedings arising out of or
      in connection with a Bareboat Charter or Memorandum of Three Party
      Agreement (which may be established by a certificate dated as of the
      Expected Drawdown Date by the president or the secretary (or equivalent
      officer) of the relevant Borrower);

            

    

     

    
      	
               
      

            	
              (d)

            	
              each
      Ship is registered in the name of the relevant Borrower under Liberian
      registry, free of all recorded liens and encumbrances, save as
      contemplated by the Finance Documents (which shall be established by a
      Certificate of Ownership and Encumbrance issued by the appropriate
      Liberian authorities stating that such Ship is owned by the relevant
      Borrower and that there are on record no other mortgages, liens or other
      encumbrances on such Ship except the relevant
  Mortgage);

            

    

     

    
      	
               
      

            	
              (e)

            	
              each
      Mortgage has been preliminarily registered against the relevant Ship as a
      valid first priority ship mortgage in accordance with the laws of the
      Republic of Liberia and the Security Interests created by the Finance
      Documents shall have been duly
perfected;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Government of the Republic of Liberia has authorized each Ship to be
      temporarily registered under Philippine flag without loss of Liberian
      registry;

            

    

     

    
      	
               
      

            	
              (g)

            	
              each
      Ship is bareboat registered in the name of the relevant Bareboat Charterer
      under Philippine bareboat registry, free of all recorded liens and
      encumbrances, save as contemplated by the Finance Documents (which shall
      be established by a Certificate of Ownership and Encumbrance (or similar
      instrument) issued by the Philippine Maritime Industry Authority stating
      that such Ship is bareboat registered in the name of the relevant Bareboat
      Charterer and that there are on record no other mortgages, liens or other
      encumbrances on such Ship except the relevant Mortgage), provided that, with
      respect to the Mortgage, it shall be acceptable for the relevant Borrower
      to deliver to the Facility Agent as soon as possible, but in no event
      later than 60 days, following the Actual Drawdown Date, evidence
      acceptable to the Facility Agent that the Philippine Maritime Industry
      Authority has recognized that the existence of the Mortgage with respect
      such Ship and that such Mortgage is governed by the law of the Republic of
      Liberia, and has duly noted the same in the Bareboat
    Registry;

            

    

     

    
      	
               
      

            	
              (h)

            	
              a
      cautionary notice of the Mortgage with respect to each Ship has been filed
      in the Bareboat Registry, such notice to be in form and substance
      acceptable to the Facility Agent, provided that such
      notice may be filed as soon as is feasible after the Actual Drawdown Date
      if such notice cannot be filed on or before the Actual Drawdown
      Date;

            

    

     

    
      	
               
      

            	
              (i)

            	
              each
      Ship is classed with the Classification Society in the highest
      classification and rating for vessels of the same age and type without any
      outstanding conditions or recommendations affecting class (other than
      those for which the time prescribed for curing the condition or
      recommendation has not passed), which shall be established by a
      Confirmation of Class Certificate issued by the Classification Society and
      dated a date reasonably near the Expected Drawdown Date; a “Class
      Statement” or similar instrument shall not be acceptable for purposes of
      this clause; and

            

    

     

    (j)           each
Ship:

     

    
      	
               
      

            	
              (i)

            	
              is
      insured in compliance with the terms of the relevant Mortgage, including
      mortgagee’s interest insurance;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              is
      or will be managed by the Approved Manager in accordance with management
      agreements acceptable to the Majority Lenders;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              has
      been inspected and found to be in a satisfactory condition by an inspector
      appointed by the Facility Agent at the cost of the
    Borrowers.

            

    

     

    
      	
              11.

            	
              A
      certificate by the president or the secretary (or equivalent officer) of
      each Borrower, or a certificate of the Approved Manager (technical),
      identifying and giving the address and other communication details of the
      ISM Responsible Person(s).

            

    

     

    
      	
              12.

            	
              Copies
      of the Document of Compliance and Safety Management Certificate for each
      Ship referred to in paragraph (a) of the definition of the ISM Code
      Documentation, certified as true and in effect by the relevant Borrower or
      the Approved Manager (technical).

            

    

     

    
      	
              13.

            	
              Copies
      of such other ISM Code Documentation as the Facility Agent may have
      requested by written notice to the Borrowers not later than 2 days before
      the Expected Drawdown Date, certified as true and complete in all material
      respects by the Borrowers or the Approved Manager
    (technical).

            

    

     

    
      	
              14.

            	
              Certification
      by each Borrower or the Approved Manager (technical)
  that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Ship owned by will maintain for the duration of the Security Period a
      valid International Ship Security
Certificate;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      security system of the Ship owned by it and associated security equipment
      complies with the applicable requirements of Chapter XI-2 of SOLAS and
      Part A of the ISPS Code; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      approved ship security plan is in
place.

            

    

     

    15.           A
valuation of the aggregate Fair Market Value of the Ships.

    

    
      	
              16.

            	
              A
      favorable report from an insurance consultant nominated by the Facility
      Agent confirming that the insurance placed on the Ships is in compliance
      with the Mortgage thereon (and all costs associated with such report shall
      be payable by the Borrowers).

            

    

    

    
      	
              17.

            	
              A
      favorable opinion of Watson, Farley & Williams (New York) LLP, New
      York counsel for the Credit Parties, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

    
      	
              18.

            	
              A
      favorable opinion of Cardillo & Corbett, New York, Liberian and
      Marshall Islands counsel to the Obligors, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

    
      	
              19.

            	
              A
      favorable opinion of Conyers Dill & Pearman, Bermuda counsel to the
      Guarantor, in form, scope and substance satisfactory to the Credit
      Parties.

            

    

     

    
      	
              20.

            	
              A
      favorable opinion of Sycip, Salazar, Hernandez & Gatmaitman,
      Philippine counsel to the Credit Parties, in form, scope and substance
      satisfactory to the Credit Parties.

            

    

     

    SCHEDULE
4

     

    

     

    ASSIGNMENT
AND ACCEPTANCE

     

    Dated as
of [l]

    

    Reference is made to the Loan Agreement
dated as of January 16, 2008 (the “Loan Agreement”) among (i)
Bedford Maritime Corp., Brighton Maritime Corp., Hari Maritime Corp., Prospect
Navigation Corp., Hancock Navigation Corp., Columbus Maritime Corp. and
Whitehall Marine Transport Corp. as joint and several Borrowers, (ii) TBS
International Limited as Guarantor, (iii) the banks and financial institutions
described therein as Lenders, (iv) DVB Group Merchant Bank (Asia) Ltd. as
Facility Agent and Security Agent, (v) The Governor and Company of the Bank of
Ireland as Payment Agent, (vi) DVB Bank AG, The Governor and Company of the Bank
of Ireland  and Natixis as Swap Banks, and (vii) Mount Washington LLC
as Arranger.  Capitalized terms used but not defined herein shall have
the meaning assigned such terms in the Loan Agreement.

    

    ______________________ (the “Assignor”) and
________________________ (the “Assignee”) agree as
follows:

    

    1.           As
of the Effective Date (defined in Paragraph 4 below), the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, that interest in and to all of the Assignor’s rights and
obligations under the Loan Agreement which represents the Percentage Interest
specified in Section 1 of Annex 1 hereto in the Assignor’s Commitment and the
Advance(s) owing to the Assignor.  After giving effect to such sale
and assignment, the Assignee’s Commitment and the amount of the Advance owing to
the Assignee will be as set forth in Section 2 of Annex 1.

    

    2.           The
Assignor (a) represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; and (b) makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Loan Agreement, the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Agreement, or any other instrument or document furnished pursuant thereto
and (b) the financial condition of the Obligors or the performance or observance
by any of the Obligors of any of its obligations under the Loan Agreement or any
other instrument or document furnished pursuant thereto.

    

    3.           The
Assignee (a) confirms that it has received a copy of the Loan Agreement and the
other Finance Documents, together with copies of the financial statements
referred to in the Loan Agreement, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (b) agrees that it will, independently and
without reliance upon the Facility Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Agreement; (c) appoints and authorizes the Facility Agent, the
Security Trustee and the Payment Agent to take such action on its behalf and to
exercise such powers under the Loan Agreement as are delegated to such parties
by the terms thereof, together with such powers as are reasonably incidental
thereto; (d) agrees that it will be bound by the Loan Agreement and perform in
accordance with its terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender; and (e) specifies as
its address for notices the offices set forth beneath its name on the signature
page hereof.

    

    4.           The
effective date (the “Effective
Date”) for this Assignment and Acceptance shall be the date of acceptance
hereof by the Agent, unless a later date is specified in Annex 1 hereto, provided that no Assignment
and Acceptance shall be effective until and unless the terms and conditions of
Clause 18.2 of the Loan Agreement are complied with.  Following the
execution of this Assignment and Acceptance, two counterparts will be promptly
delivered by the Assignee to the Facility Agent, and the Facility Agent shall
promptly forward a counterpart to the Borrower.

    

    5.           Upon
such acceptance and recording, as of the Effective Date, (a) the Assignee shall
be a party to the Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender; and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Agreement.

    

    6.           Upon
such acceptance and recording, from and after the Effective Date, the Payment
Agent shall make all payments under the Loan Agreement in respect of the
assignment effected hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the
Assignee.  The Assignor and Assignee shall make all appropriate
adjustments in payments under the Loan Agreement for periods prior to the
Effective Date directly between themselves.

    

    7.           This
Assignment and Acceptance shall be governed by, and shall be construed in
accordance with, the laws of the State of New York.

    

    NAME OF
ASSIGNOR                                                                                     NAME
OF ASSIGNEE

    

    

    By:
________________________                                                                                                By:
________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Address
for Notices:

    ____________________________

    ____________________________

    ____________________________

    Annex
1

    to

    Assignment
and Acceptance

    Dated as
of [l]

    

    

    Section
1

    

    Percentage Interest:

    

    

    Section
2

    

    Assignee’s
Commitment:                                                                           $

    

    Aggregate
Outstanding Principal

    Amount of Advances owing
to

    the
Assignee:                                                                           $

    

    

    Section
3

    

    Effective
Date:

    

    

    

    

    NAME OF
ASSIGNOR

    

    

    By:
_______________________

    Name

    Title

    

    

    SCHEDULE
5

    

    FORM
OF DELETION LETTER

    

    

     

    
      	
               
      

            	
              To:

            	
              Maritime
      Industry Authority

            

    

    The
Republic of the Philippines

    

    
      	
               
      

            	
              Date:

            

    

     

    
      	
              Re:

            	
              m.v.
      “__________________” (the “Ship”)

            

    

     

    
      	
               
      

            	
              Dear
      Sirs:

            

    

     

    Please be
advised that the Bareboat Charter dated December 5, 2007 made between [l], as Owner, and [l], as Bareboat
Charterer, has been terminated.  Accordingly, we request you to
forthwith endorse and cause the deletion of the Ship from the Maritime Industry
Authority and to cancel forthwith the temporary certificate of the Philippines
registry issued in respect of the Ship.

     

    Yours
faithfully,

    

    [l], as Owner

    

    

    By:
______________________________

    Name:

    Title:

    

    

    [l], as Bareboat
Charterer

    

    

    By:
_____________________________

    Name:

    Title:

    

    

    

    SCHEDULE
6

    

    FORM
OF DELETION POWER OF ATTORNEY

    

    

    
      	
               
      

            	
              IRREVOCABLE
      POWER OF ATTORNEY

            

    

     

    THIS
IRREVOCABLE POWER OF ATTORNEY is given and made this ___ day of January 2008
by

     

    (A)            [l], a corporation duly
incorporated under the laws of the Republic of The Marshall Islands (the “Owner”), having its registered
office at The Trust Company Complex, Ajeltake Island, PO Box 1405, Majuro,
Marshall Islands MH96960, and

     

    (B)            [l], a corporation duly
organized and validly existing under the laws of the Republic of the Philippines
(the “ Charterer”),
having its registered office at [2nd Floor, Harbor Center II, South Harbor, Port
Area, Manila, Philippines],

     

    
      	
               
      

            	
              IN
      FAVOR OF

            

    

     

    DVB GROUP
MERCHANT BANK (ASIA) LTD., a Singapore company, with offices at 77 Robinson Road
30-02 Singapore, and its successors and permitted assigns (the “Attorney”).

     

    PRELIMINARY
STATEMENTS:

     

    1.           The
Owner is the sole owner of the whole of the of the vessel [l] (the “Ship”), which is duly
registered in the name of the Registered Owner under the law and flag of the
Republic of Liberia;

    

    2.           Pursuant
to the terms and conditions of a Bareboat Charter dated December 5, 2007 (as
such may be amended, restated, supplemented, replaced, novated or otherwise
modified from time to time, the “Charter”), the Owner demise
chartered the Ship to the Charterer;

    

    3.           The
Charterer temporarily registered the Ship in its name with the Philippines
Registry of Vessels and the Ship is thus dually registered in the name of the
Registered Owner under the laws of the Republic of Liberia;and in the name of
the Charterer under the laws of the Republic of the Philippines pursuant to
Presidential Decree No. 1521, as amended, of the Republic of the Philippines and
carries the Philippine flag; and

    

    5.           The
Owner and the Charterer desire to appoint an attorney to effect or procure the
deletion of the Ship from its temporary registration with the Philippines
Registry of Vessels and, for such purpose, to execute and deliver on behalf the
Owner and the Charterer or either of them all notices, applications, oaths,
affidavits, confirmations, declarations, deeds and other relevant instruments
and documents in connection with or relating to the deletion of the Ship from
temporary registration of the Republic of the Philippines.

    

    NOW,
THEREFORE, the Owner and the Charterer hereby together jointly appoint and each
of them hereby severally appoints the Attorney the true and lawful attorney of
and for each of the Owner and the Charterer, and the Attorney is hereby
authorized, directed and empowered acting singly and with full power to act
alone, for and on behalf of each of the Owner and the Charterer, jointly and
each of them severally, in the name of the Owner or the Charterer (or in the
joint names of the Owner and the Charterer) to do any of the following acts and
things:

    

    A.           To
notify the Maritime Industry Authority of the Republic of the Philippines and
any other relevant authority or body (whether belonging to the government or
otherwise) of the Republic of the Philippines that the Charter has been
terminated and hence the Ship should be deleted from the temporary registration
under Presidential Decree No. 1521, as amended, of the Republic of the
Philippines or such other pertinent legislation of the Republic of the
Philippines, as the case may be.

    

    B.           To
delete, and to effect and procure the deletion of, the Ship from temporary
registration under Presidential Decree No. 1521, as amended, of the
Republic of the Philippines or such other pertinent legislation of the Republic
of the Philippines, as the case may be, and to cause or procure the cancellation
of the Temporary Certificate of Philippine Register issued by the Maritime
Industry Authority to or in respect of the Ship upon termination of the Charter,
including obtaining a deletion certificate from the Maritime Industry
Authority.

    

    C.           To
complete, sign, date, render perfect and deliver to the Maritime Industry
Authority of the Republic of the Philippines and any other relevant authority or
body (whether belonging to the government or otherwise) of the Republic of the
Philippines all notices, applications, oaths, deeds, declarations,
confirmations, affidavits and any other relevant instruments and documents,
including, without limitation, any notarial acts, whatsoever that may be
required or desirable for the purpose of deleting the Ship from temporary
registration under Presidential Decree No. 1521, as amended, or such other
pertinent legislation of the Republic of the Philippines, and for the purpose of
causing or procuring the cancellation of the Temporary Certificate of Philippine
Register issued by the Maritime Industry Authority to or in respect of the Ship,
and the execution and delivery by the Attorney of each such instrument and
document shall be conclusive evidence of its authority to do so.

    

    D.           To
do such other acts, objects, matters and things, and to complete and render
perfect all documents and transactions as may be, in the entire discretion of
the Attorney, appropriate or necessary for more effectively or expeditiously
carrying out the objects and purposes herein authorized or that the Attorney
may, for any reason, deem fit to carry out the acts, objects, matters and things
more specifically authorized herein.

    

    For the
better doing, performing and executing of the acts, objects, matters and things
hereinbefore mentioned, the Owner and the Charterer hereby fully jointly grant
and each of them severally grants unto the Attorney full power and authority to
substitute and appoint in its place, on such terms and at such salary as the
Attorney shall think fit, one or more attorney or attorneys to exercise for the
Owner and the Charterer as their respective attorney or attorneys any or all of
the powers and authorities hereby conferred and to revoke any such appointments
from time to time and to substitute or appoint any other or others in the place
of such attorney or attorneys as the Attorney shall from time to time deem
appropriate.

    

    The Owner
and the Charterer hereby jointly ratify and confirm and agree to ratify and
confirm, and each of them hereby severally ratifies and confirms and agrees to
ratify and confirm, whatsoever the Attorney shall do or purport to do by virtue
of these presents.

    

    The Owner
and the Charterer hereby further jointly declare, and each of them hereby
severally declares, that this Power of Attorney shall be irrevocable
indefinitely by virtue thereof and of this Power of Attorney having been given
for valuable consideration, the adequacy and receipt of which the Owner and the
Charterer hereby jointly acknowledge and each of them severally acknowledges,
and by virtue of such Power of Attorney being coupled with an interest, having
been granted by way of security for repayment of moneys owing to the Attorney
and various secured parties as its principals, and further by reason of this
Power of Attorney having been executed for the purposes of protecting the
Attorney (as first mortgagee of the Ship for the ratable benefit of such secured
parties) and such other secured parties and of enabling the Attorney to
foreclose the first mortgage on the Ship granted in favor of the Attorney for
the benefit of such secured parties and to enforce and implement the other
securities given or delivered to the Attorney for the ratable benefit such
secured parties as security for the payment and repayment of monies due or owing
to the Attorney or such secured parties.

    

    THIS
POWER OF ATTORNEY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

    

    This
Power of Attorney may be executed in counterparts.

    

    IN
WITNESS WHEREOF each of the Owner and the Charterer has caused this Power of
Attorney to be duly executed and delivered on the day and year first above
written.

    

    [l], as
Charterer

    

    

    By:
______________________________

    Name:

    Title:

    

    

    

    [l], as Owner

    

    

    By:
______________________________

    Name:

    Title:

    

    

    

    

    

    

    (Add
proper notarial acknowledgment)

    

    APPENDIX
A

    FORM OF
COMPLIANCE CERTIFICATE

    

    APPENDIX
B

    FORM OF
EARNINGS ASSIGNMENT

    

    APPENDIX
C

    FORM OF
INSURANCE ASSIGNMENT

    

    APPENDIX
D

    FORM OF
MANAGER’S UNDERTAKING

    

    APPENDIX
E

    FORM OF
MORTGAGE

    

    APPENDIX
F

    FORM OF
NOTEex-10_39.htm

    
 

    
      TBS
INTERNATIONAL LIMITED & SUBSIDIARIES                     EXHIBIT
10.39

       

    

    

    

    

    LOAN
AGREEMENT

    

    by
and among

    

    AMOROS
MARITIME CORP.,

    LANCASTER
MARITIME CORP.

    AND

    CHATHAM
MARITIME CORP.,

    

    as
Borrowers,

    

    

    TBS
INTERNATIONAL LIMITED,

    

    as
Parent Guarantor, and

    

    

     AIG
COMMERCIAL EQUIPMENT FINANCE, INC.,

    

    as
Lender

    

    

    February
29, 2008

    

     

    

    THIS LOAN AGREEMENT made and
entered into this 29th day of February, 2008, is by and among Amoros Maritime
Corp., Lancaster Maritime Corp. and Chatham Maritime Corp., each a Marshall
Islands corporation having a mailing address of P.O. Box HM 2522, Hamilton HMGX,
Bermuda and a registered address of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Borrowers”; each, a
“Borrower”), TBS International Limited, a Bermuda corporation (“Parent
Guarantor”) and AIG Commercial Equipment Finance, Inc., a Delaware corporation
(together with its successors and assigns, “Lender”).WHEREAS, each of the Borrowers
has purchased, or entered into an agreement to respectively purchase, in its own
name and for its own account the Vessel listed next to its name on Schedule
1 hereto; andWHEREAS, each Borrower has
separately requested that Lender make a single advance loan directly to such
Borrower, to be used by the Borrower solely for (a) the purchase of that
Borrower’s Vessel and the payment of related costs approved for funding
hereunder or the reimbursement to Borrower for the purchase price of that
Borrower’s Vessel and the payment of related costs approved for funding
hereunder; andWHEREAS,
Lender has separately agreed with each Borrower to make a Loan to such Borrower,
subject to the terms and conditions hereinafter set forth.  Due to the
common ownership of Borrowers, and for ease of documentation, each Loan will be
governed by this Agreement and evidenced by a separate promissory note delivered
by the Borrower in connection with its Loan. NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt of which is hereby acknowledged, Borrowers and Lender hereby agree as
follows:ARTICLE I DefinitionsSection 1.01.  Definitions.  For all purposes
of this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:   (a) The terms defined in this
Article shall have the meanings assigned to such terms in this Article, and
include the plural as well as the singular; and(b) All accounting terms not
otherwise defined herein shall have the meanings assigned to them in accordance
with GAAP (as defined below).

    

    “ABS” means the American Bureau
of Shipping

    

    “Adjustment Period” means a
successive series of LIBOR Periods following the first Adjustment
Period.  The first Adjustment Period shall begin on the Initial
Funding Date, and continue until the last day of the calendar quarter in which
the Initial Funding Date occurs.  Thereafter, each successive
Adjustment Period during the term of the Loans shall be a period of one or more
months equal to the LIBOR Period chosen by Borrower under Section 2.06(b) prior
to the beginning of such Adjustment Period, commencing on the first day of each
Adjustment Period and ending on the last day of such LIBOR Period, resulting in
successive Adjustment Periods of one, two or three months each, depending on the
length of the applicable LIBOR Period.

     

    “Advance” means, individually,
each made by Lender to a Borrower in connection with the Loan. “Advances” shall
collectively refer to all Advances.“Affiliate” means any Person
(1) which directly or indirectly controls, or is controlled by, or is under
common control with a Person or a Subsidiary of a Person; (2) which directly or
indirectly beneficially owns or holds five percent (5%) or more of any class of
voting stock of a Person or any Subsidiary of a Person; or (3) five percent (5%)
or more of the voting stock of which is directly or indirectly beneficially
owned or held by a Person or a Subsidiary of a Person.  The term
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.“Agreement” means this Loan
Agreement (including all exhibits and other attachments hereto), as amended,
supplemented and modified from time to time in accordance with the terms
hereof.“Aggregate Loan Limit”
means $35,000,000.00.

    “Applicable Foreign
Jurisdictions” means the Republic of Panama, the Marshall Islands, the
Republic of the Philippines and Bermuda.

     

    “Applicable Law” means the
internal laws of the State of New York, without regard to the conflict of laws
principles of such state (or any other jurisdiction whose laws are mandatorily
applicable notwithstanding the parties=
choice of New York law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

     

    “Appraiser” means any of the
ship inspectors, surveyors, consultants or sale and purchase brokerage
companies, and any other independent inspector, surveyor, consultant or sale and
purchase ship brokerage company that the Lender may in its sole discretion,
approve from time to time for purposes of this Agreement.

    “Assignment of Charter Hire”
shall mean, for each Borrower, that certain Assignment of Charter Hire by
Borrower in favor of Lender, and that certain Assignment of Charter Hire by
Charterer, by the assignors party thereto, in favor of Lender, each related to
the Vessel owned by the Borrower and dated as of the date of Borrower’s Ship
Mortgage, as amended, supplemented and modified from time to time in accordance
with the terms thereof.  “Assignments of Charter Hire” shall
collectively refer to all Assignments of Charter Hire.“Assignment of Insurances”
shall mean, for each Borrower, that certain Assignment of Insurances by Borrower
and the other assignors party thereto in favor of Lender dated as of the date of
Borrower’s Ship Mortgage, as amended, supplemented and modified from time to
time in accordance with the terms thereof.  “Assignments of
Insurances” shall collectively refer to all Assignments of Insurances.“Attributable Indebtedness”
means, on any date, (a) in respect of any capitalized lease of any Person, the
capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, (b) in respect of any
synthetic lease obligation, the capitalized amount of the remaining lease or
similar payments under the relevant lease or other applicable agreement or
instrument that would appear on a balance sheet of such Person prepared as of
such date in accordance with GAAP if such lease or other agreement or instrument
were accounted for as a capitalized lease and (c) all synthetic debt of such
Person.

    

    “Audited Financial Statements”
means the audited consolidated balance sheet of Parent Guarantor and its
Subsidiaries for the fiscal year ended December 31, 2006, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year of Parent Guarantor and its Subsidiaries, including
the notes thereto.

    

    “Availability” means the
borrowing availability of Parent Guarantor and its Subsidiaries under the
revolving loan established under the BofA Credit Agreement or any future
revolving line of credit that replaces the BofA revolving loan under the BofA
Credit Agreement.

    

    “BofA” means Bank of America,
N.A.

    

    “BofA Credit Agreement” means that certain
Loan Agreement between Parent Guarantor, various Subsidiaries and BofA as
Administrative Agent dated July 31, 2006, as the same may be amended from
time to time.

    

    “Borrowers” means, Amoros
Maritime Corp., Lancaster Maritime Corp. and Chatham Maritime Corp., each
a  Marshall Islands corporation; each of the Borrowers individually,
together with its successors and assigns, a “Borrower.”

    

    “Business Day” means any day
other than a Saturday, Sunday or public holiday or the equivalent for banks in
New York.

    

    “Calendar Quarter” means the
four (4) periods consisting of three (3) calendar months each during a calendar
year commencing on January 1st, April
1st,
July 1st and
October 1st.

    

    “Cash Equivalents” means any
of the following types of Investments, to the extent owned by the Borrowers or
any of their Subsidiaries free and clear of all Liens (other than Liens created
under the Collateral Documents and other Liens permitted
hereunder):

    

    (a)
readily marketable obligations issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
having maturities of not more than 360 days from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;

    

    (b) time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any

    commercial
bank that (i) (A) is a Lender or (B) is organized under the laws of the United
States of America, any state thereof or the District of Columbia or is the
principal banking subsidiary of a bank holding company organized under the laws
of the United States of America, any state thereof or the District of Columbia,
and is a member of the Federal Reserve System, (ii) issues (or the parent of
which issues) commercial paper rated as described in clause (c) of this
definition and (iii) has combined capital

    and
surplus of at least $1,000,000,000, in each case with maturities of not more
than 90 days from the date of acquisition thereof;

    

    (c)
commercial paper issued by any Person organized under the laws of any state of
the United States of America and rated at least “Prime-1” (or the then
equivalent grade) by Moody’s or at least “A- 1” (or the then equivalent grade)
by S&P, in each case with maturities of not more than 180 days from the date
of acquisition thereof; and

    

    (d)
Investments, classified in accordance with GAAP as current assets of the
Borrowers or any of their Subsidiaries, in money market investment programs
registered under the Investment Company Act of 1940, which are administered by
financial institutions that have the highest rating obtainable from either
Moody’s or S&P, and the portfolios of which are limited solely to
Investments of the character, quality and maturity described in clauses (a), (b)
and (c) of this definition.

    

    

    “Charter Registration” means
the “dual” registry of each Vessel pursuant to the charter registry of the
Vessels by the Philippine Charterer in the Republic of the Philippines (the
“Charter Registration”).

    

    “Closing Date” means the date
of this Agreement.

    

    “Collateral” means,
collectively, the Vessels, all of each Borrower=s
property that is encumbered by a Ship Mortgage from time to time during the term
of this Agreement, all other collateral securing the Loan, and all substitutions
and replacements therefor, including all component parts and
appurtenances.  It is the intent of Borrower and Lender that the
Collateral secure the entire Loan made to the Borrower.

    

    “Consolidated EBITDA” means,
at any date of determination, an amount equal to Consolidated Net Income of
Parent Guarantor and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period, plus (a) the
following to the extent deducted in calculating such Consolidated Net Income
(and without duplication):  (i) Consolidated Interest Charges, (ii)
the provision for Federal, state, local and foreign income taxes payable, (iii)
depreciation and amortization expense, (iv) prepayment of fees and write-offs of
deferred financing fees in connection with the refinancing of the Existing
Credit Agreements, and (v) net losses from the sales of vessels as permitted
under this Agreement (in each case of or by Parent Guarantor and its
Subsidiaries for such Measurement Period) and minus (b) the
following to the extent included in calculating such Consolidated Net Income,
all net gains from the sales of vessels as permitted under this Agreement (in
each case of or by Parent Guarantor and its Subsidiaries for such Measurement
Period).

    

    “Consolidated Fixed Charge Coverage
Ratio” means, at any date of determination, the ratio of (a) the result
of (i) Consolidated EBITDA, less (ii) the sum of
(x) Federal, state, local and foreign income taxes paid in cash and (y)
Restricted Payments made, in each case, for the most recently completed
Measurement Period, to (b) the sum of (i) Consolidated Interest Charges for the
most recently completed Measurement Period, (ii) the aggregate principal amount
of all regularly scheduled principal payments or redemptions or similar
acquisitions for value of outstanding debt for borrowed money for the period of
twelve (12) consecutive months following such date of determination, but
excluding any principal payments to be made in respect of the “Revolving Credit
Facility” under the BofA Credit Agreement or any replacement revolving line of
credit facility.

    

    “Consolidated Funded
Indebtedness” means, as of any date of determination, for Parent
Guarantor and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business), (e) all
Attributable Indebtedness, (f) without duplication, all guarantees with respect
to outstanding Indebtedness of the types specified in clauses (a) through
(e) above of
Persons other than the Borrowers or any Subsidiary, and (g) all Indebtedness of
the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which a Borrower or a Subsidiary is
a general partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to such Borrower or such Subsidiary; provided, however, for purposes
of calculating the “Consolidated Leverage Ratio”, Consolidated Funded
Indebtedness shall not include any portion of Permitted New Vessel Construction
Indebtedness in an aggregate amount up to $150,000,000 at any time outstanding
and used to finance a multipurpose tweendeck or bulk carrier shipping vessel so
long as such vessel remains in the construction phase (i.e., such vessel has not
been delivered to Parent Guarantor or its Subsidiaries ready for fleet service
and operation).

    

    “Consolidated Interest
Charges” means, for any Measurement Period, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses in
connection with borrowed money (including capitalized interest but excluding
capitalized interest on Permitted New Vessel Construction Indebtedness) or in
connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, (b) all interest paid or
payable with respect to discontinued operations and (c) the portion of rent
expense under capitalized leases that is treated as interest in accordance with
GAAP, in each case, of or by Parent Guarantor and its Subsidiaries on a
consolidated basis for the most recently completed Measurement
Period.

    

    “Consolidated Leverage Ratio”
means, as of any date of determination, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA
of Parent Guarantor and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period.

    

    “Consolidated Net Income”
means, at any date of determination, the net income (or loss) of Parent
Guarantor and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period; provided that
Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary
losses for such Measurement Period, (b) the net income of any Subsidiary during
such Measurement Period to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such income is not
permitted by operation of the terms of its organization documents or any
agreement, instrument or Law applicable to such Subsidiary during such
Measurement Period, except that Parent Guarantor’ equity in any net loss of any
such Subsidiary for such Measurement Period shall be included in determining
Consolidated Net Income, and (c) any income (or loss) for such Measurement
Period of any Person if such Person is not a Subsidiary, except that Parent
Guarantor’ equity in the net income of any such Person for such Measurement
Period shall be included in Consolidated Net Income up to the aggregate amount
of cash actually distributed by such Person during such Period to Parent
Guarantor or a Subsidiary as a dividend or other distribution (and in the case
of a dividend or other distribution to a Subsidiary, such Subsidiary is not
precluded from further distributing such amount to Parent Guarantor as described
in clause (b)
of this proviso).

    

    “Consolidated Tangible Net
Worth” means, as of any date of determination, for Parent Guarantor and
its Subsidiaries on a consolidated basis, Shareholders’ Equity of Parent
Guarantor and its Subsidiaries on that date minus the Intangible Assets of
Parent Guarantors and its Subsidiaries on that date.

    

    “Disposition” or “Dispose”
means the sale, transfer, license, lease or other disposition (including
any sale and leaseback transaction) of any property by any Person (or the
granting of any option or other right to do any of the foregoing), including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated
therewith

    

    “Dollars” and the sign A$@
mean lawful money of the United States of America.

    

    “Event of Default” has the
meaning set forth in Section 7.01 hereof.

    

    “Equity Interests” means, with
respect to any Person, all of the shares of capital stock of (or other ownership
or profit interests in) such Person, all of the warrants, options or other
rights for the purchase or acquisition from such Person of shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or acquisition from such Person of such shares (or such
other interests), and all of the other ownership or profit interests in such
Person (including partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are outstanding on any date of determination.

    

    “Existing Credit Agreements”
shall have the meaning assigned in the BofA Credit Agreement.

    

    “Fair Market Value” means, in
relation to any Vessel, the fair market value of such Vessel determined by the
most recent Valuation delivered to Lender

    

    

    “Financial Statements” shall
have the meaning ascribed to such term in Section 5.01(a)(1)
hereof.

    

    “First Installment Date”
means, for each Note, July 1, 2008.

    

    “Funding Date” means, for each
Loan, the date on which such Loan is funded.

    

    “GAAP” means generally
accepted accounting principles as in effect in the United States of
America.

    

    “Guarantors” means Parent
Guarantor and all other Persons now or hereafter guarantying all or any part of
the Obligations, together with each such Person’s successors and assigns; each,
a “Guarantor.”

    

    “Guaranty Agreements” means
all present and future Guaranty Agreements executed by a Guarantor securing
payment of all or any part of the Obligations; each such agreement, a “Guaranty
Agreement.”  Each of the Borrowers shall execute and deliver a
Guaranty Agreement for the obligations of the other Borrowers hereunder to be
secured by the Ship Mortgage granted by such Borrower.

    

    “Indebtedness” means all items
of indebtedness which, in accordance with GAAP, would be deemed a liability of a
Person as of the date such indebtedness is to be determined, and shall also
include all indebtedness and liabilities of others assumed or guaranteed by such
Person or in respect of which such Person is secondarily or contingently liable,
whether by reason of any agreement to acquire such indebtedness, to supply or
advance sums, or otherwise.  Without limiting the scope of the
foregoing, such term shall include (a) all obligations for borrowed money, (b)
all obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations to pay the deferred purchase price of property
or services, except trade accounts payable arising in the ordinary course of
business, (d) all lease obligations which are required to be capitalized for
financial reporting purposes in accordance with GAAP, (e) all debts secured by
any mortgage, lien, pledge, attachment, charge, or other security interest or
encumbrance of any kind in respect of any property or upon the income or profits
therefrom, whether or not such debt is assumed by the party granting such
security, and (f) all debt of third persons guaranteed by a party.

    

    “Individual Loan Limit” means,
for each Loan and each Borrower, the amount listed next to the Borrower’s name
on Schedule 1 hereto.

    

    “Initial Funding Date” means
the earliest Funding Date hereunder.  If all Loans are funded on the
same day, that day shall be the Initial Funding Date.

    

    “Interest Rate” means, for
each Loan, a rate over each Adjustment Period equal to the greater of (a) five
percent per annum, or (b) LIBOR Rate PLUS the Margin per annum, adjusted for
each Adjustment Period effective as of the first day of each Adjustment
Period.  The Interest Rate is subject to the default rate of interest
now or hereafter set forth in each Note, which default rate be equal to the
lesser of (i) the Interest Rate plus 2.0%, or (ii) the maximum rate of interest
permitted by Applicable Law.   At no time will the Interest Rate
ever be less than five (5%) percent per annum.

    

    “Intangible Assets” means
assets that are considered to be intangible assets under GAAP, including
customer lists, goodwill, computer software, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount and capitalized research and development
costs.

    

    “Lender” AIG Commercial
Equipment Finance, Inc., a Delaware corporation, together with its successors
and assigns.  In the event of the assignment of any Note, references
to “Lender” as they may relate to a specific Borrower shall be solely to the
holder of such Borrower’s Note.

    

    “LIBOR Period” means a period
of one, two or three months, selected by Borrowers prior to the beginning of
each Adjustment Period to be the LIBOR Period applicable for such Applicable
Period, as more fully provided in Section 2.06(b) below.

    

    

    "LIBOR Rate" shall mean, for
each Adjustment Period, the rate per annum equal to the arithmetic mean
(rounded to the nearest 1/100th of 1%) of the offered rates for deposits in
Dollars with a term comparable to the applicable LIBOR Period selected for such
Adjustment Period under Section 2.06(b) (which shall be a period of one, two or
three months, as provided in Section 2.06(b)), as published by the British
Bankers' Association (on its internet website at www.bba.org.uk (or in
the event such rate is not so published, in such other nationally recognized
publication as Payee may specify) at approximately 11:00 a.m., London, England
time, on the day that is the last London Banking Day immediately preceding the
first London Banking Day of such Adjustment Period, with adjustments to be
effective as of the first day of such Adjustment Period; provided, however, that (i) if no
comparable term for an LIBOR Period is available, the LIBOR Rate shall be
determined using the weighted average of the offered rates for the two terms
most nearly corresponding to such LIBOR Period and (ii) if the British Banker’s
Association shall no longer publish such a rate, "LIBOR Rate" shall mean in
such other nationally recognized publication as Lender may
specify).

     

    “Lien” means any mortgage,
deed of trust, pledge, security interest, hypothecation, assignment, deposit
arrangements, encumbrance, lien (statutory or other), or preference, priority,
or other security agreement or preferential arrangement, charge, or encumbrance
of any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement), any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code, the maritime
finance laws of the Republic of Panama, the Ship Mortgage Act (46 U.S.C. §31301
et seq.) or any
comparable law of any jurisdiction to evidence any of the
foregoing.

    

    “Loan” means, for each
applicable Borrower, the loan made to it pursuant to Section 2.01 of this
Agreement.

    

    “Loans” collectively refers to
each and every Loan now or hereafter funded under this Agreement.

    

    “Loan Documents” means this
Agreement, the Notes, the Security Documents and all related documents,
agreements, consents, schedules and attachments in connection with the
Loan.  All Loan Documents must be in a form in compliance with this
Agreement and other acceptable to Lender in all respects.

    

    “Loan Parties” means,
collectively, Borrowers and Guarantors; each, a “Loan Party.”

    

    “Loan Value” means, at any
time, 60% of the Fair Market Value of the Collateral.

    

    “London Banking Day” means all
days on which banks are required to be open for business in London,
England.

    

    “Margin” means one and
75/100ths percent (1.75%), unless the sum of the Margin and the LIBOR Rate on
the first day of an Adjustment Period is less than five percent per annum, in
which case the Margin shall equal the difference between five percent per annum
and the LIBOR Rate in effect on such date, resulting in an Interest Rate of at
least five percent per annum at all times during the term of this
Agreement.

    

    “Material Adverse Change”
means, with respect to any Person, a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of such Person taken as a whole.

    

    “Material Adverse Effect”
means, with respect to any Person, a material adverse effect on the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of such Person taken as a whole.

    

    “Maturity Date” means, for
each Note, April 1, 2012.

    

    “Measurement Period” means, at
any date of determination, the most recently completed four fiscal quarters of
Parent Guarantor.

    

    “Net Present Rental Value”
means, as of any date, the aggregate net present value of all Rentals payable by
Parent Guarantor or any of its Subsidiaries to any Person (other than Parent
Guarantor or any of its other Subsidiaries) pursuant to any Operating Lease or,
without duplication, any charter of any vessel that, in each case, after giving
effect to any renewals or other extensions provided therein and in the absence
of any early termination, shall or would have a fixed remaining term of twenty
three months or more, in each case discounted to such date at a rate of 8.00%
per annum.

    

    “Note” means, with respect to
each Borrower, the Promissory Note evidencing the Loan to such Borrower,
executed by such Borrower in connection with the applicable Funding Date, in
each case made payable to the order of Lender, in the principal amount of the
applicable Loan, together with any amendments thereto, and renewals,
replacements, refinancings and consolidations therefor.

    

    “Notes” shall collectively
refer to the Borrowers’ Notes.

    

    “Obligations” means, all
indebtedness, obligations and liabilities of Borrowers under the Notes or the
other Loan Documents, whether on account of principal, interest, indemnities,
fees (including, without limitation, attorneys=
fees, remarketing fees, origination fees, collection fees and all other
professionals=
fees), costs, expenses, taxes or otherwise.

    

    “Operating Lease”  of
any Person means any lease or other arrangement conveying the right to use
personal property (including, for the avoidance of doubt, vessels) to such
Person and for which the obligation of such Person for Rentals is not required
to be capitalized on a balance sheet of the lessee in accordance with
GAAP.

    

    “Panama Registry” means the
Directorate General of Consular and Maritime Affairs of the Republic of Panama
or any successor office or officer fulfilling the role of registering ships and
recording ship mortgages in the Republic of Panama.

    

    “Parent Guarantor” means TBS
International Limited, a Bermuda corporation.

    

    “Permitted Liens” means the
Liens on the Collateral permitted under Section 6.04 hereof.

    

    “Person” means any individual,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, corporation, entity or any government or any agency
or political subdivision thereof.

    

    “Philippine Charterer” means,
collectively, Bothelo Shipping Corporation or any other Person approved in
writing by Lender to bareboat charter the Vessel to permit the Charter Registry
of the Vessels in the Republic of the Philippines.

    

    “Permitted New Vessel Construction
Indebtedness” means Indebtedness of Subsidiaries of Parent Guarantor that
are not Loan Parties in connection with the construction
of  multipurpose tweendeck or bulk carrier shipping
vessels.

    

    “Registered Public Accounting
Firm” has the meaning assigned under the securities laws of the United
States of America and shall be independent of Parent Guarantor as prescribed in
such securities laws.

    

    “Qualified Cash” means, as of
any date of determination, the amount of cash and Cash Equivalents which is
freely transferable and not subject to a Lien (other than the Lien in favor of a
secured lender under the Loan Documents or pursuant to the BofA Credit
Agreement), pledge, security interest, encumbrance, escrow or cash collateral
arrangement or any other restriction on its use.

    

    “Rentals” means and includes,
as of the date of any determination thereof, all fixed payments (including as
such all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by a Person, as
lessee or sublessee under a lease of real or personal property, exclusive of any
amounts required to be paid by such Person, directly or indirectly (whether or
not designated as rents or additional rents), on account of maintenance,
repairs, insurance, taxes and similar charges incurred by such lessee or
sublessee.  Fixed rents under any so-called “percentage leases” shall
be computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.

    

    “Security Documents” means the
Guaranty Agreements, the Assignments of Charter Hire, the Assignments of
Insurances, the Ship Mortgages and all other documents now or hereafter
constituting security for the Loans.

    

    “Shareholders’ Equity” means,
as of any date of determination, consolidated shareholders’ equity of Parent
Guarantor and its Subsidiaries as of that date determined in accordance with
GAAP.

    

    “Ship Mortgage” shall mean,
with respect to each Borrower, that certain Panamanian First Naval Mortgage to
be executed by or on behalf of Borrower in favor of Lender encumbering the
Vessel, to be recorded in the office of the Panama Registry,
as amended, supplemented and modified from time to time in accordance with the
terms thereof.  “Ship Mortgages” shall collectively refer to the
Borrowers’ Ship Mortgages.

    

    “Subsidiary” means, as to any
Person, a corporation of which shares of stock having ordinary voting power
(other than stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other manager of
such corporation are at the time owned, or the management of which is otherwise
controlled, directly, or indirectly, through one or more intermediaries, or
both, by such Person, every Subsidiary collectively, the
“Subsidiaries.”

    

    “Synthetic Debt” means, with
respect to any Person as of any date of determination thereof, all obligations
of such Person in respect of transactions entered into by such Person that are
intended to function primarily as a borrowing of funds (including any minority
interest transactions that function primarily as a borrowing) but are not
otherwise included in the definition of “Indebtedness” or as a liability on the
consolidated balance sheet of such Person and its Subsidiaries in accordance
with GAAP.

    

    “Synthetic Lease Obligation”
means the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property (including sale and leaseback transactions), in each
case, creating obligations that do not appear on the balance sheet of such
Person but which, upon the application of United States federal bankruptcy laws
to such Person, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).

    

    “Taxes” shall mean any present
or future taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of any kind, that may now or hereafter be imposed
or asserted by any jurisdiction or any political subdivision thereof or any
taxing authority therein and all interest, penalties or similar liabilities with
respect thereto.

    

     “Total Outstanding” means, at
any time, the sum of the loan balances outstanding under the Loan Agreement at
any point in time.

    

    “Valuation” means, with
respect to the Vessel, a valuation of such Vessel made (at the expense of the
Borrowers) in Dollars at any relevant time by an Appraiser with or without
physical inspection of such Vessel (as Lender may require in its sole
discretion), on the basis of a sale for prompt delivery for cash at arms’ length
on normal commercial terms as between a willing seller and a willing buyer, free
of any existing charter or other contracts of employment, and shall be
conclusive

    

    

    “Vessel” means, for each
Borrower, the vessel listed next to such Borrower’s name on Schedule 1
hereto.  The term “Vessel” shall include, without limitation, all on
board equipment, machinery and supplies.  “Vessels” shall collectively
refer to all of the Borrowers’ Vessels.

    ARTICLE
II

    Amount, Terms and Repayment
of the Loan

    

    Section 2.01.  Loan.   Lender
individually agrees with each Borrower that Lender will make a single advance
term loan to such Borrower, on the terms and subject to the conditions set forth
herein, and in the Loan Documents and the Security Documents, in an amount not
to exceed the Individual Loan Limit applicable to such Borrower.  The
Loan shall be disbursed to Borrower in accordance with the following provisions
of this Article II.

    

    Section 2.02.  Closing;
Disbursement of Proceeds.  The closing shall
be held at the offices of Lender or Lender=s
counsel, or such other location as Borrower and Lender may mutually agree upon,
on the Closing Date.  Disbursement of Loan proceeds where the Borrower
is already the owner of the Vessel that is the subject of the Loan shall be by
bank wire transfer to an account of Borrower or any other Person designated to
Lender in writing by Borrower or by check payable to the order of Borrower or
any other Person designated to Lender in writing by Borrower delivered to
Lender.  Disbursement of Loan Proceeds where the proceeds are to be
used to purchase the Vessel that is the subject of the Loan will be in
accordance with the written disbursement instructions of Borrower, the seller of
the Vessel and any applicable mortgagee.  Notwithstanding any
provision of this Agreement to the contrary, Lender shall in no event be
obligated to make any Advance after March 31, 2008.

    

    Section 2.03.  The
Notes.  Each Loan and
each Borrower’s obligation to repay its Loan shall be evidenced by and repayable
with interest in accordance with the terms of such Borrower’s Note in the form
attached hereto as Schedule
2.03.  Principal and interest payable under each Note shall be
repaid in accordance with the repayment terms set forth in the
Note.  Each Note will be payable in sixteen (16) quarterly
installments, with the first quarterly installment payable on the First
Installment Date, and on the first day of each quarter annual period
thereafter.  The first eight (8) installments shall consist of
quarterly payments of accrued interest together with a principal payment of 7.5%
of the original principal balance of the Note (resulting in the payment of 60%
of the principal balance of the note through the first eight quarterly
payments), followed by eight (8) installments, which shall consist of quarterly
payments of accrued interest together with a principal payment of 5.0% of the
original principal balance of the Note (resulting in the payment of 40% of the
principal balance of the Note with the second eight quarterly
payments).  A final payment under each Note in the amount of all
remaining principal, interest and other amounts due thereunder will be payable
on the applicable Maturity Date.  Each Note provides for a default
rate of interest.

    

    Section 2.04.  Loan
Accounting.  Lender shall
maintain, in accordance with its usual and customary practice, an account or
accounts evidencing the outstanding indebtedness of each Borrower under its Note
and the amounts of principal and interest payable and paid from time to time by
Borrower under the Note.  In any legal action or proceeding respecting
this Agreement or the Note, the entries made in such account or accounts shall
be conclusive evidence of the existence, amounts, and terms of the obligations
of a Borrower therein or thereon recorded, absent manifest error.

    

    Section 2.05.  Interest.  Each Borrower
shall pay interest on the amounts loaned to Borrower hereunder, in accordance
with the terms hereof and of the Borrower’s Note.  Interest shall
accrue on each Note commencing on the date of the advance of the Loan evidenced
by such Note and until such time as the entire principal balance thereof is
fully repaid, together with all other obligations of the applicable Borrower
hereunder or under the Note, and on such other terms as are specified herein and
in the Note.   Interest on all Loans will accrue at the Interest
Rate, adjusted for each Adjustment Period as of the first day of each Adjustment
Period. Any interest payable under a Note shall be computed as specified in the
Note.  The Note provides for a default rate of interest upon the
occurrence of an Event of Default.

    

    Section 2.06.  Changes
to LIBOR Rate.   (a)   The
LIBOR Rate in effect hereunder shall be increased or decreased, as the case may
be, effective as of the first day of each Adjustment Period during the term of
this Agreement, in the case of each Adjustment Period, by an amount equal to any
increase or decrease in the LIBOR Rate from the immediately preceding Adjustment
Period, as more fully set forth in each Note.

    

    (b)    Prior
to the commencement of each Adjustment Period, Borrowers shall have the right to
select a period of one month, two months or three months as the LIBOR Period in
effect for such Adjustment Period.   Such election must be made
by written notice to Lender received at least five (5) London Banking Days prior
to the beginning of the Adjustment Period.  If Borrowers fail to
timely select a LIBOR Period prior to the commencement of an Adjustment Period,
a LIBOR Period of three months shall be deemed to be the LIBOR Period in effect
for the Adjustment Period.  Borrower may modify a prior selection of a
LIBOR Period for an Adjustment Period that has not yet accrued, provided that it
do so in writing no less than five London Banking Days prior to the Adjustment
Period in question.

    

    Section 2.07.  Payment.  Except as Lender
or any holder of the Note may otherwise direct in writing, each Borrower agrees
to make all payments directly to Lender or to the holder of the Borrower’s Note
from time to time at such address as Lender or such holder shall specify and in
accordance with the terms of payment set forth in the Borrower’s
Note.  All payments of principal and interest due under a Note and of
any other amounts due hereunder shall be made to Lender or the holder of the
Note in immediately available funds by not later than 2:00 p.m. Central Time on
the due date thereof without any deduction or offset
whatsoever.  Whenever any payment to be made under this Agreement or
under a Note shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day.

    

    Section 2.08.  Voluntary
Prepayment.  Each Borrower
shall have the right to prepay the Borrower’s Note, in whole or in part, in
accordance with the terms of the Borrower’s Note.  Each Borrower
agrees to the prepayment fee set forth in such Borrower’s Note.  At
the time of any prepayment, the Borrower making such prepayment shall pay to
Lender such amount as will compensate Lender for any loss, cost, expense,
penalty, claim or liability incurred by Lender as a result of such prepayment
which requires the Lender to prematurely break any related swap, interest rate
hedge or other derivative arrangement.  The Lender shall have no obligation
to purchase or enter into any swap or other derivative arrangement in connection
with funding or maintaining the Loans.

    

    Section 2.09.  Prepayment
Resulting from Acceleration.  If a holder of a
Note shall elect as one of its remedies acceleration of payment of the balance
owing under the Note pursuant to Section 7.02 hereof, the applicable Borrower
shall pay a premium determined in accordance with the computation set forth in
Section 2.08, above, and in the Borrower’s Note as to all amounts then payable
under the Borrower’s Note.

    

    Section 2.10.  Use of
Proceeds.  The proceeds of
each Loan shall be used by the Borrower under such Loan solely for the following
purposes: (a) in the case of Loans to a Borrower which has acquired the Vessel
through the use of self-generated funds prior to the Funding Date, to first
satisfy all loans to Borrower or for which Borrower is directly or indirectly
responsible, sufficient to cause Borrower to be in compliance with the
requirements of Section 6.09 hereof, and thereafter, to reimburse Borrower for
amounts paid to purchase the Vessel using its own capital or assets; (b) in the
case of Loans for which Borrower has not acquired the Vessel through the use of
self-generated funds prior to the Funding Date, to pay the purchase price due in
connection with the purchase of the Vessel.

    

    Section 2.11.  Taxes,
Assessments, etc.  Each Borrower
agrees to pay all amounts owing under its Note, this Agreement, or the other
Loan Documents free and clear of and without deduction for any present or future
Taxes, and (a) that if it is prevented by operation of law from paying any
Taxes, then the interest rate or fees required to be paid under the Borrower’s
Note or the other Loan Documents shall be increased by the amount necessary to
yield to the holder of the Note interest or fees at the rates specified in the
Note, this Agreement or the Other Loan Documents after provision for the payment
of all such Taxes and without taking into account any tax benefits accruing to
the Lender from such payment; (b) that it shall hold Lender and any holder of
Borrower’s Note harmless from and against any liabilities with respect to any
Taxes (whether or not properly or legally asserted); and (c) to provide Lender
or such other holder of its Note with the original or a certified copy of
evidence of the payment of any Taxes by it, as the holder may reasonably
request, or, if no Taxes have been paid to provide to the holder, at the
holder’s request, with a certificate from the appropriate taxing authority or an
opinion of counsel acceptable to Lender or such other holder stating that no
Taxes are payable.

    

    Section 2.12.  Term.  This Agreement
shall remain in effect so long as any sums are owing or any duties or
obligations remain to be performed by any Borrower to or for the benefit of the
holder of any Note under the Loan Documents, the Security Documents or any
documents or agreements relating hereto or thereto.

    

    Section 2.13  Currency
of Payments.  All payments
required to be made hereunder, or any of the Loan Documents, shall be payable
solely and exclusively in United States dollars.

    

    

    ARTICLE
III

    Conditions of
Lending

    

    Section 3.01.  Conditions
Precedent to each Loan.

    

    (a)         The
obligation of Lender to make the Loan to a Borrower hereunder is subject to the
condition precedent that Lender shall have received, on or before the Closing
Date (unless otherwise indicated), all of the following, each dated (unless
otherwise indicated) as of the Closing Date, in form and substance satisfactory
to Lender in its sole discretion.  References in this Section 3.01 (a)
to Borrower, Note and Vessel shall be to the Borrower requesting the Loan, and
such Borrower’s Note and Vessel:

    

    (1)             the
Note evidencing the Loan, properly executed on behalf of Borrower on or prior to
the Funding Date of such Advance and dated the Closing Date;

    

    (2)             all
Security Documents and Loan Documents to which Borrower is a party or otherwise
applicable to Borrower’s Loan, properly executed on behalf of Borrower, the
Guarantors and other parties thereto, as applicable; the form of the Security
Documents for each Advance hereunder shall be substantially in the form of the
Security Documents for the initial Advance hereunder, with such changes as may
be reasonably requested by Lender;

    

    (3)             copies
of the Articles of Incorporation and Bylaws or other organizational documents of
Borrower, its Guarantors and their constituent entities, as applicable,
certified by an authorized officer of such entity as being true and correct
copies thereof;

    

    (4)             a
signed copy of a certificate of an authorized officer of Borrower and its
Guarantors which shall certify the names of the officers of such entity
authorized to execute and deliver this Agreement, the Note, the Security
Documents, the Loan Documents to which Borrower or its Guarantors are a party,
and other documents or certificates to be delivered pursuant to the Loan
Documents or the Security Documents, together with the true signatures of such
officers.  Lender may conclusively rely on such certificate until
Lender shall receive a further certificate of an authorized officer of such
entity canceling or amending the prior certificate and submitting the signatures
of the officers named in such further certificate;

    

    (5)  the opinions
with respect to Borrower and its Guarantors set forth in Schedule
3.01(a)(5) hereto.

    

    (6)             a
copy of the appropriate resolutions and consents of Borrower and its Guarantors
approving the Loan and the Loan Documents, certified by the Secretary (or other
appropriate official) of such party as being a true and correct copy
thereof;

    

    (7)             a
good standing certificate with respect to Borrower and its Guarantors, issued as
of a recent date by the Secretary of State or other appropriate and authorized
official of such party=s
respective jurisdiction of incorporation;

    

    (8)             subordinations
or releases, as deemed appropriate by counsel for Lender, executed by any
creditors of Borrower, as well any Person having a security interest in the
assets of Borrower which would include the assets covered by the Security
Documents, containing terms and conditions reasonably satisfactory to counsel
for Lender;

    

    (9)             Guaranty
Agreements executed by Borrower’s Guarantor(s);

    

    (10)               Copies
of the bills of sale for the Vessel, reflecting Borrower as the purchaser
thereunder, together with evidence of the filing of such bill of sale in the
appropriate records of the Panama Registry;

    

    (11) evidence of the proper
registry of the Vessel in the provisional maritime registry of the Panama
Registry as reflected in registration certificates for the Vessel, and the
acceptance of such registry by the applicable authorities in the office of the
Panama Registry, including the Certificate of Provisional Registry for the
Vessel and  Patente Provisional de Navegacion;

    

    (12)  copy of the
ownership and registration certificate for the Vessel issued by the applicable
Panamanian authorities;

    

    (13)  duly executed
and filed Security Documents establishing in Lender, as determined by
Lender=s
counsel, a first preferred mortgage in the Vessel, to be received by Lender and
recorded in the  Panamanian Registry prior to the disbursement of any
Loan proceeds; subject to no adverse liens, claims or encumbrances (whether or
not perfected or preferred) it being agreed that Lender is under no obligation
to disburse any proceeds until it receives satisfactory evidence of its first
preferred mortgage position on the Vessel;

    

    (14)             
evidence that all insurance policies required under any of the Loan Documents or
the Security Documents and all other documents which may be required thereunder,
are in full force and effect;

    

    (15)  evidence
satisfactory to Lender that all required licenses have been obtained by Borrower
and the Philippine Charterer, as applicable, and are in full force and effect to
operate the Vessel according to her intended use, including, but not limited to,
the current operation of the Vessel;

    

    (16)               such
other documents, certifications and acknowledgments respecting the Loan
Documents or the Security Documents as Lender shall reasonably
request;

    

    (17)             
evidence satisfactory to Lender that no event has occurred and is continuing, or
would result from the Advance, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both;

    

    (18)             evidence
satisfactory to Lender that there shall not have occurred any Material Adverse
Change, as determined by Lender, in the business, financial condition or results
of operations of Borrower or any of its Guarantors, or the existence or value of
the Collateral provided by Borrower, or any event, condition or state of facts
which would reasonably be expected to have a Material Adverse Effect, as
determined by Lender;

    

    (19)             evidence
satisfactory to Lender that no federal, state or local tax liens have been filed
against any Loan Party, other than for taxes that are being diligently contested
in good faith by such party by appropriate proceedings promptly instituted and
for which an adequate reserve is being maintained in accordance with
GAAP;

    

    (20)             
evidence satisfactory to Lender that no suits are pending, and no unsatisfied
judgments have been rendered, against any Loan Party, in either event that could
have a Material Adverse Effect on such Loan Party;

    

    (21)             
evidence satisfactory to Lender that Lender=s
Liens on the Collateral constitute first priority Liens in and to the Collateral
and that no other Liens other than the Permitted Liens affect the
Collateral;

    

    (22)             
evidence satisfactory to Lender that no Loan Party is in default under the Loan
or any other indenture or loan or credit agreement or any other agreement, lease
or instrument to which it is a party or by which it or its properties may be
bound or affected;

    

        (23)  evidence
satisfactory to Lender that (i) the Vessel is classed as follows, without
outstanding recommendations or notations, and otherwise in compliance with the
Ship Mortgage:

    

    Panama

    Navigation                      Classification

    Vessel
Name                                           Patente
No.                                   Society                              Class

    

    HOPI
PRINCESS

    (ex
African
Sanderling)                                           36772
-PEXT                                   ABS                              Maltese
+ A1, E,

    Maltese + AMS, ACCU

    

    ZUNI
PRINCESS

    (ex
Ypermachos)                                           36778-PEXT                                   Nippon
Kaiji

    Kyokei                                    NS
MNS

    MOHAVE
MAIDEN

    
      	
               
      

            	
              (ex
      Diasozousa)

            	
                            36776-PEXT

            	
              Nippon
      Kaiji

            

    

    
      	
               
      

            	
              Kyokei

            	
              NS
      MNS

            

    

    

    

    and (ii)
all required licenses have been obtained by Borrower and Guarantors, as
applicable, and are in full force and effect to operate the Vessels according to
their intended use, including, but not limited to, the current operation of the
Vessels;

    

        (24) evidence satisfactory to
Lender that the cash or revolver availability required by Section 6.10(b) of
this Agreement is in place;

    

        (25)    Lender
or its agent shall have conducted an inspection of the Vessels which is
satisfactory to Lender;

    

         (26)  Lender
confirms that additional financing commitments of at least $55,000,000 have been
made to Parent Guarantor and its Subsidiaries.

    

         (27)   Lender’s
receipt of Borrowers’ arrangement fee of $175,000.00.

    

    (b)  Lender’s waiver
of any condition with respect to any Loan for a particular Borrower shall not be
deemed absent express written agreement to constitute a waiver of such condition
as it may apply to any other Borrower.

    

    

    ARTICLE
IV

    Representations and
Warranties

    

    Each
Borrower, severally, and its Guarantor(s), with the knowledge that Lender is
relying thereon in executing this Agreement and making the Loan to such
Borrower, represent and warrant the following to Lender as of the date hereof,
as of the date of each Advance hereunder, and for the entire term of this
Agreement:

    

    Section 4.01.  Corporate
Existence and Power.  Each of Borrower
and its Guarantors is duly formed, validly existing and in good standing under
the laws of its jurisdiction of formation, and is duly licensed or qualified to
transact business in all jurisdictions where the character of the property owned
or leased or the nature of the business transacted by such party makes such
licensing or qualification necessary.  Each of Borrower and its
Guarantors has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents and the Security
Documents.

    

    Section 4.02.  Authorization
of Borrowing; No Conflict as to Law or Agreements.  The execution,
delivery and performance by (x) each of Borrower’s Guarantors of the Guaranty
Agreement and other Loan Documents to which it is a party, and (y) Borrower of
the Loan Documents and the Security Documents to which its is a party, and the
borrowing thereunder, as the case may be, have been duly autho­rized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the stockholders (or holders of any other equity interest) of
Borrower or any Guarantor, or any authorization, consent or approval by any
domestic or foreign governmental department, commission, board, bureau, agency
or instrumentality, (ii) violate any provision of any law, rule or regulation or
of any order, writ, injunction or decree presently in effect having
applicability to Borrower or any Guarantor, or of the organizational documents
of Borrower or any Guarantor, or (iii) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower or any Guarantor is a party or by which it
or its properties may be bound or affected.

    

    Section 4.03.  Legal
Agreements.  The Loan
Documents and the Security Documents constitute the legal, valid and binding
obligations of Borrower and its Guarantors as applicable, enforceable against
such parties in accordance with their respective terms.

    

    Section 4.04.  Financial
Condition.  Borrower and its
Guarantors shall furnish to Lender the financial statements required to be
furnished to Lender in accordance with the terms of Section 5.01
hereof.  Such financial statements fairly present the financial
condition of the applicable Persons on the dates thereof and the results of
their operations for the periods then ended, and were prepared in accordance
with GAAP.  There are no liabilities of Borrower or any Guarantor,
fixed or contingent, which are material and are not reflected in the financial
statements or the notes thereto.

    

    Section 4.05.  Adverse
Change.  There has been no
Material Adverse Change as to Borrower or any Guarantor since the date of the
latest finan­cial statement referred to in Section 4.04 hereof.

    

    Section 4.06.  Labor
Disputes; Acts of God.  Neither the
business nor the properties of Borrower or any of its Guarantors  is
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance) having a Material
Adverse Effect.

    

    Section 4.07.  Litigation.  Except as set
forth on Schedule
4.07 hereto, there are no actions, suits or proceedings pending or, to
the knowledge of Borrower, threatened against or affecting Borrower, or any of
its Guarantors or any Affiliate of Borrower or any of its Guarantors or the
properties of Borrower or any of its Guarantors or such Affiliate before any
court or governmental department, commission, board, bureau, agency or
instrumen­tality, domestic or foreign, which, if determined adversely to
Borrower, any of its Guarantors or such Affiliate, would have a Material Adverse
Effect on the financial condition, properties, or operations of Borrower or any
of its Guarantors and Borrower=s
or any such Guarantor=s
ability to perform hereunder and under the Loan Documents or the Security
Documents.

    

    Section 4.08.  No
Defaults on Outstanding Judgments or Orders.  Borrower and its
Guarantors have satisfied or appealed all judgments against any of them, and
Borrower and its Guarantors are not in default with respect to any judgment,
writ, injunction, decree, rule, or regulation of any court, arbitrator, or
federal, state, municipal, or other governmental authority, commission, board,
bureau, agency, or instrumentality, domestic or foreign.

    

    Section 4.09.  Compliance
with Laws and Regulations.  Each of Borrower
and its Guarantors, in the conduct of its business affairs, has complied in all
material respects with the requirements of all applicable laws and regulations,
noncompliance with which would have a Material Adverse Effect on such party and
such party=s
ability to perform under the Loan Documents or the Security
Documents.

    

    Section 4.10.  Title to
Properties.  Borrower and its
Guarantors have good, valid and marketable title to all their material
properties and assets, including, without limitation in the case of Borrower at
the time of the funding of its Loan, the Vessel, and all material property
reflected in the financial statements of Borrower and Guarantors referred to in
Section 4.04 above, free from any Liens, except as described in such
financial statements.

    

    Section 4.11.  Adverse
Fact.  No fact is known
to Borrower or any Guarantor, as of the date hereof, which has had or might in
the future have a Material Adverse Effect on Borrower or any Guarantor which has
not been previously disclosed to Lender by Borrower or Guarantors.

    

    Section 4.12.  Liens.  The assets of
Borrower, including, without limitation, the Vessel, are not and will not be
subject to any Lien or the terms of any security agreement or similar instrument
during the term hereof, other than any Lien which may be granted on part or all
of such assets to the holder of Borrower’s Note, and, if any, other Permitted
Liens.

    

    Section 4.13.  Accuracy
of Information.  All information
supplied to Lender by or on behalf of the Loan Parties with respect to any
properties of the Loan Parties (whether prior to entering into this Agreement,
in this Agreement, or after entering into this Agreement), is and shall be true
and correct in all material respects; and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading.

    

    Section 4.14.  Taxes.  Borrower and its
Guarantors have filed or caused to be filed all tax returns which are required
to be filed by them pursuant to all applicable federal, state and local laws,
regulations, or orders.  Borrower and its Guarantors have paid, or
made provision for the payment of, all taxes which have or may have become due
pursuant to said returns or otherwise or pursuant to any assessment received by
Borrower or any of its Guarantors, other than taxes that are being diligently
contested in good faith by such Person by appropriate proceedings promptly
instituted and for which an adequate reserve is being maintained by such Person
in accordance with GAAP.  The charges, accruals, and reserves in
respect of income taxes on the books of Borrower are
adequate.  Borrower and its Guarantors know of no proposed material
tax assessment against them and no extension of time for the assessment of
federal, state or local taxes of Borrower or any of its Guarantor is in effect
or has been required or applied for, except as disclosed in the financial
statements furnished to Lender in accordance with Section 4.04
hereof.

    

    Section 4.15.  Other
Agreements.  Neither Borrower
nor any of its Guarantors is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter or corporate restriction which could have a Material Adverse Effect on
such party, or on the ability of such party to carry out its obligations under
the Loan Documents or the Security Documents.  Borrower and its
Guarantors are not in default in any material respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in the BofA Credit Agreement, or any other agreement or instrument
material to its business to which it is a party.

    

    Section 4.16.  Ownership
of Borrower and Westbrook Holdings Ltd.  Each Borrower is
a wholly owned subsidiary of Westbrook Holdings Ltd., a Marshall Islands
corporation.  Westbrook Holdings Ltd is a wholly owned subsidiary of
Parent Guarantor.

    

    Section 4.17.  Operation
of Business.  Borrower and its
Guarantors possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, required by law to conduct their
business substantially as now conducted and as presently proposed to be
conducted, and Borrower is not in violation of any applicable laws or
regulations, or valid rights of others, with respect to any of the
foregoing.

    

    Section 4.18 Stamp,
Duty, Documentary and Withholding Taxes.  No stamp, duty or
documentary taxes or charges imposed by any government or any taxing authority
are payable on or in connection with the Agreement, the Borrower’s Note, the
Loan Documents to which Borrower is a party or any related
documents.  Borrower has paid or shall pay when due all applicable
deductions or withholdings for or on account of any Taxes, levies, duties, fees,
deductions or withholding, restrictions or conditions of any nature imposed by
or on behalf of the Applicable Foreign Jurisdictions or any taxing authority
whatsoever on the payments by Borrower to Lender.

    

    Section 4.19  No
Exchange Approvals.  There are no exchange approvals required
for the execution of the Agreement, the Borrower’s Note, or the other Loan
Documents to which Borrower is a party and the Borrower will be permitted to
purchase sufficient freely transferable United States dollars for the payment of
all amounts due under such agreements and documents.

     

    Section 4.20 Civil
Acts; No Immunity.  Borrower is subject to civil and commercial
law with respect to its obligations under this Agreement. Each of Borrower’s
Guarantors is subject to civil and commercial law with respect to its
obligations under any guaranty to which it is a party. Each of the execution,
delivery and performance of this Agreement and the other Loan Documents by
Borrower and the execution, delivery and performance of any Security Documents
by any of Borrower’s Guarantors constitutes a commercial act as opposed to a
governmental act. Neither Borrower nor any of its Guarantors (nor the property
of each) enjoy, in the courts or under the laws of the Applicable Foreign
Jurisdictions any right of immunity from suit, setoff or attachment or execution
on a judgment in respect of the obligations of Borrower or any of its Guarantors
under this Agreement or any other Loan Document.

     

    Section 4.21  No
Presence or Registration Required of Lender.  The Lender will
not be deemed to be a resident of the Applicable Foreign Jurisdictions as a
result of the Loan made to the Borrower hereunder, and the Lender will not be
required to be licensed or in any way qualified to do business in the Applicable
Foreign Jurisdictions in order to enforce its rights under the Agreement or any
Loan Document.

     

    Section 4.22  Legal
Effect.  Except for (i) any registration requirements necessary
to reflect the transfer and sale of the Vessel to the Borrower, and (ii) the
recordation of the Ship Mortgage over the Vessel, no Loan Document is required
to be filed or recorded with any court or any other authority in any of the
Applicable Foreign Jurisdictions to ensure the validity of the obligations of
the Borrower and the admissibility in evidence of the Loan
Documents.

    

    Section 4.23  Dual
Registry.  Subject to the terms of this Agreement, Lender
consents to the Charter Registration.  Upon the occurrence of any
Event of Default, the Lender may terminate the Charter
Registration.  In such event, (i) the registration of the Vessel with
the Panama Registry shall no longer be suspended, (ii) the Charter Agreement
with the Republic of the Philippines shall be canceled and terminated, (iii) the
registration of the Vessel with the Panama Registry shall be in full force and
effect in the manner it existed prior to the Charter Registration, and (iv)
Lender shall be entitled to all rights and remedies under the Loan
Documents.

    

    

    ARTICLE
V

    Affirmative
Covenants

    

        Each Borrower
severally agrees as follows.  So long as the Borrower’s Note shall
remain unpaid or Borrower shall have any unfulfilled or undischarged obligations
or duties under the Loan Documents, the Security Documents or any related
agreements, Borrower will comply with the following
requirements.  References in this Article V to Note shall be to the
Borrower’s Note, to Vessel shall be the Vessel applicable to such Borrower, and
to Collateral shall be the Collateral provided directly by
Borrower.

    

    Section 5.01.  Financial
Statements; Other Information.  Borrower will deliver to
Lender:

    

    (a) (1)           
as soon as available, but in any event within 180 days after the end of each
fiscal year of Parent Guarantor (commencing with the fiscal year ending December
31, 2007, a consolidated balance sheet of Parent Guarantor and its Subsidiaries
as at the end of such fiscal year, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP, such
consolidated statements to be audited and accompanied by (i) a report and
opinion of a Registered Public Accounting Firm of nationally recognized standing
reasonably acceptable to Lender which report and opinion shall be prepared in
accordance with generally accepted auditing standards and applicable Securities
Laws and shall not be subject to any “going concern” or like qualification or
exception or any qualification or exception as to the scope of such audit or
with respect to the absence of any material misstatement and (ii) if required
under Sarbanes-Oxley, an opinion of such Registered Public Accounting Firm
independently assessing Parent Guarantor’ internal controls over financial
reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing
Standard No. 2, and Section 404 of Sarbanes-Oxley expressing a conclusion that
contains no statement that there is a material weakness in such internal
controls, except for such material weaknesses as to which the Lender does not
object;

     

             (2)
as soon as available, but in any event within 90 days after the end of each of
the first three fiscal quarters of each fiscal year of Parent Guarantor
(commencing with the fiscal quarter ending March 31, 2008), a consolidated
balance sheet of Parent Guarantor and its Subsidiaries as at the end of such
fiscal quarter, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal quarter and for the portion
of Parent Guarantor’ fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, certified by the chief executive officer, chief
financial officer, treasurer or controller of Parent Guarantor as fairly
presenting the financial condition, results of operations, shareholders’ equity
and cash flows of Parent Guarantor and its Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of
footnotes;

     

    (b)                immediately
after the commencement thereof, notice in writing of all litigation and of all
proceedings before any state or federal court or any governmental or regulatory
agency, bureau or commission affecting Borrower or any of its Guarantors, or any
Subsidiary or Affiliate of Borrower or any of its Guarantors of the type
described in Section 4.07 hereof or which seek a monetary recovery against such
Party in excess of Two Million Dollars ($2,000,000.00), whether or not covered
by insurance, along with, if requested in writing by Lender, an opinion of
Borrower’s, Guarantor’s or such Subsidiary’s or Affiliate’s counsel regarding
the circumstances underlying and perceived merit of such litigation or
proceedings;

    

    (c)         
as promptly as practicable (but in any event not later than five (5) Business
Days) after Borrower obtains knowl­edge of the occurrence of any event which
constitutes an Event of Default (as hereinafter defined) or would constitute an
Event of Default with the passage of time or the giving of notice or both,
notice of such occurrence, together with a detailed statement by an officer of
Borrower of the steps being taken by Borrower to cure such Event of Default or
monitor such event that is not an Event of Default;

    

    (d)         within
ninety days of the end of each fiscal quarter of Parent Guarantor, a compliance
certificate in substantially the form attached hereto as Schedule 5.01 (d);
and

    

    (e)                from
time to time and promptly upon the request of Lender, such data, certificates,
reports, statements, docu­ments or further information or assurances
regarding (i) the Loan Documents or the Security Documents to which Borrower is
a party, or (ii) the business, assets, liabilities, financial condition,
results of operations or business prospects of the Borrower and/or its
Guarantors as Lender may request, in each case in form and substance, and
certified in a manner, satisfactory to Lender.

    

    Section 5.02.  Compliance
with Laws and Regulations; Payment of Taxes and Claims.   Borrower
and its Guarantors shall, in the conduct of their business, comply with all
applicable laws, rules, regulations and orders (such compliance to include,
without limitation, paying and discharging promptly, and in all events before
the same become delinquent, all taxes, claims, assessments and governmental
charges imposed upon it or upon its property, except to the extent contested in
good faith), and shall comply with and perform and observe all material
covenants, provisions and conditions to be performed and observed on the part of
Borrower or such Guarantors in connection with all other loan or credit
agreements.

    

    Section 5.03.  Insurance.  Borrower shall
obtain and maintain insurance on the Vessel in accordance with the terms of
Schedule
5.03 hereto.  In addition, as to other business properties
owned by Borrower, Borrower shall obtain and maintain insurance with insurers
believed by Borrower to be responsible and reputable and reason­ably
acceptable to Lender, in such amounts and against such risks as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which Borrower operates or as may be required by
any applicable laws, orders or regulations or as may reasonably be requested by
Lender.  Borrower shall promptly provide Lender with evidence of such
insurance coverage.  Additionally, Borrower shall provi­de not
less than thirty (30) days advance written notification to Lender in the event
of cancellation or material change in the terms of such coverage.

    

    Section 5.04.  Preservation
of Corporate Existence.  Borrower and its
Guarantors shall preserve and maintain their corporate existence and all of
their respective rights, privileges, licenses, patents and franchises; provided,
however, that Borrower and any of its Guarantors will obtain Lender’s consent to
any change in the status of its corporate existence (whether by merger,
dissolution or otherwise), it shall not be required to preserve any such rights,
privileges, licenses, patents, and franchises if (i) its Board of Directors or
other governing body shall determine that the preservation thereof is no longer
desirable or necessary in the conduct of the current business of Borrower or
Guarantor and (ii) the loss thereof is not disadvantageous in any material
respect to the holder of Borrower’s Note.

    

    Section 5.05.  Inspection.  At any reasonable
time and from time to time, upon prior notice to Borrower, Lender or any agents
or representatives of Lender shall be allowed to examine and make and prepare
copies of and abstracts from the records and books of account of, and visit and
inspect the Collateral and the other properties of, Borrower and the other Loan
Parties and to discuss the affairs, finances and accounts of Borrower or any
other Loan Party with any officer of such Person.

    

    Section 5.06.  Maintenance
of Properties, Etc.  Borrower shall
maintain and preserve the Collateral and all of its other properties necessary
or useful in the proper conduct of its current business in good mechanical
condition and running order, ordinary wear and tear excepted.

    

    Section 5.07.  Maintenance
of Records and Books of Account.  Borrower and each
of its Guarantors shall keep accurate records and books of their accounts, in
accordance with GAAP consistently applied.

    

    Section 5.08.  Discharge
of Indebtedness.  Borrower and each
of its Guarantors shall promptly pay and discharge any and all Indebtedness and
lawful claims which, if unpaid, might become a lien or charge upon the
Collateral, except such as may in good faith be contested or disputed or for
which arrangements for deferred payment have been made, provided appropriate
reserves are maintained, to the satisfaction of Lender, for the eventual payment
thereof.

    

    Section 5.09.  Uninsured
Loss.  Borrower shall
give Lender written notice of any uninsured loss suffered by Borrower or any
Guarantor through fire, theft, liability or property damage in excess of an
aggregate of Two Hundred Fifty Thousand Dollars ($250,000.00) for any Borrower
or an aggregate of Five Hundred Thousand Dollars ($500,000.00) for any
Guarantor.

    

    Section 5.10.  Ownership
of Borrower and Parent Guarantor.  Parent Guarantor
shall own 100% of all the issued and outstanding shares of Westbrook Holdings
Ltd. (“Westbrook”).  Westbrook shall own 100% of the all of the issued
and outstanding shares of each Borrower.  There shall be no sale,
transfer, pledge, donation, hypothecation, alienation or other encumbrance of
any of the outstanding shares of Borrower or Westbrook, other than a transfer of
the shares of Westbrook to either Parent Guarantor or a wholly owned subsidiary
of Parent Guarantor.

    

    Section 5.11.  Operation
of the Vessel.  The Vessel and
all related equipment shall at all times be operated and maintained in
accordance with good industry practice.

    

    Section
5.12     Valuation.  Borrowers will
deliver to Lender as soon as available, but in any event within 30 days after
the end of each fiscal year a certificate executed by an  Officer
setting forth the Fair Market Value of the Vessels as of such fiscal year end
and attaching the most recent Valuation of the Vessels as of such
date.

    

    If for
any reason at any time the Total Outstandings shall exceed the Loan Value, the
Borrowers shall immediately prepay the Loans in an aggregate amount equal to
such excess; provided that, the Borrowers shall not be required to make such
prepayment of the Loans so long as (A) no Default or Event of Default shall have
occurred or then be continuing and (B) within 10 days of any such event (or, in
the case of any Disposition of a Vessel, prior to any such Disposition), (x) the
Borrowers pledge additional Vessels (to be accepted by Lender in its sole
discretion)s having an appraised Fair Market Value sufficient to eliminate such
deficiency or (y) the Borrowers cause another Subsidiary of Parent Guarantor
(which may be an Excluded Subsidiary) to join this agreement and such Person
pledges additional Vessels having an appraised Fair Market Value sufficient to
eliminate such deficiency, in each case, such pledge to be in a manner and
pursuant to documentation satisfactory in all respects to the Lender, and to
include a Valuation of such additional Vessels and documentation and information
acceptable to Lender.

    

    

    

    ARTICLE
VI

    Negative
Covenants

    

        Each Borrower
severally agrees as follows.  So long as the Borrower’s Note shall
remain unpaid or Borrower shall have any unfulfilled or undischarged obligations
or duties under the Loan Documents, the Security Documents or any related
agreements, Borrower will comply with the following
requirements.  References in this Article VI to “Note” shall be to the
Borrower’s Note, to “Vessel” shall be the Vessel applicable to such Borrower,
and to “Collateral” shall be the Collateral provided directly by
Borrower.

    

    Section 6.01.  Sale of
Assets. Borrower
will not sell, lease, assign, transfer or otherwise dispose of the Vessel or any
of the other Collateral or any assets being used in Borrower’s business, except
that, with respect to assets other than the Vessel, such restriction shall not
be applicable to any disposi­tion in the ordinary course of business of any
assets or retired property not used or useful in such party=s
business.

    

    Section 6.02.  Consolidation
and Merger.  Borrower will not
consolidate with or merge into any Person, or permit any other Person to merge
into it, or acquire (in a transaction analogous in purpose or effect to a
consolidation or merger) all or substantially all the assets of any other
Person.

    

    Section 6.03.  Restrictions
on Nature of Business.  The Loan Parties
will not engage in any line of business materially different from that presently
engaged in by such Loan Parties.

    

    Section 6.04.  Liens and
Encumbrances.  Borrower will not
permit or suffer to exist or to be created any Lien upon the Collateral,
except:

    

    (a)         such
Lien as may be granted to Lender;

    

    
      	
               
      

            	
              (b)

            	
              Liens
      for taxes, assessments, or other governmental charges not yet due or which
      are being contested in good faith by appropriate action promptly initiated
      and diligently conducted, if such reserve as shall be required by GAAP
      shall have been made therefor;

            

    

    

    
      	
               
      

            	
              (c)

            	
              Liens
      of lessors (subordinated), carriers, warehousemen, mechanics, laborers and
      materialmen arising by law in the ordinary course of business for sums
      either not yet due or being contested in good faith by appropriate action
      promptly initiated and diligently conducted, if such reserve as shall be
      required by GAAP shall have been made therefor;
  and

            

    

    

    
      	
               
      

            	
              (d)

            	
              With
      respect to the Vessel, Liens in an aggregate amount not to exceed Two
      Hundred Fifty Thousand Dollars ($250,000.00) (i) for crew’s wages (1) for
      thirty (30) days after the termination of a voyage, or (2) which shall
      then be contested in good faith by appropriate action promptly initiated
      and diligently conducted, if such reserve as shall be required by GAAP
      shall have been made therefor, (ii) for general average (1) which are
      unclaimed, (2) for thirty (30) days after having been claimed, or (3)
      which shall then be contested in good faith by appropriate action promptly
      initiated and diligently conducted, if such reserve as shall be required
      by GAAP shall have been made therefor, (iii) for salvage, whether
      voluntary or contract, (1) which are unclaimed, (2) for thirty (30) days
      after having been claimed, or (3) which shall then be contested in good
      faith by appropriate action promptly initiated and diligently conducted,
      if such reserve as shall be required by GAAP shall have been made
      therefor, (iv) for the wages of a stevedore when employed directly by
      Borrower, or the operator, master or agent of the Vessel, (v) for repairs
      or with respect to any changes made in the Vessel (1) which are unclaimed,
      (2) for thirty (30) days after having been claimed, or (3) which shall
      then be contested in good faith by appropriate action promptly initiated
      and diligently conducted, if such reserve as shall be required by GAAP
      shall have been made therefor, and (vi) for necessaries (1) which are
      unclaimed, (2) for thirty (30) days after having been claimed, or (3)
      which shall then be contested in good faith by appropriate action promptly
      initiated and diligently conducted, if such reserve as shall be required
      by GAAP shall have been made
therefor.

            

    

    

    Section 6.05.  Loans by
Borrower.  Borrower will not
loan funds to any Person, whether by way of loan, stock purchase, capital
contribution or otherwise, other than loans to any Affiliate.

    

    Section 6.06.  Contingent
Liability; Investments.  Borrower shall,
at all times during the term hereof, not incur contingent liabilities (as
determined in accordance with GAAP and applicable standards of the Financial
Accounting Standards Board) for third-party obligations.  Borrower
will not acquire by purchase of stock or by purchase of assets in exchange for
cash, shares of capital stock, or other securities of Borrower or any other
Person, all or any substantial division or portion of the assets and business of
any other Person.

    

    Section 6.07.  Dividends.  During the term
hereof, Borrower will not: (i) declare, or pay, to any shareholders (or other
equity holders) of Borrower, Parent Guarantor or any parent of either (whether
directly or indirectly) any dividends of cash or stock; (ii) purchase, redeem,
retire, or otherwise acquire for value any of its capital stock now or hereafter
outstanding; make any distribution of assets to its shareholders as such,
whether in cash, assets, or in obligations of Borrower, (iii) allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption, or retirement of any shares of its capital
stock; or (iv) make any other distribution by reduction of capital or otherwise
in respect of any shares of its capital stock, to the extent any such action
would cause a violation of any of the financial covenants set forth in Section
6.10 hereof or any other term of this Agreement.

    

    Section 6.08.  Vessel
Operations.  Borrower will not
operate any Vessel, or permit any Vessel to be operated, in (a) any area
excluded from coverage by any insurance policy or coverage in effect with
respect to the Vessel or required by the terms of this Agreement or any other
Loan Document, including without limitation, the war risk coverage described
therein, or (b) the territorial waters of any jurisdiction which is or may
during the term of the Loan be subject to any trade restriction, trade or other
embargo, or similar sanctions, instituted from time to time by the government of
the United States of America or any other government having appropriate
jurisdiction over the Vessel, or by the United Nations, including without
limitation, any and all trade restrictions now or hereafter administered by the
United States Treasury Department’s Office of Foreign Assets Control; provided
that a Vessel may be located, operated or used in the territorial waters of any
jurisdiction with respect to which the government of the United States of
America has issued trade restrictions to the extent that the owner and/or
operator of the Vessel, (a) as required by applicable law, has obtained all
required valid and effective licenses and permits from all United States
governmental authorities permitting the location, operation and/or use of such
Vessel in such jurisdiction and (b) operated such Vessel in strict compliance
with such licenses and permits, and otherwise in accordance with applicable
law.

    

    Section
6.09  Single
Purpose Entity Restrictions.

     

    (a) The
Borrower’s business and purpose shall consist solely of the
following:

     

    
      	
              (1)  

            	
              To
      engage in the ownership of the Vessel, where the Vessel is placed on
      bareboat charter and operated by third persons;
  and

            

    

     

    
      	
              (2)  

            	
              to
      engage in such other lawful activities permitted to corporations by the
      applicable laws and statutes for such entities of the Marshall Islands as
      are incidental, necessary or appropriate to the
  foregoing.

            

    

     

    (b) So
long as any portion of the Loan remains outstanding, the Borrower shall
not:

     

    
      	
               
      

            	
              (i)

            	
              engage
      in any business or activity other than those permitted hereby or own any
      assets other than the Vessel;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              borrow
      money or incur any Indebtedness, other than normal trade accounts and
      charter obligations incurred in the ordinary course of business, or in
      favor of Lender pursuant to this Agreement;
or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              institute
      proceedings to be adjudicated bankrupt or insolvent, or consent to the
      institution or bankruptcy or insolvency proceedings against it, or file a
      petition seeking or consenting to reorganization or relief under any
      applicable federal or state law relating to bankruptcy, or consent to the
      appointment of a receiver, liquidator, assignee, trustee, sequestration
      (or other similar official) of the Borrower or a substantial part of
      property of the Borrower, or make any assignment for the benefit of
      creditors, or admit in writing its inability to pay its debts generally as
      they become due, or take any action in furtherance of any such
      action.

            

    

     

    (c)  All
property owned by the Borrower shall be owned by the Borrower as an entity and,
insofar as permitted by applicable law, no shareholder, officer or director
shall have any ownership interest in any Borrower property in its individual
name or right and, each share or other ownership interest in the Borrower shall
be personal property for all purposes.

     

    Section
6.10   Financial
Covenants.  Borrower
covenants and agrees that for the term of this Agreement that Parent Guarantor
and its consolidated Affiliates and Subsidiaries shall not violate, on a
consolidated basis, the following financial covenants:

    

    (a) Minimum Consolidated
Tangible Net Worth.   Permit Consolidated Tangible Net
Worth at any time to be less than the sum of (i) $235,000,000.00 plus (ii) an amount
equal to 75% of the Consolidated Net Income earned in each full fiscal quarter
ending after September 30, 2007 (with no deduction for a net loss in any
such fiscal quarter) and (iii) an amount equal to 100% of the aggregate
increases in Shareholders’ Equity of Parent Guarantor and its Subsidiaries
after September 30, 2007 by reason of the issuance and sale of Equity
Interests of Parent Guarantor or any Subsidiary (other than issuances to Parent
Guarantor or a wholly-owned Subsidiary), including upon any conversion of debt
securities of Parent Guarantor into such Equity Interests.

     

    (b) Minimum Cash
Liquidity.  For each calendar month ending on or after the date
hereof, Qualified Cash, plus Availability in
an average daily amount during such calendar month not less than
$15,000,000.00.

     

    (c) Maximum Consolidated
Leverage Ratio.  Permit the Consolidated Leverage Ratio of Parent
Guarantor and its Subsidiaries at any time to be greater than
3.00:1.00.

     

    (d) Minimum Consolidated Fixed
Charge Coverage Ratio.  Permit the Consolidated Fixed Charge
Coverage Ratio as of the end of any fiscal quarter and for the period of four
fiscal quarters then ending of Parent Guarantor to be less than
1.50:1.00

     

    

    Unless
otherwise required by Lender as a result of a Default or a Material Adverse
Change in a Borrower’s or Guarantor’s financial position, compliance will be
tested on a quarterly basis on each March 31st, June 30th, September 30th and
December 31st, based on the quarterly consolidated financial statements of
Parent Guarantor.

    

    

    

    

    

    ARTICLE
VII

    Events of Default, Rights
and Remedies

    

    Section 7.01.  Events of
Default.  AEvent
of Default@,
wherever used herein, means any one of the following events:

    

    (a)                default
by any Borrower in the payment of any principal of or interest on the Borrower’s
Note or any other amount for which Borrower is obligated when it becomes due
hereunder or under the Borrower’s Note or any other Loan Documents or the
Security Documents to which it is a party (whether at maturity, by reason of
notice of prepayment or acceler­ation or otherwise) and any such default
shall continue for ten (10) days unremedied; or

    

    (b)         
default in the performance, or breach, of any covenant or agreement of any
Borrower or other obligor in the Loan Documents or the Security Documents to
which it is a party or a default in the performance, or breach, of any covenant
or agreement of any Guarantor or other Loan Party in this Agreement, the
Security Documents or the Guaranty Agreement, and (other than with respect to a
default under Section 7.01(d) or 7.01(p) hereof and other defaults for which no
cure period, or a shorter cure period, is provided in the applicable Loan
Document or Security Document) any such default or breach that is capable of
being cured is not cured within thirty (30) days after notice thereof from
Lender to any Borrower; or

    

    (c)  default
(including the expiration, without cure, of any applicable grace periods) in the
performance, or breach (including the expiration, without cure, of any
applicable grace periods) , of any covenant or agreement of any Borrower or
Guarantor in the BofA Credit Agreement or any other loan or credit agreements
(other than the Loan Documents and the Security Documents) or any note issued
pursuant thereto or default (including the expiration, without cure, of any
applicable grace periods) in the payment of any sum due under any such agreement
or any note issued pursuant thereto (whether payment is due at maturity, by
reason of notice of prepayment or acceleration or otherwise); or

    

    
      	
               
      

            	
              (d)

            	
              (I)  any
      Borrower or Guarantor shall be adjudicated a bankrupt or insolvent, or
      admit in writing its inability to pay its debts as they mature, or make an
      assignment for the benefit of creditors; or any Borrower or Guarantor
      shall apply for or consent to the appointment of any receiver, trustee, or
      similar officer for it or for all or any substantial part of its property;
      or such receiver, trustee or similar officer shall be appointed without
      the application or consent of any Borrower or Guarantor and such
      appointment shall continue undischarged for a period of thirty (30) days;
      or any Borrower or Guarantor shall institute (by petition, application,
      answer, consent or otherwise) any bankruptcy, insolvency,
      reorganizat­ion, arrangement, readjustment of debt, dissolution,
      liquidation or similar proceeding relating to it under the laws of any
      jurisdiction; or any such proceeding shall be instituted (by petition,
      application or otherwise) against any Borrower or Guarantor and shall
      remain undismissed for a period of thirty (30) days; or any judgment,
      writ, warrant of attachment or execution or similar process shall be
      issued or levied against a substantial part of the property of
      any  Borrower or Guarantor and such judgment, writ, or similar
      process shall  not be released, vacated or fully bonded within
      thirty (30) days after its issue or levy;
or

            

    

    

    (II)             if
any of the following events occur:  any Subsidiary or Affiliate of any
Borrower shall be adjudicated a bankrupt or insolvent, or admit in writing its
inability to pay its debts as they mature, or make an assignment for the benefit
of creditors; or any Subsidiary or Affiliate of any Borrower shall apply for or
consent to the appointment of any receiver, trustee, or similar officer for it
or for all or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of such
Subsidiary or Affiliate of any Borrower and such appointment shall continue
undischarged for a period of thirty (30) days; or any Subsidiary or Affiliate of
any Borrower shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganizat­ion, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating to
it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against any such Subsidiary
or Affiliate of a Borrower and shall remain undismissed for a period of thirty
(30) days; or any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of the property of
any Subsidiary or Affiliate of a Borrower and such judgment, writ, or similar
process shall not be released, vacated or fully bonded within thirty (30) days
after its issue or levy; or

    

    (e)         
any representation or warranty made by any Loan Party in the Loan Documents or
the Security Documents, or in any certificate, instrument, financial statement
or other statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, shall prove to be false, incorrect or misleading
in any material respect; or

    

    
      	
               
      

            	
              (f)

            	
              (I)

            	
              Any
      Borrower or Guarantor suffers a final judgment against it which, within
      thirty (30) days from the date such judgment is entered, shall not have
      been discharged or execution thereof stayed pending appeal unless (i) such
      judgment in the reasonable opinion of Lender is adequately covered by
      insurance; or (ii) (x) adequate accruals with respect to such judgment
      have been established in accordance with GAAP, or (y) a bond in form and
      substance satisfactory to Lender in its sole discretion is issued in order
      to ensure payment of the judgment, and the aggregate amount of all such
      judgments at any time during the term hereof, not adequately covered by
      insurance is not at any time in excess of Two Hundred Fifty Thousand
      Dollars ($250,000.00); or

            

    

    

    (II) if
any of the following events occur:  any Subsidiary or Affiliate of any
Borrower suffers a final judgment against it which, within thirty (30) days from
the date such judgment is entered, shall not have been discharged or execution
thereof stayed pending appeal unless (i) such judgment in the reasonable opinion
of Lender is adequately covered by insurance; or (ii) (x) adequate accruals with
respect to such judgment have been established in accordance with GAAP, or (y) a
bond in form and substance satisfactory to Lender in its sole discretion is
issued in order to ensure payment of the judgment, and the aggregate amount of
all such judgments at any time during the term hereof, not adequately covered by
insurance is not at any time in excess of Two Hundred Fifty Thousand Dollars
($250,000.00); or

    

    (g)         
any other AEvent
of Default@
under and as defined in any of the Security Documents; or

    

    (h)    a
hypothecation of any beneficial interest in any Borrower or Guarantor, without
the prior written consent of Lender; or

    

    (i)         any
provision of any Loan Document or Security Document to which any of the Loan
Parties is a party shall for any reason cease to be valid and binding on such
Loan Party, or any of the Loan Parties shall so assert in writing;
or

    

    (j)         any
of the Loan Parties suffers or sustains a Material Adverse Change;
or

    

    (k)         any
Federal tax lien is filed of record against any of the Collateral of any of the
Borrowers or any of the Loan Parties and is not bonded or discharged within ten
(10) Business Days, other than a lien for taxes that are being diligently
contested in good faith by such Loan Party by appropriate proceedings promptly
instituted and for which an adequate reserve is being maintained by such Loan
Party in accordance with GAAP; or

    

    (l)         any
of the Loan Parties shall deny or disaffirm its obligations under any of the
Loan Documents or any Liens granted in connection therewith; or any Liens
granted on any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated by this
Agreement; or

    

    (m)                any
Loan Document or any Security Document shall for any reason (other than pursuant
to the terms hereof) cease to create a valid and perfected first priority lien
on the Collateral purported to be covered hereby or thereby, subject to the
Permitted Liens, if any; or

    

    (n)         the
Ship Mortgage shall for any reason cease to create a valid and perfected first
preferred mortgage on the Vessel, subject to the Permitted Liens, if any;
or

    

    (o)         there
is a change in the ownership of any equity interests in violation of Section
5.10; or

    

    (p)         failure
of any Borrower to maintain any insurance required under this Agreement or any
other Loan Document.

    

    Section 7.02.  Rights
and Remedies Upon Event of Default.  Upon the
occurrence of an Event of Default or at any time thereafter until such Event of
Default is cured to the satisfaction of Lender, Lender may exercise any or all
of the following rights and remedies:

    

    (a)                Lender
may declare the entire unpaid principal amount of the Note(s) held by it, all
interest accrued and unpaid thereon, and all other amounts payable to it under
this Agreement (including, but not limited to, any prepayment amount payable
under Section 2.09 hereof) to be forthwith due and payable, whereupon such
Note(s), all such accrued interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by each
Borrower;

    

    (b)                Lender
may proceed to protect and enforce this Agreement and the Note(s) held by it by
suit or suits or proceedings in equity, at law or in bankruptcy, and whether for
the specific performance of any covenant or agreement herein contained or in
execution or aid of any power herein granted or for the recovery of judgment for
the indebtedness hereby owed, or for the enforcement of any other proper legal
or equitable remedy available under applicable law; and

    

    (c)                Lender
may exercise any other rights and remedies available to it by law or under the
other Loan Documents or the Security Documents held by it.

    

    Section 7.03.  Status
Quo.  In case Lender
shall have proceeded to enforce any right under this Agreement, and such
proceedings shall have been discon­tinued or abandoned for any reason or
shall have been determined adversely to Lender, then, and in every such case,
the applicable Borrower(s) and Lender shall be restored to their former
positions and rights hereunder.

    

    

    ARTICLE
VIII

    Miscellaneous

    

    Section 8.01.  No
Waiver; Cumulative Remedies.  No failure or
delay on the part of Lender in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by the Loan Documents or available under law.

    

    Section 8.02.  Amendments,
Etc.  No amendment,
modification, termination or waiver of any provision of this Agreement, the
Notes or any other Loan Documents or consent to any departure by the Loan
Parties therefrom shall be effective unless the same shall be in writing and
signed by the authorized representatives of Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.  Any such amendment, modification,
termination or waiver shall bind and benefit the Loan Parties and Lender and
their respective successors and assigns, subject, in the case of the Loan
Parties, to the limitations contained in Section 8.07 hereof.  No
notice to or demand on the Loan Parties in any case shall entitle any Loan Party
to any other or further notice or demand in similar or other
circumstances.

    

    Section 8.03.  Right of
Setoff.  As collateral
security for the repayment of Borrower=s
obligations and liabilities under this Agreement and the Note, each Borrower
hereby grants to the holder of Borrower’s Note and its successors and assigns
the right to apply, at any time and from time to time should an Event of Default
exist hereunder, any and all obligations owing from such Lender to Borrower
toward repayment of any sums owing from Borrower to such Lender hereunder or
under the Borrower’s Note.

    

    Section 8.04.  Addresses
for Notices, Etc.  Except as
otherwise expressly provided herein, all notices, requests, demands and other
communications provided for hereunder shall be in writing and sent by certified
mail (return receipt requested) or nationally recognized overnight courier
service delivered to the applicable party at its address indicated
below.  Notwithstanding the foregoing, any notice to an address
outside the continental United States may be sent by facsimile.

    

    If to any Borrower or
Guarantor:

    

    Suite
306

    Commerce
Building

    One
Chancery Lane

    Hamilton
HM 12

    Bermuda

    

    Mailing
Address:

    

    P.O. Box
HM 2522

    Hamilton
HMGX

    Bermuda

    

    Attention:  William
J. Carr

    Telephone:  1441
295 9230

    Fax: 1441
295 4957

    

     

    with a
copy to:

     

    

    TBS
Shipping Services, Inc.

    612 East
Grassy Sprain Road

    Yonkers,
NY 10710

    Attention:
Ferdinand Lepere

    Telephone:
(914) 961-1000

    Fax:
(914) 961-5121

     

    And

    

    Cardillo
& Corbett

    29
Broadway

    New York,
NY 10006 USA

     

    Attention:  Tulio
R. Prieto

    Telephone:  (212)
344-0464

    Fax:  (212)
797-1212

    

    

    If to
Lender:

    

    AIG
Commercial Equipment Finance, Inc.

    5700
Granite Parkway, Suite 850

    Plano,
Texas  75024

    Attention: 
Operations Manager

    

    with a
copy to:

     

    AIG
Commercial Equipment Finance, Inc.

    5700
Granite Parkway, Suite 850

    Plano,
Texas  75024

    Attention: 
Legal Department

    

    or, as to
each party, at such other address or to the attention of such other
representative as shall be designated by such party in a written notice to the
other party provided in accordance with the terms of this
Section.  All such notices, requests, demands and other communications
shall, when mailed or transmitted (postage or other charges pre-paid), be
effective three (3) Business Days after  deposited in the mails or one
(1) Business Day after deposited with the applicable courier service, addressed
as aforesaid.  Facsimile notices shall be effective upon confirmed
facsimile transmission by the sender.  Notice to any one Borrower or
Guarantor shall constitute notice to all Borrowers and Guarantors.

    

    Section 8.05.  Costs,
Expenses and Indemnification.  Each Borrower
agrees to pay all costs and expenses in connection with the execution and
enforcement of the Loan Documents and the Security Documents to which it is a
party or any other documents to be delivered by it hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for Lender
with respect thereto and with respect to advising Lender as to its rights and
responsibilities under this Agreement.  Each Borrower agrees to pay on
demand all losses, costs and expenses, if any (including reasonable counsel fees
and expenses), incurred in connection with the preservation of any rights of
Lender under, or the enforcement of, or legal advice in respect of, the rights
or responsibilities of Lender under this Agreement with respect to Borrower,
that Borrower’s Note, the Security Documents to which such Borrower is a party,
and any other documents delivered hereunder including, without limita­tion,
losses, costs and expenses (other than taxes, fees, duties and assessments for
which Borrower is not responsible under Section 2.11 hereof) sustained by Lender
as a result of any failure by such Borrower to perform or observe its
obligations contained herein or in such Borrower’s Note or any other document
related thereto.  Each Borrower further agrees to indemnify and hold
harmless Lender from and against any and all damages, losses, liabilities, costs
and expenses resulting from, related to or connected with this Agreement, the
Borrower’s Note, the Security Documents to which it is a party and any document
or instrument delivered in connection herewith or the transactions contemplated
thereby.

    

    Section 8.06.  Execution
in Counterparts.  This Agreement
may be executed separately by the Loan Parties and Lender in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original and all of which, taken together, shall constitute but one and
the same instrument.

    

    Section 8.07.  Binding
Effect, Assignment.  This Agreement
shall be binding upon and inure to the benefit of the Loan Parties and Lender
and their respective successors and assigns, except that the Loan Parties may
not assign their rights hereunder or thereunder or any interest herein or
therein without the prior written consent of Lender.  Borrowers shall
not be responsible for any costs incurred by Lender in connection with any such
assignment by Lender of this Agreement or any interest in and to the
Notes.

    

    Section 8.08.  Governing
Law.  THE VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE NOTE SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.

    

    Section 8.09.  Judicial
Proceedings.   THE LOAN
PARTIES AND THE LENDER AGREE THAT ANY ACTION OR PROCEEDING ARISING UNDER OR
RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT  MAY BE COMMENCED IN
ANY FEDERAL OR STATE COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE LOAN PARTIES HEREBY
IRREVOCABLY SUBMIT TO, AND ACCEPT FOR THEMSELVES AND IN RESPECT OF THEIR
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF EACH SUCH COURT AND
AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER, OR THAT THE AGREEMENT OR THE SUBJECT MATTER THEREOF OR THE TRANSACTION
CONTEMPLATED HEREBY OR THEREBY MAY NOT BE ENFORCED IN OR BY SUCH
COURT.  THE PARTIES AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  EACH
LOAN PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE LOAN PARTY AT
THE ADDRESS FOR IT SPECIFIED IN SECTION 8.04 HEREOF.  NOTHING HEREIN
SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN
PARTY IN ANY OTHER JURISDICTION, SUBJECT IN EACH INSTANCE TO THE PROVISIONS
HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.

    

    Section 8.10. Consent
to Loan Participation and Assignments.  Each Loan Party
agrees and consents to Lender’s sale, transfer, assignment or syndication,
whether now or later, of one or more interests in the Loans or any one or more
of the Notes to one or more parties, whether related or unrelated to
Lender.  Lender may provide, without any limitation whatsoever, to any
such parties or potential parties, any information or knowledge Lender may have
about any Loan Party or about any other matter relating to the Loan, and each
Loan Party hereby waives any rights to privacy it may have with respect to such
matters.  Each Loan Party additionally waives any and all notices of
sale of participation interests or assignment, as well as all notices of any
repurchase of such interests. In the event of a sale of one or more Notes, the
holder of such transferred Note(s) will not have any rights against any
Borrowers other than the Borrower(s) that were the maker(s) of the Note(s)
acquired by such holder, or any interest any Collateral of such other Borrowers
whose Notes are held by another Lender, absent an express guaranty by the other
Borrowers with respect to the transferred Note(s), which continues with the
consent of all Note holders following the date of assignment.  Each
Loan Party agrees to execute and deliver to Lender or any other party involved
any in such sale, transfer or assignment, any and all documents requested by
Lender or such other party.  The requested documents may include
documents to re-define which Notes are cross-collateralized.

    

    Section 8.11.  Severability
of Provisions.  Any provision of
this Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

    

    Section 8.12.  Survival
of Agreements, Representations and Warranties, Etc.   All warranties,
representations and agreements made by any Loan Party herein or in the Notes or
by any person in any certificate or other document or instrumen­t required
to be delivered in connection with this Agreement shall be considered to have
been relied upon by Lender and shall survive the issuance and delivery to Lender
of the Notes regardless of any investiga­tion made by Lender or on its
behalf, and shall terminate only upon the full and final payment and performance
by such Borrower of the Borrower’s Loan.  All statements in any such
certificate or other document or instrument shall constitute representations and
warranties by Borrower hereunder.

    

    Section 8.13.  Several
Liability of Borrowers.  The representations and liabilities of
each Borrower hereunder and any other Loan Documents to which a Borrower and
other Borrowers may be a party shall be several in nature, and no Borrower shall
have personal liability for any representations or liabilities of another
Borrower under this Agreement, the other Borrower’s Note, or Loan Documents or
Security Documents to which another Borrower may be a party, absent an express
guaranty of such obligations.  Nothing in this section shall be deemed to
modify the cross-default provisions of this Agreement or the other Loan
Documents, or to limit a Borrower’s liabilities under representations and
warranties that include matters pertaining to other Borrowers, notwithstanding
that the other Borrowers have independent and separately enforceable liability
to Lender for such matters. 

    

    Section 8.14.  Headings.  Article and
Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

    

    Section 8.15.  Jury
Trial Waiver.
EACH LOAN PARTY AND LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT, THE SECURITY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.  EACH LOAN PARTY ACKNOWLEDGES THAT THE FOREGOING
WAIVER IS A MATERIAL INDUCEMENT TO LENDER ENTERING INTO THIS AGREEMENT AND THAT
LENDER IS RELYING UPON THE FOREGOING WAIVER IN THEIR FUTURE DEALINGS WITH THE
LOAN PARTIES.  EACH LOAN PARTY WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL
COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

    

    {signature page
follows}

    BORROWERS:

    

    AMOROS
MARITIME CORP.

    

    

    /s/
Tara DeMakes

    By:  Tara
DeMakes

    Title:  Attorney
in Fact

    

    LANCASTER
MARITIME CORP.

    

    

    /s/
Tara DeMakes

    By:  Tara
DeMakes

    Title:  Attorney
in Fact

    

    CHATHAM
MARITIME CORP.

    

    

    /s/
Tara DeMakes

    By:  Tara
DeMakes

    Title:  Attorney
in Fact

    

    GUARANTOR:

    

    TBS
INTERNATIONAL LIMITED

    

    

    /s/
Tara DeMakes

    By:  Tara
DeMakes

    Title:  Attorney
in Fact

    

    

    

    LENDER:

    AIG
COMMERCIAL EQUIPMENT FINANCE, INC.

    

    By:
/s/Richard M.
Johnston

    Name:  Richard
M. Johnston

    Title:  Vice
President

    

    

    LIST OF SCHEDULES TO LOAN
AGREEMENT

    
      	
              Schedule
      1-

            	
              List
      of Borrowers and Vessels

            

    

    
      	
              Schedule
      2.03 -

            	
              Form
      of Note

            

    

    
      	
              Schedule
      3.01(a)(5)  -

            	
              Forms
      of Opinion

            

    

    
      	
              Schedule
      4.07 -

            	
              Litigation
      affecting Borrower, Guarantors or
Affiliates

            

    

    
      	
               
      

            	
              Schedule
      5.01 (d)         Form of
      Compliance Certificate

            

    

    
      	
              Schedule
      5.03-

            	
              Insurance
      Requirements

            

    

    
      	
               
      

            	
              SCHEDULE
      1

            

    

    

    

    

    
      	
              Borrower

            	
              Vessel Name Following Borrower
      Purchase

            	
              Maximum Individual Loan
    Amount*

            
	
              Amoros
      Maritime Corp.

            	
              Hopi
      Princess

            	
              $13,000,000

            
	
              Lancaster
      Maritime Corp.

            	
              Mohave
      Maiden

            	
              $13,000,000

            
	
              Chatham
      Maritime Corp.

            	
              Zuni
      Princess

            	
              $9,000,000

            

    

    

    

    

    

    
      	
              VESSEL
      NAME

            	
              PANAMA
      NAVIGATION PATENTE NO.

            	
              PANAMA
      CALL LETTERS

            	
              PHILIPPINES
      OFFICIAL NO.

            	
              PHILIPPINES
      CALL SIGN

            	
              ADDITIONAL
      VESSEL SPECIFICATIONS

            
	
              HOPI
      PRINCESS

            	
              36772-PEXT

            	
              3EPG2

            	
              MNLA000706

            	
              DYTU

            	
              LENGTH,
      145.52 METERS, BREADTH, 22.70 METERS, DEPTH, 13.80 METERS, GROSS TONNAGE,
      13,911, NET TONNAGE 7,162

            
	
              MOHAVE
      MAIDEN

            	
              36776-PEXT

            	
              3EPG7

            	
              MNLA000705

            	
              DYTT

            	
              LENGTH,
      167.64 METERS, BREADTH, 23.10 METERS, DEPTH, 14.75 METERS, GROSS TONNAGE,
      17,056, NET TONNAGE 10,329

            
	
              ZUNI
      PRINCESS

            	
              36768-PEXT

            	
              3EPG6

            	
              MNLA000703

            	
              DYTK

            	
              LENGTH,
      167.64 METERS, BREADTH, 23.10 METERS, DEPTH, 14.75 METERS, GROSS TONNAGE,
      17,066, NET TONNAGE 10,334

            
	 
      	 
      	 
      	 
      	 
      	 
      

    

    

    

    

    SCHEDULE
2.03

    

    Form
of Note

    

    PROMISSORY
NOTE

    

    Principal:  $_____________ Date:   ________________,
2005

    

    

     

    FOR VALUE
RECEIVED, the undersigned promises, jointly and severally if more than one, to
pay to the order of AIG COMMERCIAL EQUIPMENT FINANCE, INC. or its assigns (the
“Payee”) at
Church Street Station, P.O. Box 6344, New York, NY 10249-6344 or at such other
place as the Payee or the holder hereof may designate in writing, the principal
amount of ___________________ and No/00 Dollars ($__________.00), with interest
(computed on the basis of a 360-day year for the actual number of days elapsed)
on the unpaid principal amount hereof from and including the date of the advance
by Payee until paid in full at a variable per annum simple interest rate (the
“Interest
Rate”) calculated as follows.  The Interest Rate shall be equal
to the greater of (a) five percent per annum or (b) LIBOR plus
1.75%.  Beginning on the first day of the Adjustment Period following
the date hereof, the Interest Rate shall be adjusted once each Adjustment Period
and such adjustment shall be effective during such Adjustment
Period

    

    The
principal amount hereunder shall be payable (i) in eight (8) consecutive equal
quarterly installments each in the amount of $________ payable on the 1st day of
each month commencing July 1, 2008 and (ii) in eight (8) consecutive equal
monthly installments each in the amount of $________ payable on the 1st day of
each month commencing July 1, 2010, with the final installment of all amounts
due and payable hereunder payable on April 1, 2012.  The undersigned
further promises to pay interest, in like money and funds, at the Payee’s
address referenced above or at such other place as the Payee or the holder
hereof may designate in writing, on the unpaid principal amount hereof from and
including the date hereof until paid in full at the Interest Rate for the
applicable Adjustment Period.  Interest shall be payable in arrears on
each date on which an installment of principal is due, upon prepayment in part
of the unpaid principal amount hereof (with respect to the amount so prepaid)
and upon payment (including prepayment) in full of the unpaid principal amount
hereof.  All payments received by Payee shall be applied first to
interest and then to principal.

     

    All
payments hereunder shall be made in lawful money of the United States and in
immediately available funds.  If any installment of this Note is not
paid within ten (10) days after its due date, the undersigned agrees to pay on
demand, in addition to the amount of such installment, an amount equal to the
lesser of (i) five percent (5%) of such installment or (ii) the maximum rate
permitted by Applicable Law (the “Default Rate”).

    

    This Note is one of the promissory
notes referenced in that certain Loan Agreement by the undersigned, the other
borrowers and guarantors named therein, and the Payee, of even date herewith (as
amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) and
is subject and entitled to all provisions and benefits
thereof.  Capitalized terms used, but not expressly defined, herein
shall have the meanings as set forth in the Loan Agreement.

    

    In addition to the required payments
set forth above, the undersigned shall have the right to prepay this Note, in
whole or in part, at any time following the first anniversary date of this Note
on fifteen (15) days prior written notice to the Payee, provided,
that the amount of the prepayment is at least $500,000.00 and the prepayment is
made in multiples of $500,000.00, and further provided
that on the date of such prepayment, the undersigned shall pay the principal
amount of this Note being so prepaid (the “Prepayment Amount”),
together with all interest, fees and other amounts payable on the amount so
prepaid or in connection therewith to the date of such prepayment and, if
applicable, the Prepayment Fee set forth below.  If the undersigned
prepays this Note in full or in part, the undersigned shall pay, on the date of
such prepayment, a fee  (the “Prepayment Fee”) to
the Payee in an amount equal to one half of one percent (0.5%) of Prepayment
Amount if such prepayment occurs prior to the second anniversary of the date of
this Note, provided that the
Prepayment Fee shall be charged and paid only to the extent permitted by
Applicable Law.  No prepayment fee will be due if prepayment occurs on
or after the second anniversary date of this Note.  No prepayments
will be permitted prior to the first anniversary date of this
Note.  Any prepayment pursuant to this paragraph shall be applied to
the installments hereof in the inverse order of maturity. In addition, whether
or not a Prepayment Fee is due, at the time of any prepayment, the undersigned
shall pay to Payee such amount as will compensate Payee for any loss, cost,
expense, penalty, claim or liability incurred by Payee as a result of such
prepayment which requires the Payee to prematurely break any related swap,
interest rate hedge or other derivative arrangement.  The Payee shall have
no obligation to purchase or enter into any swap or other derivative arrangement
in connection with funding or maintaining the loan evidenced by this
Note.

    

    Upon the maturity of this Note or the
acceleration of the maturity of this Note in accordance with the terms of the
Agreement, the entire unpaid principal amount on this Note, together with all
interest, fees and other amounts payable hereon or in connection herewith, shall
be immediately due and payable without further notice or demand, with interest
on all such amounts at a rate (the “Default Rate”) equal
to the lesser of (i) the Interest Rate plus 2.0%, or (ii) the maximum rate of
interest permitted by Applicable Law, from the date of such maturity or
acceleration, as the case may be, until all such amounts have been paid in
full.  Upon the occurrence of any Event of Default, without further
notice or demand and at Lender’s discretion, interest on all outstanding sums
under this Note shall accrue at the Default Rate, from the date of such Event of
Default until all such amounts have been paid in full.

    

    If any payment on this Note becomes
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to prepayments of
principal, interest thereon shall be payable at the applicable rate during such
extension.

    

    The undersigned hereby waives
diligence, demand, presentment, protest and notice of any kind, and assents to
extensions of the time of payment, release, surrender or substitution of
security, or forbearance or other indulgence, without notice.  The
undersigned agrees to pay all amounts under this Note without offset, deduction,
claim, counterclaim, defense or recoupment, all of which are hereby
waived.

    

    The Payee, the undersigned and any
other parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to time in effect.  In furtherance
thereof the undersigned and the Payee stipulate and agree that none of the terms
and provisions contained in the Loan Documents shall ever be construed to create
a contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by Applicable
Law from time to time in effect.  Neither the undersigned nor any
present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under Applicable Law from time to
time in effect, and the provisions of this paragraph shall control over all
other provisions of the Loan Documents which may be in conflict or apparent
conflict herewith.  The Payee expressly disavows any intention to
charge or collect excessive unearned interest or finance charges in the event
the maturity of any Obligation is accelerated.  If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the maximum legal rate allowed under Applicable Law, or (c) the Payee
or any other holder of any or all of the Obligations shall otherwise collect
amounts which are determined to constitute interest which would otherwise
increase the interest on any or all of the Obligations to an amount in excess of
that permitted to be charged by Applicable Law then in effect, then all sums
determined to constitute interest in excess of such legal limit shall, without
penalty, be promptly applied to reduce the then outstanding principal of the
related Obligations or, at the Payee’s or such holder’s option, promptly
returned to the undersigned upon such determination.  In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under Applicable Law, the Payee and the
undersigned (and any other payors thereof) shall to the greatest extent
permitted under Applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate,
and spread the total amount of interest through the entire contemplated term of
this Note in accordance with the amount outstanding from time to time thereunder
and the maximum legal rate of interest from time to time in effect under
Applicable Law in order to lawfully charge the maximum amount of interest
permitted under Applicable Law.

    

    This Note may not be changed, modified
or terminated orally, but only by an agreement in writing signed by the
undersigned and the Payee or any holder hereof.

    

    The undersigned shall, upon demand, pay
to the Payee all costs and expenses incurred by the Payee (including the fees
and disbursements of counsel and other professionals) in connection with the
preparation, execution and delivery of this Note and all other Loan Documents,
and in connection with the administration, modification and amendment of the
Loan Documents, and pay to the Payee all costs and expenses (including the fees
and disbursements of counsel and other professionals) paid or incurred by the
Payee in (a) enforcing or defending its rights under or in respect of this
Note or any of the other Loan Documents, (b) collecting any of the
liabilities by the undersigned to the Payee or otherwise administering the Loan
Documents, (d) foreclosing or otherwise collecting upon any collateral and
(d) obtaining any legal, accounting or other advice in connection with any
of the foregoing.

    

    This Note shall be binding upon the
successors and assigns of the undersigned and inure to the benefit of the Payee
and its successors, endorsees and assigns.  If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the validity of
all other terms and provisions hereof shall in no way be affected
thereby.

    

    THE UNDERSIGNED AND, BY ITS ACCEPTANCE
HEREOF, THE PAYEE, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT
ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.

    

    THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.  THE PARTIES AGREE
THAT ANY ACTION OR PROCEEDING ARISING UNDER OR RELATED TO THIS NOTE MAY BE
COMMENCED IN ANY FEDERAL OR STATE COURT SITTING IN THE SOUTHERN DISTRICT OF NEW
YORK OR THE NORTHERN DISTRICT OF TEXAS AND THE PARTIES IRREVOCABLY SUBMIT TO THE
JURISDICTION OF EACH SUCH COURT AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF SUCH
SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THE AGREEMENT OR THE SUBJECT
MATTER THEREOF OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY MAY NOT BE
ENFORCED IN OR BY SUCH COURT.  THE PARTIES AGREE THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW

     

    

     

    
      	
               
      

            	
              [__________]
      Maritime Corp., a Marshall Islands
corporation

            

    

    

    

                                                          By:                                                                

    Name:

    Title:

    

    

    

    

    SCHEDULE
3.01 (a) (5)

    

    [LETTERHEAD
OF CARDILLO AND CORBETT – NEW YORK AND MARSHALL ISLANDS COUNSEL TO BORROWERS AND
GUARANTORS]

    

    AIG
Commercial Equipment Finance, Inc.

    5700
Granite Parkway

    Suite
850

    Plano,
Texas  75024

    

    
      	
               
      

            	
              Re:

            	
              Loan
      Agreement dated as of ____________, 2005 (the “Loan
      Agreement”), by and among Amoros Maritime Corp., Lancaster Maritime
      Corp. and Chatham Maritime Corp., as borrowers (collectively, the “Borrowers”),
      and TBS International Limited, as guarantor, and AIG Commercial Equipment
      Finance, Inc., as lender (the “Lender”)

            

    

     

    Gentlemen:

     

    We have acted as counsel for the
Borrowers, and TBS International Limited (the “Guarantor”), all in
connection with the Loan Agreement and the loan made pursuant thereto by Lender
to the Borrowers in a principal amount not to exceed $35,000,000.00 (the “Loan”).  Capitalized
terms used herein, but not defined herein, shall have the meaning set forth in
the Loan Agreement.

    

    For purposes of rendering our opinion
set forth herein, we have reviewed originals or copies of the following
documents which pertain directly to the Loan (collectively, the “Loan
Documents”):

    

    
      	
               
      

            	
              1.

            	
              Loan
      Agreement;

            

    

    
      	
               
      

            	
              2.

            	
              Notes
      by each of the Borrowers in the amounts set forth
  below:

            

    

    

    
      	
              Borrower

            	
              Note
      Amount

            

    

    

    a.           Amoros
Maritime
Corp.                                                                $9,000,000

    b.           Lancaster
Maritime
Corp.                                                                $13,000,000

    c.           Chatham
Maritime
Corp.                                                                $13,000,000

    

    

    
      	
               
      

            	
              3.

            	
              Ship
      Mortgage by each of the Borrowers;

            

    

    
      	
               
      

            	
              4.

            	
              Assignments
      of Insurances by each of the Borrowers and the other assignors described
      therein;

            

    

    
      	
               
      

            	
              5.

            	
              Assignments
      of Charter by each of the
Borrowers;

            

    

    
      	
               
      

            	
              6.

            	
              Assignments
      of Charter Hire by the various charterers and service provided described
      therein for each Vessel owned by the
Borrowers;

            

    

    
      	
               
      

            	
              7

            	
              Unsecured
      Guaranty by the Guarantor for each of the
Notes;

            

    

    
      	
               
      

            	
              8.

            	
              Omnibus
      Agreement Regarding Lien Rights by the various charterers and service
      provided described therein;

            

    

    
      	
               
      

            	
              9.

            	
              Pay
      Proceeds Letters by each of the Borrowers;
and

            

    

    
      	
               
      

            	
              10.

            	
              [ADD
      ADDITIONAL LOAN DOCUMENTS]

            

    

    

    For
purposes of rendering our opinion set forth herein, we have also examined
originals or copies of corporate records, documents and instruments relating to
the Borrowers and the Guarantor.  In addition to the foregoing, we
have also reviewed such other certificates, documents and instruments as
necessary for us to render the opinions set forth herein.

    

    In such
examination we have assumed the genuineness of all signatures (other than the
Borrowers and Guarantor), the authenticity of all documents submitted to us as
originals and the conformity with the original documents of all documents
submitted to us as copies.  As to factual matters we have, to the
extent that relevant facts were not independently established by us, relied upon
certificates of public officials and certificates or representations made in
writing by officers or representatives of the Borrowers and Guarantor and the
representations and warranties of the Borrowers and the Guarantor in the Loan
Documents.  We have no knowledge that any such certificates,
representations or warranties are incorrect.  We have also assumed the
power, authority and legal right of all parties to the Loan Documents other than
the Borrowers and the Guarantor to enter into and perform their respective
obligations thereunder and the due authorization, execution and delivery of the
Loan Documents by such parties.  We have further assumed the validity
and enforceability of the Loan Documents under all applicable laws other than
the federal laws of the United States of America, the laws of the State of New
York and the laws of the Republic of the Marshall Islands.  With
respect to the laws of the Republic of Panama, Gibraltar and of Bermuda, we have
relied on the opinion of special Panamanian counsel, Patton, Moreno & Asvat,
special Gibraltar counsel Massias & Partners and special Bermuda counsel,
Conyers, Dill & Pearman.

    

    Based
upon our examination of the foregoing, subject to the qualifications herein set
forth, we are of the opinion that:

    

    1.           Each
Borrower is a company validly formed and duly existing under the Marshall
Islands, is qualified to do business and own and operate its assets and is in
good standing under the laws of the Marshall Islands.

    

    2.           Each
Borrower and Guarantor has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its assets and to execute and
deliver, and to perform all of its obligations under the Loan Documents and the
Security Documents to which it is a party.

    

    3.           The
individuals executing the Loan Documents on behalf of each Borrower and
Guarantor have been duly authorized and empowered to do so.

    

    4.           The
execution, delivery and performance by each Borrower and Guarantor of the Loan
Documents and the Security Documents to which it is a party, and the borrowing
thereunder, have been duly authorized by all necessary action and do not and
will not (i) require any further or additional consent or approval of the
directors, shareholders or partners of such Borrower or Guarantor, or any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, or (ii) violate any provision of any
law, rule or regulation having applicability to such Borrower or Guarantor, or
of the partnership agreement, certificate of limited partnership, articles of
incorporation, bylaws or other organizational documents of such Borrower or
Guarantor.

    

    5.           The
execution, delivery and performance by each Borrower and Guarantor of the Loan
Documents and the Security Documents to which it is a party, and the borrowing
thereunder, do not and will not (i) to the best of our knowledge after due
inquiry, violate any provision of any order, writ, injunction or decree
presently in effect having applicability to such Borrower or Guarantor, or (ii)
to the best of our knowledge after due inquiry, result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Borrower or Guarantor is a
party or by which either of them or their properties may be bound or
affected.

    

    6.           All
of the Loan Documents have been duly executed and delivered to Lender by each
Borrower and Guarantor, as applicable, and no consents, permissions or
authorizations are required from any other parties in connection with the
execution and delivery of the Loan Documents.

    

    7.           Each
of the Loan Documents to which any Borrower is a party (except the Ship
Mortgages) is a legal, valid and binding instrument, enforceable against such
Borrower in accordance with its terms.  Each of the Loan Documents to
which Guarantor is a party is a legal, valid and binding instrument, enforceable
against such Guarantor in accordance with its terms.

    

    8.           The
Loan, as made pursuant to the terms of the Loan Documents, and the Notes
evidencing the Loan, comply with applicable state or federal laws, regulations
and other requirements pertaining to usury.

    

    9.           The
courts of the State of New York would, in a properly presented case with respect
to the Loan Documents, enforce against each Borrower and Guarantor the choice of
New York law provisions of the Loan Documents.

    

    10.           To
the best of our knowledge after due inquiry, each Borrower and Guarantor has all
permits and approvals that are required for execution and delivery of the Loan
Documents and the Security Documents, and the operation of its business and
assets.

    

    11.           There
are no actions, suits or proceedings pending or, to the best of our knowledge
after due inquiry, threatened against any Borrower or Guarantor, or the
properties of any Borrower or Guarantor before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to such Borrower or Guarantor, would
have a Material Adverse Effect on the financial condition, properties, or
operations of such party and its ability to perform under the Loan Documents and
the Security Documents.

    

    12.           After
due inquiry, we have no knowledge of any outstanding judgments against any
Borrower or Guarantor.

    

    The
opinions expressed in this letter are made subject to and are qualified by the
following:

    

    a.           The
enforceability of the Loan Documents shall be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
affecting the rights and remedies of secured creditors.

    

    b.           The
effect and application of general principles of equity, whether considered in a
proceeding in equity or at law;

    

    c.           Limitations
imposed by or resulting from the exercise by any court of its discretion;
and

    

    d.           Limitations
imposed by reason of generally applicable public policy principles or
considerations.

    

    In our
opinion, the foregoing exceptions (b), (c) and (d) do not make the remedies and
procedures which would be available under the Loan Documents or applicable law
inadequate for the ultimate practical realization of the primary substantive
benefits intended to be available to the Lender under the Loan
Documents.

     

    Our
opinions herein are limited solely to the laws of the State of New York, the
United States of America and the Marshall Islands, and we express no opinions as
to the laws of any other jurisdiction.

    

    The
opinions expressed in this letter are given solely for the benefit of Lender,
its successors and assigns (including any purchaser of all or any portion of the
Loan), and any law firm representing Lender, its successors or assigns
(including any purchaser of the Loan), in the sale of the Loan in connection
with the transaction referred to herein.  The opinions expressed in
this letter are rendered as of the date hereof and we express no opinion as to
circumstances or events that may occur subsequent to such date.

    

    Very truly yours,

    

    

    

    [
LETTERHEAD OF  PATTON MORENO & ASVAT - PANAMA COUNSEL
]

    

    AIG
Commercial Equipment Finance, Inc.

    5700
Granite Parkway

    Suite
850

    Plano,
Texas  75024

    

    
      	
               
      

            	
              Re:

            	
              Loan
      Agreement dated as of ____________, 2005 (the “Loan
      Agreement”), by and among Amoros Maritime Corp., Lancaster Maritime
      Corp. and Chatham Maritime Corp., as borrowers (collectively, the “Borrowers”),
      and TBS International Limited, as guarantor,, and AIG Commercial Equipment
      Finance, Inc., as lender (the “Lender”)

            

    

     

    Gentlemen:

     

    We have acted as counsel for the
Borrowers and Guarantor, all in connection with the Loan Agreement and the loan
made pursuant thereto by Lender to the Borrowers in a principal amount not to
exceed $35,000,000.00 (the “Loan”).  Capitalized
terms used herein, but not defined herein, shall have the meaning set forth in
the Loan Agreement.

    

    For purposes of rendering our opinion
set forth herein, we have reviewed originals or copies of the following
documents which pertain directly to the Loan (collectively, the “Loan
Documents”):

    

    
      	
               
      

            	
              1.

            	
              Loan
      Agreement;

            

    

    
      	
               
      

            	
              2.

            	
              Notes
      by each of the Borrowers set forth below (the “Initial Advance
      Borrowers”) in the amounts set forth
  below:

            

    

    

    
      	
              Borrower

            	
              Note
      Amount

            

    

    

    a.           Amoros
Maritime
Corp.                                                                $9,000,000

    b.           Lancaster
Maritime
Corp.                                                                $13,000,000

    c.           Chatham
Maritime
Corp.                                                                $13,000,000

    

    
      	
               
      

            	
              3.

            	
              Ship
      Mortgage by each of the Borrowers (the “Ship
      Mortgages”);

            

    

    
      	
               
      

            	
              4.

            	
              Assignments
      of Insurances by each of the Borrowers and the other assignors described
      therein;

            

    

    
      	
               
      

            	
              5.

            	
              Assignments
      of Charter by each of the
Borrowers;

            

    

    
      	
               
      

            	
              6.

            	
              Assignments
      of Charter Hire by the various charterers and service provided described
      therein for each Vessel owned by the
Borrowers;

            

    

    
      	
               
      

            	
              7.

            	
              Unsecured
      Guaranty by each of the Guarantors for each of the
  Notes;

            

    

    
      	
               
      

            	
              8.

            	
              Omnibus
      Agreement Regarding Lien Rights by the various charterers and service
      provided described therein;

            

    

    
      	
               
      

            	
              9.

            	
              Pay
      Proceeds Letters by each of the Borrowers;
and

            

    

    
      	
               
      

            	
              10.

            	
              [ADD
      ADDITIONAL LOAN DOCUMENTS]

            

    

    

    In
addition to the foregoing, we have also reviewed such other certificates,
documents and instruments as necessary for us to render the opinions set forth
herein.

    

    Based
upon our examination of the foregoing, subject to the qualifications herein set
forth, we are of the opinion that:

    

    1.           Each
Vessel described below is registered with the Directorate General of Consular
and Maritime Affairs of the Republic of Panama (the “Registration Office”)
in the name of the respective Borrower set forth opposite each Vessel below,
free of mortgages, liens or other encumbrances of record, except the Ship
Mortgage encumbering each Vessel:

    

    
      	
              OWNER

            	
              VESSEL
      NAME

            	
              PANAMA
      NAVIGATION PATENTE NO.

            	
              PANAMA
      CALL LETTERS

            
	
              Amoros
      Maritime Corp.

            	
              HOPI
      PRINCESS

            	
              36772-PEXT

            	
              3EPG2

            
	
              Lancaster
      Maritime Corp.

            	
              MOHAVE
      MAIDEN

            	
              36776-PEXT

            	
              3EPG7

            
	
              Chatham
      Maritime Corp.

            	
              ZUNI
      PRINCESS

            	
              36768-PEXT

            	
              3EPG6

            
	 
      	 
      	 
      	 
      

    

    

    

    2.           Each
Ship Mortgage is in appropriate form under the laws of the Republic of Panama
for recordation with the Registration Office.

    

    3.           Each
Ship Mortgage (a) has been received for record in the Registration Office,
(b) has been recorded in the book maintained by the Registration Office for such
purpose, (c) creates a valid preferred mortgage lien on the Vessel described
therein in favor of the Lender enforceable in accordance with its terms, (d) is
a legal, valid and binding instrument, enforceable against the applicable
Borrower in accordance with its terms, and (e) contains, at a minimum, the
customary remedies included in similar documents used by international
institutional lenders to effectuate naval mortgages encumbering vessels
registered in the Republic of Panama in transactions involving substantial
amounts of credit.

    

    4.           Apart
from the recordation of each Ship Mortgage in the Registration Office, none of
the Loan Documents are required under the laws of the Republic of Panama to be
filed, registered or recorded in any public office or elsewhere in the Republic
of Panama to ensure the validity, effectiveness or enforceability of the Loan
Documents.

    

    5.           Under
the laws of the Republic of Panama, no further consent, license, permit,
approval, exemption or authorization of or by any governmental authority or
regulatory agency or body of the Republic of Panama is necessary to enable each
Borrower and Guarantor to execute and deliver the Loan Documents to which each
is a party or to ensure the legality, validity or enforceability
thereof.

    

    6.           The
“dual registry” of each Vessel with the Maritime Industry Authority of the
Republic of the Philippines will not adversely affect the validity,
enforceability or priority of any Ship Mortgage.

    

    7.           Neither
the execution and delivery of, nor the performance by each Borrower or Guarantor
of its respective obligations under, the Loan Documents will violate any
provision of the laws of the Republic of Panama.

    

    The
opinions expressed in this letter are made subject to and are qualified by the
following:

    

    The
enforceability of the Loan Documents shall be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
affecting the rights and remedies of secured creditors.

    

    Our
opinions herein are limited solely to the laws of the Republic of Panama, and we
express no opinions as to the laws of any other jurisdiction.

    

    The
opinions expressed in this letter are given solely for the benefit of Lender,
its successors and assigns (including any purchaser of all or any portion of the
Loan), and any law firm representing Lender, its successors or assigns
(including any purchaser of the Loan), in the sale of the Loan in connection
with the transaction referred to herein.  The opinions expressed in
this letter are rendered as of the date hereof and we express no opinion as to
circumstances or events that may occur subsequent to such date.

    

    Very truly yours,

    

    [
LETTERHEAD OF CONYERS, DILL &
PEARMAN- BERMUDA COUNSEL ]

    

    AIG
Commercial Equipment Finance, Inc.

    5700
Granite Parkway

    Suite
850

    Plano,
Texas  75024

    

    
      	
               
      

            	
              Re:

            	
              Loan
      Agreement dated as of ____________, 2005 (the “Loan
      Agreement”), by and among Amoros Maritime Corp., Lancaster Maritime
      Corp. and Chatham Maritime Corp., as borrowers (collectively, the “Borrowers”),
      and TBS International Limited, as guarantor,, and AIG Commercial Equipment
      Finance, Inc., as lender (the “Lender”)

            

    

     

    Gentlemen:

     

    We have acted as counsel for TBS
International Limited (the “Company”) in
connection with the Loan Agreement and the loan made pursuant thereto by Lender
to the Borrowers in a principal amount not to exceed $55,000,000.00 (the “Loan”).  Capitalized
terms used herein, but not defined herein, shall have the meaning set forth in
the Loan Agreement.

    

    For purposes of rendering our opinion
set forth herein, we have reviewed originals or copies of the following
documents which pertain directly to the Loan (collectively, the “Loan
Documents”):

    

    
      	
               
      

            	
              1.

            	
              Loan
      Agreement;

            

    

    
      	
               
      

            	
              2.

            	
              Unsecured
      Guaranty by the Company for each of the Notes;
  and

            

    

    
      	
               
      

            	
              3.

            	
              [ADD
      ADDITIONAL LOAN DOCUMENTS TO WHICH THE COMPANY IS
      PARTY]

            

    

    

    For
purposes of rendering our opinion set forth herein, we have also examined
originals or copies of corporate records, documents and instruments relating to
Company.  In addition to the foregoing, we have also reviewed such
other certificates, documents and instruments as necessary for us to render the
opinions set forth herein.

    

    Based
upon our examination of the foregoing, subject to the qualifications herein set
forth, we are of the opinion that:

    

    1.           The
Company is a company duly incorporated, validly existing and in good standing
under the laws of Bermuda.

    

    2.           The
Company has full power and authority under Bermuda law and its organizational
documents to enter into and perform its obligations under the Loan Documents and
the Security Documents.

    

    3.           The
execution, delivery and performance by the Company of the Loan Documents has
been authorized by and on behalf of the Company and the Loan Documents have been
duly executed and delivered on behalf of the Company.

    

    4.           The
execution and delivery of the Loan Documents by the Company and the performance
of its obligations under the Loan Documents do not and will not conflict with or
result in a breach of any of the terms or provisions of its organizational
documents or any published law, public rule or regulation applicable to the
Company currently in force in Bermuda and, to the best of our knowledge, do not
and will not conflict with or result in a breach of or constitute a default
under any existing published order, decree or judgment of any governmental
authority or agency or any official body or court in Bermuda. There are no
actions or petitions pending against the Company in the courts of
Bermuda.

    

    5.           There
is no filing, recordation or enrollment of any documents with any governmental
department or other authority in Bermuda which is necessary or advisable to
ensure the legality, validity, enforceability or admissibility in evidence of
any of the Loan Documents.  No authorizations, notarizations, consents
or approvals are required from any governmental authorities or agencies or other
official bodies in Bermuda in connection with the execution, delivery, validity
or enforceability of the Loan Documents or the performance by the Company of its
obligations thereunder.

    

    6.           Under
the laws of Bermuda, no deduction or withholding for or on account of any tax
will be required to be made by any person from any amount paid or expressed to
be payable under the Loan Documents.

    

    7.           No
stamp, documentary, registration, transfer or like taxes are payable under the
laws of Bermuda in respect of the execution of the Loan Documents or the
enforcement thereof.

    

    8.           The
Company is subject to suit in its own name and is not entitled to claim any
immunity in relation to itself or any of its assets under Bermuda law or in the
courts of Bermuda in connection with any legal proceedings relating to the Loan
Documents.

    

    9.           No
taxes will be payable (by withholding or otherwise) to the Government of Bermuda
or any political subdivision or taxing authority thereof or therein in respect
of any payments made by the Company under the Loan Documents, including the
proceeds of any judgment obtained in respect of the Loan Documents in the courts
of Bermuda which may be remitted outside of Bermuda without limit or restriction
and without the need to obtain any consent, permit, license, approval,
authorization or exemption of any person.

    

    10.           The
courts of Bermuda will recognize a foreign judgment as the basis for a claim in
Bermuda.

    

    11.           Bermuda
courts have jurisdiction to give judgment in the currency of the relevant
obligation and statutory rates of interest payable upon judgments will vary
according to the currency of the judgment.

    

    12.           The
courts of Bermuda will observe and give effect to the choice of New York law as
the governing law of the Loan Documents (and to the laws of Panama as the
governing law of each Ship Mortgage) and to the submission to the New York
courts in the Loan Documents.

    

    The
opinions expressed in this letter are made subject to and are qualified by the
following:

    

    Our
opinions herein are limited solely to the laws of Bermuda, and we express no
opinions as to the laws of any other jurisdiction.

    

    The
opinions expressed in this letter are given solely for the benefit of Lender,
its successors and assigns (including any purchaser of all or any portion of the
Loan), and any law firm representing Lender, its successors or assigns
(including any purchaser of the Loan), in the sale of the Loan in connection
with the transaction referred to herein.  The opinions expressed in
this letter are rendered as of the date hereof and we express no opinion as to
circumstances or events that may occur subsequent to such date.

    

    Very truly yours,

    

    

    [ END OF
SCHEDULE 3.01 (a) (5) ]

    

    SCHEDULE
4.07

    

    Litigation

    

    None.  There are no
actions, suits or proceedings pending or threatened against or affecting
Borrower, or any Guarantor or any Affiliate of Borrower or the properties of
Borrower or such Affiliate before any court or governmental department,
commission, board, bureau, agency or instrumen­tality, domestic or foreign,
which, if adversely determined, would have a Material Adverse Effect on the
financial condition, properties or operations of Borrower or any Guarantor and
Borrower=s
or Guarantor=s
ability to perform hereunder and under the Loan Documents or the Security
Documents.

    

    

    [ END OF
SCHEDULE 4.07 ]

    

    Schedule
5.01 (d)

    Form
of Compliance Certificate

    

    The
undersigned hereby certifies that he/she is the [Chief Financial Officer]
[President] of Amoros Maritime Corp., Lancaster Maritime Corp. and Chatham
Maritime Corp. (“Borrowers”) and an officer of TBS International Limited
(“Guarantor”), and as such he/she is authorized to execute this certificate on
behalf of the Borrowers.  With reference to the Loan Agreement dated
as of February __, 2008 by and between Borrowers and AIG Commercial Equipment
Finance, Inc. (“Lender”) (as the same may be amended or supplemented from time
to time, the "Agreement"), the undersigned certifies to the Lender and each
holder of a Note as follows (each capitalized term used herein having the same
meaning given to it in the Agreement unless otherwise specified):

     

    (a)           The
representations and warranties of the Borrowers contained in the Agreement were
true and correct when made, and are repeated at and as of the time of delivery
hereof and are true and correct at and as of the time of delivery hereof, except
as such representations and warranties are expressly limited to another
date.

     

    (b)           The
Guarantor is in compliance with the financial covenants of Section 6.10 of the
Agreement, as illustrated by the computations set forth on Schedule 1 attached
hereto and made a part hereof.

     

    EXECUTED
AND DELIVERED this ___ day of ______ , 20__.

     

    

    _____________________________

    Name:

    Title:

    

    SCHEDULE
5.03

    

    REQUIRED
INSURANCES

    

    (a) Each
Borrower shall, without cost to the Lender, maintain insurance on each Vessel as
specified in this Schedule 5.03, and, in addition, keep the Vessels insured
against such further risks as may be commercially reasonable or reasonably
specified by the Lender from time to time.  The Borrowers shall
maintain all such insurance in an amount in United States dollars which shall
not be less than the greater of (i) the fair market value of the applicable
Vessel (taking into account any charter relating to the Vessel) from time to
time, as determined by Lender, or (ii) the amount set forth below in Section
1(a)(5) of this Schedule.  In the case of protection and indemnity
insurance required herein, the limits of such policies with respect to the
Vessel shall not be less than the greater of (i) the applicable protection &
indemnity club rules, or (ii) One Hundred Million Dollars
($100,000,000.00).

    

     (1)           (a)
(i) Hull and machinery insurance (including, without limitation, war, navigation
and port risk); (ii) Protection and indemnity insurance (including, without
limitation, war risk), and (iii) Pollution risks insurance, in an amount not
less than the greater of (A) the applicable protection & indemnity club
rules or (B) Five Hundred Million Dollars ($500,000,000.00).  Such
policies of insurance shall be under the most current forms (determined at the
time of issuance of the policies in question) of policies approved by the Lender
insuring against the usual risks covered by such forms (including, at the option
of the Borrower, such amounts of increased value as are permitted by said hull
insurance policies).

    

    (b)  While a Vessel is laid
up, at the option of the Borrower and in lieu of hull and machinery and
protection and indemnity insurance, port risk insurance under the most current
forms (determined at the time of issuance of the policies in question) of
policies approved by the Lender insuring the Vessel against hull and machinery
and protection and indemnity risks.

    

    (c)  In addition, the
Lender’s interest in each Vessel shall be noted by any Protection and Indemnity
Club (where applicable) in which the Vessel is enrolled.

    

    (d)  The Lender, at
Borrower’s expense, may directly obtain, or may cause Borrower for Lender’s
benefit to obtain, mortgagee’s interest coverage for each Vessel in a form
acceptable to Lender and in an amount acceptable to Lender, but in no event less
than the value set forth below in Section 1(a)(5) of this Schedule.

    

    (2)           [intentionally
omitted].

    

    (3)           Workers’
Compensation (to the extent required by applicable law) and Employer’s Liability
Insurance, including statutory workers’ compensation in compliance with the laws
of the states in which employees of Borrower conduct operations and the United
States Longshore and Harbor Workers’ Compensation Act, as extended by the Outer
Continental Shelf Land Act (to the extent applicable).  Borrower and
Lender agree and acknowledge that the coverages required by this paragraph shall
not be required by Lender to the extent such coverages are not applicable to the
Vessel’s operations or are otherwise included under the protection and indemnity
policy required above.

    

    (4)           Borrower
shall further on behalf and for the benefit of itself and Lender maintain a
Certificate of Financial Responsibility (Oil Pollution) issued by the United
States pursuant to the Federal Water Pollution Control Act to the extent that
same may be required by law or regulation and such other similar certificates as
may be required in the course of the Vessel’s operations pursuant to the
International Convention on Civil Liability for Oil Pollution Damage of 1969, or
other applicable government requirement.

    

    
      	
              (5)  

            	
              Minimum
      coverage requirements:

            

    

    

    
      	
              Name
      of Vessel

            	
              Hull
      & Machinery

            	
              Mortgagee’s
      Interest

            
	 
      	 
      	 
      
	
              Mohave
      Maiden

            	
              $18,000,000

            	
              $13,000,000

            
	
              Zuni
      Princess

            	
              $18,000,000

            	
              $13,000,000

            
	
              Hopi
      Princess

            	
              $14,000,000

            	
               $9,000,000

            

    

    

    

    

    

    (b)  All
policies of insurance maintained under this Schedule shall, except with respect
to worker’s compensation insurance, or liability insurance as provided in
subsection (e) below, provide that, so long as the Obligations are not fully
satisfied, payment of all losses in excess of Five Hundred Thousand Dollars
($500,000.00) (the “Threshold Amount”) by all insurance under­writers with
respect to any one accident, occurrence or event shall be made directly to the
Lender as loss payee and shall be payable to Lender and the applicable Borrower
as their interests may appear; provided, however, that after
an Event of Default (as hereinafter defined) or an event which, with lapse of
time or notice or lapse of time and notice, would constitute an Event of Default
(herein called an “Unmatured Event of Default”) shall have occurred, the Lender
may direct such insurance underwriters to make remittance of all payments under
such policies, regardless of amount, directly to and to the sole order of the
Lender, including amounts payable with respect to claims made or accidents,
events or occurrences transpiring prior to an Unmatured Event of
Default.  Payment prior to an Unmatured Event of Default of all losses
not in excess of the Threshold Amount shall be made to the Borrower or as the
Borrower may otherwise direct, except as otherwise provided in the proviso to the
foregoing sentence of this subsection (b).  Any such insurance
recoveries to which the Lender shall be so entitled shall be applied as
follows:

    

    (1)  In
the event that insurance becomes payable under said policies on account of an
accident, occurrence or event not resulting in an actual or constructive total
loss or an agreed or compromised total loss of the Vessel, the Lender shall do
the following:

    

    (A) If
there is no existing Event of Default and no Unmatured Event of Default, and if
a written request therefor shall have been made by the applicable Borrower,
Lender shall apply the proceeds of insurance to pay, or consent that the
underwriters pay, for repairs, liabilities, salvage or other charges and
expenses (including labor charges due or paid by the Borrower), covered by the
policies.  If the Borrower shall have repaired the damage and paid the
cost thereof or discharged or paid such liabilities, salvage claims or other
charges and expenses, and certifies such payment in a certificate signed by an
executive officer of the Borrower (a  “Borrower’s Certificate”) delivered
to the Lender, accompanied by written confirmation by the underwriter, a
surveyor, an adjuster or a marine insurance broker, Lender shall apply the
proceeds of insurance to reimburse, or consent that the underwriters reimburse,
the Borrower for such expenditures.  Provided that prior to
undertaking any repair estimated to cost more than Five Hundred Thousand Dollars
($500,000.00), Borrower shall obtain the approval of the
Lender.  After the repair of all known damage from a loss (unless
Borrower and Lender agree that the completion of such repair is not advisable),
and all known costs, liabilities, salvage claims, charges and expenses covered
by the policies with respect to such loss shall have been discharged or paid
(such fact having been certified to by a Borrower’s Certificate delivered to the
Lender, accompanied by written confirmation by the underwriter, a surveyor, an
adjuster or a marine insurance broker) Lender shall return (to the extent of its
remaining receipt), or consent that the underwriters pay, any balance of the
proceeds of insurance to the Borrower.

    

    (B) If
there is no existing Event of Default but there is an existing Unmatured Event
of Default, no payment shall be made to any Borrower and all payments received
and retained by the Lender hereunder shall be applied by the Lender, if it so
elects, for the purposes stated in (A) above or shall be held by the Lender
until such payments may be applied pursuant to (C) below.

    

    (C) If
there is an existing Event of Default, no payment shall be made to any Borrower
and all such payments received and retained by the Lender hereunder shall be
applied by the Lender, at its option, (a) in accordance with this Agreement, or
(b) for the purposes stated in (A) above, with the balance, if any, applied in
accordance with this Agreement.

    

    (2)  In
the event of an accident, occurrence or event resulting in an actual or
constructive loss or an agreed or compromised total loss of a Vessel, the
applicable Borrower shall forthwith deposit with the Lender any insurance moneys
which the Borrower may receive on account thereof under policies of insurance
required by this Schedule, and any insurance moneys received by the Lender
(whether from the Borrower or any insurer or otherwise) shall be applied by the
Lender in accordance this Agreement (whether or not an Event of Default or
Unmatured Event of Default shall exist).

    

    (c)  In
the event of an accident or event resulting in a constructive total loss of a
Vessel, the Lender shall have the right (but only with prior written consent of
the Borrower, unless there is an existing Event of Default, in which event no
such consent shall be neces­sary) to claim for a constructive total loss of
the Vessel, and if (1) such claim is accepted by all underwriters under all
policies then in force as to the Vessel under which payment is due for total
loss and (2) payment in full is made in cash under said policies, then the
Lender shall have the right to abandon the affected Vessel to the underwriters
under such policies, free from the lien of the Security Documents encumbering
such Vessel.

    

    (d)  The
Lender shall not have the right to enter into an agreement or compromise
providing for an agreed or compromised total loss of a Vessel without the
applicable Borrower’s prior consent unless there is an existing Event of
Default.  If (1) the Borrower shall have given its prior consent
thereto or (2) there is an existing Event of Default, the Lender shall have the
right in its discretion to enter into an agreement or compromise providing for
an agreed or compromised total loss of the Vessel.

    

    (e)  In
accordance with subsection (a) the Borrowers shall, without cost to the Lender,
keep the Vessels insured against marine protection and indemnity risks and
liabilities and against pollution liability, and shall maintain such other
liability policies required hereunder.  All such insurance shall be by
policies of insurance approved by the Lender as to form and
amount.  Such policies may provide that, (i) if the Borrower shall not
have incurred the loss, damage or expense in question, any loss under such
insurance may be paid directly to the person to whom any liability covered by
such policies has been incurred (whether or not an Event of Default then
exists), and (ii) if the Borrower shall have incurred the loss, damage or
expense in question, any such loss shall be paid (A) to the Borrower in
reimbursement if there is not an existing Event of Default or an existing
Unmatured Event of Default of which the underwriter has received written notice
from the Lender, or (B) to the Lender to be held and applied in the manner and
order as set forth in this Agreement if there is an existing Event of Default or
Unmatured Event of Default of which the underwriter has received written notice
from the Lender, or (C) to the Lender to be held until it may be applied under
(A) or (B) above.  Any contractual liability insurance obtained by
Borrower with respect to its obligations under this Agreement or the Security
Documents shall provide for payment directly to Lender, and any amounts paid
under such policy shall be applied in the manner and order as set forth in this
Agreement, unless Lender otherwise specifies in writing.

    

    (f)  In
connection with its requiring, permitting or approving any insurance under this
Schedule (including the form and amount thereof and the insurer), the Lender, if
it shall so require, shall be furnished with, and may rely upon a certificate or
opinion of the firm of marine insurance brokers acting for the Borrowers in
respect of the Vessels at the date of this Agreement, or such other firm of
marine insurance brokers (who may be marine insurance brokers for the Borrower)
selected by the Borrower and approved by the Lender (which approval shall not be
unreasonably withheld or delayed), stating, in effect, that said insurance
complies in all respects with appli­cable requirements of this
Schedule.

    

    (g)  Unless
otherwise consented to in writing, all insurance required under this Schedule
shall be placed and kept with first class American, British, or other insurance
companies, underwriters’ associations, clubs or underwriting funds approved by
the Lender.

    

    (h)           All
insurance required under this Schedule shall be taken out in the name of the
Borrower and in the name of the Lender as assured.  If applicable, the
Lender shall be named loss payee under all such policies.

    

    (i)  All
policies for such insurance so taken out shall, unless otherwise consented to by
the Lender, provide that (1) there shall be no recourse against the Lender for
the payment of premiums or commissions, (2) if such policies provide for the
payment of club calls, assessments or advances, there shall be no recourse
against the Lender for the payment thereof and (3) at least thirty (30) days’
prior written notice of any cancellation or modification of any element of
insurance coverage provided for herein shall be given to the Lender by the
insurance underwriters.  All policies of insurance required hereunder
shall contain a waiver of subrogation with respect to Lender and its
assigns.  All such policies shall provide that they are primary
insurance with respect to any insurance carried by Lender or its assigns, and
that any “Other Insurance Clause” contained in Borrower’s insurance shall be
inoperative as to the Lender and its assigns.  In addition, any policy
shall not contain any provision under which Borrower is a co-insurer, but may
provide for reasonable deductibles acceptable to Lender.  Lender
approves a deductible amount of up to $100,000 for hull & machinery coverage
and $100,000 for protection and indemnity risks.

    

    (j)  The
Borrowers shall not, without the prior written consent of the Lender, do any
act, or voluntarily suffer or permit any act to be done, whereby any insurance
required by this Schedule shall or may be suspended, impaired or defeated, or
suffer or permit any Vessel to engage in any voyage or operations, or to carry
any cargo not permitted under the policies of insurance then in effect without
procuring insurance satisfactory to the Lender covering such Vessel in all
respects for such voyage of the carriage of such voyage.

    

    (k)  In
the event that any claim or lien is asserted against any Vessel for loss, damage
or expense which is covered by insurance hereunder, and it is necessary for a
Borrower to obtain a bond or supply other security to prevent arrest of the
Vessel or to obtain the release of the Vessel from arrest on account of said
claim or lien, the Lender, at the written request of the Borrower may, but it
shall not be required to, assign all of its right, title and interest in and to
said insurance covering such loss, damage or expense, to any person, firm or
corporation executing a surety or guaranty bond or other agreement to save or to
release the Vessel from such arrest as collateral security to indemnify against
liability under said bond or other agreement.

    

    (l)  The
Borrower shall deliver to the Lender detailed cover notes in a form acceptable
to Lender evidencing insurance maintained under this Schedule.

    

    (m)  Concurrently
with the delivery of this Agreement and annually thereafter, the Borrowers shall
furnish or cause to be furnished to the Lender a detailed certificate or opinion
(signed by a firm of marine insurance brokers qualifying under subsection (f)
above) as to the insurance maintained by the Borrower pursuant to this Schedule
specifying the respective policies of insurance covering the same and stating,
in effect, that such insurance complies in all respects with the applicable
requirements of this Schedule.  If any Borrower fails to maintain any
such insurance, the Lender may arrange for (at such Borrower=s
expense and without any responsibility on the Lender’s part for) obtaining the
insurance.  Each of the coverages set forth in this Schedule may be
increased to such greater amount as Lender may reasonably required consistent
with prudent industry practice.

    

    [ END OF
SCHEDULE 5.03 ]

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